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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
Human Resources
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DATE:
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May 23, 2011
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BOARD MEETING DATE:
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June 7, 2011
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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Donna Vaillancourt, Director of Human Resources
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SUBJECT:
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Changes in retirement benefits for specified probation safety members and making Government Code section 31485.10 applicable in the County in order to implement the changes.
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RECOMMENDATION:
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Adopt a Resolution (1) terminating the applicability of Government Code section 31664.1 to specified probation safety members of the County retirement system; (2) making Government Code sections 31664 and 31664.2 applicable to specified probation safety members of the County retirement system effective July 10, 2011 and (3) making Government Code section 31485.10 applicable in San Mateo County.
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BACKGROUND:
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On April 12, 2011, the Board of Supervisors approved a Memorandum of Understanding (MOU) with Probation and Detention Association (PDA) for a new six-year contract. The MOU provides certain retirement benefits for new hires effective July 10, 2011. In order to effectuate the benefit changes agreed upon in the MOU, the Board needs to adopt a resolution setting forth which Government Code sections are applicable to these PDA employees.
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DISCUSSION:
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The current benefit for existing PDA members is 3%@50 (Government Code section 31664.1). Under the new PDA agreement, employees hired on or after July 10, 2011 will not receive that benefit but instead will have the option of enrolling in one of two other retirement plans: 2%@50 (Government Code 31664) or 3%@55 (Government Code section 31664.2). Members choosing the latter formula will pay an additional cost share contribution.
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On May 10, 2011, the Board accepted Milliman Inc.’s actuarial valuation of the retirement benefit changes for PDA employees hired on or after July 10, 2011, that reflected the estimated savings for the first year as well as the estimated cumulative savings at the tenth and twentieth years. The proposed resolution presented for your approval effectuates these benefit changes by setting forth which Government Code sections are applicable to these PDA employees.
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The proposed resolution also makes Government Code section 31485.10 applicable in the County. Section 31485.10 (a) authorizes the Board to provide, upon adoption of a resolution, any retirement benefits for some, but not all, general and safety members of the county and may provide a different formula for calculation of retirement benefits, by making different retirement formula sections contained in the County Employees’ Retirement Law ("CERL") applicable to any subgroup of members within a membership classification. Accordingly, in order to provide the benefits as described above, the Board must make Government Code section 31485.10 applicable to the County.
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County Counsel has reviewed and approved the resolution.
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Adopting this resolution relating to retirement benefit changes contributes to Shared Vision 2025 of a Prosperous Community by helping to meet current budget challenges.
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FISCAL IMPACT:
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As set forth in Milliman’s actuarial report presented to the Board on May 10, 2011, it is not possible to estimate which retirement plan option new hires will choose. Savings for both options are set forth below.
2%@50
Y1 Savings: $21,000
Y10 Cumulative Savings: $1,818,000
Y20 Cumulative Savings: $10,912,000
3%@55
Y1 Savings: $23,000
Y10 Cumulative Savings: $1,971,000
Y20 Cumulative Savings: $11,853,000
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