City Council Report
City Council Meeting: December 6, 2011
Agenda Item: 3-G
To: Mayor and City Council
From: Donna C. Peter, Director of Human Resources
Subject: Adoption of a Resolution Correcting CalPERS Retirement Program Employer Paid Member Contributions
Staff recommends that the City Council adopt the attached resolution required by the CalPERS Retirement System which correctly identifies Employer Paid Member Contributions.
The City contracts with the California Public Employees Retirement System (CalPERS) for retirement benefits for City employees. The retirement benefits are funded through employee and employer designated contributions. Employee contributions paid by an employer on the employees’ behalf may be reported as additional compensation under CalPERS regulations and may be included in the final compensation used to determine an employee’s retirement benefit amount. This benefit is known as Employer Paid Member Contributions (EPMC). The City has been reporting the value of EPMC for most miscellaneous non-sworn employees since June 2003 and employees have been reimbursing the City for the cost of this benefit since its implementation. The City changed its retirement benefit formula from 2%@55 to 2.7%@55 effective May 27, 2007 for miscellaneous employees. This change increased the employee rate from 7% to 8%. As required under CalPERS regulations and following negotiations with the employee bargaining units through the Coalition of Santa Monica Employees (Coalition), the City amended its CalPERS contract and approved a Memorandum of Understanding (MOU) with the Coalition. The MOU included a provision increasing the EPMC from 7% to 8%; however, a separate resolution specifically designating the 8% EPMC was not completed as required. The City has been reporting the value of the 8% EPMC since 2007 and CalPERS has been receiving contributions based on the higher amount. Additionally, employees have been reimbursing the City for the costs associated with the 8% EPMC. The attached resolution corrects the City’s record and brings the City into compliance with CalPERS regulations.
As stated above, the City has been reporting the value of EPMC at 8% since May 27, 2007 when the change to the 2.7%@55 benefit formula was adopted. Recently, CalPERS replaced its payroll reporting computer system. When CalPERS reviewed its contract documents to set up their new computerized payroll and reporting system, it was discovered that the City had not adopted a separate 8% EPMC resolution at the time it amended its CalPERS contract as required. The result was that errors were being reported in the automated system. Upon contacting CalPERs to correct the reporting problem, CalPERS notified the City that the appropriate EPMC resolution was not on file. Staff researched the issue and determined that the appropriate resolution had not been adopted at the time of the contract amendment.