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Current Council Agenda and Past Meeting Information

 

CITY COUNCIL AGENDA ITEM NO. 2

Meeting Date: October 25, 2005

Subject/Title: Adopt a Resolution redefining the coverage groups eligible to elect pre-tax payroll deductions for California Public Employees’ Retirement System (CalPERS) service credit purchases by removing the coverage group code numbers and providing text descriptions that cover all miscellaneous and all safety coverage groups and repeal previously adopted Resolution No. 97-01

Prepared by: Patricia Standley, Human Resources Manager

Submitted by: Karen L. Chew, Assistant City Manager

RECOMMENDATION
Adopt a Resolution to cover all miscellaneous and safety coverage groups currently in place, as well as those established in the future, that will continue to allow qualified California Public Employees’ Retirement System (CalPERS) members the option to elect the pre-tax payroll deduction plan for their service credit purchases (i.e., redeposit, service prior to membership, military, etc.) and repeal Resolution No. 97-01.

PREVIOUS ACTION
The pre-tax payroll deduction plan was approved on January 14, 1997 when the City Council approved Resolution 97-01. This Resolution covered all employees in the following CalPERS coverage groups that existed at that time:

MISC 70001
POLICE 75001

Effective August 1, 2003, the City Council approved a CalPERS contract amendment which resulted in a new coverage group code for the miscellaneous coverage group listed above. The establishment of the new coverage group code inadvertently excludes miscellaneous members in the new coverage group code from electing the pre-tax payroll deduction plan for service credit purchases because Resolution 97-01 included specific coverage group codes in place at that time.

BACKGROUND
To avoid the recurrence of this restriction, the attached Resolution describes the coverage groups in general terms without coverage group codes so that any future coverage group code changes will not impact the eligibility of plan participants to elect the pre-tax payroll deduction plan for service credit purchases.

CalPERS requires specific language relative to the pre-tax payroll deduction plan for service credit purchases, therefore, with the exception of the general description of the coverage groups instead of coverage groups identified by coverage group code, the attached Employer Pickup Resolution Pre-Tax Payroll Deduction Plan for Service Credit Purchases (Contribution Code 14) contains the same language contained in Resolution 97-01 that staff recommends to be repealed.

FISCAL IMPACT
There is no cost impact to the City of Brentwood in providing this benefit to its employees.

Attachment:
• Resolution

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD APPROVING EMPLOYER PICKUP FOR PRE-TAX PAYROLL DEDUCTION PLAN FOR SERVICE CREDIT PURCHASES (CONTRIBUTION CODE 14) AND REPEAL RESOLUTION NO. 97-01

WHEREAS, the Board of Administration of the California Public Employees’ Retirement System (CalPERS) at the April 1996 meeting approved a pre-tax payroll deduction plan for service credit purchases under Internal Revenue Code (IRC) section 414 (h)(2); and

WHEREAS, the City of Brentwood (“City”) has the authority to implement the provisions of IRC section 414(h)(2) and has determined that even though implementation is not required by law, the tax benefit offered by this section should be provided to those employees who are members of CalPERS; and

WHEREAS, the City elects to participate in the pre-tax payroll deduction plan for all employees in the following CalPERS coverage group(s):

All Miscellaneous Coverage Groups
All Safety Coverage Groups

NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Brentwood that:
1. The City will implement the provisions of IRC section 414(h)(2) by making employee contributions for service credit purchases pursuant to the California State Government Code on behalf of its employees who are members of CalPERS and who have made a binding irrevocable election to participate in the pre-tax payroll deduction plan. “Employee contributions” shall mean those contributions reported to CalPERS which are deducted from the salary of employees and are credited to individual employee accounts for service credit purchases, thereby resulting in tax deferral of employee contributions.
2. The contributions made by the City to CalPERS, although designated as employee contributions, are being paid by the City in lieu of contributions by the employees who are members of CalPERS.
3. The employees shall not have the option of choosing to receive the contributed amounts directly instead of having them paid by the City to CalPERS.
4. The City shall pay to CalPERS the contributions designated as employee contributions from the same source of funds as used in paying salary, thereby resulting in tax deferral of employee contributions.
5. The effective date for commencement of the pre-tax payroll deduction plan cannot be any earlier than July 1, 1996, or the date the completed resolution is received and approved in CalPERS, whichever is later.
6. The City Council shall participate in and adhere to requirements and restrictions of the pre-tax payroll deduction plan by authorizing the City Manager or his/her designee to report pre-tax payroll deductions when authorized by CalPERS for those employees of the above stated Coverage Group(s) who have elected to participate in this plan.
7. Resolution No. 97-01 is hereby repealed.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on 25th day of October, 2005 by the following vote:
 

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