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|CITY COUNCIL AGENDA ITEM NO. 5
Meeting Date: April 8, 2003
Subject/Title: Approve a resolution authorizing the addition of a third (3rd) Deferred Compensation Plan for the City Employees through STARS (Self-Directed Tax Advantage Requirement Systems)
Submitted by: Pamela Ehler, Director of Finance and Information Services
Approved by: John Stevenson, City Manager
Approve a resolution authorizing the addition of a third (3rd) Deferred Compensation Plan for the City Employees through STARS (Self-Directed Tax Advantage Requirement Systems).
Resolution No. 96-142 was adopted on September 24, 1996 that provided an additional 457 tax deferral plan with additional investment options of the employees of the City of Brentwood.
Currently, employees are offered the choice of two deferred compensation plans. Those are 457(b) plans from the International City/County Management Association (ICMA) and the Public Employee Retirement System (PERS).
During the last year the Association of Bay Area Governments (ABAG) joined with several other jurisdictions to develop a more employee beneficial deferred compensation/defined contribution pool. The objective of creating this pool was for employees to benefit from the group’s combined purchasing power in securing high quality investment services at competitive costs. In particular, the team believed as pooled assets grew, the costs of servicing the plan should go down. Current plan providers do not offer this pricing opportunity.
Public agencies throughout California are eligible to use the competitively bid master contract to obtain deferred compensation/defined contribution services which also provides for maintaining agency independence, i.e., each participating jurisdiction manages their own plan in cooperation with the plan provider.
A committee of interested agencies developed a request for proposals (RFP), which was issued in May 2,000. The RFP was sent to 14 providers including ICMA and PERS. Seven proposals were received. ICMA bid, but PERS did not. The submitted proposals were reviewed and interviews were conducted with the top three bidders. After thorough reviews and reference checks with other cities and counties, and obtaining retirement benefits legal counsel, a master contract was negotiated with American General Retirement Services Company (AGRS).
Twenty-one public agencies with over $420 million in participating employees’ retirement plan assets have expressed interest in participating in this pool. The League of California Cities recently added this plan to those it offers.
There is no impact to the City’s budget as a result of implementing STARS.
STARS Plan Highlights
A RESOLUTION AUTHORIZING THE ADDITION OF A THIRD (3RD) DEFERRED COMPENSATION PLAN FOR THE CITY EMPLOYEES THROUGH STARS (SELF-DIRECTED TAX ADVANTAGE REQUIREMENT SYSTEMS).
WHEREAS, staff are currently authorized to offer City employees deferred compensation plans either from the International Cities/Counties Management Association (ICMA) or the State’s Public Employee Retirement System (PERS), and;
WHEREAS, the City desires to add a third deferred compensation plan, STARS, which offers employees the opportunity to benefit from the combined purchasing power of pooled assets with the employees of agencies and cities throughout the State which should lower plan costs to employees, and;
WHEREAS, the City desired to offer employees the potential for improved customer support services;
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Brentwood that the City Manager is authorized to enter into agreements and modify such agreements as needed with American General Retirement Services Company to add a third deferred compensation plan called the Self-Directed Tax Advantaged Retirement Systems (STARS) plan.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 8TH day of March 2003 by the following vote:
Karen Diaz, CMC
City of Brentwood City Council
150 City Park Way
Brentwood, CA 94513
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