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CITY COUNCIL AGENDA ITEM NO. 5

Meeting Date: May 27, 200June 24, 20033

Subject/Title: Adopt and waive second reading of Ordinance 745 authorizing an amendment to the contract between the Board of Administration California Public Employees’ Retirement System and the City Council of the City of Brentwood; and a Resolution authorizing the Finance Director to facilitate internal loans necessary to pay the unfunded liability

Submitted by: John Stevenson, City Manager

Approved by: John Stevenson, City Manager

RECOMMENDATION
Waive the second reading and adopt Ordinance 745. Adopt a Resolution authorizing the Finance Director to pay the unfunded liability in one lump sum and to facilitate the internal loans necessary to do so.

PREVIOUS ACTION
At its meeting on May 27, 2003, the City Council waived the first reading and introduced Ordinance No. 745, which provided for the notice of intention to approve an amendment, and adopt an ordinance to approve amendment of the contract between the City of Brentwood and the Board of Administration of the California Public Employees’ System (CalPERS) as agreed during the meet and confer process.

BACKGROUND
Through the meet and confer process, bargaining units and employee groups that contain employees defined by CalPERS as “miscellaneous” and “safety” members requested that the City amend the CalPERS retirement benefit from 2% @ 55 formula for miscellaneous members to 2.7% @ 55 formula, including an addition which caps the Annual Cost-of-Living Allowance Increase for both miscellaneous and safety members at 5%.

The 2.7% @ 55 formula and 5% Annual Cost-of-Living Allowance cap contract amendments for miscellaneous members will result in the following changes: The Present Value of Benefits (PVB) which represents the total dollars needed today to fund future benefits for current members of the plan, results in a PVB of $6,582,365. The change in the Unfunded Accrued Liability for the last CalPERS actuarial is estimated at $2,931,569. A lump sum payment of $4,217,150 will be made by the Finance Director to cover the Unfunded Accrued Liability, which is the $2,931,569 plus contributions and interest that will have been reported to CalPERS from July 1, 2001 through June 30, 2003.
The 5% Annual Cost-of-Living Allowance Increase for safety members will result in the following changes: The PVB which represents the total dollars needed today to fund future benefits for current members of the plan, results in an estimated change in the amount of $1,749,871. The change in the Unfunded Accrued Liability is estimated at $951,758. A lump sum payment of $1,275,342 will be made to cover the Unfunded Accrued Liability, including contributions and interest that will have been reported to CalPERS from July 1, 2001 through June 30, 2003.

FISCAL IMPACT
Total costs of all contract amendments for Fiscal Year 2003/04 are estimated at $5,492,492 which includes the $4,217,150 for this Ordinance 745 and an additional $1,275,342 for an additional ordinance to complete the meet and confer process for the Brentwood Police Officer’s Association. By paying the Unfunded Accrued Liability in one lump sum, the City will save $3,877,372 in interest payments.

ATTACHMENT
Ordinance No. 745
Resolution

ORDINANCE NO. 745

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD AUTHORIZING AN AMENDMENT TO THE CONTRACT BETWEEN CITY OF BRENTWOOD AND THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM

THE CITY COUNCIL OF THE CITY OF BRENTWOOD DOES ORDAIN AS FOLLOWS:

Section 1. That an amendment to the contract between the City Council of the City of Brentwood and the Board of Administration, California Public Employees’ Retirement System is hereby authorized, 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 of the City of Brentwood 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 30 days from the passage thereof shall be published at least once in the Brentwood Press, a newspaper of general circulation, published and circulated in Contra Costa County and thenceforth and thereafter the same shall be in full force and effect.

The foregoing Ordinance was introduced, with full reading waived, by the City Council of the City of Brentwood.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting on the June 24, 2003, by the following vote:

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD AUTHORIZING THE DIRECTOR OF FINANCE TO FACILITATE
INTERNAL LOANS NECESSARY TO PAY THE UNFUNDED LIABILITY
FOR THE CALPERS CONTRACT AMENDMENTS

WHEREAS, the City Council on June 24, 2003, adopted Ordinance #745 amending the contract between the City Council of the City of Brentwood and the Board of Administration, California Public Employees’ Retirement System, and,

WHEREAS, contract amendments include 2.7% @ 55 formula and 5% Annual Cost-of-Living Allowance cap for miscellaneous members, and,

WHEREAS, payment due for the unfunded liability equals $5,492,492, and,

NOW, THEREFORE BE IT RESOLVED the City Council of the City of Brentwood authorizes the Finance Director to facilitate internal loans necessary to pay the unfunded liability of the CalPERS contract amendments.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on June 24, 2003, by the following vote:

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