HomeMy WebLinkAbout14 TPOA 3% @ 50 02-18-03AGENDA REPORT
02-18-03
MEETING DATE: FEBRUARY 18, 2003
TO:
FROM:
SUBJECT:
WILLIAM A. HUSTON, CITY MANAGER
HUMAN RESOURCES DEPARTMENT
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CONTRACT AMENDMENT
TO PROVIDE THE 3% @ 50 FULL FORMULA FOR LOCAL POLICE MEMBERS
ONLY
SUMMARY:
This item begins the process to amend the City's Public Employees' Retirement System
(PERS) contract effective July 1, 2003 to provide eligible sworn safety employees the
ability to retire with the 3% at age 50 full formula pursuant to the Memorandums of
Understanding with the Tustin Police Officers' Association and the Tustin Police
Management Association each dated January 1, 2001 to December 31,2003.
RECOMMENDATION:
.
Adopt Resolution 03-09 providing the required notice of intent to approve an
amendment to the City's contract with the PERS for local police members
which will determine the percentage of final compensation for each year of
credited prior and current City service as a local police member using the 3%
at age 50 full formula.
,
Conduct first reading of Ordinance No. 1267 as required to amend the City's
PERS contract effective July 1, 2003.
,
Schedule second reading of Ordinance No. 1267 for the March 17, 2003 City
Council meeting consistent with Government Code Section 20471 that
requires a minimum of 20 days elapse between adoption of the Resolution of
Intention and the adoption of the final Ordinance.
,
Direct staff to publish the Ordinance in the Orange County Register as
required by PERS.
FISCAL IMPACT:
Based on current payroll, in fiscal year 03/04 the additional cost will be 11.625% of
safety payroll which will equate to approximately $1,008,309.
S:\City Council Agenda Items\2003\3% @ 50 Contract Amendment.doc
City Council Agenda
February 18, 2003
Page 2
BACKGROUND AND DISCUSSION:
The City currently provides the 2% @ 50 retirement formula for local safety members
through the PERS. The Memorandums of Understanding, effective January 1, 2002
through December 31, 2003 between the City of Tustin and the Tustin Police Officers'
Association and the Tustin Police Management Association state in part:
"The City agrees to amend its current contract with PERS in order to
provide the 3% @ 50 retirement formula for Local Safety Members (in lieu
of the current 2% @ 50 formula) to be effective no later than July 1,2003."
A public agency may amend its contract with the PERS to provide the 3% @ 50 Full
formula pursuant to Section 21362.2 of the Government Code.
Amending our contract in this manner increases the amount of compensation that
members will receive upon retirement from City employment based on a 3% formula
utilizing years of service and age.
The costs associated with this amendment will be funded solely by the City. The
estimated cost of this enhanced retirement was given great consideration in 2001 when
the City negotiated the three-year MOU with its Police associations.
According to the valuation prepared by PERS, the City's contribution rate will increase
from 6.755% to 18.380% upon the effective date of this amendment. As such, it will be
necessary to increase the budget for this rate increase at the time that staff puts
together the budget for fiscal year 03/04.
While the costs associated with this enhanced retirement is significant, implementing
the enhanced retirement program for our sworn safety personnel is required pursuant to
our previously negotiated agreement with our police associations. Further, the benefit
enhances the City's ability to attract and retain quality law enforcement personnel and it
enables the City to remain competitive with other local public agencies.
Arlene Marks, SPHR
Director of Human Resources
Attachments: Resolution No. 03-09 Ordinance No. 1267
Exhibit- Amendment to Contract
PERS Actuarial Valuation dated November 5, 2002
S:\City Council Agenda Items~2003\3% @ 50 Contract Amendment.doc
l0
14
16
17
20
2.4
2?
RESOLUTION NO. 03-09
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN,
CALIFORNIA, OF INTENTION TO APPROVE AN AMENDMENT TO THE
CONTRACT
BETWEEN THE BOARD OF ADMINISTRATION OF
THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AND THE CITY COUNCIL OF THE CITY OF TUSTIN
WHEREAS, the Public Employees' Retirement Law permits the
participation of public agencies and their employees in the Public Employees'
Retirement System by the execution of a contract, and sets forth the procedure by
which said public agencies may elect to subject themselves and their employees
to amendments to said Law; and
WHEREAS, one of the steps in the procedures to amend this contract is
the adoption of the governing body of the public agency of a resolution giving
notice of its intention to approve an amendment to said contract, which resolution
shall contain a summary of the change proposed in said contract; and
WHEREAS, the following is a statement of the proposed change: To
provide eligible safety members PERS retirement benefits pursuant to
Government Code Section 21362.2 (3% @ 50 Full formula) effective July 1,2003.
NOW, THEREFORE, BE IT RESOLVED that the governing body of the
above agency does hereby give notice of intention to approve an amendment to
the contract between said public agency and the Board of Administration of the
Public Employees' Retirement System, a copy of said amendment being attached
hereto, as an "Exhibit" and by this reference made a part thereof.
By:
TRACY WILLS WORLEY, MAYOR
ATTEST:
CITY CLERK
Attachment: PERS Contract Amendment - Exhibit
S:\City Council Agenda Items\2003\reso 03-092.DOC
City of Tustin
RESOLUTION CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF ORANGE )SS
CITY OF TUSTIN )
RESOLUTION NO. 03-09
I, PAMELA STOKER, City Clerk and ex-officio Clerk of the City Council of the City of
Tustin, California, hereby certifies that the whole number of the members of the City
Council of the City of Tustin is five; and that the above and foregoing Resolution No. 03-
09 was adopted at a regular meeting of the City Council held on the 18th day of February,
2003, by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNCILMEMBER ABSENT:
Pamela Stoker, City Clerk
CalPERS
California
Public Employees' Retirement System
EXHIBIT
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
Ci~ Council
City of Tustin
The Board of Administration, California Public Employees' Retirement System,
hereinafter referred to as Board, and the governing body of the above public agency,
hereinafter referred to as Public Agency, having entered into a contract effective August
1, 1967, and witnessed June 28, 1967, and as amended effective October 1, 1969,
June 18, 1979, December 29, 1980, February 26, 1990, October 5, 1992, December 28,
1992, July 6, 1995, April 5, 1996, June 6, 1996, March 28, 1997, December 31, 1999
and April 8, 2002 which provides for participation of Public Agency in said System,
Board and Public Agency hereby agree as follows:
A.
Paragraphs 1 through 13 are hereby stricken from said contract as executed
effective April 8, 2002, and hereby replaced by the following paragraphs
numbered 1 through 13 inclusive:
I ·
All words and terms used herein which are defined in the Public
Employees' Retirement Law shall have the meaning as defined therein
unless otherwise specifically provided. "Normal retirement age" shall
mean age 55 for local miscellaneous members and age 55 for local fire
members; and age 50 for local police members.
,
Public Agency shall participate in the Public Employees' Retirement
System from and after August 1, 1967 making its employees as
hereinafter provided, members of said System subject to all provisions of
the Public Employees' Retirement Law except such as apply only on
election of a contracting agency and are not provided for herein and to all
amendments to said Law hereafter enacted except those, which by
express provisions thereof, apply only on the election of a contracting
agency.
,
,
,
.
.
o
DO NOT SIGN "EXHIBIT
Employees of Public Agency in the following classes shall become
members of said Retirement System except such in each such class as
are excluded by law or this agreement:
a. Local Fire Fighters (herein referred to as local safety members);
b. Local Police Officers (herein referred to as local safety members);
C.
Employees other than local safety members (herein referred to as
local miscellaneous members).
In addition to the classes of employees excluded from membership by
said Retirement Law, the following classes of employees shall not become
members of said Retirement System:
a. PERSONS COMPENSATED ON AN HOURLY BASIS.
The percentage of final compensation to be provided for each year of
credited prior and current service as a local miscellaneous member shall
be determined in accordance with Section 21354 of said Retirement Law
(2% at age 55 Full).
The percentage of final compensation to be provided for each year of
credited prior and current service as a local fire member shall be
determined in accordance with Section 21366 of said Retirement Law
(One-half pay at age 55 Full).
The percentage of final compensation to be provided for each year of
credited prior and current service as a local police member shall be
determined in accordance with Section 21362.2 of said Retirement Law
(3% at age 50 Full).
Public Agency elected and elects to be subject to the following optional
provisions:
a,
Section 21571 (Basic Level of 1959 Survivor Benefits) for local fire
members only.
b,
Section 20042 (One-Year Final Compensation) for local police
members and local miscellaneous members only.
C.
Section 21574 (Fourth Level of 1959 Survivor Benefits) for local
police members only.
do
Section 21024 (Military Service Credit as Public Service), Statutes
of 1976 for local miscellaneous members and local police members
only.
eo
Section 21573 (Third Level of 1959 Survivor Benefits) for local
miscellaneous members only.
Section 21583 (Additional Opportunity to Elect 1959 Survivor
Benefits) for local police members only.
,
Public Agency, in accordance with Government Code Section 20790,
ceased to be an "employer" for purposes of Section 20834 effective on
June 18, 1979. Accumulated contributions of Public Agency shall be fixed
and determined as provided in Government Code Section 20834, and
accumulated contributions thereafter shall be held by the Board as
provided in Government Code Section 20834.
10.
Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of prior and future service liability with
respect to local miscellaneous members and local safety members of said
Retirement System.
11. Public Agency shall also contribute to said Retirement System as follows:
a,
Contributions required per covered member on account of the 1959
Survivor Benefits provided under Section 21573 of said Retirement
Law. (Subject to annual change.) In addition, all assets and
liabilities of Public Agency and its employees shall be pooled in a
single account, based on term insurance rates, for survivors of all
local miscellaneous members.
b.
Contributions required per covered member on account of the 1959
Survivor Benefits provided under Section 21574 of said Retirement
Law. (Subject to annual change.) In addition, all assets and
liabilities of Public Agency and its employees shall be pooled in a
single account, based on term insurance rates, for survivors of all
local police members.
Co
A reasonable amount, as fixed by the Board, payable in one
installment within 60 days of date of contract to cover the costs of
administering said System as it affects the employees of Public
Agency, not including the costs of special valuations or of the
periodic investigation and valuations required by law.
do
A reasonable amount, as fixed by the Board, payable in one
installment as the occasions arise, to cover the costs of special
valuations on account of employees of Public Agency, and costs of
the periodic investigation and valuations required by law.
12.
Contributions required of Public Agency and its employees shall be
subject to adjustment by Board on account of amendments to the Public
Employees' Retirement Law, and on account of the experience under the
Retirement System as determined by the periodic investigation and
valuation required by said Retirement Law.
13.
Contributions required of Public Agency and its employees shall be paid
by Public Agency to the Retirement System within fifteen days after the
end of the 'period to which said contributions refer or as may be prescribed
by Board regulation. If more or less than the correct amount of
contributions is paid for any period, proper adjustment shall be made in
connection with subsequent remittances. Adjustments on account of
errors in contributions required of any employee may be made by direct
payments between the employee and the Board.
B. This amendment shall be effective on the
BOARD OF ADMINISTRATION x ~'~
PUBLIC EMPLOYEES' RETIRE~~;SYSTEM
KENNETH W. MAR~!ON;~i3HIEF
ACTUARIAL & EM,~'~'d,~ER SERVICES DIVISION
PUBLIC EMPLO;~EEs RETIREMENT SYSTEM
day of
CITY COUNCIL
CITY OF TUSTIN
BY
PRESIDING O F F i C,E,~&"'~
Witne§~Date
Attbst:
Clerk
AMENDMENT ER# 0688
PERS-CON-702A (Rev. 8\02)
ORDINANCE NO. 1267
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA,
AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN THE CITY
COUNCIL OF THE CITY OF TUSTIN AND THE BOARD OF ADMINISTRATION OF
THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
THE CITY COUNCIL OF THE CITY OF TUSTIN DOES ORDAIN AS FOLLOWS:
SECTION 1. That an amendment to the contract between the City Council of the
City of Tustin and the Board of Administration, California Public Employees' Retirement
System is hereby authorized (to be effective July 1, 2003), a copy of said amendment
being attached hereto, marked Exhibit, and by such reference made a part hereof as
though herein set out in full.
SECTION 2. The Mayor of the City Council is hereby authorized, empowered,
and directed to execute said amendment for and on behalf of said Agency.
SECTION 3. This ordinance shall take effect 30 days after the date of its
adoption, and prior to the expiration of 20 days from the passage thereof shall be
published at least once in the Orange County Register, a newspaper of general
ciirculation, published and circulated in the City of Tustin and thenceforth and thereafter
the same shall be in full force and effect.
PASSED AND ADOPTED at a regular meeting of the City Council for the City of
TUstin on this day of ., 2003.
TRACY WILLS WORLEY, MAYOR
ATTEST:
CITY CLERK
Attachment: PERS Contract Amendment - Exhibit
Si\City Council Agenda Items\2003\PERS CONTRACT AMENDMENT 3% @ 50 ACT ORDINANCE 1267.doc
EXHIBIT
California
Public Employees' Retirement System
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
CRy Council
City of Tustin
The Board of Administration, California Public Employees' Retirement System,
hereinafter referred to as Board, and the governing body of the above public agency,
hereinafter referred to as Public Agency, having entered into a contract effective August
1,. 1967, and witnessed June 28, 1967, and as amended effective October 1, 1969,
June 18, 1979, December 29, 1980, February 26, 1990, October 5, 1992, December 28,
1992, July 6, 1995, April 5, 1996, June 6, 1996, March 28, 1997, December 31, 1999
and April 8, 2002 which provides for participation of Public Agency in said System,
Board and Public Agency hereby agree as follows:
A~
Paragraphs I through 13 are hereby stricken from said contract as executed
effective April 8, 2002, and hereby replaced by the following paragraphs
numbered 1 through 13 inclusive:
o
All words and terms used herein which are defined in the Public
Employees' Retirement Law shall have the meaning as defined therein
unless otherwise specifically provided. "Normal retirement age" shall
mean age 55 for local miscellaneous members and age 55 for local fire
members; and age 50 for local police members.
,
Public Agency shall participate in the Public Employees' Retirement
System from and after August 1, 1967 making its employees as
hereinafter provided, members of said System subject to all provisions of
the Public Employees' Retirement Law except such as apply only on
election of a contracting agency and are not provided for herein and to all
amendments to said Law hereafter enacted except those, which by
express provisions thereof, apply only on the election of a contracting
agency.
.
,
.
,
,
o
DO NOT SIGN "EXHIBIT
Employees of Public Agency in the following classes shall become
members of said Retirement System except such in each such class as
are excluded by law or this agreement:
a. Local Fire Fighters (herein referred to as local safety members);
b. Local Police Officers (herein referred to as local safety members);
C.
Employees other than local safety members (herein referred to as
local miscellaneous members).
In addition to the classes of employees excluded from membership by
said Retirement Law, the following classes of employees shall not become
members of said Retirement System:
a. PERSONS COMPENSATED ON AN HOURLY BASIS.
The percentage of final compensation to be provided for each year of
credited prior and current service as a local miscellaneous member shall
be determined in accordance with Section 21354 of said Retirement Law
(2% at age 55 Full).
The percentage of final compensation to be provided for each year of
credited prior and current service as a local fire member shall be
determined in accordance with Section 21366 of said Retirement Law
(One-half pay at age 55 Full).
The percentage of final compensation to be provided for each year of
credited prior and current service as a local police member shall be
determined in accordance with Section 21362.2 of said Retirement Law
(3% at age 50 Full).
Public Agency elected and elects to be subject to the following optional
provisions:
a,
Section 21571 (Basic Level of 1959 Survivor Benefits) for local fire
members only.
b.
Section 20042 (One-Year Final Compensation) for local police
members and local miscellaneous members only.
C.
Section 21574 (Fourth Level of 1959 Survivor Benefits) for local
police members only.
d,
Section 21024 (Military Service Credit as Public Service), Statutes
of 1976 for local miscellaneous members and local police members
only.
DO NOT SIGN "EXHIBIT
e,
Section 21573 (Third Level of 1959 Survivor Benefits) for local
miscellaneous members only.
f Section 21583 (Additional Opportunity to Elect 1959 Survivor
Benefits) for local police members only.
,
Public Agency, in accordance with Government Code Section 20790,
ceased to be an "employer" for purposes of Section 20834 effective on
June 18, 1979. Accumulated contributions of Public Agency shall be fixed
and determined as provided in Government Code Section 20834, and
accumulated contributions thereafter shall be held by the Board as
provided in Government Code Section 20834.
10.
Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of prior and future service liability with
respect to local miscellaneous members and local safety members of said
Retirement System.
11. Public Agency shall also contribute to said Retirement System as follows:
ao
Contributions required per covered member on account of the 1959
Survivor Benefits provided under Section 21573 of said Retirement
Law. (Subject to annual change.) In addition, all assets and
liabilities of Public Agency and its employees shall be pooled in a
single account, based on term insurance rates, for survivors of all
local miscellaneous members.
bo
Contributions required per covered member on account of the 1959
Survivor Benefits provided under Section 21574 of said Retirement
Law. (Subject to annual change.) In addition, all assets and
liabilities of Public Agency and its employees shall be pooled in a
single account, based on term insurance rates, for survivors of all
local police members.
C,
A reasonable amount, as fixed by the Board, payable in one
installment within 60 days of date of contract to cover the costs of
administering said System as it affects the employees of Public
Agency, not including the costs of special valuations or of the
periodic investigation and valuations required by law.
d.
A reasonable amount, as fixed by the Board, payable in one
installment as the occasions arise, to cover the costs of special
valuations on account of employees of Public Agency, and costs of
the periodic investigation and valuations required by law.
12.
Contributions required of Public Agency and its employees shall be
subject to adjustment by Board on account of amendments to the Public
Employees' Retirement Law, and on account of the experience under the
Retirement System as determined by the periodic investigation and
valuation required by said Retirement Law.
13.
Contributions required of Public Agency and its employees shall be paid
by Public Agency to the Retirement System within fifteen days after the
end of the'period to which said contributions refer or as may be prescribed
by Board regulation. If more or less than the correct amount of
contributions is paid for any period, proper adjustment shall be made in
connection with subsequent remittances. Adjustments on account of
errors in contributions required of any employee may be made by direct
payments between the employee and the Board.
This amendment shall be effective on the
)ARM OF ADMINISTRATION
JBLIC EMPLOYEES' RETIRE~X'[~YSTEM
NNETH W.
& EMP:CdgER SERVICES DIVISION
TUARIAL
JBLIC EMPLOYEES' RETIREMENT SYSTEM
--NDMENT ER# 0688
~S-CON-702A (Rev. 8\02)
day of
CITY COUNCIL
CITY OF TUSTIN
BY
PRESIDING OFFIC.~I~*
'\ ' ~ '
WitneSS'gate
Attest:
Clerk
ONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2001
PLAN FOR CITY OF TUSTIN
NUMBER 688
Description: Section 21362.2, 3% ~ 50 Full Formula for Local Police Members Only
'resent Value of Projected Benefits
table below shows the change in the total present value of benefits for the proposed plan amendment.
present value of benefits represents the total dollars needed today to fund all future benefits for
members of the plan, i.e. without regard to future employees. The difference between this amount
current plan assets must be paid by future employee and employer contributions. As such, the change
the present value of benefits due to the plan amendment represents the "cost" of the plan amendment.
owever, for plans with excess assets some or all of this "cost" may already be covered by current excess
~sets.
As of June 30, 2001
tal Assets at Market Value (MVA)
Value of Assets (AVA)
/ MVA
Value of Projected Benefits (PVB)
Value of Assets (AVA)
Value of Future Employer and Employee
ntributions (PVB - AVA)
:ange to PVB
Current Plan
$ 36,930,327
39,083,092
105.8%
$ 48,491,43O
39,083,092
Post-Amendment
$ 36,930,327
$ 9,408,338
39,083,092
105.8%
$ 55,115,328
- 39,083,092
16,032,236
6,623,898
,ccrued Liability
is not required, nor necessarily desirable, to have accumulated assets sufficient to cover the total present
of benefits until every member has left employment. Instead, the actuarial funding process
a regular contribution schedule of employee contributions and employer contributions (called
costs) which are designed to accumulate with interest to equal the total present value of benefits
the time every member has left employment. As of each June 30, the actuary calculates the
level of plan assets as of that point in time by subtracting the present value of scheduled future
31oyee contributions and future employer normal costs from the total present value of benefits. The
,'suiting "desirable" level of assets is called the accrued liability.
· plan with assets exactly equal to the plan's accrued liability is simply "on schedule" in funding that
lan, and only future employee contributions and future employer normal costs are needed. A plan with
~sets below the accrued liability is "behind schedule", or is said to have an unfunded liability, and must
~orarily increase contributions to get back on schedule. A plan with assets in excess of the plan's
liability is "ahead of schedule", or is said to have excess assets, and can temporarily reduce future
A plan with assets(AVA) in excess of the total present value of benefits is called super-
and neither future employer nor employee contributions are required. Of course, events such as
lan amendments and investment or demographic gains or losses can change a plan's condition from year
year. For example, a plan amendment could cause a plan to move all the way from being super-funded
being in an unfunded position.
ovember 5, 2002 Page I of 6
02 AM
eNTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2001
8
fit Description: Section 21362.2, 3 Yo ~ 50 Full Formula for Local Police Members Only
changes in your plan's accrued liability, unfunded accrued liability, and the funded ratio as of June
), 2001 due to the plan amendment are shown in the table below.
As of June 30, 2001
Age Normal Accrued Liability (AL)
tuarial Value of Assets (AVA)
funded Liability/(Excess Assets) (UAL = AL - AVA)
nded Ratio (AVA / AL)
ange to AL
34,173,266
39,083,092
(4,9O9,826)
114.4%
Current Plan
Post-Amendment
39,515,686
39,083,092
432,594
98.9%
5,342,420
otal Employer Contribution Rate
[hile the tables above give the changes in the accrued liability and funded status of the plan due to the
nendment, there remains the question of what will happen to the employer contribution rate because of
~e change in plan provisions.
alPERS policy is to implement rate changes due to plan amendments immediately on the effective date
f the change in plan benefits: This change is displayed as the "Change to Total Employer Rate" on the
)llowing page. If the contract amendment effective date is on or before June 30, 2003, the change in the
mployer contribution rate should be added to the employer's current rate. In general, the policy also
rovides that the change in unfunded liability due to the plan amendment will be separately amortized
ver a period of 20 years from the effective date of the amendment and all other components of the plan's
nfunded liability/excess assets will continue to be amortized separately.
[owever, your actuary may choose to apply different rules to plans with a current employer contribution
~te of zero. The pre-amendment excess assets in these plans were sufficient to cover the employer's
)rmal cost for one or more years into the future. A plan amendment will use up some or all of the pre-
nendment excess assets. In order to maintain our goal of providing rates that are relatively stable, while
iking into account known or expected future events, your actuary may decide to spread any remaining
xcess assets over a single number of years. This is known as a "fresh start" and will generally be for a
eriod not less than 15 years, and in no case less than 5 years. You may call your actuary to discuss
arther alternative financing options. If the amendment uses up all excess assets and creates an unfunded
~ability (i.e. from being ahead of schedule to behind schedule), the total post-amendment unfunded
!ability may be amortized over 20 years.
a no case may the annual contribution with regard to a positive unfunded liability be less than the amount
~hich would be required to amortize that unfunded liability, as a level percent of pay, over 30 years.
,he table on the following page shows the change in your plan's employer contribution rate due to the
.lan amendment for fiscal 2003-2004.
,lovember 5, 2002 Page 2 of 6
0:02 AM
ONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2001
~FETY PLAN FOR CITY OF TUSTIN
MPLOYER NUMBER 688
enefit Description: Section 21362.2, 3% ~ 50 Full Formula for Local Police Members Only
As of June 30, 2001 Current Plan Post-Amendment
Employer Rate
,ment for Normal Cost
,ment on Amortization Bases
,ment for 1959 Survivor Benefit Program
Employer Rate
~ange to Normal Cost
range to Total Employer Rate
~rrent Amortization Base ~
Amortization Base
Start z
fie Base 3
Employee Rate
~tal Employee Rate
range to Total Employee Rate
Employer Rate 4 (recognizing-6%
eestment return for 2001-2002)
ection Amortization Base
12.162%
-5.407%
0.000%
6.755%
Multiple Base
9.000%
13.9%
Multiple Base
16.281%
2.099%
0.000%
18.380%
4.119%
11.625%
30-year
N/A
9.000%
0.000%
25.1%
Multiple Base
- Details of the current amortization base are shown on page 7 of June 30, 2001 annual valuation report. If you have adopted any other
~bsequent amendments, the current amortization base is the schedule after these adopted amendments.
- Ifa fixed number of years is shown, it means that the current unfunded actuarial liability is projected and amortized over this fixed number of
mrs. This amortization replaces the amortization schedule shown in your June 30, 2001 annual valuation and any other subsequent
nendments you have adopted.
- If20-year is shown, it means that the change in liability due to plan amendments is amortized separately over a 20-year period. This
nortization schedule is in addition to the amortization schedule shown in the June 30, 2001 annual valuation and any other subsequent
nendments you have adopted.
- Excludes 1959 Survivor Benefit Program rate.
n the above table, the information shown in the 2003-2004 box represents the actual initial contribution
ate that will apply during fiscal 2003-2004 if you adopt the amendment. However, these figures do not
acorporate the -6% investment return in 2001-2002. The estimated employer rates shown in the 2004-
005 box do take the negative return into consideration and will give you a better estimate of what to
xpect in 2004-2005.
~ote that the change in normal cost in the table above may be much more indicative of the long term
hange in the employer contribution rate due to the plan amendment. The plan's payment on
.mortization bases shown in the table above is a temporary adjustment to the employer contribution to
get the plan back on schedule". This temporary adjustment to the employer rate varies in duration
rom plan to plan. For example, a plan with initial excess assets being amortized over a short period of
ime will typically experience a large rate increase when excess assets are fully amortized. While a plan
.mendment for such a plan may produce little or no increase in the employer contribution rate now, the
.hange in normal cost due to the plan amendment will become fully reflected in the employer
:ontribution rate as soon as initial excess assets are fully amortized.
4ovember 5, 2002 Page 3 of 6
0:02 AM
AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2001
PLAN FOR CITY OF TUSTIN
NUMBER 688
Description: Section 21362.2, 3% ~ 50 Full Formula for Local Police Members Only
dsclosure
your agency is requesting cost information for two or more benefit changes, the cost of adopting more
an one of these changes may not be obtained by adding the individual costs. Instead, a separate
must be done to provide a cost analysis for the combination of benefit changes. If the proposed
lan amendment applies to only some of the employees in the plan, the rate change due to the plan
still applies to the entire plan, and is still based on the total plan payroll.
~ny mandated benefit improvements not included in the June 30, 2001 annual valuation have not been
tcorporated into this cost analysis.
lease note that the cost analysis provided in this document may not be relied upon once the CalPERS
staff have completed the next annual valuation, that is, the annual valuation as of June 30, 2002.
you have not taken action to amend your contract, and we have already completed the June 3 0, 2002
~nual valuation report, you must contact our office for an updated cost analysis, based on the new annual
~escriptions of the actuarial methodologies, actuarial assumptions, and plan benefit provisions may be
)und in the appendices of the June 30, 2001 annual report. Please note that the results shown here are
ect to change if any of the data or plan provisions change from what was used in this study.
;ertification
actuarial valuation for the proposed plan amendment is based on the participant, benefits, and asset
used in the June 30, 2001 annual valuation, with the benefits modified if necessary to reflect what is
provided under your contract with CalPERS, and further modified to reflect the proposed plan
The valuation has been performed in accordance with standards of practice prescribed by the
,ctuarial Standards Board, and the assumptions and methods are internally consistent and reasonable for
lis plan, as prescribed by the CalPERS Board of Administration according to provisions set forth in the
:alifornia Public Employees' Retirement Law.
Hwang, A.S.A., M.A.A.A.
Pension Actuary, CalPERS
Process Ids: Annual-107192 Base-117585 Proposal-117586
lovember 5, 2002 Page 4 of 6
0:02 AM
~NTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2001
FETY PLAN FOR CITY OF TUSTIN
~YER NUMBER 688
~nefit Description: Section 21362.2, 3% ~ 50 Full Formula for Local Police Members Only
of Plan Amendments Valued
}VERAGE GROUP 75001
Pre-Amendment
· The Service Retirement benefit calculated for service earned by this group of
members is a monthly allowance equal to the product of the 2% ~ 50 benefit factor,
years of service, and final compensation. (Final compensation is reduced by $133.33
per month for members with a modified formula). The benefit factors for retirement
at integral ages are shown below:
Retirement 2% at 50
Age Factor
50 2.000%
51 2.140%
52 2.280%
53 2.420%
54 2.560%
55 and older 2.700%
Post-Amendment
The Service Retirement benefit calculated for service earned by this group of
members is a monthly allowance equal to the product of the 3% ~ 50 benefit
factor, years of service, and final compensation. (Final compensation is
reduced by $133.33 per month for members with a modified formula). The
benefit factors for retirement at integral ages are shown below:
Retirement
Age
50
51
52
53
54
55 and older
3% at 50
Factor
3.000%
3.000%
3.000%
3.000%
3.000%
3.000%
)vember 5, 2002
0:02 AM
Page 5 of 6
ONTRAcT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2001
~,FETY PLAN FOR CITY OF TUSTIN
VIPLOYER NUMBER 688
~nefit Description: Section 21362.2, 3°/0 ~ 50 Full Formula for Local Police Members Only
OVERAGE GROUP 75002
Pre-Amendment
The Service Retirement benefit calculated for service earned by this group of
members is a monthly allowance equal to the product of the 2% ~ 50 benefit
factor, years of service, and final compensation. (Final compensation is
reduced by $133.33 per month for members with a modified formula). The
benefit factors for retirement at integral ages are shown below:
Retirement
Age
5O
51
52
53
54
55 and older
2% at 50
Factor
2.000%
2.140%
2.28O%
2.420%
2.560%
2.7OO%
Post-Amendment
The Service Retirement benefit calculated for service earned by this group of
members is a monthly allowance equal to the product of the 3% ~ 50 benefit
factor, years of service, and final compensation. (Final compensation is
reduced by $133.33 per month for members with a modified formula). The
benefit factors for retirement at integral ages are shown below:
Retirement
Age
5O
51
52
53
54
55 and older
3% at 50
Factor
3.000%
3.000%
3.OOO%
3.000%
3.OOO%
3.000%
qovember 5, 2002
0:02 AM
Page 6 of 6