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HomeMy WebLinkAbout9.2 Public Employee Retirement System e . 72/):{I0 CITY OF DUBLIN AGENDA STATEMENT Meeting Date: August 9, 1982 SUBJECT: Public Employee1s Retirement System EXHIBITS ATTAC.HED: Optional Public Agency Contract Provisions under the Public Employee's Retirement System RECO~'lMENDATION : 1) Authorjze Staff to initiate the PERS membership process 2) Determ~ne if elective officials are to be excluded from the contract FINANCIAL STATEIvlENT: Undetermi ned at thi s time DESCRIPTION: The State Public Employee1s Retirement System offers employees of 'contracting agencies those retirement benefits which are provided to State employees. The responsibility of providing sufficient funds to pay for those benefits rests wi th the contracti ng agency. The benefi.t formul a under whi ch Dublin City miscellaneous employees would come under is the 2% at 60 formula. This formula provides a benefit of 2% of final compensation for each year of service at a retirement age of 60. Retirement is compulsory at age 70. This formula would require an employee contribution of 7%. The employer contribution rate would be determined by an actuarial valuation. On previous occasions, the City Council has agreed to provide City employees with retirement coverage under the Public Employee's Retirement System (PERS). Before such coverage can be provided, the City must enter into a contract with PERS. In order to accomplish this, the Public Employee1s Retirement Law requires the following steps to be taken: 1. The City must determine whether salaried elective officials are considered optional members. If elective officials are not specifically excluded from membership by contract, each official could individually elect coverage under the system. Elective officials include members of the City Council and the City Attorney. 2. The City must determine which, if any, optional benefits to include as part of the contract (see attached). Staff does not recommend that any optional benefits be added to the basic contract at this time. Copies To: ITEM NO. 7ft ~ e e AGENDA STATEMENT Public Employee's Retirement System Page 2 3. The City must request PERS to conduct an actuarial valuation which is necessary to compute the required City contribution. PERS will forward contracts to the City to authorize the valuation. The fee for the valuation is $172. 4. A Resolution of Intention must be adopted specifying intent to contract with PERS. 5. After adopting the Resolution of Intention, the City Council must make public the costs to the City which are necessary to fund the benefits as provided in the contract. The publication of costs must be accomplished at least two weeks prior to the adoption of the contract authorizing PERS participation. 6. Prior to the adoption of the contract, an election of the employees to be brought under membership must be held to determine their approval or disapproval of the retirement proposal. 7. Upon adoption of the final contract coverage by PERS becomes effective 30 days after the adoption of the contract. , " .r ~ONAL PUBLIC AGENCY CONTRACT P~SIONS U~ THE PUBLIC EMPLOYEES' RETIRE~ SYSTEM '" 1982 Listing INTRODUCTION All section references are to the California Government Code. The following optional contract provisions are intended to provide basic infor- mation regarding the benefits that are available to contracting agencies through various sections of the Public Employees' Retirement Law. Some of the follow- ing contract provisions applicable to the miscellaneous member category require that a public agency which is "pooled" must withdraw from the miscellaneous mem- ber funding pool that was established on July 1, 1971, when all miscellaneous members became covered under one retirement formula. Other provisions do not require the public agency to withdraw from the pool. These provisions are identified separately from the provisions that do require unpooling. All original contracts executed on or after January 1, 1977, are automatically unpooled under Section 20759.1, whether or not any optional benefits are includ- ed in the contract. The unpooled employer rate is determined by actuarial val- uation and may be either higher or lower than the common pooled rate, since it is based only on the individual agency's members. It should be noted that "pooled" and "unpooled" apply only to miscellaneous groups and not safety groups since the safety groJps have never been pooled. Any cost increases for the optional contract provisions requlrlng unpooling are added to the unpooled miscellaneous rate of the agency. When possible, we have included a rough estimate of the cost of the benefit to the employer. This es- timate should be used as a guideline and not as an absolute. If the employee data for your agency differs significantly from the averages used, the actual cost figures may differ from the estimate provided. In 1979, the Public Employees' Retirement 'System Board of Administration adopt- ed Section 566 to Title 2, California Administrative Code - Contract Amendments. This regulation requires that any optional benefit which requires an immediate adjustment to the allowance of retired members must have an effective date of at least 30 days after the receipt of the executed final documents in our Sacramento office. Since all allowance increases are implemented on the first of the month, the operative date of such an amendment would be the first of the month following the 30-day waiting period. If the 30-day waiting period applies to any of the following benefits, it will be noted in the discussion of the affected benefits. MEMBER GROUPS ELIGIBLE FOR SEPARATE BENEFITS Under the provisions of Section 20496 (Chapter 1315, SB 47, Statutes of 1974, effective January 1, 1975) a contracting agency may provide any of the optional benefi ts independently to each of the following groups: (1) Local miscellane- ous; (2) Local police; (3) Local fire; (4) County peace officers; and, (5) Local safety other than local police, local fire, or county peace officers. ADDITIONAL INFORMATION Anyone wishing additional information regarding any of the optional benefits should contact: Public Employees' Retirement System Contracts Division Post Office Box 1953 Sacramento, Calfiornia 95809 (916) 445-6570 ~w.R~~rnN-nn-~n (1 fR?) ~1982 OPTIONAL CONTRACT PROVIS~ CONTENTS ITEM PAGE NO. I. Optional Contract Provisions Requiring Unpooling 1. One-Year Highest Compensation (Section 20024.2).......1 2. Extension of Reciprocity Rights for Elective Officers (Section 20046).........................1 3. Different Level of Benefits Provided for New Employees (Section 20461.6)......................1 4. Full Formula Plus Social Security (Section 20499).....2 5. Employee Sharing Cost of Additional Benefits (Section 20500).......~..........................3 6. Employee Contribution Rate for CSUC Auxiliary Organizations Reduced to State Member Level (Section 20603.03)...............................4 7. Payment .of Normal Member Contributions (Sections 20614 and 20615).......................4 8. Limit Prior Service to Members Employed on Contract Date (Section 20835.1)..................5 9. Credit for Unused Sick Leave (Secition 20682.8)........5 10. Military Service Credited as Public Service (Section 20930.3)... .J............................5 11. Public Service Credit for War Relocation Leave (Section 20936)............................6 12. Waiver of Miscellaneous Member Compulsory Retirement Age (Section 20983.6).................6 13. Industrial Disability Retirement for Miscellaneous Members (Section 21022.1)..........6 14. One-Time 15% Increase for Certain Safety Members (Section 21222.4).................7 15. One-Time 15% Increase for Certain Miscellaneous Members Retired Prior to July 1,1971 (Section 21222.6)..........7 16. One-Time 3% to 15% Increase for Members Who Retired or Died Prior to January 1, 1974 (Section 21222.85)................................7 17. One-Time 1% to 7% Increase for Members Who Retired or Died Prior to July 1, 1974 (Section 21222.86)...............................8 18. One-Time Increase for Members Who Retired or Died Prior to January 1, 1975 (Section 21223)..................................8 19. Annual Cost-of-Living Allowance Increase (Section 21230)..................................9 20. Post-Retirement Survivor Allowance (Sections 21263 and 21263.1).....................9 21. Post-Retirement Survivor Allowance (Section 21263.3)................................10 22. Increase in Non-Job Related Disability Retirement Allowances (Section 21298)...........10 23. Industrial Disability Retirement Allowances of 75% of Final Compensation (Section 21305)....11 24. Improved Industrial Disability Allowance for Safety Members (Section 21307)..............11 25. Local System Service Credit for Safety (Section 21361.5)...............................11 26. $600 Retired Death Benefit (Section 21367.53)........12 27. Increased Level of 1959 Survivor Benefit (~<>f'Hr"" ?17iR?_?L _q_'__ __qq____H__H_H.1~ II. Optional co~ract Provisions Not Requiring ~OOling 1. Two Years Additional Service Credit ( See t i on 2081 8) . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 1 3 2. Age 50 Actuarially Discounted Retirement Allowances for Safety Members (Section 20952.5)...............................13 3. 1959 Survivor Benefit (Sections 21380-21387).........13 III. Miscellaneous Member Classes Optionally Reclassified to Safety Qy Inclusion of Applicable Section in Contract............................15 IV. Special Item - Health Insurance Public Employees Medical and Hospital Care Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . .1 6 1. OPTI'L CONTRACT PROVISIONS REQUIRIN'UNPOOLING" 1. One-Year Highest Compensation (Section 20024.2) The period for determining average salary when retirement allowances are computed would change from the current 36 highest paid consecuti.ve months to the 12 highest paid consecutive months. A.pplicable only to members re- tiring after the effective date of this benefit in the contract. Employer Cost: Rough Estimate: 1-1/2% - 2% Employee Cost: 2. Extension of Reciprocity Rights for Elective Officers (Section 20046) Valuation required. 1% - 1-1/2% of payroll for safety groups. None. for miscellaneous groups; The current maximum period of six months between a local member's PERS ser- vice and service under a reciprocal retirement system, to ensure recipro- city privileges, would be extended to one year for elective officers if the PERS agency includes Section 20046 in its contract and the reciprocal system adopts a similar provision. The local member must have agency and wi thin one year system upon commencement of January 1, 1977. formerly been" an elective officer of a PERS become a mem'der of a reciprocal retirement serviclil in an elective office on or after Employer Cost: member is Employee Cost: 3. Different Level of Benefits Provided for New Employees (Section 20461.6) An actuarial valuation to identify costs per required. None. Section 20461.6 permits a contracting agency to amend its contract to pro- vide a different package of benefits to its new employees. This results in what is often called a two-tiered system. Such amendments: a. May reduce benefits, terminate provisions which are available only at the option of a public agency, provide different benefits, or provide any combination of such changes from the benefits and provisions ap- plicable to members who were in employment prior to such contract amendment. b. May only be effectuated after the contracting agency has fully dis- charged all of its obligations under the Meyer-Milias-Brown Act. PERS will accept the agency's certification that it complies in this respect without question, except for obvious deficiencies. c. Shall apply uniformly with respect to all members wi thin each of the following categories: (1) Local miscellaneous members; (2) Local police; (3) Local fire; (4) County peace officers; (5) All local safety members other than local police, local fire, and county peace officers. -1- d. Shall apply o~ to members who: e (1) (2) Receive service credit for the first time wi thin an affected category after the effective date of this contract amendment; or, Return to service wi thin an affected category following a refund of contributions. However, if the member has redeposited or elects to repeposit withdrawn contributions prior to 90 days after return~g to service, that member will not be subject to this amendment. Several issues and questions have been raised in connection with this bill: a. All PERS benefits may not be terminated in favor of only Social Secur- ity coverage. b. Amendments may not substitute a miscellaneous service retirement form- ula for a safety formula for safety members. c. There will be no change in the normal contribution rates paid by employee members, even when they receive lesser benefits than older members paying the same rate, unless the agency agrees to provide for employer payment of all or a part of such contributions under Section 20615. d. ~ An agency may amend its contract to this section only once every three years with respect to each category of employees. e. The Actuarial Office has informed the Contracts Division that an actuarial valuation will be required for this contract amendment and will be based on current employee data in the agency. The actual change in rate will not be reflected in the employer rate until enough new employees have been hired to affect the total employee data. f. The agency will be required to report new employees who are on a dif- ferent tier of benefits on a separate payroll. Instructions on the reporting will be sent to the agency by the PERS Accounting Division when the contract has been amended. Employer Cost: Employee Cost: Valuation required. None. 4. Full Formula Plus Social Security (Section 20499) Section 20499 permits a contracting agency to provide full PERS coverage for past and/or future service of its employees even though the agency's contract had provided a modified formula for that past service. Since the agency will be "deemed" not to have had social security coverage, service prior to the effective date"of the contract amendment will be com- puted as if there were no social security coverage. Thus, there would be no offset on industrial disability or industrial death benefits nor would the members be eligible for temporary annuity. Should the agency currently provide Post Retirement Survivor Allowance for its employees or later amend to this benefit, the eligible employees would be entitled to 1/2 continuance rather than 1/4 continuance. -2- This benefit woulA applicable only to emPIOyeeaO are employed on and after the effective date of the contract amendment. Employer Cost: Rough Estimate: 3-1/2% for Employee Cost: Valuation required. 2% - 3% for miscellaneous safety groups. None. groups and 2-1/2% - 5. Employee Sharing Cost of Additional Benefits (Section 20500) The addition of Section 20500 allows a contracting agency to share the cost of additional retirement benefits with the employees as a result of a writ- ten agreement with the employee group. This sharing of costs applies only to the current service employer rate. There are two methods of requesting an actuarial study from the Retirement System: a. If the agreement with the employees specifies a definite percentage increase in the employee rate, such as 1%, 2%, etc., the valuation can be done on that basis. For example: If an agency and its safety employees agree to share the cost of adding Section 20024.2 (One-year final compensation for retire- ment calculation) the estimated cost is 1-1/2% to 2% for safety groups. If the employees agree to pay 1~ of the cost, only one valua- tion would be required to determine the employer rate. b. If the agreement with the employee group is indefinite, several valua- tions may be required to determine the final contract prior to complet- ing the agreement with the employees. Using the same situati.on as in Example (a), the agency might request three valuations with the employee paying 1/2%, 1 % or 1-1/2% of the current service costs. When the three valuations are received, an agreement could then be reached with the employee group as to which valuation would be used. There are several points to be emphasized: a. A number of the optional benefits available to the public agencies cannot be valued prior to adoption since the Actuarial Office has no informa tion on which to base the cost. Therefore, an arbitrary cost is assigned and future valuations will adjust that cost either up or down if the employer is paying the cost. b. Some of the optional benefits available, such as 1959 Survivor, credit for military service and post-retirement survivor allowance may not be applicable to certain employees, yet if the agency amends to any of these in conjunction with Section 20500, each employee's rate of con- tribution would reflect the increase. c. Amendment to this section requires that the employer and employees agree in writing to share the cost of the applicable benefits. PERS will accept the agency's certification as to this agreement without question, except for obvious deficiencies. Employer Cost: Rough Estimate: will depend involved and employer. Valuation required. No estimate of cost is possible, since it on what additional retirement benefi t the percentage paid by the employee is and -"'l- 6. Ein 10 State ee Contributio~ate for CSUC Auxiliar Member Level Section 20603.03 Organi~Ons Reduced to Individual auxiliary organizations of the CSUC system may reduce the employee contribution rate for active members to the level applicable to State miscellaneous members, by providing Section 20603.03 in its contract. For members covered by the full 1/50th at age 60 formula, the employee rate would become 6% of monthly salary in excess of $317 (current rate: 7% of total monthly salary). For members covered by the modified 1/50th at age 60 formula, the employee rate would become 5% of monthly salary in excess of $513 (current rate: 7% of monthly salary in excess of $133.33). Employer Cost: Rough Estimate: Employee Cost: tions). Valuation required. 2% - 3% of miscellaneous member payroll. ---None (see above for reduction in employee contribu- 7. Payment of Normal Member Contributions (Section 20614 and 20615) Section 20614 was repealed and added in 1980 to remove the present provi- sion for the reduction of normal member contributions and permits an agency that had previously amended :to Section 20614 to revoke prospectively this section. ~ A contract amendment will be required to remove this section from an agency's contract and an employee election must be held to approve such action. Employer Cost: Valuation required. Rough Estimate: The reductions in employer rate will depend on the percentage of reduction in employee contributions under Section 20614 and any changes which may have occurred in employee data since the amendment to Section 20614. Employee Cost: Payment of normal member contributions unless the employer utilizes Section 20615, described below. Chapter 1168 also added Section 20615 to the Government Code to permit a contracting agency to pay all or a portion of normal member contributions for its employees and to periodically increase, reduce, or eliminate such payment without a contract amendment or notification to PERS as to the agreement made with the employees. Such payments shall be reported as nor- mal member contributions and are credited to member accounts. Since the PERS data bases do not allow the System to differentiate between taxed and untaxed "employee contributions" we are currently unable to report such con- tributions to the Internal Revenue Service or the Franchise Tax Board as taxable wages. PERS hopes to be able to accomplish the maintenance of such records by extensive changes to our data bases by July, 1983. In the inter~ im, a contracting agency paying member contributions should maintain full accounting records on this type of "employee contribution". A contract amendment is not required under Section 20615 and PERS does not require any notification.--- -4- 8. Limit Prior Servi o Members Em 10 ed on Contrac te (S~ction 20835.1) This section was added by 1981 legislation. Chapter 374, SB 174, Statutes of 1981, effective January 1, 1982, provides that a contracting agency may limit prior service (service with that agency prior to its contract date with PERS) to members in employment with the agency on the effective date of its contract. The contracting agency must provide this benefit in its contract at the time it contracts with PERS. Otherwise, any former employee of the agency would have the right to claim such service if the employee is currently, or has previously been, a member of PERS. Einployer Cost: Employee Cost: 9. Credit for Unused Sick Leave (Section 20862.8) Valuation required. None. Unused accumulated sick leave at time' of retirement, for which there is no compensation or remuneration at all to the employee, would be converted to addi tional service 'credit at the rate of 0.004 year for each day (250 days of sick leave for one additional year of service credit). The increase in allowance will apply to any retirement allo;wance paid after the effective date of this benefit in the agency's contract: Einployer Cost: No valuation currently required but this benefit will unpool an agency. Valuations may be required in the future. Miscellaneous rate and/or safety rate increased 1/4% of payroll. Employee ,Cost: None. 10. Military Service Credited as Public Service (Section 20930.3) This option allows a contracting agency to amend its contract to permit its members to purchase up to four years of service credit for any continuous active military or merchant marine service. The member must contribute an amount equal to the contribution for current and prior service that the employee and the employer would have made with respect to that period of service. The member's payment will be calculated by PERS based upon the employer's contribution rate at the time of the member's election, and the member's compensation and contribution rate at the first period of service with the employer after the military service. Interest (6-3/4% compounded annually) on both employer and employee contributions will be calculated from the date of, membership with current employer to date of member's election, and included in the figure quoted to the member. The member is allowed up to 96 monthly payments to purchase the service prior to retirement. This benefit applies only to active members while in employment with an employer providing this benefit in its contract. Einployer Cost: 1% of payroll for miscellaneous groups; 2% of pay- roll for safety groups. Revalued in later valuations when actual costs emerge. No valuation is currently required but your agency will be unpooled, and valuations may be required in the future. Employee Cost: Calculated by PERS Membership Division, on the average, $2,500 per year of military service for miscellaneous members; $3,000 per year of military service for safety members. -5- NOTE: Those ageJIILs which in 1975 or 1976 provi~ in their contract Section 20930.3 as it read prior to January 1, 1977 may amend again to become subject to the provisions of this new Section 20930.3, if it is agreed to by the employees or their representatives. The amendment would allow current employees to elect within 90 days after the effective date of the amendment to receive credit under the provisions of Section 20930.3 as it read prior to January 1, 1977, wherein the employer funded the entire cost for military service predating the employer's original contract date. 11. Public Service Credit for War Relocation Leave (Section 20936) This contract option would allow a member to purchase as public service all the time the member was absent from service due to war relocation leave. The member must have been in service with the contracting agency on March 5, 1942, and returned to such service by July 1, 1947. "War Relocation Leave" is defined as the period of absence from service occasioned by the evacuation and relocation of a local member of Japanese descent pursuant to orders issued by the Western Defense Command. Employer Cost: An actuarial valuation is required prior to provid- ing this benefit in the employer's contract to identify employer costs which exceed the member payments of the member(s) involved. Employee Cost: The amount required to purchase the public service credit would be det~rmined in accordance with Section 20932. 12. Waiver of Miscellaneous Member Compulsory Retirement Age (Section 20983.6) Compulsory retirement provisions applicable to local miscellaneous members were changed with the amendment to this Section in 1979. A miscellaneous member would have the opportunity to continue in employment beyond the age of 70 if the employer provides Section 20983.6 in its con- tract prior to the member's compulsory retirement date and if the agency certifies the member's competency in his/her position. The written request from the member and the written certification of competence from the employ- er must be received by PERS prior to the member's compulsory retirement date. Members who continue in employment beyond age 70 are subject to the same rights and requirements as other active members. Employer Cost: No valuation required but is will unpool the agency. PERS actuaries state there should be no additional costs. However, there could be additional costs to continue the member's salary rather than a replacement's salary. Employee Cost: None. 13. Industrial Disability Retirement for Miscellaneous Members (Section 21022.1) This is the standard job-related disability benefit available to all local safety members. If this benefit is included in the employer's contract, the disabled member qualifies for the retirement allowance based solely on his being employed - there are no service or age requirements (injury could occur on the first day of employment). The allowance is 50% of final com- pensation. However, if there is/was concurrent coverage by the same agency under the Social Security program, the PERS allowance is reduced to the amount necessary to make the combined income from PERS and Social Security" equal to 50% of final compensation. Outside earnings are not limited and do not affect the amount of the PERS allowance. _h - e Employer Cost: To provide this benefit, 1/2% of miscellaneous pay- roll is added to the current miscellaneous rate. There is no initial experience on which to base valuations, and if this provision is adopted the actual cost will emerge through future valuations. For a pooled agency no valuation is required and 1/2% of miscellaneous payroll would then be added to the- agency's unpooled rate. Employee Cost: None. 14. One-Time 15% Increase for Certain Safety Members (Section 21222.4) This section permits a contracting agency to elect to increase by 15% the allowance with respect to safety members who retired or died prior to the date the agency provided the 2% @ 50 retirement formula. The increase applies to beneficiaries and survivors of such retirees as well as survi- vors of such members. The increase does not apply to those members who retired under disability retirement formulas or to those survivors under the Special Death Benefit. Employer Cost: Rough Estimate: factors to be Employee Cost: Valuation required. None available since there are too many variable considered. None. This benefit is subject to the 30-day waiting period referred to in our in- troductory statement. 15. One-Time 15% Increase for Certain Miscellaneous Members Retired Prior to July 1, 1971 (Section 21222.6) This option allows a contracting agency to amend its contract to grant a 15% allowance increase for those miscellaneous members retired prior to July 1, 1971 whose allowances were calculated on the 1/60th retirement formula. The increase would also apply to beneficiaries of such retirees and to survivors of members whose death occurred prior to July 1, 1971 with the survivor allowances calculated under the 1/60th formula. Employer Cost: Valuation required. Rough Estimate: 1/4% - 1% of active member payroll, depending on number of eligible retirees. Employee Cost: None. This benefit is subject to the 30-day waiting period referred to in our in- troductory statement. 16. One-Time 3% to 15% Increase for Members Who Retired or Died Prior to January 1, 1974 (Section 21222.85) This section permits a contracting agency to amend its contract to provide under Section 21222.85 a one-time allowance increase with respect to members who retired or died prior to January 1, 1974, the increase ranging from 3% to 15% on a graduated scale based on the member's date of retirement or death. The increase applies to beneficiaries and survivors of such retirees as well as survivors of such members. -7- Period during which4lPtirement or death occurred: e Percentage: On or before December 31, 1965.................................. .15% 12 months ending December 31, 1966...............................14% 12 months ending December 31, 1967...............................13% 12 months ending December 31, 1968...............................12% 12 months ending December 31, 1969................................9% 12 months ending December 31,1970................................6% 12 months ending December 31, 1971................................5% 12 months ending December 31, 1972................................4% 12 months ending December 31, 1973................................3% Employer Cost: Rough Estimate: on number of Employee Cost: Valuation required. 1/2% - 1-1/4% of active eligible members. None. member payroll, depending This benefit is subject to the 30-day waiting period referred to in our in- troductory statement. 17. One-Time 1% to 7% Increase for Members Who Retired or Died Prior to July 1, 1974 (Section 21222.86) This section permits a contrlacting agency to amend its contract to provide under Section 21222.86 a one-time allowance increase with respect to mem- bers who retired or died prior to July 1, 1974, the increase ranging from 1% to 7% on a graduated scale based on the member's date of retirement or death. The increase applies to beneficiaries and survivors of such retirees as well as survivors of such members. Period during which retirement or death occurred: Percentage: On or before December 31, 1965.............................'.......7% 12 months ending December 31,1966................................6% 12 months ending December 31, 1967................................5% 12 months ending December 31,1968...,.............................4% 12 months ending December 31, 1969................................3% 18 months ending June 30, 1971....................................2% 36 months ending June 30, 1974....................................1 % Employer Cost: Valuation required. Rough Estimate: 1/4% - 3/4% of active member payroll, depending on number of eligible members. Employee Cost: None. This benefit is subject to the 30-day waiting period referred to in our in- troductory statement. 18. One-Time Increase for Members Who Retired or Died Prior to Januar 1, 1975 Section 21223 This section permits a contracting agency to amend its contract to provide under Section 21223 a one-time allowance increase with respect to members who retired or died prior to January 1, 1975. The increase applies to bene- ficiaries and survivors of such retirees as well as survivors of such mem- bers. The increase is based on the member's retirement or death as follows: -8- Period during Wh4lt retirement or death occurred:~ Percentage: 12 months ending December 31, 1967.............................1.51% 12 months ending December 31, 1968.............................1.26% 12 months ending December 31, 1969.............................1.86% 12 months ending December 31, 1970.............................2.55% 6 months ending June 30, 1971.................................1.91% 6 months ending December 31, 1971.............................7.05% 12 months ending December 31, 1972.............................6.76% 12 months ending December 31, 1973.............................4.45% 6 months ending June 30, 1974.................................0.47% 6 months ending December 31,1974.............................1.31% Employer Cost: Rough Estimate: on the number Employee Cost: Valuation required. 0.10% - 0.60% of active member payroll, depending of eligible retirees. None. This benefit is subject to the 30-day waiting period referred to in our in- troductory statement. 19. Annual Cost-of-Living Allowance Increase (Section 21230) Allowances for retired members are currently covered by an annual 2% maxi- mum cost-of-living increase, providing thef California Consumer Price Index (CPr) factor increases at least 2%. Section 21230, if provided in an agency's contract, would grant a 3%, 4% or 5% maximum annual cost-of-living increase in lieu of the 2% maximum. (Should the CPI factor increase less than the percentage adopted by the agency, the individual allowances would be increased by the lesser percentage.) Chapter 963, AB 2018, Statutes of 1981, effective January 1, 1982, amends Section 21230 and permits contracting agencies to provide the increased cost-of-living allowance beginning on a date specified by the agency by con- tract amendment. Th~s has the effect of permitting the contracting agency to provide the 'increase retroactive to a date specified in the contract or to any future date specified. Prior to this legislation, current allowan- ces paid because of death or retirement of the member at the time of the amendment to include the 3%, 4% or 5% cost-of-living increase, were increas- ed the following April 1 by the specified amount plus a percentage repre- senting the difference between 3%, 4% or 5% and 2% cumulative from date of retirement or death, or 1965, whichever is later. Employer Cost: Valuation required. The valuation request should specify the year(s) chosen. Rough Estimate: Under the new law, no figures can be given. Based on the old law and the results of over 100 agency valuations, the 5% cost-of-living increased employer rates frm 1-1/2 times to twice the current rate. Employee Cost: None. This benefit is subject to the 30-day waiting period referred to in our in- troductory statement. 20. Post-Retirement Survivor Allowance (Sections 21263 and 21263.1) The Post-Retirement Survivor Allowance benefit provides that upon the death of a member after retirement for service or disability an allowance shall be continued to the surviving spouse (must be married to the member for one year prior to the member's retirement and be married continuously to the date of the retired member's death). " Should there be chi.n under the age of 18 but no Avi ving spouse (or if the spouse later di~ or remarries), the allowance '-all be continued to the eligible children collectively until all have reached age 18 or have married (effective January 1, 1982, eligible children include disabled children over age 18 if the disability begins prior to age 18). Should there be no eligible spouse and no eligible children under the age of 18, a surviving parent or parents continuously dependent upon the retired member for support may receive a continuous allowance throughout their lives. If at effective date of retirement the member has no eligible spouse, eligible children or eligible dependent parents, and elected an optional settlement by naming another beneficiary, no survivor allowance shall be paid under this benefit. The allowance to the survivor(s) of a member who retires after the employer includes Sections 21263 and 21263.1 in its contract is determined as follows: a. One-quarter of the retired member's unmodified allowance based on service subject to the modification for Social Security; and b. One-half of the retired IOOmber's unmodified allowance based on service not subject to the modification for Social Security. For members already retired Who chose Option 2, 3 or 4, or to the benefici- ary of such retired member, allowances would be increased 15%. For members already retired who chose Option 1 or the Unmodified Allowance, allowances would not be increased but their eligible beneficiary would receive the survivor continuance allowance upon the retiree's death. Employer Cost: Valuation required. Rough Estimate: 3% - 6% of payroll for safety groups; for miscellaneous modified formula groups; 2% miscellaneous full formula groups. Employee Cost: None. 1-1/2% - 2% 3% for This benefit is subject to the 30-day waiting period referred to in our in- troductory statement. 21. Post-Retirement Survivor Allowance (Section 21263.3) This section was amended to permit contracting agencies that had amended their contracts to include the Post-Retirement Survivor Allowance prior to September 28, 1980, to provide the 15% increase in allowances paid ~o the beneficiaries of retired members who had selected Option 2, 3, or 4, and had died prior to the agency contracting for this benefit. Prior to September 28, 1980, the 15% increase was paid only to retired members and beneficiaries of retired members who were living on the effective date of a contract amendment under which an agency became subject to this section. Thl'ployer Cost: Rough Estimate: Employee Cost: Valuation required. Up to 1/2% for miscellaneous and safety groups. None. This section is subject to the 30-day waiting period referred to in our in- troductory statement. 22. Increase in Non-Job-Related Disability Retirement Allowances (Section 21298) This benefit applies to future disability retirements of miscellaneous mem- bers and of non-job-related disability retirements of safety members. The current stat.ry level of disability retir.nt benefits for members with at least five years of credited service (1.8% of final compensation for each year of service, with a 33-1/3% maximum) would be raised to a mini- mum benefit of 30% of final compensation for five years of service and be increased 1% of final compensation for each additional year of service to a maximum benefit of 50% of final compensation. Under no circumstances may the disability retirement allowance be more than the service retirement allowance if the member were to continue in employ- ment and retire at age 60. Employer Cost: Rough Estimate: safety groups. Employee Cost: Valuation required. 1/4% - 3/4% of payroll for miscellaneous and/or None. 23. Industrial Disabilit Retirement Allowances of 75% of Final Com ensation Section 21305 This contract option would apply to active safety members, but could also apply to active miscellaneous members if the employer also provided in its contract the optional provision of industrial disability retirement cover- age for miscellaneous members under Section 21022.1 (see page 6, item 13). t The determination of total disability for eligibility under Section 21305 must be made by PERS. Employer Cost: Employee Cost: Valuation required. None. 24. Im roved Industrial Disabilit Allowance for Safet Members Section 21307 If the Workers' Compensation Appeals Board permanent disability rating per- centage is greater than 50%, the same percentage (up to a maximum of 90%) will be used as the percentage of final compensation to calculate the PERS industrial disability retirement allowance. Employer Cost: Employee Cost: Valuation required. None. 25. Local System Service Credit for Safety (Section 21361.5) This section was amended by 1981 legislation. Prior to the 1981 change in the law, this section applied only to local mis~ cellaneous members who were members of a local retirement system. Chapter 548, SB 400, Statutes of 1981, effective January 1, 1982, makes this sec- tion applicable to all local members (miscellaneous and safety) who were members of a local retirement system at the time the local system was dis- continued. By amending its contract to include this section, a contracting agency per- mi ts the use of that local system service credit in the computation of benefits payable under the basic death benefit. Employer Cost: Employee Cost: Valuation required. None. -11- 26. $600 Retired Death ~efit (Section 21367.53) ~ This section provides that the death benefit paid to beneficiaries of re- tired members will be $600 if the contracting agency amends its contract to provide for it. If the contracting agency does not provide for this bene- fit, the death benefit is $500. This section is spplicable only to deaths which occur after the effective date of the contract amendment. Employer Cost: Rough Estimate: Employee Cost: Valuation required. Up to .050% for miscellaneous and safety groups. None. 27. Increased Level of 1959 Survivor Benefit (Section 21382.2) This option allows a public agency to provide 25% higher levels of 1959 survivor benefits than the normal levels provided under Sections 21380- 21387. The benefit levels become $538, $450 and $225, respectively (see page 13, item 3). The increased benefits would apply to current and future beneficiaries, and could be provided any time after, or simultaneously with, providing Sec- tions 21380-21387 in the contract. Employer Cost: Simuataneous with providing Sections 21380-21387; same as regular provisions (see page 13, item 3). After provid- ing Sections 21380-21387: Valuation required; increase of approxi- mately 0.1% to 0.2% i~ current 1959 Survivor rate. Employee Cost: There is no increase in the $2.00 monthly charge required by Sections 21380-21387, the basic 1959 Survivor Benefit. -12- II. OPTION_ONTRACT PROVISIONS NOT REQUIRe "UNPOOLING" 1. Two Years Additional Service Credit (Section 20818) PERS contracting agencies are authorized to grant up to two years addition- al service credit to members who retire during a designated period ~f a lay- off situation is imminent and the following requirements are met: a. The member is employed in a job classification, department, or other organizational unit designated by the governing body of the contract- ing agency and retires wi thin the period designated by the governing body. The designated period must be subsequent to the amendment date and can not be less than 90 days nor more than 180 days in length; b. The governing body must transmit an amount to the Retirement Fund that is the actuarial equivalent of the difference between the allowance the member would receive under this section and the allowa~ce the mem- ber would receive without this section; c. The governing body must certify .that it is electing to exercise the provisions of this section due to imminent mandatory transfers, demo- tions, and/or layoffs that constitute at least one percent of the job classification, department, or orgainza~ional unit; i d. The governing body must certify that any vacancies created by this section, or at least one vacancy in any position in any department or other organizational unit shall remain permanently unfilled. In order to be eligible to receive this service credit, the employees must already have at least five years' service credit and must be employed by the contracting agency during the designated period. If the member subse- quently re-enters 'membership,' the additional service credit is forfeited and no member may receive credit under this section if such member is re- ceiving any unemployment insurance payments. Employer Cost: Valuation required. Terms and conditions includ- ing time and method of payment will be negotiated. Employee Cost: None. 2. Age 50 Actuariall Discounted Retirement Allowances for Safet Members Section 20952.5 This contract option applies only to active safety members of contracting agencies providing safety formulas other than 2% @ 50. Under this provision safety members who otherwise would have to wait until age 55 to retire, could retire as early as age 50 and receive an actuar- ially discounted retirement allowance. Employer Cost: Employee Cost: None. None. 3. 1959 Survivor Benefit (Sections 21380-21387) This optional benefit provides the below-listed monthly allowances to bene- ficiaries of a member who dies prior to retirement. This benefit is in addition to the Basic Death Benefit or the 1957 Survivor Benefit but would be reduced by the amount of the Industrial Death Benefit, if payable. -13- Spouse with two or m~ children; or three or ~ more dependent children, alone...........................$430 Spouse with one dependent child; or two dependent children, alone................................$360 Widow or widower, alone, age 62 or over; dependent mother and dependent father, age 62 or over; or one dependent child...................$180 The eligibility of a surviving spouse ceases with remarriage. Concurrent coverage under this program and Social Security is prohibited by law (Section 21385), but an agency may provide the program for the full- formula members of a divided miscellaneous member group. Members in employ- ment on amendment date may elect not to be covered, but the program manda- torily covers all future hires who are not covered under the agency's Social Security program (Section 21385). Employer Cost: ua tions, the ini tially: for safety. Employee Cost: Although rates will be adjusted on subsequent val- following close approximations of costs are used 1% of payroll for miscellaneous and 1/2% of payroll $2.00 monthly (non-refundable). f -u- III. MISCELLAN~ MEMBER CLASSES OPTIONALLY RE~SIFIED TO SAFETY BY INCLUSION OF APPLICABLE SECTION IN CONTRACT Employees in the following miscellaneous classes must meet the safety defini- tion of the applicable section, and any past "qualifying service" is reclassi- fied when these employees are transferred into the safety group: 1. Ocean beach lifeguards of a city as "Local Safety members" (Section 2001 9 . 3 ) . 2. Juvenile bureau employees as "Local Police" (Section 20020.5). 3. Constables and marshals as "County Peace Officers" (Section 20021.6). 4. Probation and juvenile hall employees as "County Peace Officers" (Section 20021 .8). 5. Custodial employees of the county sheriff's office as "County Peace Officers"(Section 20021.9). 6. Bailiffs as "County Peace Officers" (Section 20021.10). Chapter 1264, AB 2626, Statutes of 1980, provi4es for an individual member elec- tion when an agency reclassifies a group of miscellaneous empioyees to a safety formula other than the 2% @ 50 formula (Section 20019.52). The member or mem- bers affected by such reclassification may elect to remain covered by the mis- cellaneous formula (1 150th) by making an irrevocable election in writing no later than 90 days after the date of the reclassification. If such an election is made, the miscellaneous formula is retained for the members electing but they would be subject to age 65 mandatory retirement for safety and would be eligible for all safety industrial benefits. Employer Cost: Valuation required. Employee Cost: Payment of any arrears employee contributions for the period of service reclassified and the prospective change of contribution rate to the appropriate safety member contribution rate. -15- -T IV. ~ECIAL ITEM - HEALTH INSURANC~ PUBLIC EMPLOYEES' MEDICAL AND HOSPITAL CARE PROGRAM Public agencies which contract with PERS for retirement benefits may also elect to participate in the Public Employees' Medical and Hospital Care Program. Par- ticipation is by resolution and that resolution is compeltely separate from the agency's contract for retirement purposes. The health benefits program was originally established by the Meyers-Geddes Act in 1962 for active and retired employees of the State of California. The orig- inating legislation was amended in 1967 to permit public agency participation, thus evolving into the Public Employees' Medical and Hospital Care Act. (Effec- tive January 1, 1979 the program was further expanded to include S.T.R.S. mem- bers whose individual school district contracts to participate.) A wide variety of approved health benefits plans are available through the pro- gram, offering, whenever possible, all philosophies of health care, including: A. One statewide indemnity plan with scheduled or fixed contract benefit levels. B. One statewide service plan cqmbining Blue Cross, which is an association of hospitals, and Blue Shield which is an association of physicians. C. Numerous comprehensive individual practice plans in which participating pro- viders guarantee that member physicians will provide a package of listed benefi ts; covered hospital expenses are reimbu"rsed on a scheduled rate basis. D. A number of direct service and Health Maintenance Organization plans which provide direct medical care utilizing their own hospitals, clinics and physicians. Included plans are: Available Statewide Blue Cross/Blue Shield Statewide Service Plan - basic and supplemental plans. Cal-Western Life Statewide Indemnity Plan - basic and supplemental plans. Geogra plan's (available onl to members residing in each area Kaiser Foundation Health Plan-Northern - basic and supplemental plans Kaiser Foundation Health Plan-Southern - basic and supplemental plans First Farwest's Comprehensive Foundation Health Plan - basic and supplemental plans Ross-Loos Medical Group, Inc. - basic and supplemental plans INA Health Plan of California - basic and supplemental plans Family Health Program - basic and supplemental plans Children's Hospital Health Plan - basic and supplemental plans Foundation Health Plan - basic and supplemental plans Healthcare - basic and supplemental plans Health Maintenance Network - basic and supplemental plans Maxicare - basic and supplemental plans _1h_ . . .. ~ . . . . Rockridge Health Plan - basic and supplemental plans Takecare - basic and supplemental plans Bay Pacific Health Plan - basic and supplemental plans Greater San Diego Health Plan - basic and supplemental plans Health Plan of the Redwoods - basic and supplemental plans PacifiCare, Inc. - basic and supplemental plans Lifeguard - basic plan only The rights and responsibilities of all employers are uniform under the Act. In general, a public agency electing to participate in the program must: A. Offer all active and retired employees who are members of the Public Employees' Retirement System an opportunity to enroll in a PERS plan of their choice. B. Contribute a minimum of $16.00 per month toward the cost of both the active and the retired employee's premium, including dependent coverage and major medical coverage. (An agency may increase its contributions by submitting a new resolution at any time.) C. Contribute 2% of the total gross monthly premium of employees (active and retired) to the Employee Contingency Reserve Fund which can be used to re- duce premiums, improve benefits or offsjet the higher cost of providing equal benefits and premiums to all enrolled members. D. Contribute to the administrative cost of providing the program to the agency. Current cost is seventy-five cents per month per active and re- tired employee enrolled in a basic or supplemental plan. (No charge for family members.) Complete information will be furnished upon request. Information regarding this program may be qbtained from the Health Benefits Division, Public Agency Unit, Post Office Box 1953, Sacramento, California 95809, or phone (916) 322-5707. C0709 -17-