Resolution 1860
RESOLUTION NO, 1860
RESOLUTION OF INTENTION TO APPROVE AN AMENDMENT TO yONTRACT BETWEEN
THE BOARD OF ADMINISTRATION OF THE PUBLIC EMPLOYEES RETIREMENT
SYSTEM AND THE CITY COUNCIL OF THE CITY OF GILROY,
WHEREAS} the Public Employees' Retirement Law permits the par-
ticipation of public agencies and their employees in the Public Employees'
Retirement System by the execution of a contract, and sets forth the procedure
by which said public agencies may elect to subject themselves and their employees
to amendments to said law; and
WHEREAS} one of the steps required in the procedure to amend this
contract is the adoption by the legislative body of the public agency of a reso-
lution giving notice of its intention to approve an amendment to said contract,
which resolution shall contain a summary of the changes proposed in said con-
tract; and
WHEREASJ attached is a summary of the major provisions of the pro-
posed plan;
NOW} THEREFORE} BE IT RESOLVED} that the City Council of the
City of Gilroy gives, and it does hereby give, notice of intention to approve
an amendment to contract between said City Council and the Board of Adminis-
tration of the Public Employees' Retirement System, a copy of said amendment
and a summary of the major provisions of the proposed change being attached
hereto, marked Exhibits IIAII, "B", "C", and "D", and by this reference made a
part hereof.
PASSED AND ADOPTED this 4th day of November, 1974, by the fol-
lowing vote:
NOES:
COUNCIL MEMBERS: DeBELL, DUFFIN, HUGHAN, PATE, SILVA,
STOUT and GOODRICH.
COUNCIL MEMBERS: None
AYES:
ABSENT:
COUNCIL MEMBERS: None
APPROVED:
~A/IrV?~/5go.6~~
Mayor
RESOLUTION NO. 1860
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ri''';;~,:\C~ \t .AMENDMEN~ TO CONTRACT :&""'TWEEN 'filE
, ,;;.,..,.~. BOARD OF ADMINISTRATION
.j PUBLIC EMPLOYEES t RETIREMENT SYSTEM
AND THE
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CITY COONCIL
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CITY 0' GILROY
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The :Board of Administration, Public Employees' Retirement System, hereinafter
referred to as :Board, and the CITY COUNCIL of the CITY 0' GILROY, hereinafter re-
ferred to as Public Agency, having entered into a contract under date of May 21,
. 1968, effective July 1, 1968, as amended effective November 3, 1971 and August 1,
1913, ,and as provided by Chapters 170 and 316, Statutes of 1911, which provide
for participation of Public Agency in said System, Board and Public Agency- hereby
agree as follows:
A. Paragraphs 1 through 11 are hereby stricken from said contract as executed
effective July 1, 1968, and are hereby replaced by the following paragraphs
numbered 1 through 9 inclusive:
1. All words and terms used herein which are det1ned in the Public Employ-
ees' Retirement Law shall have the meaning as defined therein unless
otherwise specifically provided. "Normal retirement age" shall mean
age 60 for miscellaneous members and age 55 for local safety m.embers.
2. Public Agency shall participate in the Public Employees' Retirement
System from and after July 1, 1968, m~king its employees as herein-
. after provided, members of said System subject to all provisions of
the Public Employees I Retirement Law except such as apply only on
election of a contracting agency and are not provided for herein and
to all amendments to said Law hereafter enacted except such as by
express provision thereof apply only on the election of contracting
agencies.
3. Employees of Public Agency in the following classes shall become mem-
bers of said Retirement System except such in each such class as are
excluded by law or this agreement:
a. Local firemen (herein referred to as local. safety members);
b. Local policemen (herein referred to as local safety members);
c. Employees other than local safety members (herein referred to
as miscellaneous members).
The folloWing employees shall be excluded from membership in said--'--- - --.- H
Retirement System:
PERSONS COMPENSATED ON AN HOURLYl3ASIS.
ELECTED OFFICIALS.
Ret. Form 102-1
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4. i:~sa~~s"accumulated with respect to members in the local Retirement
S~stem were transferred to the Public Employees' Retirement System
within four months of the effective date of this contract and
applied against the liability for prior service incurred hereunder.
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6. The follOwing additional. provisions of the Public Employees' Retire-
ment Law which apply only upon election of a contracting agency sball
apply to the Public Agency and its employees:
a. The fraction of final compensation to be provided for each year
of credited prior and current service as a local safety member
shall b~ that provided in Section 21252.1 of the Retirement Law.
b. Section 20952.5 (proViding for age 50 as the minimum voluntary
retirement age for local safety members with benefit payments
commencing prior to age 55 subject to actuarial discount).
c. Section 21380-7 (providing for allowances for survivors of mem-
bers covered under the program upon death before retirement).
d. Section 21361.5 (providing that years of service rendered as a
member of the Local Retirement System prior to the effective
date of this contract shall be included in the computation of
the basic death benefit provided in Section 21361 upon the
death of any member who was also a member of said local system).
e. Section 21.222.1 (providing for increases in allowances to wh:ich
the annual cost-of'-living provisions apply, payable for time
commencing on August 1, 1973 to or on account of persons retired
or members deceased on or prior to December 31, 1970).
7.' Public Agency shall contribute to said Retirement System as follows:
a. With respect to miscellaneous members, the public agency shaJ.l
contribute the following percentages of monthly salaries earned
as miscellaneous members of said. System:
(1) 1.63 percent until June 30, 1980 on account of the liability
for prior service benefits.
(2) 7.67 percent on account of the liabill ty for current service
benefi ts.
(3) 1.00 percent on account of the liability for the 1959 Survivors
program.
Ret. Form 702-2
b. With rQect to local safety members, ~ public agency shall con-
tribute the following percentages of monthly salaries earned as
local saf'ety members of said System: .
(1) 2.998 percent until June 30, 1988 on account of the liability
for prior service benefits.
(2) 9.930 percent on account of the liability for current service
benefits.
(3) 0.500 percent on account of the liability for the 1959 Surv:ivors
program.
c. A reasonable amount per annum, as 1'1xed by Board to cover the costs
of administering said System as it affects the employees of Public
Agency, not including the costs of special valuations or the period-
ical investigation and valuation required by law.
d. A reasonable amount as fixed by the Board, payable in one install-
ment as the occasions arise, to cover costs of special valuations
on account of employees of Public Agency, and costs of the period-
ical investigation and valuation required by law.
8. Contributions required by Publ1cAgency and its employees shall besut>-
3ect to adjustment by Board on account of amendments to the Public
Employees' Retirement Law, and on account of the experience under the
Retirement System, as determined by the periodical investigation and
valuation required by said Retirement Law.
9. Contributions required of Public Agency and its employees shall be paid
by Public Agency to the Retirement System wi thin thirty days after the
end of the period to which said contributions refer. If more or less
than the correct amount of contributions is paid for any period, proper
adjustment shall be made in connection with subsequent remittances,
or adjustments on account of errors in contributions required of any
employee may be made by direct cash payments between the employee and
Board. Payments by Public Agency to Board may be made in the form. of
warrants, bank checks, bank drafts, certified checks, money orders,
or cash.
B.
This amendment shall be attached to said contract and shall be effective
on the day of
.
day of
CITY COUNCIL OF THE
CITY OF GILROY
Wi tness our hands this
BOARD OF ADMINISTRATION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
BY
William E. Payne, Executive Officer
BY
Presiding Officer.
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Attest:
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Clerk
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EXHD3IT B
SUMMARY OF MAJOR PROVISIONS
1/50 Retirement Program
Local Miscellaneous Members
(Por service after termination of Social Security)
MEMBERSHIP
Membership is compulsory for all employees, other than elected officials, who
are employed one-half time or more except those excluded under the contract.
SERVICE RETIREMENT
The earliest retirement age is 55; the normal. retirement age is 60; and the
compulsory retirement age is 67. An employee may retire any time between these
ages, 55 ~d 67, provided he meets the min;nnilJl requirements that he either have
5 years of service 2E. have attained the compulsory retirement age of 67.
The monthly income is determined by age at retirement, years of credited
service, and "final compensation". The basic benefit will be 2% of tlfinal com-
pensation" for each year of 'credited service upon retirement at age 60. If re-
tirement is deferred beyond age 60, the percentages of "final compensationll for
ea.ch year of service are increased tip to age 63 but not beyond. If retirement
is earlier than age 60, the percentages of "final compensationll for each year of
service are decreased. Service credit prior to Social Sec~~~~~~2~~s
computed on the modified 1/50 formula with all service on or after termination
'of-Social Security computed on:the=~furliGmlJ a.--~~--~-~-----~~--~=-=O
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":Flnal 'Compensation" is the highest average annual compensation (excluding
overtime) earnable by a member during the three consecutive years of employment
immediately preceding the effective date of retirement or during any other period
of three consecutive years designated by the member.
A m;nhmtlJl service retirement allowance of $100 per month is guaranteed upon
compulsory retirement with credit for prior service.
DISABILITY RETIREMENT
An employee becoming disabled to the extent that he is incapable of performing
his duties shall be eligible for disability retirement provided he has at least
5 years of service. The monthly retirement allowance is l.~ of "final compensa-
tion" for each year of service with a minimum guarantee of one-third of final
compensation for most employees who have rendered at least 10 years of service.
The disability retirement allowance shall under no circumstances exceed the service
retirement allowance payable upon retirement for service at age 60 if employment
could be continued to that age. If his disability is such that he is also entitled
to a disability income from Social Security, the State System benefit will be
reduced by the amount of his Social Security benefit.
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"IEATH BENEFITS
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Death Before Retirement
Basic Death Benefit This benefit is a reftmd of the member's accumulated
contributions plus six months' salary provided he has been a member
for six years or more. For those who die before completing six years
of membership, the benefit is one month's salary for each year of
aembership plus refund of contributions. The salary referred to is '
that earned during the year preceding death. Prior service does not.
count toward this benefit.
1957 Survivor Benefit Employees with 5 or more years of service who have
reached the minimum age for service retirement have further death
protection tmder this item. Here the surviving widow can elect to
:receive either the basic death benefit or a monthly income equal to
one-half the munodified retirement allowance the employee was eligible
for on the date of his death. The monthly income lasts tmtil the
widow' s death or remarriage with a guarantee that the System will pay
.. as much as under the basic death benefit.
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1959 Survivor Benefit A mont;lly ~owance shall be paid to certain sur-
vivors of a member who dies before retirement. ~
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Death After Retirement
, The death benefit is $500 if death occurs after retirement. This amotmt
will be in addition to any payments which might be made under an
optional, retirement benefit chosen by the member at his retirement.
TERMINATION OF EMPLOnlENT
Upon termination of employment, an employee with 5 or more years of service may
either leave his contributions with the System and receive, upon attaining retirement
age, the retirement benefit he has earned, or he may withdraw his contributions (plu$
interest), thus, terminating his membership in the System and receiving no retirement
benefits. Except, (1) a member with less than 5 years of service shall not have the
privilege of leaving his contributions with the System, but shall automatically have
his contributions, plus interest, refunded upon termination of employment and (2) a
member who is transferring to employment with another agency which is covered tmder
the System shall not have the right of withdrawing his accumulated contributions.
EMPLOYEE CONTRIBUTIONS
Each mis ce 11 aneous member, whether a new member or a member with years of member-
ship, will start contributing at the unifonn rate of 7% of salary earned, exclusive of
overtime, on the date this fonnula becomes effective.
The employer also contributes toward the cost of the benefits. The amotmt con-
tributed by the employer for current service retirement benefits will, on the average,
exceed the cost to the employee. In addition, the employer bears the entire cost of
prior service benefits and disability benefits.
All contribution rates are subject to revision by the Board of Administration.
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EXHIBIT C
SUMMARY OF MAJOR PROVISIONS
Local Safety Members - One-Half Pay at 55
Retirement Program
MEMBERSHIP
Membership is compulsory for all employees, other than elected officials, who
are employed one-half time or more, except those excluded under the contract.
SERVICE RETIREMENT
The earliest retirement age is 50, discounted basis; the nomal retirement age
is 55; and the compulsory retirement age is 65. An employee may retire any time
after age 50 provided he has at least 5 years of service or has attained the com-
pulsory retirement age of 65.
At noma! retirement at 'age 55 the unmodified life allowance will be 50% of
"final compensation" for those who have completed 20 or more yec1rs of service
continuously to that age. Those who have completed less than 20 years of service
after 55 will receive an unmodified life allowance of two and one-half (2~%) percent
of final ~ompensation for each year of service so rendered.
"Final compensation" is average monthly salary (excluding overtime) eanted
during the final 36 consecutive months unless member specifically requests another
36 consecutive months period.
A minimum service retirement allowance of $100 per month is guaranteed upon
compulsory retirement with credit for prior service.
DISABILITY RETIRE~mNT
An employee becoming disabled to the extent that he is incapable of perfoming
his duties shall be retired for disability. His disability will be either employ-
ment connected (industrial disability) or otherwise (nonindustrial disability).
An employee who becomes disabled while a member of this System for reasons
arising out of his employment, will be eligible for a life income of fifty (50%)
percent of his final compens at i on. If his disabili ty is such that he is also
entitled to a disability income from Social Security, the State System benefit
will be reduced by the amount of his Social Security benefit.
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An employee becoming disabled for reasons not connected with his employment
shall be eligible for disability retirement provided he has at least 5 years of
service; such disability allO\o1anCe is equal to 1.8% of final compensation for each
year of service~ with a guarantee of one-third of such final compensation for most
employees who have rendered at least 10 years of service. The "ordinary" disability
retirement allowance shall under no circumstances exceed the service retirement
allowance which would become payable at age 60 if employment could be continued to
that age.
DEATH BENEFITS
Death Before Retirement
Basic Death Benefit This benefit is a refund of the member's accumulated
contributions plus six months' salary provided he has been a member
for six years or more. For those who die before completing six years
of membership ~ the benefit is one month "s salary for each year of
membership plus refund of contribu,tions. The salary referred to is
that earned during the year preceding death. Prior service does not
count toward this benefit.
Industrial Death If death is service-connected in the judgment of the
Industrial Accident Commission~ a monthly income is paid to the widow
for life (or until remarriage) instead of the above basic death benefit.
However~ if she is also eligible for survivor benefits from Social
Security because of the member's death~ the State system benefit will be
reduced by the amount of such Social Se,:urity so long as Social Security
benefits are payable (usually until the youngest child reaches 18 and
after the widow' reaches age 62). The total ~ including Social Securi ty ~
would be 50% of "final compensation". If death was caused by. external
violence or physical force~ the total benefit (including Social
Security) would be increased to the following percentages of "final
compensation" so long as the widow lives and does not remarry:
Widow with 3 or more children under 18
Widow with 2 children under 18
Widow with 1 child under 18
75%
70%
62~%
1957 Survivor Benefit Employees with 5 or more years of service who have
reached the minimum age for service retirement have further death
protection under this item. Here the surviving widow can elect to
receive either the basic death benefit or a monthly income equal to
one-half the unmodified retirement allowance the employee was eligible
for on the date of his death. The monthly income lasts until the
widow's death or remarriage with a guarantee that the System will pay
as much as under the basic death benefit.
1959 Survivor Benef! t A monthly allowance shall be paid to certain sur-
vivors of a member who dies before retirement.
Death After Retirement
The death benefit is $500 if death occurs after retirement. This amount
will be in addition to any payments which might be made under an
optional retirement benefit chosen by the member at his retirement.
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TERMINATION OF EMPLOYHENT
. Upon termination of employment ~ an employee with at least 5 years of service
may either leave his contributions with the System and receive, upon attaining
retirement age, the retirement benefit he has earned, or he may withdraw his contri-
butions (plus interest), thus, terminating his membership in the System and receiving
no retirement benefits. Except, (1) a member with less than 5 years of service shall
not have the privilege of leaving his contributions with the System, but shall auto-
matically have his contributions, plus interest, refunded upon termination of employ-
ment and (2) a member who is transferring to employment with another agency which is
covered under the system shall not have the right of withdrawing his accwnulated
contributions.
E4PLOYEE CONTRIBUTIONS
Each member makes monthly contributions to the System which are deducted from
his salary. The rate of contribution (percentage of pay) depends upon a member's
sex and age at entry into safety service, Such contributions, for male employees,
currently range from a minimlUIl of 5.64% of salary to a maximmu of 12.55% of salary.
The employer also contributes toward the cost of the benefits. The amount
contributed by the employer for current service retirement benefits will, on the
average, exceed the cost t9 the employee, In addition, the employer bears the entire
cost of prior service benefits, the industrial death and disability benefits.
All contribution rates are subject to revision by the Board of Administration.
EXHIro:~ D
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Benefits to Employees Under
PERS SURVIVOR BENEFITS
(Benafits provided by Sections 21380-21387 of the Retirement Law)
BENEFITS
Survivors of members who elect coverage under the PERS survivor program and
whose death occurs before retirement will receive a monthly life income as follows:
ltlidow and two or more dependent children $430
or
Three or :nore dependent children, alone
ltlidow and one dependent child $360
or
Two dependent children, alone
Wido\v, alone, age 62 ( wido,",er age 65) $180
or
One dependent child, alone
If there is no widow or dependent child, then
to each dependent parent (mother 62, father 65)
$180
Conditions~
1. A dependent child is one under the age of 18 and unmarried, or a disabled
child of any ase who has been continuously disabled since age 18. (For
purposes of the 1959 Survivor allowance, a person shall be considered
under the age of 18 if he is an unmarried, full-time student ~etween the
aGes of 18 and 220)
20 A widow ceaS8S to be eligible for a benefit upon her remarriage.
3. A vJ~dOVJC1- will be eligible for a benefit the same as a widow provided he
W23 dependent upon the deceased member for at least one-half of his SQPP~~t_
4. A wid0W (or widower) Th~st be married to member prior to the occurrence of
the injury or onset of the illness which resulted in death.
5. The basic death benefit currently included in your retirement program prv-'
videa that shQl.:.ld a member die prior to his retirement, his beneficiary
would be paid tee member's accumulated contributions plus an additional
r:l.iliC!;.~rt equal to one-month' s salary for each year of service, up to a max-
i~um GI six ~0nths. The above survivor benefits will be payable in additio!l
to any basic death benefit the survivor may be entitled to receive.
6. If a r:<c;::'b81' is covered under both the PERS 1959 Survivor Benefit described
above and the survivor benefits as provided in Section 21365.5 (1957
SU"!'vivors Ber~fit) of the Retirement La\Ii, the survivor will be paid both
b.::1efits. '
(. Section 21383 - If survivor is entitled to special death benefit and at
the same time is entitled to receive a survivor allo\~nce, the survivor
allowance payable in any month shall be reduced by the amount of the
special death benefit allowance.
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COST TO THE EMPLOYEE
Each employee will contribute $2.00 a month in addition to his normal retire-
ment contributions. He will continue to pay this additional amount until either
terminatioll of employment or retirement and under no circumstances will these
coutributions be refundable.
EFFECTIVE DATE
These survivor benefits will become effective on (Date).
All present members of the System will be given the opportunity by written ballot
to select this survivor coverage. Persons who choose coverage will remain covered
until they terminate their employment or retire.
For agencies not covered under Social Security all future employees would be
mandatorily covered under this program. For agencies who are covered under Social
Security all future employees are mandatorily covered under Social Security and,
therefore, are not eligible for the PERS survivor benefits.
EXAMPLE
Under the PERS survivor program, if a member passes away before retirement
leaving a widow and four children, the widow would receive a monthly income of $430
until such time as the three oldest children have passes age 18 (so that she now
only has one child under the age of 018) at which time her benefit would be reduced
to $360. The $360 would continue to be paid until the last child passes the age of
18 at which time the payment would cease until the widow reaches the age of 62.
She would then receive $180 a month for the remainder of her lifetime. The widow
ceases to be eligible for her benefit when she remarries although benefits would
continue to any remaining children under the age of 18.
For purposes of the 1959 Survivor allowance, a person shall be considered
1lnder the age of 18 if he is an unmarried, full-time student between the ages of
18 and 22.
PERS-ACT-DO-l (1/72)
I, SUSANNE E. STEINMETZ, City Clerk of the City of Gilroy~ do
hereby certify that the attached ResolutIon No. 1860 Is an original
resolution, duly adopted by the Council of the City of Gilroy at a
regular meeting of said Council held on the 4th day of November
, 19 Zi-, at which meetIng a quorum was present.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
official seal of the City of Gilroy, this 7th day of November
, 19~.