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HomeMy WebLinkAbout25H - AGMT - PARSREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: DECEMBER 20, 2016 TITLE: RESTATEMENT AND AMENDED OF AGREEMENT WITH PUBLIC AGENCY RETIREMENT SERVICES TO PROVIDE A TRUST PLAN FOR A LIMITED NUMBER RETIRED POLICE OFFICERS ASSOCIATION MEMBERS {STRATEGIC PLAN NO. 7,4) CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: p .. 20171 co 177 As Recommended E] As Amended D Ordinance on 18' Reading ® Ordinance on 2nd Reading ❑ Implementing Resolution El Set Public Hearing For_ CONTINUED TO FILE NUMBER Authorize the City Manager and Clerk of the Council to restate and amend the agreement with Public Agency Retirement Services, establishing a trust to provide supplemental retirement benefits to a limited number of former Police Officers Association members for an extended period in an amount not to exceed $125,000 per year, subject to non -substantive changes approved by the City Manager and City Attorney,. DISCUSSION On April 18, 2011, the City Council authorized the establishment of a trust establishing a Supplementary Retirement Plan for 25 Police Officers Association (POA) retirees administered through Public Agency Retirement Services (PARS). This trust was the result of negotiations between the POA and City. POA, at the request of the City, agreed to extend the Memorandum of Understanding (MOU and defer salary increases scheduled for July 1, 2009 and January 1, 2010. However, it was agreed that members of the POA who had anticipated retiring during the Extension would receive the salary increases per the original schedule and, in exchange, would participate in an unpaid furlough program equivalent to the monetary value of the increases they received. In August 2010, the City and the POA reached tentative agreement on another contract extension, which also deferred salary increases except to those employees with a stated intention to retire during the term of the agreement, in exchange for participation in an unpaid furlough program. Before Council approved the second contract extension and 12 months after the first employee retired under the 2010-11 extension, the California Public Employees Retirement System (CalPERS) notified the City that this provision was not consistent with the principles concerning the awarding of pensions to public employees. Therefore, the City and POA negotiated an 25H-1 Agreement with Public Agency Retirement Services to Provide a Trust Plan for a Limited Number of Police Officers Association Members December 20, 2016 Page 2 alternate method of providing a stipend to eligible employees that will reflect the actual salary they would have received upon retirement, and will comply with the agreement made by the City during the contract extension negotiations. Staff is requesting renewal restatement and amendment of the agreement with PARS to clarify that the term of the agreement is ongoing until termination or until the last beneficiary or their eligible heirs expire. This restatement and amendment allows for continued administration and funding of this trust for the duration of the retirees' lives. STRATEGIC PLAN ALIGNMENT Approval of this item allows the City to meet Goal #7 - Team Santa Ana, Objective #4 (Establish employee compensation that attracts and retains a highly qualified workforce). FISCAL IMPACT The cost to fund the trust is $128,356.92 for 2016. The annual ongoing cost of the trust was originally estimated to be $94,672 and the cost of the trust will diminish as the retirees expire. Funds are budgeted in the 2016-17 Personnel Service Department budget account no. 08009051-62300. I Edward S. Raya Executive Director Personnel Services APPROVED AS TO FUNDS AND ACCOUNTS: Francis Gutierrez SP Executive Director Finance & Management Services Agency Exhibits: 1. Restated and amended agreement for administrative services 2. March 21, 2011 POA Retirement Issue sheet 3. Resolution No. 2011-024 25H-2 RESTATED AND AMENDED AGREEMENT FOR ADMINISTRATIVE SERVICES This restated and amended agreement ("Agreement") is made this 20" day of December, 2016, between Phase II Systems, a corporation organized and existing under the laws of the State of California, doing business as Public Agency Retirement Services (hereinafter "PARS") and the City of Santa Ana ("Agency"). WHEREAS, Agency entered into an agreement for administrative services with PARS dated June 7, 2011 to provide a defined benefit supplemental retirement plan ("original agreement") to certain eligible retirees. The term of the original agreement was April 18, 2011 ending April 17, 2016 with a provision that the agreement will continue unchanged for successive twelve-month periods following the original term unless terminated. WHEREAS, Agency and PARS want to clarify that the term of the Agreement is ongoing unless terminated or until the last beneficiary or their eligible heirs expire. WHEREAS, Agency is desirous of c o n t i n u i n g t o retain PARS, as Trust Administrator to the PARS Trust, to provide administrative and consulting services with respect to the qualified City of Santa Ana PARS Supplementary Retirement Plan (the "Plan"). NOW THEREFORE, the parties agree: 1. Services, PARS will provide the services pertaining to the Plan as described in the exhibit attached hereto as "Exhibit IA" ("Services") in a timely manner, subject to the further provisions of this Agreement, 2. Fees for Services. PARS will be compensated for performance of the Services as described in the exhibit attached hereto as "Exhibit IB", Payment Terms, Payment for the Services will be remitted directly from Plan assets unless otherwise stated in Exhibit 113, in the event that the Agency chooses to make payment directly to PARS, it shall be the responsibility of the Agency to remit payment directly to PARS based upon an invoice prepared by PARS and delivered to the Agency. lfpayment is not received by PARS within thirty (30) days of the invoice delivery date, the balance due shall bear interest at the rate of 1.5% per month. If payment is not received from the Agency within sixty (60) days of the invoice delivery date, payment plus accrued interest will be remitted directly from Plan assets, unless PARS has previously received written communication disputing the subject invoice that is signed by a duly authorized representative of the Agency. 4. Fees for Services Beyond Scope. Fees for services beyond those specified in this Agreement will be billed to the Agency at the rates indicated in the PARS standard fee schedule in effect at the time the services are provided and shall be payable as described in Section 3 of this Agreement. Before any such services are performed, PARS will provide the Agency with written notice of the subject services, terms, and an estimate of the fees therefore, 5, Information Furnished to PARS. PARS will provide the Services contingent upon the Agency's providing PARS the information specified in the exhibit attached hereto as "Exhibit 1C"("Data"). it shall be the responsibility of the Agency to certify the accuracy, content and completeness of the Data so that PARS may rely on such information without further audit. It shall further be the responsibility of the Agency to deliver the Data to PARS in such a manner Page 1 r that allows for a reasonable amount of time For the Services to be performed. Unless specified in Exhibit IA, PARS shall be under no duty to question Data received from the Agency, to compute contributions made to the Plan, to determine or inquire whether contributions are adequate to meet and discharge liabilities under the Plan, or to determine or to inquire whether contributions made to the Plan are in compliance with the Plan or applicable law. In addition, PARS shall not be liable for non-performance of Services if such non-performance is caused by or results from erroneous and/or late delivery of Data from the Agency, In the event that the Agency fails to provide Data in a complete, accurate and timely manner and pursuant to the specifications in Exhibit 1C, PARS reserves the right, notwithstanding the further provisions of this Agreement, to terminate this Agreement upon no less than ninety (90) days written notice to the Agency, 6. Suspension of Contributions. In the event contributions are suspended, either temporarily or permanently, prior to the complete discharge of PARS' obligations under this Agreement, PARS reserves the right to bill the Agency Par Services under this Agreement at the rates indicated in PARS' standard fee schedule in effect at the time the services are provided, subject to the terms established in Section 3 of this Agreement. Before any such services are performed, PARS will provide the Agency with written notice of the subject services, terms, and an estimate of the fees therefore. 7, Records. During the term of this Agreement, and for a period of five (S) years after termination of this Agreement, PARS shall provide duly authorized representatives of the Agency access to all records and material relating to calculation of PARS' fees under this Agreement. Such access shall include the right to inspect, audit and reproduce such records and material and to verify reports furnished in compliance with the provisions of this Agreement. All information so obtained shall be accorded confidential treatment as provided under applicable law. 8. Confidentiality. Without the Agency's consent, PARS shall not disclose any information relating to the Plan except to duly authorized officials of the Agency and to parties retained by PARS to perform specific services within this Agreement. The Agency shall not disclose any information relating to the Plan to individuals not employed by the Agency without the prior written consent of PARS, except as such disclosures may be required by applicable law. 9. Independent Contractor. PARS is and at all times hereunder shall be an independent contractor. As such, neither the Agency nor any of its officers, employees or agents shall have the power to control the conduct of PARS, its officers, employees or agents, except as specifically set forth and provided for herein. PARS shall pay all wages, salaries and other amounts due its employees in connection with this Agreement and shall be responsible for all reports and obligations respecting them, such as social security, income tax withholding, unemployment compensation, worker's compensation, and similar matters. 10, Indemnification. PARS and Agency hereby indemnify each other and hold the other harmless, including their respective officers, directors, employees, agents and attorneys, from any claim, loss, demand, liability, or expense, including reasonable attorneys' fees and costs, incurred by the other as a consequence of PARS' or Agency's, as the case may be, acts, errors, or omissions with respect to the performance of their respective duties hereunder. Page 2 25H-4 11. Compliance with Applicable Law. The Agency shall observe and comply with federal, state and local laws in effect when this Agreement is executed, or which may come into effect during the term of this Agreement, regarding the administration of the Plan. PARS shall observe and comply with federal, state and local laws in effect when this Agreement is executed, or which may come into effect during the term of this Agreement, regarding Plan administrative services provided under this Agreement. 12. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. in the event any party institutes legal proceedings to enforce or interpret this Agreement, venue and jurisdiction shall be in any state court of competent jurisdiction. 13. Force Majeure. When satisfactory evidence of a cause beyond a party's control is presented to the other party, and nonperformance was unforeseeable, beyond the control and not due to the fault of the party not performing, a party shall be excused from performing its obligations under this Agreement during the time and to the extent that it is prevented from performing by such cause, including but not limited to: any incidence of fire, flood, acts of God, acts of terrorism or war, commandeering of material, products, plants or facilities by the federal, state or local government, or a material act or omission by the other party. 14. Ownership of Reports and Documents. The originals of all letters, documents, reports, and data produced for the purposes of this Agreement shall be delivered to, and become the property of the Agency. Copies may be made for PARS but shall not be furnished to others without written authorization from Agency. 15, Designees. The Plan Administrator of the Agency, or their designee, shall have the authority to act for and exercise any of the rights of the Agency as set forth in this Agreement, subsequent to and in accordance with the written authority granted by the Governing Body of the Agency, a copy of which writing shall be delivered to PARS. Any officer of PARS, or his or her designees, shall have the authority to act for and exercise any of the rights of PARS as set forth in this Agreement. 16. Notices. All notices hereunder and communications regarding the interpretation of the terms of this Agreement, or changes thereto, shall be effected by delivery of the notices in person or by depositing the notices in the U.S, mail, registered or certified mail, return receipt requested, postage prepaid and addressed as follows: (A) To PARS: PARS; 4350 Von Karman Avenue, Suite 100, Newport Beach, CA 92660; Attention: President (B) To Agency: City of Santa Ana, 20 Civic Center Plaza, Santa Ana, CA 92701; Attention: Executive Director of Personnel Services Notices shall be deemed given on the date received by the addressee. 17. Term of Agreement. This Agreement shall remain in effect for the period that began April 18, 2011 for twelve (12) month periods thereafter unless terminated or until the last beneficiary or their eligible heirs expire (Term). This Agreement will continue unchanged for the duration of the term unless either parry gives written notice to the other party of the intent to terminate prior to ninety (90) days before the end of the twelve (12) month period. Page 3 25H-5 1 &. Amendment. This Agreement may not be amended orally, but only by a written instrument executed by the parties hereto. 19. Entire Agreement. This Agreement, including exhibits, contains the entire understanding of the parties with respect to the subject matter set forth in this Agreement. In the event a conflict arises between the parties with respect to any term, condition or provision of this Agreement, the remaining terms, conditions and provisions shall remain in full force and legal effect. No waiver of any term or condition of this Agreement by any party shall be construed by the other as a continuing waiver of such term or condition. 20. Attorney's Fees. In the event any action is taken by a party hereto to enforce the terms of this Agreement, the prevailing party therein shall be entitled to receive its reasonable attorney's fees. 21. Counterparts. This Agreement may be executed in any number of counterparts, and in that event, each counterpart shall be deemed a complete original and be enforceable without reference to any other counterpart. 22. Headings. headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions. 23. Effective Date. This Agreement shall be effective on the date first above written, and also shall be the date the Agreement is executed, AGENCY: BY: TITLE: DATE: PARS: BY: TITLE: DATE: RECOMMENDED FOR APPROVAL: Ed Raya Executive Director of Personnel Services Page 4 25H-6 ATTEST: Maria D, Huizar City Cleric APPROVED AS TO FORM: SOMA R, CARVALHO City Attorney By: A., Laura A. Rossini Senior Assistant City Attorney EXHIBIT IA SERVICES PARS will provide the following services for the City of Santa Ana: 1. Plan Consultation Services: (A) Meeting with Agency personnel to discuss the impact to the Agency of implementing a Plan; (B) If appropriate, completing a fiscal analysis, based on data and assumptions provided by Agency, to determine the fiscal feasibility of a Plan; (C) Meeting with Agency personnel to discuss the fiscal analysis and receive feedback on the analysis, data, and assumptions made; (D) Making appropriate revisions to the fiscal analysis as directed by Agency. 2. Plan Installation Services: (A) Meeting with appropriate Agency personnel to discuss plan provlslOns, implementation timelines, benefit communication strategies, data reporting and contribution submission requirements; (B) Providing the necessary analysis and advisory services to finalize these elements of the Plan; (C) Providing the documentation needed to establish the Plan for review by Agency legal counsel. 3. Plan Administration Set -vices: (A) Monitoring the receipt of Plan contributions made by the Agency to the trustee of the PARS Trust Program ("Trustee"), based upon information received from the Agency and the Trustee; (B) Performing periodic accounting of Plan assets, including the allocation of employer contributions, distributions, investment activity and expenses (if applicable), based upon information received from the Agency and/or Trustee; (C) Acting as ongoing liaison between the Participant and the Agency in regard to distribution payments, which shalt include use by the Participants of toll-free telephone communication to PARS; (D) Producing benefit illustrations and processing enrollments; (E) Coordinating the processing of Participant distribution payments pursuant to authorized written Agency certification of distribution eligibility, authorized direction by the Agency, and the provisions of the Plan, and, to the extent possible, based upon Agency - provided Data; (F) Directing Trustee to liquidate Plan assets (if necessary) and make Participant distribution payments, and producing required tax filings regarding said distribution payments; Page 5 25H-7 (G) Notifying the Trustee of the amount of Plan assets available for further investment and management, or, the amount of Plan assets necessary to be liquidated in order to fund Participant distribution payments; (H) Coordinating actions with the Trustee as directed by the Plan Administrator within the scope this Agreement; (1) Preparing and submitting a report of Plan activity to the Agency, unless directed by the Agency otherwise; (J) Coordinating and selecting of a licensed actuary to perform actuarial valuation, if required, on a periodic basis to comply with state and federal laws (the actuarial certification fee for which shall be paid by the Agency); (K)Preparing and submitting the Annual Report of Financial Transactions to the California State Controller, as required by law, for the PARS Trust Program, including the required certified audit of the PARS Trust. 4. Plan Compliance Services: Coordinating and preparing changes to the Trust, Plan and other associated legal documents required by federal and state agencies to maintain the Plan in compliance, for review by Agency legal counsel. 5. PARS is not licensed to provide and does not offer tax, accounting, legal, investment or actuarial advice. In providing the services specified above, PARS will retain qualified professional service providers at its cost as it deems necessary if the service lies outside its area of expertise. 6. Any analysis provided by PARS is subject to the receipt of accurate information and assumptions as may be provided by Agency. The Agency is responsible for integrating the PARS analysis into any Agency budgetary analysis or decision-making processes. The fiscal projections in the PARS analysis are dependent upon future experience conforming to the assumptions used and the results will be altered to the extent that future experience deviates from these assumptions. It is certain that actual experience will not conform exactly to the assumptions used in the analysis. Page 6 25H-8 EXHIBIT IB FEES FOR SERVICES PARS will be compensated for performance of Services, as described in Exhibit IA based upon the following schedule: Upon implementation of the Plan associated with this Agreement, the Agency agrees to pay: (A) An ongoing administration fee equal to five and one-half percent (5.50%u) of all contributions made by the Agency on behalf of participants in the subject Plan. Fees will be billed to the Trustee as contributions are made by the Agency, and it will be the responsibility of the Trustee to pay those fees from the assets of the Plan. These fees are exclusive of Trustee and investment management fees, which are based on the standard fees charged by the Trustee. (B) A fee equal to actuarial expenses, if any, charged to PARS by an outside contractor for an actuarial valuation of the Agency's Plan ("Actuarial Valuation Fee"). (C) A fee equal to the stated IRS application fees and legal fees related to any ongoing federal and/or state required Plan compliance changes. Such fees will not be charged to the Agency without prior authorization by the Plan Administrator. Page 7 25H-9 EXHIBIT IC DATA REQUIREMENTS PARS will provide the Services under this Agreement contingent upon recelvrng the following information; 1. Participant Data (provided by Agency): (A)Participant's Legal Name (B) Participant's Position (C) Participant's Address (D) Participant's Birth Date (E) Participant's Hire Date (F) Participant's Contract Salary (G) Years of Agency Service (H)Retirement Date 2. Executed Legal Documents (provided by Agency): (A) Certified Resolution (B) Adoption Agreement (C) Plan Document (D) Trustee Investment Forms 3. Completed Funding Documents (provided by Agency): (A) Authorization to Pay Benefits Form (B) Funding of PARS Supplementary Retirement Plan Form 4. Completed Enrollment Forms (timely submitted by Participant): (A) Correction Form (B) Enrollment Form (C) Beneficiary Designation Form (D) Tax Withholding Request Form (E) Letter of Resignation S. Other information pertinent to the Services as reasonably requested by PARS. Page 8 25H-10 POA RETIREMENT ISSUE March 21, 2011 BACKGROUND; In June 2009 the City and POA agreed to a contract extension which deferred scheduled pay raises of 4% and 2.5%. In exchange for deferral of these scheduled increases, the City agreed that any employee who retired prior to 2011 would receive the scheduled pay increases, in exchange for the 4% and 2.5% those employees would take unpaid furlough hours off, equivalent in the value to the salary increases. The City submitted the MDU to CaIPERS and reported salaries In accordance with the MOU. The first POA retirement under the MOU provisions occurred in October 2009. Subsequently, 24 other POA employees (20 sworn and s non -sworn) retired without incident. in October 2010, CoIPERS contacted the City and advised there might be a problem with reportable compensation. in December 2010, PERS finally "ruled" that the 4% and 2.5% were not considered "reportable compensation." In December 2010, POA requested that these 25 employees "be made whole" by the City. in February 2011, POA requested the City pay POA $1,963,251 to create a trust, which POA would administer. STEPS TAKEN; The City asked PARS (Public Agency Retirement Services) to provide an actuarial study on the casts of such a proposal, which would be paid over a 20 -year period. Several scenarios were evaluated, including POA administering the trust itself. This scenario would require the City to provide a lump sum to POA and, therefore, it was eliminated as an option. This left the following options for consideration; Scenario 1 plan administered by PARS, includes 2% COLA and no survivor benefits.- ✓ Approximately $1,969,03.1 or approximately $94,671 per year (2011= $126,087) ✓ This scenario assumes a $5,000 all-inclusive annual administrative fee Scenario 2 plan administered by the City, includes 2% COLA and no survivor benefits; ✓ Approximately 1,989,031 or approximately $114,671 per year (2011 = $156,087 ✓ This scenario assumes a startup fee of $10,000, and ongoing annual costs of $20,000 NOTE., Cost of 4916 and 2.5% increases through CaIPERS for the 25 retirees had been gstimated to be $1,635,000 amortized over 30 years. PERS revised tills estimate to be $2,269,85. RECOMMENDATION; fi+ Contract with PARS (Public Agency Retirement Services) to create and administer a trust, on a "Pay -os -you -go" basis, in an estimated annual amount of $94,671. First year costs are estimated to be $126,087. w 25H-11 25H-12 RESOLUTION NO. 2011-024 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA AUTHORIZING THE IMPLEMENTATION OF A SUPPLEMENTARY RETIREMENT PLAN FOR TWENTY-FIVE (25) POLICE OFFICERS ASSOCIATION RETIREES, DESIGNATING PUBLIC AGENCY RETIREMENT SERVICES AS THE TRUST ADMINISTRATOR AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE RETIREMENT PLAN AND TRUST DOCUMENTS BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1. The City Council of the City of Santa Ana hereby finds, determines and declares as follows: A. The Public Employees' Retirement Law (PERL) permits the participation of public agencies and their employees in the California Public Employees' Retirement System (CaIPERS) by the execution of a contract, and sets forth the procedure by which said public agencies may amend and supplement such contract; and B. During contract negotiations between the City and the Santa Ana Police Officers Association (POA) for fiscal year 2010-2011, it was agreed by the POA to defer salary increases scheduled for July 1, 2009 and January 1, 2010, except that members of the Association who stated their intention to retire from employment with the City during the term of the Extension would receive salary increases per the original schedule that would qualify for calculation in their retirement formulas and, in exchange for said salary increases, said members would participate in an unpaid furlough program equated to the monetary value of the received increases. Twenty-five (25) members of the Association timely stated their intention to retire, received the salary increases and participated in the furlough program; and C. The Public Agency Retirement System (PARS) is a professional entity that provides supplemental retirement plans to public employees and has agreed to develop a Supplementary Retirement Plan and Trust ("the PARS Trust Supplementary Retirement Plan") for the above -referenced twenty-five (25) POA retirees, supplementing the CaIPERS retirement benefits and qualifying under the relevant sections of the Internal Revenue Code and the California Government Code. r Resolution No, 2011-024 Page 1 of 3 25H-14 Section 2. The City Council of the City of Santa Ana hereby authorizes the implementation of the PARS Trust Supplementary Retirement Plan for said twenty-five (25) POA retirees, as part of the City's Retirement Program. Section 3. The City Council hereby appoints PARS Trust as Trust Administrator and Record keeper for the Plan. Section 4. The City Council hereby authorizes the transfer of funds to a financial institution as agreed upon by PARS and the Plan Administrator as soon as administratively feasible. Section 5. The City Manager and the Executive Director of Personnel Services are hereby authorized to execute and submit the Administrative Services Agreement, Trust document and any other documents necessary to implement the PARS Trust Supplementary Retirement Plan for said twenty-five (25) POA retirees, on behalf of the City. Section 6, The City Council hereby appoints the Executive Director of Personnel Services, or her designee, as the City's Plan Administrator for the Plan. Section 7, The City's Plan Administrator is hereby authorized to implement the Plan and to take additional actions as necessary to maintain the City's participation in PARS, maintain compliance with any regulations regarding the Plan, and to administer the PARS Trust Supplementary Retirement Plan for said twenty-five (25) POA retirees, on behalf of the City. Section 8. If the City's Plan Administrator finds that the PARS Trust Supplementary Retirement Plan for said twenty-five (25) POA retirees must be limited under Section 415 of the Internal Revenue Code, then the Plan Administrator will implement replacement benefit programs at no additional cost to the City. Section 9. This Resolution shall take effect immediately upon its adoption. Resolution No. 2011-024 Page 2 of 3 25H-15 25H-16 ADOPTED this 18th day of April 2011. APPROVED AS TO FORM: City Attorney's Office Aoselih Straka Interim City Attorney AYES: Councilmembers: NOES: Councilmembers: C • U Miguel A. Pulido pp Nt e(1de Mayor Alvarez, Benavldes, Bustamante, Martinez (4) 1►GLIf 1 ABSTAIN: Councilmembers: None (0) NOT PRESENT: Councilmembers: Pulido. Sarmiento. Tinaiero (3) CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, Clerk of the Council, do hereby attest to and certify the attached Resolution No. 2011-024 to be the original resolution adopted by the City Council of the City of Santa Ana on April 18, 2011. Date: �Y a'y"y C' )D, & "s ' Clerk of the Council City of Santa Ana Resolution No. 2011-024 Page 3 of 3 25H-18