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HomeMy WebLinkAbout03.a. Board Policy Options for CCCERA Regarding Their Legal Opinion Letter~l~/io Board Policy Options for CCCERA Regarding Their Legal Opinion Letter The CCCERA legal opinion letter made recommendations forfurther Retirement Board consideration with respect to cashing in of administrative leave, vacation time in the final year, and vacation time at termination. CCCSD employees cannot cash in administrative leave and therefore any recommendations as to administrative leave will not affect this District. Two general rules were cited in the legal. opinion letter: 1. Per the Ventura case, to be included in final compensation the item must be both earned and paid or payable during the final compensation year. 2. Case law indicates cash outs payable only at termination ought not to be included in final compensation beyond what was earned in the final year. Hence the item specifically discussed in the legal opinion letter that appl to CCCSD is Y vacation cash out in the final year. It appears likely that these two general rules would apply to accrued holiday compensatory time. There are a range of options the Board could consider, including: 1. Make no comment at this time, and await any proposed actions by CCCERA before determining this board's position. . 2. Make a general comment that this Board supports CCCERA's efforts to determine what policies and practices require review to assure that the benefit calculation for retirees conforms to legal requirements. 3. Make specific comment by letter or in person taking a position on whether any changes to the current policies on vacation cash outs which were the subject of their attorneys'. recommendations should be applied 1 J prospectively to new employees only; 2) prospectively to new and existing employees; andlor 3} retroactively to current retirees. 4. With respect to the issues of holiday compensation payouts, .the Board, either directly or through the Genera! Manager could affirmatively request that. CCCERA review its policies and practices with respect to these items in accordance with the recommendations made by its attorneys, and advise the District as to its findings. Alternatively, the Board could make .specific recommendations that CCCERA affirmatively revise its practices as to these items to exclude any amounts not earned in the final year, as wel! as make affirmative recommendations as to whether such revisions should apply prospectively or retroactively, as above Of course, there may be other options Board Members may wish to discuss and consider as well. This matter is on the agenda for the January 6 and 7, 2010 Board Meetings. ~~;a ~~,~ ~~~ Em pioyees Retirem ent Association `~ 355 willowway suite 221 concord ca 94520 925.521.3960 fax 925.646.5747 ---~ RETIREMENT BOARD MEETING Meeting will be held at: SPECIAL BOARD MEETING ,The Concord Hilton 9:00 a.m. 1970 Diamond Way J January 11, 2010 Concord, CA THE RETIREMENT BOARD WILL CONSIDER ISSUES RELATING TO FINAL COMPENSATION AND RETIREMENT BENEFITS -- SPECIFICALLY, WHICH ELEMENTS ARE CONSIDERED IIV "FINAL COMPENSATION" CALCULATIONS. THE INFORMATION IS OF INTEREST TO MANY SYSTEM MEMBERS; BOTH ACTIVE AND THOSE WHO RETIRED AFTER SEPTEMBER 30, 1997. ~ NO ACTION WILL BE TAKEN AT THIS MEETING 1. Pledge of Allegiance. 2. Introductions by Board Chair. 3. Presentation from Fiduciary Counsel regarding the calculation of final com ensati p on for retirement allowances; Board questions and: discussion.. - - ~ ; 4. Presentation from staff on current implementation regarding elements of final compensation as applied to calculating retirement benefits; Board questions and discussion. 5. Public Comment* a. Retired members. b. Active members. c. Employer representatives. d. General public. 6. Discussion and possible direction from the Board. *Public comment will be limited to 3 minutes per person. The Retirement Board will provide reasonable accommodations for persons evith disabilities planning to attend Board meetings who contact the Retirement Office at least 24 hours before a meeting vai vvi cvt~ u: wt rt~11 vG5ZZt11U8H P E U LOCAL ONE ~1002~/•00.9 .. ~'u~lic Em,~~~y~~es ~IJJni~n, ~~c~~ ~~~ ~ THE UNION FOR PUe~IC EMPLOYEES. ~ oacarvlrEO l~nl ' ~ Mailinb Address: PO Box 6783, Concord, CA 945~d. "s Unwn Gall, 5034 Bhun Roai1. Martinez. / Phone: (l)3~)238-1600 ~ Toll Free: I-Soo-S85=005 • F;i~t: (93S)?23-1099 www.peul.ut;v, - • 'info(rr;peill.urg - January 5, 2010 ~ , By Fax (925) 335-7744 and by U.S. Maal ~ ~ ~ ,~ Mr. Jim Kelly General Manager Central Contra Costa Sanitary Aistrict 5019 Imhoff Plaice ~ ~ - Martinez, CA 94553 Re; Possible Action by Retire~ent Board coneernin"g "final compensation".and: ' retirement benefits ...:., .~ ,.:. Dear Mr ICelly: , As you know, the Board of Retirement of the Contra-Costa County Employees' Retirement Association (" CCCERA") is reviewing many issues regarding "final compensation" and retirement benefits. This letter shall serve as notice that should the Board of Retirement take any action that nnay lead to a diminution of retirement benefits for the District employees Local One represents including but not limited to excluding certain remuneration fronn "final .compensation" we will expect the District to take what ever steps are necessary,to preserve and maintain the level of retirement benefits our members would receive-based :upon the applicable retirement formula and t}ie:anclusion" of those items presezxtly:iteported bYthe District as .part of "fnal compensation'." ' ` What the District has xticluded in what it reports to CCCERA as "final compensation" is a product of collective Bargaining; both explicit terms of our IvfoC1`and its, predecessors slid past practice. ,The!parties have recognized arad agreed that: these items are included wk~en we have bargained and their inclusion as boon a significant factor in our negotiations; particularly with regards.:to the retirement forn~ula,~-'.Our members have'reasanably z~elied` upon the District including all these forms of remuneration in "final compensation." Moreover,. the parties'. uziderstanding that those.items are included in "final eompensavon" has influenced our position at the bargaining table. Please feel free to contact me if you wish to discuss this matter. Sincerely Rolan ' ~' Su stng Business Agent •~ In~l.~p~a.ile~q I h~iun (alw ~`~`I 01/08/2010 11:92 FAX 9252281099 P E t1 LOCAL ONE f~009/009 /. ,. ~ . c: , _Dayid Rolley, Local One General President and Central_San,Unit President '' _ Rick Hernandez, Local One Vice President, ~ ~ , .Candace Bradley, Local One Secretary ~~'~ Philip Notamaso, Local One Treasurer - Local One Members Larry I/dginton, Local One General lvtanager handy Musgrove, Director of Administration Cathryn Freitas, HR Director G°~L~C~L~DMC~® January 5, 2010 JAN 0 5 201 Cathryn Freitas, Human Resources Mana er S~~oFTMeD1 Central Contra Costa Sanitary District g 5019 Imhoff Place Martinez, CA 94553 Dear Mrs. Freitas: 1 S/CG is wntmg in response,to the' letter posted on the website for the: C tY, . P :, ., . , ontra Costa,. remeni Association C ontem Eatinlo han Re t~ p 9 g;^s to the s stem thaf~ma CCERA) m,;,which CCCERA~may be ; ,:: ;. ~ y aff ves ect the ted benefts of retirees. ': ,: ;1 ~r. -The Distract and" MS/CG have' negotiated; in good faith; the wa a ~~ members.' This is stated in the Preamble of the MOU wherei 9 s and benefits of our jointly agree...except however, that all rights, privileges, and benefiD~Serict and MS/CG this agreement shall remain in full force and effect, except as ma be rcured prior to Regardless of any actions CCCERA may or ma ( y p °vided herein." to maintain the current level of retirement benefits that have been nex of att the District Sincerely;.,. x .. .. , :..: , .. ~ ..w .:,~ .. .. _ .... .. ~, -,; ,. _. .. ,, Frank J. F yalora President of MS%CG ~. ;.. cc; Andy Baker (counsel- for MS/CG) MS/CG Executive Board ' Jim Kelly, General Manager Board of Directors c% Elaine Boehme Fax Server 1/6/2010 11:41:21 AM PAGE 3/025 Fax Server .~~. ~C , Borenstein, Danie! From: Borenstein, Ranief Sent: Tuesday, January 05, 2010 4:55 PM To: 'jkelly@centralsan.dst.ca.us' Cc. 'mcgill@mms-inc.net'; Borenstein, Daniel Subject: Attachment Q Attachments: 082009 SRVFPD pension legal opini~n.PDF; 102109 CCCERA Leiderman legal memo.pdf 082009 SRVFPb 102209 CCCI=RA penslan legal op... Lelderman legal ... • Jim, Just as a follow-up Co our conversation, the issue of releasing Attachment Q.,xaises a:. bigger issue: 17oes the'sanitary district. want°to'h`ave.a: full public review af,penson"•~ ' °. issues, or does'it;warit to filter the information available to the'publia, employees; ratepayers and voters? , .. _ >. As" you. can see from- the attached memos;;, the San Ramon` Valley k'1re~, Protection; Distri'c~. and CCCERpi:~have set good examples for.,"publc.debate of ,these pension issues. They Piave opted''~~ to•condupt their:reviews of,:pension-rules in an open manner, Indeed, CCCSD would not. be. able to fully understand the legal reasoning-and implications of the terminal pay issue if it wez'en't.for CCCERA's decision. to make its legal memo public. Clearly, members of the public cannot fully understand the issues if they are not allowed to understand the legal implications. The question for the staff and the board is whether it truly wants a public airing of. the issues. I hope that the board will follow the lead ' of other Contra Costa agencies that recognize the mex'it of a timely public vetting of these critical. pension ,issues. Thanks, Dan B - - . Ddnlel Borenstein _ .._ - Y Columnist and,editoxial writer ' Contra Costd 'crimes :. , ,. .... ... .. Oakland "Tribune ~ ` ;. BaY Area News .Group/East gay - '.. •264'0' Shadelands' Drive.... ; • - • Walnut C;:eek, CA ' 99598,. (925) 943-8248..',... ~ ' 1 Fax Server 1/6/2010 11:41:21 AM PAGE 4/025 Fax Server m e y e r s f n a v e riback si{ver ~ Wilson proFessian,al law corparatiaa Arthur A. Hettinger Terry Roemer Attorneys at Law 5'ID. SD8.2O0O August 19, 2x09 The Honorable Nick Dickson, President And Members of the District Beard of airsctors San. Ramon Valley Fire Protection District 1500 Boilinget Canyon Road Sari Ramon, CA 94583 `_ °: ~: . aei Analysis of Board 0otions Relative to the f=ffact of Termination Pay on iPenslons .. . Dear President Dickson and.Members of~the District Board:'. ~ ~ ' This communication analyzes the District's optldns,relative to the effect of payments, including rctermination pay,° on the pension allowances payable to retiring management employees of the San Ramon Valley Fire District ("the bistrict"). The Board has expressed a concern regarding pension benefit caiculatlons (I.e., annual allowances That are higher than a member's final base salary caused, at least in part, by terminatigh payouts. The Board would like a legal determination as to whether (t has loco! discretion to change. the outcomes, and if so, how this could be accomplished, V. I.• ; Execu#ive 3animarv . .. _ .. , ' ~ ,. V The Distract is bound by ~pensron law principles concerning w hat forms of pay must be counfed toward a retiring member's final compensation; The Califomia Supreme Court haslnterpreted the County ; Employees' Retirement Law (GERL) and ruled that mast-premiums ahd payouts which are paid during a member's final year.miast count toward pension, and the District has no disctetion to change that outcome, - The District can, inyanous Instances, reduce premiums and layout forrriulae, and this would have ~_ ; - ' ~~ the effect of teducing the amount of the final ensign allowances, ~'he District does not have-any legal `. ° ~ ~~ P ..... . - obligation id provide benefits; except that the.District is legally obligated to honor contracts fay benefits rt has entered into tivith indlvidu&I employees and is legally obligated to provide benefits agreed to in the course of collective bargaining with its unions. II. Factual Background: The District employs employees who fall within the following three groups: rank and file firefighters who are represented by IAFF Locat3546 whq are currently covered by a collective bargaining agreement which expires as of March 2011; employees who are not represented by a union (i.e., management employees and ceilaih non-management employees); and the Fire`Chief, who has afoot--year ernpleyment contract with the District which, among other things, sets forth his benefits, 555 t2tfi StreeC Suite 1500 ~ Oakland; Califomia 94607 ~ .tcl 5t0.8UB2008 ~ fax 5i0.444.t108 ~ unvw.meyersnave.com LOS ANGELES OAKLAND ~ SACRAMENTO SAN FRANCISCO SANTA ROSA Fax Server 1/6/2010,11:41:21 AM PAGE 5/025 The Honorable Nlck Dickson, President And Members of the District Board of Directors San Ramon Valley Fire Protection District August 19, 2009 Page 2 Fax Server District management employees are not represented by a labor union. Their benefits are set forth In the District's Management and Non Represented Personnel Handbook ("Handbook'). The Handbook describes the "Management and Non-represented Position Compensation Policy° as follows; The Dstrict's policy for management and non-represented support staff compensation is to establish and maintain a general structure based on marketplace norms and internal job alignment with broad compensation grades and ranges. St€uctures and ranges may be raviewed,snd updafegl.as necessary based on marketplace survey data and District financial conditions. By Resolution No.2001-03, the District authorized fhe retirement benefit of:"3%at 5{Y service credit for safety members set forth ln. Government Cade section 31 G64,1_, That formula generally means that an ell ible em to ee sari receive a ensiori startln of a s 5Q a ual to 3' ericent of his/her hi hest 12 -- g p y p 9. 9 q P 9. -months' campensatlon multfpli~d by the nunitier.of years: of service with the Distract. ': ., ~- A, :' Non•Penslo~n ~l~ertefits provided In the Fandbook ' As explained below, °compensationp which is the basis for computation of retirement benefits, is not limited to annual salary but else includes other cash benefits received by the employee within his/her highest Twelve months of compensation, Pursuant to the Handbook, District management personnel are eligible to receive the fallowing cash payments during a twelve-month period in addition bo annual salary; i- I Mananement incentive nay -All managers serving In a management position for more than one year . receive this pay.equal to 5°/0 of ine premium base monfhly`salary (P8M5) far Fire ~rigineers, Step 5 - -_ . - ~: ' Management Incentive..Pay Is provided iri recognition of managers'. loss of eliglbillty_.for previous; - ~ ,. ~ ~ ~ ~ . - ~ ~dlfferetitiats, increased educational requirements; grid as an (riceritlve to promote into menagerie) positions, n ~ a' - All sa€oty .managers receive a monthly standby drfferential of 5% of PBMB for emergency . ., p , . res ons _ e during off-duty periods,...,. ~, .: ' . . Holiday compensation -~."56-hour'' managers receive, In lieu of time off for holidays, an additional 6°!o per . month of DBMS Jn recogniGori of worklrtg such holidays. Tli7ee management employees (BaHalion Chiefs) currently receive this benefit, District VehicleNehicleAllowance -1n lieu of receiving use of a Distract vehicle, designated employees who use their privafe.automobifes for Distract use receive a cash allowance of $681 per month, Employees providing a hybrid vehicle receive an additional $75 par month. Employees required to have emergency "Code 3' operating equipment on their personal vehicle recelVe an additional $75 per montr to offset additional insurance requirements of the District, These cash payments may be adjusted based on the percentage change of fhe IRS Standard Mileage Rate. 2 rax Server 1/6/2010 11:41:21 AM PAGE 6/025 Fax Server ' The Honorable Nick Dickson, President And Members of the District Board of Directors San Raman Valley Fire protection pistrict August 19, 2009 Page 3 Individual Retirernen Allotment IRA -1'he District pays 100°/p of the iRA which is derived from the following calculation, base monthly salary mu(tlplled by the retirementrate -the IRA Is considered a salary item and appears In fhe employee's paycheck as a taxable coming: Administrafi~~e Leave Pavout --;exempt management employees are granted 80 hours of administrative leave annually in recognition of extraordinary work required outside of normal work hours in lieu of overtime (far example, attendance at community,meetings).` Administrative leave may be taken as paid time off, added to vacation accrual (subject to vacation accrual limitations), or paid auf at the end of the calendar year.:... 8>lnual Vacation Cashout -4t)-hour employees may elect to cacti out up to 80 hours of vacation and'56- i hour employees may elect to cash out 112 hours of vacation by notifying the bistrict by. Qecember 1 of ' each year. The employee wJll receive the cash-out in,the.final paycheck of`tfte year:.: ;~ in addition, District management personnel are eligible to receive the following cash payments and additional:servicacredit atthe time of separation from employment: Vacation Payout at Seaaration or Retirement - 5fi-hour employees accrue vacation. up to a maximum of 72t1 hours; 4Q-hour employees accrue vacation up to a maximum of 514 hours. At the time of separation from District service; employees shall be paid for any'unused vacation at their currant rate of pay. ;. . - Unused Sick Leav re its Toward Retirement - 58-hour employees accrue sick Ieave'cradit at the rate of ' - - 12 hours per rrionth;.4t}-hour employees accrue sick leave-credit at the rate of 8 hours per month. There is ~- • ~ ' no "cap" on accrual of sick leave credit:. ' Af the Gme of retirement, an employee may apply any unused sick leave toward retirement (l.e., cohvert it to service credit to increase the-retirement benefit}. B.'' Ter s of Settlement.4 "reement Affectin the Distric er the `Nentur " t]eclsortf • In the mid-1990's;~two lawsuits were filed by retired,employeesvho were members of the Contra ' Costa County Employees' Retirement Association. ("CCERA~ claiming that fhe CCERA had improperly . failed to Include certain cash payments as part of their"compensation' on~ which their relirement benefits were caici,lated (Paulson v. CCr=RA and V'Jalden"v. CCr~RA}. Among the class of employeescoveifed by the lawsuits tivare employees of the San Ramon Valley Flre Protection Distract who retired on 'or before September 30,.1957: In m?d-1999, a settlement agreement was reached in both of those lawsuits implementing the Uenfura /decision (explained below}. That agreement set forth pay items which the parties agreed to accept as inclusions and exclusions from pensionable cornpensatlon, for compensation earned on or before September 30;1997, ~ ~ ' The settlement agreement specifically listed the pay items which the San Ramon Valley Fire Protection District ("District") agreed to accept as inclusions and exclusions from pensionable compensation. Of the 96 listed pay items, the Distrlcf agreed to exclude only 25 pay items from 3 Fax Server 1/6/2010 11:41:21 AM PAGE 7/025 Fax Server The Honorable Nick Dickson, Fres;dent And iVtembers of the pistrict Boarci of directors San Ramon Valley Fire Protection District August 19, 2009 Page 4 pensionable compensation. Among the notable items that were excluded from pensionable compensation I were (1) lump sum of accumulated unused vacation, paid upon termination, that was not earned in the final compensation period; and (2} sick leave payoff. ~ • The settlement agreement also provided as follows: ALI parties` agree.that anysubsequent determinations by a court of competent Jurisdiction that enlarge, define; narrow; or in any other way relate to tlieacope of the decision.of the p Retirernenl$16 Caf 4+~ 4$3.1n Ventura County Deputy 5heriifs' Association'v, 13oar~ of ~• (1997)_ (°Ventura Count'} or the. items, ofcompensatlon to be ` ~ , included for benefit` purposes under the 1937 County EmPloyaes~ Retirement Act shall _ " ~ ^ ~' have no effect In this Settlement or its terms Although this Agreement Is tntendad to be ~ L ,binding on -the Pafies. regarding.. the retirement treatment of alt pay items, and' t3eneflts ,. . listed on Exhibit A- nothtng.in this Agreement is intended, to expand or to !lmit, or fo affect ~ ' i. .. !n any way, either posrtiveiy or negatively; whatever rights any Party may have regarding. I . the future continuation,'moo'Ification or eUnai>?ation of arty ilsted pay item or ,benefrt (emphasis added) i III. ~agal Issues Surroundtnu Pensions A. Elements of Final Cam Ansatlon U on W ' h Pensions A Based Qis4lct employees receive retirement benefits, pensions) under s`retirement systeni`estabNshetl pursuant to the Caurity Employees Retirement Law of 1937 (CERI_}, _Govemment Code § 39450 et seq _; ' • ~ ~ l'enslons are calculated based on ~e retiring employee's "final compensation:" (government Code ; section :31462) The>"final.. compensation" for District employees is based on the singls highest year's rlr (~ g p Y ,. ) p p sale includin ; cash a ments .For ur oses of determining °final compensation,° °compensation' is tlefned it Govemment Code sectlon31460, in relevant part; as follows: °remuneratton~pald m cash out of county or dlstnct funds, plus any amount deducted from a mamber's~wages for participation ir~a`deferred., compensation plan . f}ut does not include: the monetary value of board; lodging, foal; laundry; or other . . ,~. ~ . advantages furnished to a member.";~"Compensation earriable"is defined in Govemment Code section. ` ~ 31461;-in relevant part, as,follows: "the average compensation as determined by the board; for the period' under consideration upon the basis of the average number of days ordinarily worked by persons 'in the seme grade or classofposifions doting the period, and atthe same rate of pay.° In ,Ventura County Deputy Sheriffs' Assoclatr'on v. &oard of f?efirement of Ventura County Employees' Retirement Association (1997} 16 Gal.4~ 4$3 (°Ventura i``) ,the California Supreme Court interpreted the terms °compensation° and "compensation eamable'' in Govemment Coda sections 3160 and 31461 and ruled that, with the exception of overtime pay, items of "compensation° paid in cash, even if not earned by all employees in the same grade or class, tivere required to be Included in the "final compensation° on which, an employee's pension was based, In that case, pursuant to a memorandum of understanding ("MOU°} with plaintiff employees' association, the County paid employees, in cash, bilingual premium pay, a uniform rriaintenance allowance, educafibnal incentive pay, additional compensation for 4 Fax Server 1/6/2010 11:41:21 AM PAGE 8/025 Fax Server The Honorable Nick Dickson; President And Members of the District Board of Directors San Ramon Valley Fire Protection Dist»et August 19, 2009 Page 5 scheduled meal periods for designated employees, pay in lieu of annual leave accrual, holiday pay, a motorcycle bonus, and a field training officer bonus. When the County refused to include the cash payments agreed tv fn the MOU in the employees"'final compensation"upon which their pensions were based, plaintiffs filed the lawsuit The Court ruled that the correct interpretation of the statutory definitions of "compensation" and "compensation eamable° in CERL required that any cash payments made to employees for special skills, activities, and cash received in lieu of benefits should be included in the computation of pension benefits. in light of the Ventura 1 ruling,.it is now well-established that employees who receive pensions under a retirement system established pursuant to CERL, such as_Distriet employees, are entitled to have their pensions computed based not only on their annual salary, but also on all cash payments they n;celve as premlum.pay for special skills, activities or cash received in lieu of benefits on an annua! basis (each as unused vacation and adminlstratlve leave):: The District was one of the parties to the 1999 settlement agreement (described above) which was entered into after the yenfura !ruling. According to that settfemenf agreement, ail of the types of cash payments listed above which are received and earned on an annual basis must be included in the computation of the employee`s pension if the employee received thane cash payments within the single highest 12-month period of employment, with the following exception, any lump sum of accumulated unused vacation, paid upon termination, that was not earned in the final compensation period at the time of separaton should not be included in pensionable compensation. .. • In 2003, in a case decided in connection wlkh the original Ventura case, lrr re Retiremenf.Cases, ._ 110 Cai.App,4~ 426: (2003) (aka'tienfur~ fly, a California court of appeal addressed the issue of whether cash-outs by employees of unused leave upon separator (i.e,, "temtination pay"} should be Indud2d in the calculation of final compensation for retirement benefits. The court Hated that, in Verrfura 1, the court held that, when an employee receives a cash payout at the end of any given year for unused compensatory,. .time, sick leave, vacation or holiday pay, such cash payment, is "compensation" wlthlri khe meaningof. . Governmeht Code § 31460. However, I n,Veritura l!, the court held fh~at the one-time cash-out of accrued leave at t17e time of separation: front employment should not be Included In "final compensation"for purposes of calculation of retirement benefits; The court reasoned, that aone-time cash~ut of accrued leave at separation occurs at separation of employment, and not during the period ofamploymerf itself, and therefore should be excluded under the statutory definition of "final compensation.° The statute defines "final compensation° as "the average annual compensation eamable by a member during any year elected by a member or at the time he files an application for retirement; or, if he fails to elect, during the year immediately preceding his retirement" (Government Code § 31462.1}, and therefore plainly excludes cash payouts made after service has been completed, at the time of retirement or separation. (!d. at p. . 475}. The court also relied on cases which interpreted the Public Employees' Retirementlaw (PERL) which excluded termination pay from calculating retirement benefits, since, among other things, including termination pay would permit "spiking" of pension benefits. Santa Monica Police Otfrcers Assn. v. Board of Fax Server 1/6/2010 11:41:21 AM PAGE 9/025 Fax Server ~ The Honorable Nick Dickson, I'resldenf And Members of the district Board of Directors San Ramon Valley Fire Protection District August 19, 2049 Page ti Administration , ii9 Cal.App.3d 96,100 (1977); Hudson v. Board ofAdrninistraUon, 59 CalApp.4~ 1310, 1323 (1997). It should be Hated that the concept of pension "spiking" has sometimes been misunderstood. Pension spiking is the abil':ry to increase an employee's pensionable earnings used for calculating pension benefits. However, as explained in this communication, such Increases in an employee's pensionable earnings are not necessarily illegal, lt~i5 not illegal ro have pensions computed based natonlyon an employee's annual salary, but also.on all cash payments the employee receives as premium pay for . special skills, activities pr cash received in lieu of berietlts ari an annual basis, such as unused vacation acid administrative leave;..; ' ~ . . B. Le al Restriction n ucln Penslons~-The Vested RI hts Doctrine:- ,_ ~: ... ,. 1, : _ Tradltiorial pensions. With regard to the right to receive a pension, a long fine of cases confirm the proposition that "since a pension right is an 'integral portion of contemplated compensation; if cannot be destroyed, once it has vested, without impairing a contractual obligation.' In Kern v. G11yofLor:g beach, 29 Gal.2d 848, 853 (1947), ilia Supreme Court confirmed that the right to a pension becomes vested upon acceptance of employmenf: Thus; for current DlsMct employees, their right to receive a pension becomes vested when they commenced District employment, However, even if a benefit;ls vested; it may be modified subJect to certain rules'of moditicatian . :. ... . ~ ,~. In Allen v C1fy of Long 13eactt, 45 Ca(.2d 128,130. (1955), the courf discussed the rules for mod'rfioation of . vested pension benefits as follows; ' :. Ah employee's vested contractual pension rights m2y be modified prior to retirement for the purpose of keeping. a'pension system; flexlble~ #o permit adjustments in accord with . , • changing condiflons and. af:the same trm~=maintain the integrity of the-syslem; Such . _ • ; modificationsmust be °reasonable; and it.is for the courts to determine-upon the facts of : ~ _ '~ each case what constitutes a permissible ctiange..To, be'sustained as reasonable; . • alterations of employees' pension rights must bear some material relation to the theory of a .pension system and its successful operation, and changes In a pension plan which result (n disadvantage t4 employees should be accompanied by comparable new advantages. ' In Sales v. San Diego County Employees RetirementAssn.,117 Gal.App.4~ 734 (2004), the court n;lled on Ventura It and held'itiat the payout of accrued sick leave benefits at time of retirement tivare Hat "final eompensaGon' vrithin the meaning of CERL and the payouts should not oe included in the calculation of retirement benefts. The court noted that "final compensation" under CERL involves three requirements: compensation In the form of c~dsh, rather than In the form of in kind goods and services or time off; cash earned during a usual'uork period, as opposed to cash earned for overtime; and cash earned. before retirement, rather than at or after retirement- 6 rax Server 1/6/2010 11:41:21 AM PAGE 10/025 Fax Server The Honorable Nick Dickson, President And Members of the District Board of Directors San Ramon Valley Fire Protection District August 19, 2009 rage 7 , Thus, even though current District employees' right to receive pension benefits is a contractually vested right, the District may legally modify the 3% at 50 formula for employees' pension iaenefits, but if the modification to the formula results in a disadvantage to the employees, it must be accompanied by a comparable new advantage. In practical terms, it may be difficult and impractical to provide a comparable new advantage to affsef a reduction in the 3% at 56 pension benefit. Therefore, if the District wants m consider reducing the pension formula, It would likely be more practical to reduce the pension formula only for new hires, since new hires would not have a vested right to the existing 396 at 50 pension formula, - 2. other Post f~ntglovinent Benefits . In contrast. tb the law regarding the vesting of pension benefits, the issue ofwhether nan-pension benefits are wasted ,is` more complicated because the-law is relatively undeveloped and there !s an arguable conflict amdttg the courts of appeal. In But#erworth a Boyd,12 Cai. 2d•140,150 (1947); the Califomia Supreme Court determined that public employees have no contractually vested right in any particular measure of compensation or benel7ts (not including pension benefits), and that these maybe modified or reduced by the proper statutory authority. There are two important cases that consider whether certain non-pension benefits may become vested: California t_eague of City Employee ~4ssociafions v. Palos Verdes Library District (1978) 87 Cal.App.3d 135 ("Cal#fomla League") and San Bernardino Public Employees v. Ci#y ofFonfana (1998) 67 CaLApp.4~ 1215 ("Fontana"}, :; ~ , In Caiifomia League, plaintifif employee organization claimed that the library tllstricthad violated their vested contractual rights when; (n 1975, the library dlsirlet purported to eliminate three benefits by resolution, I.e., (1) a longevity salary increase equal fo 2 percent of base pay; awarded at the end of the 9~, 12~,15~h and 18~ years of service; (2) a fifth weak of vacation for full-time professional employees after kart years of continuous service; end'{3} a 4-month fully paid sabbatical for librarians at the end of each 8 year; pffull-time service: These, benefits were included in the library district's:uPersonnel Policies.and" Procedures" adopted by the district's board of•trustees Irr1,966, and had been Implemented:as a matterof practice far x long period of lima. During meet and confer sessions under the Meyers-M(lias-Brown Acf (MMBA), fhe library~districi.offered the employees a 6 to 6.6 percent raise conditioned on the elimination of the three benefits in question. Rio memorandum of understanding between the parties was reached. Subsequently; the library district unilaterally adopted the 6 to 6.6 percent salary increase and eliminated the three benefits for all employees 4vho had not yet completed the specific conditions precedent to qualrfy far the benefits. The court held that the employees had a vested contractual right to the three benefits. The court reasoned that, in determ(nfng whether certain benefits are fundamental, the court must evaluate "the effect of it in human terms and the importance of into the individual in the life situation." The court concluded that the benefits "were important to the employees, had been an inducement to remain employed with the district, and were a form of compensation which had been earned by remaining in employment," (ld. at p. rax Server 1/6/•2010 11:41:21 AM PAGE 11/025 Fax Server ~ ~ r,:f The Honorable Nick Dickson, President- , ~ f And Members of the district Board of Directors:,: Sari Ramon Valley Flre Protection Disfript~;~. August 19, 2009 ~ `•:~,.~~:. Page 8 ~ ~ - 14Q) In response to the library district's argument that the benefits in question were adequately "offset" by the salary increase, the court ruled that the salary increase.did not satisfy the principle that vested contractual rlgtitsmay be. modified ifthey-Bear some material relation to the theory of a pension system and its successful operation, and.chariges in the pension plan which result in a disadvantage to employees should be accompanied by comparable new. advantages: The court. held tfrat the rbrary district had failed 1o prove the equivalency of the berietits ahd the salary~increase; (!d, at 141) Another court took a different view do the issue of :whether.longevrty~based benefits are vested. In -: . ~ San Bernardino Public rcmployeas Association v._ City ofFwifana ("Fontana") the ceurt disagreed tivifh.the, ' ~' - Caltfnrnla Ceagug reasoning. and ~n,ied that employees did not possess vested contractual rights o .. case, the longevity.pay or personal leave accrual. benefits In that~~ns of eSan ~emardirio Public-Employees , ~ ~ -~ Association ~SBpE,4) challenged various terms and coed mployment under. a MOU negotiated ? ~ - with the City. In 1995, the Clfy and three bargaining. units; .all act(ng through and represented by S8P1=A, ;. entered into new MOUs;Y Befon' 1993, the MQUs,for the three bargaining units al(provided for longevity.'- , pay, leave accrual increases based:on longevity, and pald~,retiree medical and dental insurance benefits, Those benefits lied been agreed upon 6y tfie'thrae;~bargalriing units. through ttie collective bargalnlrig process: The 199Q-1993 MOUs stated; fUnless.specifically changed or modified 6y this Memorandum of Understanding, all'preyalling benefits existing from previous agreements between the parties and approved by the C1ty Council shallbe maintained at~current lev®Is." ~ - luring negotiations for the .1995-1997 MOUs; the ~i ro osetl to reduce accrual of personal . tY p p , ... ~ :. leave, longevity pay, and retiree insurance benefits. (°longevity.-based. benefits"), The City warned that, if ' .. ' - ~ ~~ .. the membership rejected the proposal to reduce"those benefits; file City would Implement a 7 petcent; ~ ' _ ~ ;~ reduction in the City's contribution to PERS retirement The SI~PEA took the position that the lor-gevit~r- F based benefits were vested and corld not be bargained sway, However, the memtiers of the three bargaining units ratified the MOUs that reduced the longevity-based;beneflts. The new MOUs.reduced the : , . personal leave accrual ratefgr employees tiaving.l0.o~ mares years of service and changed (ongevitypay . ~ . from a percentage-af salary payable annually t6 a fixed amount payable only in,fhe-year of service the '~` _ .. employee became eligible for.the longevity pay These praufsions of the MOUs were strictly prbspectlve.: :. There was no change fn any employee's previously accrued or used balances of per5oral leave, longevity pay or health benefits ~ , . . .: ~ .: . .. ;: , Tile court of appeal disagreed with Calrfomia~teegue's ruling. that the. longevity-based benefits were vested righis. The court reasoned that there can be no impairment of contract by a change effected wi#h the consent of one of the contracting. parties. The longevity-based benefits~were provided for in co1lecfive bargaining agreements reached between the City and Its bargaining groups. Those collective bargaining agreements were of fixed: duration: Once the MOU's exp(red under their awn terms, the employees had no fegltimate expectation iliatthe longevity-based tienefiis would continue unless they . tivere renegotiated as part of a new bargaining agreement: The court noted thaf "It has long been held that "public employees have no vested right In any particular measure of compensation or benefits, and that these maybe modified or reduced by the proper statutory authority." (td. at p.1225) a rax Server 1/6/2010 11:41:21 AM PAGE 12/025 Fax Server The Honorable Vick Dickson, President And h~lembers of the Dlstrlct Board of Directors San Ramon ~/alley Firs Protection pislrlct August 19, 2009 ' Page 9 In Barber v: East Bay Municipal Uftlify Oistricf, 2000 WL 33313098 {an unpublished decision), the court addressed a claim by employees that they had a vested right to "career service pay ". Career senrlce pay tivas instituted by the District in 1870 in a Personnel Policy Statement and procedure. It amounted to a 2.75 percent increment that was added to a 20-year employee's monthly salary. Three years later, the Distrlet adopted a management salary plan, applicable to supervisory and management personnel, which did. not include career service pay. The District argued that career senrlce pay was merely a measure of comperisatiori or benefit that the District could modify, Tt1e employees argued that it was. "deferred compensation in the nature of pension benefits" that the District could not take away., The court agreed with the District.. The. court noted that "provisions concerning compensation. are stricdy construed in favor of the employer' but that "pension. provisions are to be IiberaQy construed In favor of the employee." The -~ court `also notetl~ that employees have no"vested right in any particular measure of.compensation or benefits, and that these may be modified or reduced by fhe proper statufory authority, cltlrig to Buftenvorfh v. Boyd, supra: Finding the career service pay to be a form of "pay" rather ttian a pension benefit; ttie court held that fhe career service pay was merely a particular measure of compensation as to which the employees had no vested right }iowever, the court noted that even if this benefit had been a pension, the District had the power to modify it, In accordance with the rules for modification of pensions set forth in Allen v, Cify of long Beach, supra, In light of these cases, the Issue as to whether non-pension benefits such as longevity pay, management pay, and leave accruals are "vested° is an open question. We believe that a strong argument can be made that such benefits are not vested and can be reduced ar eliminated without providing an . .. offsetting benefif .to. the employees, Even if they-are vested rights, they may be modifed if the District grovldes a comparable new, advantage: IV, Item by Item Analysis of District Options f The Handbook provides that compensation "may be n3viavYed and updated as necessary based on ~ marketplace survey data and District fnancia! condittons.° Thus, the Handbook reserved the District's right I .. , to change aspects of management compensation? ~~ In addition, the 1999 settlement agreement stated That nothing in the agreement was intended to expand or to limit, or to affect in any way, `he rights any Party had to continua, modify or eliminate any pay ~ items or benefits in the future. Set forth below Is an analysts of each item of compensation currently paid in a member's final year of employment, along with our opinion as to whether the District can: (a) prohibit the item's inclusion in the s if the employees were represented by a recognized union, the District would be obligated to meet and confer with the union before making any changes topensions ornon-pension benefits, pursuant to the Meyers-Milias-Brown Act However, there is no legal obligation fa meet and confer formally wish employees who are not represented by union, before changing compensation. Nevertheless, it would be advisable to discuss and consult with such employees in advance of making material changes. rax ~ex~ver 1iEi/2010 11:41:21 AM PAGE 13/025 Fax Server The Honorable Nick Dickson, President And Members of the District Board of Directors San Ramon Valley t=ire Protection District August i9, 2009 Page 10 calculation of "final compensation^ for purposes of calculating pension benefits; and (b) otherwise change the benefit so that the effect on a pension is reduced or otherwise mitigated, These opinions must be viewed in conjunction ttiitl~ the risks described above conceming "vested rights" Forthe l=ire Chief, who has a four year employment contract, any changes in his contractual benefits would be subject fo contractuat negotiations with him, For non-represented employees, even though such employees may not have contractually vested rights to those benefits, it may be prudent fo negotiate or consult with those employees before~changing their benefits. Finally,. it should be noted that we do not include any policy analysis as to whether It is' prudent to reduce or eliminate a particular benefit. For examp}e, while there may be no legal: requirement to pay a particular henefif or premium, it may neverthBless bs appropriate from the standpoint of the comparable existing labor market and in order.io rectuit;. attract and retain the highestqualified employees..: _ (a) Management incentive pay -Ail managers serving in a management posldon for more than one year receive this pay equal ro 5% of the premium base monthly salary (PBMS) for Fire Engineers; step 5,' • Discretion to Prevent this Pay from Counting Toward Pension: None, based on current law, • • Discretion to Alter this Pa : The District has complete authority to reduce or • eliminate this pay in its entirety, subject to contractual rights and collective _. bargaining rights described above, - (ii) Standby pay -All safety managers receive a monthly standby differential of 5% of PBMS for emergency response after hours. Discretion tc Prevent this Pa from Countln Toward Pension; None, based .;, .. on current law, • Dfscretlan to Altar this Pay: The. District has complete authority to reduce or eliminate this pay in Its eritlrety, subject to contractual rights aril collective bargaining rights described above. - (c) Vehicle Allowance - In lieu of receiving use of a District vehicle, designated employees who use their private aukomobiles for District use receive a cash allowance of $681 per month. Employees providing a hybrid vehicle receive an additional $75 per month. Employees required~to have emergency "Code 3° operating equipment on their personal vehicle receive ari additional $75 per month to offset additional insurance requirements of the Distrct. 1 • plscretion to Prevent this Pa from Counfin Toward Pension: None, based on current law. ~:: ;. to rax Server 1/6/2010 11:41:21 AM PAGE 14/025 Fax Server The Honorable Nick Dickson, President And Members of the Qistrict board of Directors San Ramon Valley Fre Protection District August 19, 2009 ' Page 11 Discretion to ql,~r this Pav, The District has complete authority to reduce or eliminate this pay in its entirety, subject to contractual rights and collective bargaining rights described above. However, the Distr~t is legally required to indemnify employees for expenses incurred as a result of discharging their work duties, and Therefore would be required to reimburse for expenses incurred white driving a vehicle far District purposes, pursuant to Labor Code § 2802, (d) Administrative Leave Pakout - exempt management employees are granted 80 hours of administrative leave annually.. Admiristratlve leave may b`e taken as paid lime off, added to vacation accrual (subject to vacatlon accrual limitations), or paid out at the end of each calendar year. In cbtront practice; management employees have been allowed to °straddle"'payouts of administrative leave so that they essentially receive two years'. worth of adminlstratiya leay_e in one calendar year, Far example, a. management employee could have received payment In January 2008 for unused administrative leave accrued in 2007 and also receive a payout In late December 200& for unused administrative leave accrued in 2008. • Discretion to Prevent this Pav from Counting Toward Pension: So long as payment for the unused administrative leave does not exceed the administrative leave that was accrued in one calendar year and does not occur at the time of separationlretirementend (as prohibited under Ventura !1), the DisMct must allow this payment to count toward pension, according to Ventura !. • Discretion to Alter this Pav: The Disfricl has complete authority to reduce or eliminate this pay in its entirety, subject to contractual rights and collective bargaining rights described above. Forexample, the Dlstrlctcauld eliminate adrninistrative.leave, or eliminate the cashout benefit (requiring employees to "use it or Inse It") or could prohibit the. practice of °straddling° payouts in one calendar ysar3 (e) Annuel Vacation Cashout and Vacation Pa out at Retirement ~ This payment item has the potential forcreating the biggest increase in final compensation, and affecting increases In pension. 40-hour employees may elect to cash out up to 80 hours of vacatlon, and 56-hour employees may elect to cash gut 112 hours of vacation each year by notifying the District by December 1 of each year. In addition, 40-hour employees may accrue vacation up b a maximum of 514 hours and 56•hour employees may accrue a maximum of up to 720 hours of vacation. Unused vacation must be paid out in cash at the employee's current rate of pay at time of separation or retirement, as required by Lobar Code § 227.3.4 3 If "administrative leave pay" is deemed °vacatlon," then it would be subject to the limltaGorv; of tabor Code Section 227.3. Sse inrra. ~ For example, a management employee aviih 30 years of service is allowed to accrue a maximum of 514 hours of vacatoon. The maximum he can accrue (none year is 257 hours (i.e., 21.42 hours per month limes 12 months 11 rax server 1/6/2010 11:41:21 AM PAGE 15/025 The Honorable Nick Dickson, President And Members of the District Board of Directors San Ramon Valley Fire Protection District August 19, 2009 . Page 1~ Fax Server i • Discretion to Prevent this Pay from Counting Toward Pension: So long as payment far the unused vacation.does not exceed the vacation that was accrued in one calendar year (as prohibited under Ventura 11), the bistrict must allow this payment f4 count toward pension, according to Venfura 1. • Discretion to Atter this Pay: The District has complete authority to reduce or eliminate vacation benefits, subject to contractual rlghks, For example, the Board can stop allowing 130 hours of vacation to be cashed out each year, can control the rataof accrual of vacation,. etc. But the l]istnct is legally,required topayout ' _ ~ -_ any acxiuediunusetl vacation, pursuant.to Labor Code § 22.3. . - (f) , . Unuaed Sick t.eave Credits Toward Retirement - 56-hour employees. accrue sick leave , credit of 12 hours per month; aQ-hour employees accrue sick leave credit at 8 hours per month. There is no "capN on accrual of sick leave credit. At the time of retirement, an employee may apply any unused sick leave toward additional service lime (i:e.; convert it to service credit which results in an increased retirement beneftt). Discretion to Prevent Conversion of Ung~gd Sick Leave to Service Credit Toward Penslan: CERI., Government Code § 31641.Ot~et seq., provides that counties may provide by ordinance that each employee shall ba credited; at retirement, with service credit far accumulated sick leave, Such service credit. . ~ - _:, . increases pension beneflts,5. The District has no dlscietlon tr7;charige,this. provision. Dtscretlon to Alter this Conversion: The plstrict has complete authority to reduce or eliminate sick leave benefits,. subject to contractual rights and. collect"nre bargaining rights described above: For example; if may place a cap on the:- . - amount afsick leave:empfoyeesmay accnie; - _.. _... V. _ Gonciusions and ~ptlon>3 Based on our review, the District has the following options with respect to modifying pension-n:lated benefits, equals 257 hours), If, In his final year, he cashes out 80 hours of vacaticn and gets a payout for a full year of unused vacation {257 hours) at time of retirement, he will receive 337 hours times his current hourly rate m his final compensation period, vrhich is all counted towards his pension, s The formula for determining 40-hour safety pension benefits is determined by multiplying 3 times years of senr[ce credit times highest y?ar ccmpensation. One hour of unused sick leave equals one hcur of service credit. 1,000 hours of unused sick leave divided by 2,000 hours (average hours won.<ed in a year) equals %, year of service credit. Thus, additional years of service credit Krill increase pensien. 12 rax Server 1/6/2010 11:41:21 AM PAGE 16/025 Fax Server I The Honorable Nick Dickson, President And Members of the District Board of Directors San Ramon Vailey Fire Protection District ~ August 19, 2009 . Page 13 (1) With respect to prospective employees, the District Is free to adapt any retirement and compensation plan it chooses. The District could lower the pension formula and/or materially restn~cture the elements ofcompensation. - ~ (2) With respect to current employees, there are a number of considerations: (a~ With respect to °termination pay,° as described above, we believe that the lump sum payouts which are net earned in a members final year should not be counted toward pension. i (h); With respect to other cash-outs and premiums earned during a member's final compensallori period, those must be included in fnal compensaf<on for pension purposes. However, the ' District could reduce or eliminate a variety of different payouts and this would have the effeof of reducing a ~ ` member's final compensation #hat counts toward pension, There is a risk of a vested rights claim, but we . < ~ believe the-risks to be relatively small if implemented correctly. (C} With respect to the pension formula itself, this cannot be changed without substitution of a comparable benefif. - Please feet free to contact either of us if you have questions. j i Very truly' yours, ~ ~ Arthur A. Hartinger - 1281914 ~. 13 r ax server 1/6/2010 11:41:21 AM- PAGE 17/025 Fax Server ~eedS~i~h Harvey l.. Lelderman Direct Phone: +1 415 659 5914 Emall: HLeidennan~resdsmith,com October 2l, 2009 CONk'iDENT1G#1. AND PRIVILEGED ATTORNEY-CLIENT COMMUNICATION ATTORN~Y'4'V~OTi1C 1SRODUCT fZeleased to the public on 10/2812009. ~0` ~- and of Retirement . Contra Costa County Employees' Retirement Asszs. _.:.. _.:.. _ . 1355 Willow Way, Suite 221. Concord;. Ct1., ,91520 ~.. , . 1Fixtal Compensation' send Retlremeint Benefits Dear Members of the Roard: Reed Smlth i.t.a 101 Second Street suite laoo San Francisco, CA 94105 +1 415 543 8700 Fax +1 415 391 8269 reedsmith.com 'You have asked us to advise the Board as to current issues affecting the retirement system's determination of the "final coarapensation" on which members' retirement benefits are calculated. Followi~~g is a summary of the outstanding issues together with our 1ega1 analysis, conclusions and zecommendations for further $oard consideration. -, SUMMARY=OF ISS>U~ES CCCFRA has a statutory obligatipn to pay the proper amount of retirerxtent benefits to each of its members and beneficiaries, as provided by law. Indeed, it "calinot fulull [its fiduciary] mandate unless it investigates applications and pays benefts only to those members who are eligible for them." A~Iclnryt•e u.Srinta Barbara Cpunty Employees' Ret: Sys.' (2001).91 Ca1,App.4th 730, 734: In order to. , discharge that obligation, it is the Board's responsibility to: deterlniz3e the proper elements that ~o into catcizlating a member's~benefit :as recognized liy the laws governing the retirement.system. As those . - ' laws evolve over time; the Board's policies must evolve with tliezi~. ~ - A CCC)/RA member's service retirement allowance is based an four factors: (1) the stahttory benefit formula applicable to that member; (2) the member's age at retirement; (3) the member's years of credited service; and (4) t11e member's "final compensation." In order to properly determine a member's f rxal compensation, the retirement system must clearly specify the elements of remt>nzration that are and are not includable in the calculation. This requires that the reporting system between CCCI;RA.and each participating employer is sufficiently precise so as to enable CCC1rRA to distinguish botrveen items of remuneration that are and are not properly included in a member's final compensation. ` NEW YORK • LONDON • HOHC HONG • CHICACA • VJA9NINO70N, 0.G. • BEUINq • PAR75 • LOS ANGeL~C9 • SAN FRANCISCO • MIILaDELPNIA • Pltt&eURGH OAKLAND • MUNICH • A9V DI'Aai • PRINCE7aY • IIORTNSRN VIRGWIA • WILn11NG70N • SIUCOtJ VaLLEY • DUBAI •CENTLRY CITY • RfC11MOND • GRE1=C@ l Fax Server 1/6/2010 11:41:21 AM PAGE 18/025 Fax Server Confidential and privileged Board of retirement October 21, 2009 page 2 ReedSmi~h CCCERA's current policies and defuutions used in determining its members' retirement allowwances were last revised over a decade ago. Since that tune, developments iz~ the law and in public employee compensation practices have evolved in important ways. In addition, recent public attention has been focused on certain employer and employee practices that have led to unexpectedly inflated retirement allowances being received by certain CCCERA members; the [nedia has labeled this "pension spiking," It is prudent at this time, then, to revisit CCCIR.A.'s policies and definitions and consider revising them in order to assiue that the systeru and its stakeholders continue to be aligned with applicable law. 'Phis letter reviews the current rules for determining a member's "final compensation," addresses some of the specific areas of concern that have been raised and makes recommendations for further Board consideration, LEGAL AND FACTUAL BACI~GROUNA Determit~,ingA Meaabea~'s Final Compensadon Under CERL Tn 1997, the California Supreme Court explained: "["I']here is a logical progression in'the statutory framework under which a [CERT.] pension is calculated. Application of section 31460 is the first step, since an item must meet its broad definition of `compensation' if it is also to fall within the narrower category of `compensation earnable' defined in section 31461 and thus form the basis for the calculation of `final compensation' on which the pension is.based pursuant to section ... 31462.1." Ventura County Deputy She~•~s' Assn v..8d. of Xet. (1997) 16 Cal.4th 483, 493-94. Tlius; in order to determine a member's final coinpensatioti the retirement system must ga through the following threestep process:' STEP ONE: The system must determine which employment remuneration and advantages properly constitute "compensation." Section 31460 pro~~des: "`Compensation' means the remuneration paid in cash out of county, or district funds, plus any amount deducted from a member's wages for participation in a deferredcompensation plan ... but does not include the monetary value of board, lodging, fuel, ` laundry or other advantages famished to a member." • This defi:ninon filters nut arty item nf'vaii~e that was not paid in cash to the member. STEP TWO: Once "compensation" is determined, the retirement system must determine how much of that "compensation" dualifies as "compensation earnable." CE1tI. Section 31461 provides: "`Compensation earnable' by a member means the average compensation as determined by the board, for the period under consideration upon the basis of the average number of days ordinarily worked b'y persons in the same grade or class of positions dtuin~ the period, and at the same rate of pay. ... Compensatipn, as defined in Section 31460, drat has been deferred shall be deemed `compensation earnable' when earned, rather than tivhen paid." • 7hi.r definition has two pr•irncrry irnpacts~ (1) it filters art compensation for overtime ~~ork, becat.ese it is t7ot bcesed on the "average number of dcrys ordinarily worked" by eornparable Fax Server 1/6/2010 11:41:21 AM PAGE 19/025 Fax Server Confidential and Privileged Board of lZetiremcnt _ ReedSml~h October 21, 2009 Page 3 , employees; and (Z) it f hers oztt compensation that was ear~~ed outside of the final compensation period, even if it ivas paid during that period STEP Ti-iRBE~ The retirement system must determine how much of "compensation earnable" qualifies as "final compensation." Section 31462:1 provides: "`Pic.al compensation' means the avez~age annual compensation eamable by a tiaember during any year elected by a member at or before the time he files an application for retirement, or, if he Fails to oleo, during the year immediately preceding his retirement." • Thas d ,. , of ninon rrteans that CC`CERA`iras~.st iazclude in f nal compensation only the amounts of ' _ "eonapensation Burnable ",that,ver~ pdaci ~r~ring: the single,; cont~,;uotts: 355=dtxy period; chO:sen,. , by the member as his or her `final compensation."period (usually the last year, ofem~layment . lvlzen'salary aria benefits are at then"r highest,)1 Distilling this three-step process, a general rule emerges: To be included in final compensation an amount must be both (a) earned by the member stud (b) paid (or payable) to the member during the member's final compensation year, and it must trot represent overtime pay. Case Zaw Interpreting CE,KI .., ; . . In the ~entut'¢"case'cited above; t1ie, California Supreme Court ruled that ~'E12S; systems had; for many ` ` years; been improperly eYCIuding matiy pay ifctas from members' final compensation.` Such items included payments in cash for bilingual premitlzn pay, uniform maintenance allowance, educational incentive pay, additional compensation for scheduled meal periods, pay in lieu of annual leave accrual, holiday-pay,. motorcycle bonus, field training off Cei bonus aad a longevity incentive: ' After Yentirrd,' tvro'cases in the.lower appellate courts addressed the question t~f whether accrued, leave that could be converted.to cash o• my upon termination should be included,in a member's final < . compensatioa Both courts' answered that questiain.in the`negative.. ` . In the 2003 case, In re netiretnent Cases (2003) 110 Ca1.App.A~th h26, the First District Court of Appeal (which reviews appeals from the Contra Costa County Superior Court) explained: "Where an employee cannot or.does not elect to receive cash in lieu of the accrued time off prior to retirement, the benefit remains ono of time rather than cash. The right to a terixtiriation pay cash-out arises only upon. retirement...; the right does not arise prior to retirement or dut7ng service." The court went on to state: "we hold That termination pay that is received upon retirement is z~ot required under C.EItL to be ' Some CCCEtZA members arc subject to the three year final compensation period under section 31~?62, in which case their "final compensation" isthe avera;c of each of those final three years. Far case of reference in this analysis, we will .refer to a one year final compensation period.. The principles discussed herein also apply to a three year final Compensation period. Fax Server 1/6/2010 11:41:21 AM PAGE 20/025 Conffdeukial and Privileged $oard of R.etiremcnt October 21, 2009 Page 4 Fax Server ~eEd~mY~.h included hi the calculation of pension benefits." Id. at 476. The court found this result clear under the statute: "This language is not ambiguous; it plainly excludes [compensation paid only at] retirement and we will not rewrite the statute." Id at 475. A year later, the appellate court for tlae Fourth District Court of Appeal (San Diego) addressed the same issue under CERL and ruled in the same way, explaining: "As In re Retirement Cases makes clear, a public employer's decision to provide cash reimbursement for unused leave, after separation fronn service,. does not alter the noneash nature ~of the leave. Such one-time post-termination payments cannot be considered part of final compensation. without creating the risk of substantial distortion. in the retirement benClits otherwise payable to employees." Saltrs.v. San Diego County Employees Retirement Assn. (20Q4) 117 Cal.App.4th 734. "Thew xs nothing it CERL which suggests the l;egislature.intended " pensions slould vary so widely. on the basis of accrued. and unused leave, rather than on the basis of age, years of service'and`salary." Id. at 740. " Sulus was consistent with the same appellate court's interpretation of the analogous law governing Ca1PERS in Hudson v. Bd. of,4dmin. (1997) 59 Ca1.App.4th 1310, 1321, where the court ruled that "[the exclusion of final settlement pay from compensation was intended to eliminate distortions caused by extraordinary increases just prior to retirement." In addition to the exclusion of "final settlement" or "terminal" pay from final compensation, Sales also noted that ,lludsof~ had excluded from final compensation payments made solely on condition that the employee retire. In Hudson, a PERS-participating city had agreed to convert non-cash benefits to cash „ salary in certain managerial .employees' f nal year of employment to encourage them to retire. with a higher }ienefit than they `would have otherwise received: The appellate court found that such . •` conversions`shouldaot be included in final compensation, to avoid the improper "spiking" of pension benefits. See, Sales, 117 Ca1.App.4th at 741. History oi',Fir~a,1 Compensation Determinatinbs by CCCERA ~ .. Following Veiattira, iii December, 1997, the CCCERA Board adapted a Policy caked; "Determining Which Pay: Items are 'Compensation' foz~ Retirement Purposes," in order to implement the court ruling: Tlie Policy itemizes the day items that would and rwould' not be included when deterrxiining a member's feral compensation. The Policy was amended a few weeks later. See Attachment A. ivleanwhile, after I/entura, litigation arose or vas threatened in most CER):. counties (including Contra Costa) over {a} several additional pay items that were not specifically addressed in I/entt~ra, and (b) whether Ventura applied to members who had already retired before the ruling. This is the litigation that ultimately resulted in the In Re Retirement case discussed above, where the claims of active and retired members and plan sponsors in CERL counties across the state were coordinated into a sxo.gle proceeding in San l;rancisco County Superior Court. The litigation involving CCCERA, the County attd CCClr12A's participating districts resulted in a court- approvedsettlement agreement in 1999 known as the 1'cndsott settlement. The treatment of most participating employers' pay codes was specified in exhibits to the settlement. See Attachment B. rax ~~rvex' L/Ei/'LUlU 11:41:21 AM PAGE 21/025 Fax Server' ConFideutial and Privileged . Board of Retirement October 21, ?009 }'age 5 ReedSmith The CCCERA Policy and the Paulson settletxtent allow for the inclusion of amounts paid at terrnination~ to the extent those ~unounts were earned (but not necessarily payable) dw•irtg the final compensation period. This treatment became inconsistent with. the Iater rulings in In Re Retirement and Sakes (discussed. above}, because under those rulings no terminal pay should be included in final corz~pensation unless it was both (a) earned and (b) payable ("cashable") during employment. Anticipating later legal developments, however, the Paulson settlement expressly states: "AlI Parties agree that any subsequent determinations by a court of competent jurisdiction that enlarge, define, narrow, or in any ~ther.:way relate to the scope of the decision of the [Ventura case] or the. items of compensation to be i~ucluded for benefit purposes under [CERLf shall have no effect ozi this Settlement or its terms:" Thus, the parties to Paulson (including CCCERA} agreEd that, even if a court laterrizlEd " that all termination cash outs should be excluded from final compensation, that ruling would not impact the class members' rights under the settletrient to have termination cash outs included if the cashed=out time was earned during the final compez~satiQn period. The Paulson litigation tivas brought by' retired CCCERA members, to increase their retirement benefits. 'Che Settlement Aereement b~! its terms only applied to those &lreadV xetiured as f September 30 1997. Active employees were also threateriulg suit at the time, and their counterparts had already filed similaz litigation in other CERL counties. ror that reason, the CCCERA Board determined that it would voluntarily apply the same terms to all members, regardless of active, retired or deferred status. As a matter of law, however, the Paulson settlement is not binding as to any member who retired aRer September 30, 1997, and the Board isnot bound by the Paulson settlement as to any such members or their beneficiaries. , ~ . ANALYSIS Final Compensgtron Properly Xncludes .llXore X'hrn Just Base Salary ,, Before addressing the areas-of concern, it is irnporfant to note that, under the binding Ventura precedent, more than.just base salary`is properly iricluded,in a`member's final compensation. Far'example, items like "management incentive pay" (additional~cash payments for managers), "vehicle allowance" (cash payments to employees ~vho use their own cars for work purposes) and "stand-by pay" (cash payments in recognition of members' availability after normal tvorkiztg hours) are properly included in the calculation of a member's final compensation under both CEI~. and the Paulson settlement. These inclusions do not constitute improper "spiking" of benefits, as has been contended in the media. Under law, the CCCER~ Board must include these items in members' final compensation for the purpose of calculating their retirement allo~u~rices. It has no discretion to da otherwise. tax server' 1/ti/Lulu 11:41:'L1 AM t~AU1; 'L'L/U'L5 F'aX server Confidential and Privileged Board of Retirement October 2l, 2009 Page b Areas of Concern "Strdddling" ReedSmit~h The timing of a member's cash out of accrued vacation or leave can sometimes be structured so that two cash outs earned in rive different fiscal years will fall within a single 365 day final compensation period. Mary employers only pernlit one cash.out per fiscal year, but even with that restriction, it maybe possible for a rraem~hcr to choose a-final compensation period that "straddles" two fiscal years' -worth of cash outs. Although both cash acts are paid during the metrAber's chosen final compensation ,period, they are not both fully earned during the final compensation period. Accordingly, at least"one of the cash eats, should be excluded from the member's ftnal,compensation (and no time should be included if if was earned befarc the menibcr's final' compensation year):z" "~ ~" Cash Cid of,4ccrued Yacution ot• Zecive Larned in Prior Years CCCERA's Policy states: "The value of accrued time, such as vacation, holiday or sick leave, that is sold back to the employer by the employee each year under a `cash-out' agreement, is includable in compensation earnable.". The exhibits to the Paulson. settlement also state that annual vacation cash out is pensionable. While this statement in the Policy is generally consistent with the Yenlura precedent, it appears incomplete because it does not expressly require the vacation time cashed out to have been earned in the final compensation period. Thus, some participating employers and members maybe reporting vacation cash out as pensionable compensation, when it does meet both the "earned" and "cashable" legal requirements. It also appeal's that: some members may have taken advantage of this l?olacy statement by cashing out one year of accrued vacation in their final year of employment and then reporting to CGCERII as pensionable compensation another year's worth of accreted vacation cash out at termination. This has the impact of including two years' worth.o£.vacation accrual in a single final compensation year. _. Althoughtioth years ofvacation accrual, were paid in the final compensation year,. by definition only one {at most) could,have been earned,in that year. Under applicable law, members should not be allowed to _ include. n~ore,than_ oiie year's worth of accrued vacation cash out in their final compensation (or no more than three years'"worth of accnied vacation cash out if t$e rnember has a three year final compensation _ period). Under some circumstances, a member may be able to achieve a higher retirement allowance through a type of "straddling" that is consistent with CERL and the Paulson settlement. This could occur when an employee is allowed to cash out in one fiscal yeax less than she may have earned during that year. For e;cample, if a member earns 160 hours of vacation each fiscal year, but is allowed to cash out only one-third of that time each fiscal year, the member could legitimately "straddle" rivo fiscal years and cash out two-thirds of her earned and accrued 160 hours ((ate S 07 houurs). lrlnder this scenario, all 107 hours of vacation cashed out would have been both earned and paid (or payable) during the final compensation period. 'f'ltus, all 107 hours would be properly included in the member's fmai compensation. ra,x 5C!'v~Y' 1/kb/'GUlU 11:41: "L1 AM PAGE Z3/025 Fax Server 1 Confidential and Privileged ,-7~~++ Board of Retiretxieltt RE',E',C~~7ITllth October 21, 2009 Page 7 Cash. Outs Upon Termination. As explained above, CCCIJRA has historically applied the terms of the Paulson settlement to all of its members even though the settlement is only binding with respect to members who were retired on or before September 30, 1997. Under the Paulson settlement, cash outs at termination are includable in final compensation to the extent the time cashed out was earned during the final compensation period. This aspect o£the Paulson settlement would be inconsistent ~vith 1'n Re Retire"meet and ,4altrs if members 4vere able fo include more cash outs in their Fnal compensation than they could have converted from time to cash in during the final;eompensation year of their employment. While the Paaslson settlement bound the Retirement Board to this practice with respect to, members who retired on or before September 30, 1997, it did not.bind the Board with respect to members who have retired after that date. Thus, for members retiring after September 30, 1997, case law indicates that cash outs payable only at termination ought not be included in final compensation. - EXA.IV,IPLE To better illustrate how these (sometimes overlapping) issues play out, below is an example of a member whose $283,958 annual retirement allowance was recently highlighted in the Contra Corta Tames. In addition to a $222,507 base salary; the employer reported to CCCERA the following compensation as _- '- , having been paid to the member in his final compensation year: • $4,906 -- "management pay" $11,p74 - "stand-by pay" ,f • $8,400 -= `.`auto allowance" • $18,810 --160 hours of administrative leave cashed out in his final compensation year • X18,838 -- 160 hours of vacation time cashed out in his final compensation year $28,121 -- 240 hours of vacation time cashed out at termination In this example, the Crst three items`were properly included in the member's final compensation under case law and the Paulson settlement. 1'he problems appear in the amounts of cashed out administrative leave and vacation time the member had included ira his pensionable compensation. Regardira the adtxunistrativefeave, it is our understanding that this member earned 80 hours of administrative leave per year and could cash out up to the same amount each year during emplo~~ment. ~Dtu'ing his final year, hotivever, he was permitted to receive (and submitted to CCCERA as additional rax server - 1/6/2010 11;41:21 AM PAGE 24/025 Fax Server ~ ~, Confidential and Privileged Board of Retirement October 21, 2009 Page 3 Reed~m~th "fmal compensation") the cash value of 160 hours' worth of administrative leave (by "straddling" two fiscal years with his final compensation year.) This means that he had 30 hours of leave cash oat included in his final compensation that at a minimum .vas not earned during his final compensation year. Thus, half o.f the administrative leave figure may have been improperly included in his final compensation, resulting in excess final compensation of $9,40x. Regarding the vacation cash outs, it Is our understanding that this member earned 240 hours of vacation per year, but he was only allowed to cash out a maximum of 80 hours each year.. He was also permitted to cash out at least 514 hours of accrued vacation at the time o:f his termination. By engaging in"lawful straddling" (see footnote 2 above) this member would have been able cash out up to 160 hours of accnied vacation that would have been bath earned and paid (or payable) in cash during his final ...compensation period. That amount is properly included in his final compensation.: However, the addition 240 hours above and beyond that amount was not permitted to be included. Including this .` overage resulted ixi excess final compensation of $2.8,12L In the above example, the member's final compensation appears to have been overstated by at least $37,526. With 30.27 years of service credit, his annual retirement benefit may be overstated by approximately $34,000 per year, phis compounding COLA increases on that arxiount, for the rest of his life (presumably another 20 to 30 years). "Thus, we can See how just one example of what the press labels "pension spiking" (albeit an extreme case) could result in a benefit cost approaching a million dollars over time. CONCX~USxON AND RECOMMENDATIONS. ~ : , .. .: ., .. Marry items of remuneration that members arc paid in addition fo theirbase salaries are properly included in calculating theiz~ final compensation. Phis is not "spiking." The word "spiking" should be reserved for the purposeful manipulation of a member's final compensation in order to increase a retirement allowance beyond what the law allows. . _. ',::.,It appears thaE CCCERA's,.Policy and. inconsistencies izi the, reporting systems between CCCERA and some of ifs participating eriiployers maybe eziabling azx overstatement of pensionable compensation by same members of the system. ,at would be prudent riow to consider appropriate adjusttnents to CCCERA's policies arid•practices in order to avoid potentially substantial future unfunded costs to the system, its participating employers, and ultimately, the county's taxpayers. We recommend that the Board proceed as follotivs: 1. Research and evaluate selected employer pay and reporting practices to determine whether and to what extent the overst~~ttcment of final compensation may be occurring in the retirement system. 2. Determine whether and to what extent employer and employee caiitributions have been collected on elements of compensation that are not properly includable in f nal compensation. 3. Deternine what changes iri CCC~RA's policies and practices, if any, tivould be appropriate in order tq bring the system into compliance with currently applicable law. rax ~Crv~r 1/b/2U1U 11:41:21 AM PAGE 25/025 - Fax Server .~ Confidentisil And Privileged Board of Retirement De~~~~~ October 21, 2009 1` Page 9 Central Contra Costa Sanitary Dis#rict January 4, Q 1 T~. Ht~NABC.E B~JARI~ F DIRET~RS 1=t~M. JAMES M, I~EI_LY, CEN~~AI_ MANAGER ~ ~;. ~~~ SUBJE~T~ +~~~ERA BENEFIT STATEMENT BROCHURE Thy tta~hd brochure is send t~ ail on~ra cyst un~ Ens ~~ ~ I~irer~t Asocia~i~ y Y ~~I~A~ r~~mbar ea+h yeah ~this~ one is i~t~m ~UO~ . 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Y f 7 { ~ .~ ~' `< i \ ,.! ~ k~o>a~:l' i ~.,:x ~.,>/ W E ~ k~~ t..:l a : 1,..~ f ~ >,.,/' 1. 6 ;l ~~'~ .,:.h~ ~~+~s x "~ "` '"`~ h :r's YS nt.:_^v 1 "'~ ~ M.~ y, t ~.; ~ ~ ~, :_.{ ;:.C ~ ~ i ~! ~ ~~ ~~, g~+S . ` l..u ~ .~J,t •:) ~r...l ~ ~.; !~ ~g ~: ~ \ ~~ ~ : .~+R ~ ~ .;~F iF +^`.~5. z „tea { ~~ ''~.d ~i1?'J ''~~ ~ ~ 'E ~ ( ~ ~ ,~: '~ y. ~, a~.:l £+...~~~'~ 5..,+S.~ak 1~"' T`~ ~.,F #...I ~t,': fY^i ~~.o £ }~S'. t ~~~~ ~~, ...~ a...t.,l e/ ~; .J ,.i' ~.~. .., a .. , ~.5 P k .~. i t+'^4 >'' ..+y ::v^c i/M .~'. y. ..,;,w '~'i. ,t. q ' i ,S 1. $ : ~, j:~~. t : t ..~ ~ f t ~~~,~'~ } .. ~?ii'~ ~l c d'?l..:o- ~.. ?,,,;I Tf~f # k~ hs+~~ '.>rt %.~k ~ ~` « t ~ 3:5i1w :. r•'a::, Er^~'Yf ~'~ ~ ~•^h ~' Y+~~ ~„ l 1.. ~..~,My..~++,.~+,p ..kf~~q~ t~',.~ T~D`5> .i ~' #n't (t""R.~''~3<>'w? ;d'j~ ~ ~~ .;.:r~ ~,.~{ ..ya ~;k"S ~ ~.'`~y+~.ti4 4^h ~Y ~" )...Y".'~. :;.~+.¢ y1. fv A rt: Y'^h <N S,fY`\ ~P "v ~, ~..,tsq,.:r~/ t~.1~.pia~a`~ i.~ i'•'..~i ,i F~,r+E£ # k ~+,,,~rok >~ ~r3~ ;1 f'aJ §~J' si r''l,..id it,,,,tt.d~ ~~..~ ',.di £¢ Y 6~;,/£Ct~~~~\t£ z#~t~3,.~Oz~ i~~ , 3 ~..~t°~>~~3J rs>.~s,~.,t~ :s~s S`a~S3~./~ ,p~ r t k f ~i'f a~1 s"5£ ~' ~ F"4,, -~ _.. ,-~ p. ,.yfzk ~ IQ's. zF~.Y{ +e~d.,~w,, yv4~n ~q, +b*. ¢ i~t X ¢a 9'$3y'c z . v+^t. a,~ gbz:^k ~.: ~~ ~..,~} t'} ;4,J}~ +.~i~# ~~~a ~.»+t..J~.. ~,.di`'..rr~~de ~ ~...df .1 ~..d;c+..li~ i i.~,d'~1~~ <'J~.:.t~ ec ~f ~i~. z3 _Y~ Y,.,F.>~~»++ft ~~ ~ i~:+t i~ Your Estimated benefits at itetirement as of December 31, 2004 E ti~at r ~a~d ors fi~~ assume t~r~~ c s p You chose the [~nmod~ied Retirement Option,.: as described in your Handbook,. You will meet all eligibility requirements at the projected retirement ages, You will work continuously at your current employment and membership status; Your aWerage monthly compensation rate, $13,555.88, remains unchanged until the retirement age shown; .There are no changes the Plan or in tl~e law bet~een now and the ales indicated. The ~n~fits Home S-t-r-e-t-c-h Accruals and Terminal Pay pan improve your financial future: Before you use (hose vacation, sick leave and floating holidays you've earned, consider how these accruals may influence your future favorable cash flow. Depending on your employer, union contract, and employment position, you may be able to add substantially to your pension, by taming a portion of these accruals (along with other terrninal pay items} into a higher retirement benefit. 'the eha elo~~ illustrates the dirference to Monthly benefits these additional ea~~in~s rnigl~t provide. ~. • • # 0 ~~~st dears ~~' age at ~'at~r ~~~~~er~i~,re R.eirt~e~it ~et~~~erne~~ ~c~ l~•~ ~Iie~ c~n~~ly erv~ce F~tc~t~r~~` ~en~t ~~a~ P~C1Ve Ser~1~e cre~~t ~ r~aCe th~fn one tier, ~ separate. aiC~lE~t~an lS ~a~e ~C~r e ~ tier al s~'i~vl~~?, since retirement age ~~€aators' are different ~- each r~en~b rship categaryr ease are ants are c~dde~ together ~ make ya~r monthly benefit, Far ~xamp~e, new T~ r 3 rrfembers termer Tier ~ `~em~ers wha were mandated rota bier 3 die to legislatic~n~ and those m tubers wha previa~sly elect Tier ~, wl~i lave service ~n both tiers, ~n~ess they ahaase ~o convert c~~~ of tr it retirement ~ervice credit to bier nhanc~d benefit factors ~~°~~ at age ~ ~~r t~enerai members, 3°~~ at age 5g tc~r Safety e~bers~ were adopted' ay the cc~c~~t~ Sadr bf Suervlsers in late 2Q~2 these faders ara dvdi~abie fry C~~A, ar on our website, wvv~cccerq,prC~, in the E~~enefts ~alcul~tor" areal At your actual time ofi reflrrnr~~, y~aur ~eni~n wild b aa~la~~1'~ ase ~n tha pr~~r~fie k~enei structure fqr your service in the apficdbl~ tier. o-r Pier 1 ~n Fier ~ ~r~playees i~ me~nbershi ~rio~ t ctaber 1 2Q~; in the avertt your oid benefit formuia resulted in higher ~ene~it than tie ne~v enhanced ..benefit formula, you wlii receive the ald, higher benefit. i 0 0 ~'' c~'rs ~ct~ rc~u ~~ ~n~~v~~r~~ c~c~~~rrselin sess~o~s tc ~l ya~u ~n~ke i~r~~e~.~ p~~ent ~ecis~ons act~t yc~trr retir~~~t benef~~s ~h~ rc~~~~ ~ctu~s~~i~ ~c~at ~d~•es~s in~~i~~ia canons b~ prov~~ng persc~na~ bene~i~ estimates, but a~s~ ~by ans~reri~ ~. va~~ a~w qu~st~~~ that . day touch can ~uur oti~vn r~teres~s. ncividua co~sel~n session are acs availa~-le b appo~nt~lent. Contact the Retirement Office: ~L~/[\rt~~~rllt~ V~~V1r JLCt~ Gll~ [~1~~'rCltdtl~~~ tail (F;[~~.7~~~1it1 tl~l~ ~~~~J#~~t11t~J V1 J~Cttlt. tirtd~~~~~1~~1~wJ Ct~~~l~l.~Gt~1r~~~~ ( tl~'.~~l~ll~~~ bet~`~~tt~ .~~, anc ~.ln.s '~~or~ci~~y rhrc~rr~~~ ~ri~~~y. l~l~~crs~ ttc~t~. ~ ' ` S~ eta Ott ~~a~~~~t~~r~~~~~t ~t•r~~}tcliac~~ ~~~ ~~tis ~~~'i~~c' r~ ~5~trr~~~t~tc~tt~ ~~.~tt,~~~ ~~E~ ttt~~~~c~ ~~ ~~~~~•~~~~~ . ~~se t~~e ~~~-~~~~~~t•~~~~~ ~a~ t~~ ~~~ ~~.~t ~~~~~ t ~~~~~~~; to ~~. ~~li ~~~ i~etie~~~er~t C~~~~ce ~cr ail ether ir~~art~~t~n • ~~,~r ct~ ~,~T~ . 925.646.571 ~~ ~~,, ~:. 4. i ~, ~~rr'£V~T~~s„r l.~~ .~V;r~d E ~E :~§ ~%~'~.J~.+'~,r ~'uf~3~f !~ x k ~~ ~ "~ E f !k. 4 , .{ f ti v~ enerai Tier l members hired before ~uiy ~ ,198, or by part~c~pat~r~c~ employers ~~~ho did not adapt Tier G ~n Jul 198Q, ~~~~~~ general Tcer t and members who will retire bet~,~een tl"~e ages of ~~ and b~f~ years of ~~ ~ a e aid who havo ten car more ears of eli ible service credit4 The new °r~ af' 5 ~~ y ~ A~ ret~rerrent age factor** is used to calculate your benefit until ale b2~/~, Af#er tha# c~c~ex the factor reverts to the original Tier l , non.enhanced rate, which assures you the H~~ hi hest benefit at'retirem~ent, members hind after August ~,19~~ Tier way ellr~inated cr future serviced in ~~ and those hired before august ~ , C~Ctaber as far active n~embers~ hest. ~ t ~ 1950, whc~ elected transfer to ~aun~y and ~~s#r~ef T~pr members were the Tier ~ Plans transferred ~ Tier ~~~ ~~~~ example, ~A members adopted the enhanced Tier 3 was origlnal~ an elective benefit s~ruere as of 2(lg~~ CC Mosquito ~IBR t~T ~~ Choice fbr General Tler ~ members.. remains 1n Tier, 2,) who had ~ years of eligible service, Tier 3 and 3E service time earns a higher As of ~a2, most employees retlrernent benefit because the ** is a higher entering the retirement system will retirement age factor be Tier ~, unless they are Safety percentage, See below and page 3 of personnel, this staterr~ent for more information, ~~ ~~ Safety members with 10 or more years of continuing service, who retire on or after N~ANCBt~ age 5g, will receive pensions calculated with the enhanced benefit factor ~S~~o at 5fl~, . ~~ ate rr~ernbers with 1 ~ or more years of continuing service, whp retire on or diter age ~~, wi#1 receive pensi~r~~ calculated with .the 2°~~ at ~ r~tire~en age factor. (Sams Safety employers mdy not have adopted enhanced benefit farr~ulas far their A ~~ employees ~~ What is a refiirernen~ age factor? c~~ ~-~;tir~t~~~nt 'actor ~s tie ~~ren#~~~~ ~~~~~e~s~d ~~ d.~c~r~l fc~ ~anat~~ b'~ ~~~t s~~~t anc~ ~c~u~r~:~~i c~ir cr~~~a~r, that is mutpli~;~ car ~~e ~~~ c~t~rs cf sc~~~cc tc e~~c~~ate your bc~~~: ~~~~~~~le. 3`'~~ ~t l ~n~~ns `c~~ retire a# .~ ~~ yc~rr ~ea~l~~ ~~~~ ~e c~c~~~atcc~ cis~r~ ~''~~a, ,. County Employees please note: ~~~ ene~t st~t~r~l~~~ ~-ct~~cfs ~~~~~~ ~~~~r~t~yi~~~tir}c~~ rra~r~~ ~~ ~?3~ 1~~ ~~~~~~rci. er~~~ce rc~~~~5~s cc~~~~~I~t~~ ~ ~~f , f ~3~ ~2~~ i~~cr~~~l i ~~~~~ ~tarc~~~~t. A ! ~` `~.. . • ~~y `~~ s ' ~ ~..~- i • a ~, ~, .~ ~: ~ `~° ~, ~. r~ ~ ~. Y .. ~1a~c ~ co of the ~t~~tc~ncr~ ~t7~ s~ o~~ hen arc ~ error ~~tr~~~i17I~~n ~~~c c~at~~ l~l t~tlt'Stlol~, ~°~'~'ie .~~t~re~nen~ Cif ~~ rl~eS tt~t ~in~ve Co~leS ~~'~'~-u~ ~,~~~, '~te~,} . You can use the s ace be~o to ~ fain our cc~nccrns or to cornet ~~~orrnaton. ~ ~ Y fiend these co~~es and dour questonsto tie ct~rent +~~cc, ~~~`~ c~hc~~t ~ i~ per~soncrl in~or~na~~o re~cires spe~ic~l4 f~, ~~~~ ~~~~~ s~~~c~ ~ tc~ ~~~~~,,~ ,~ . F'or vericat~on ur os+~s lease si ~ and d~fi~ our r+~ ue~t~ ~' • Fold ~, ~ • , a Y + ~ ` o ~ sta ~~ cop~~e~ ~nszde t~~ ~-a ~~1~~. t~ ~`~.~ a.d~~~s a ~~~: ou~s~d~. Ford the flap with your printed ~d~r~ss ~irs~~ o r+~~~ ~dd~~~ daes~~ shove, ~'~ the side ~~s c~Tl~-~~, J~ .Don't ft~r et to ut n a ~ o stamp... «,~, _ .1 ~~~7 - i)~i ~(~i I~e~e~nber ~~}, ~~~ Tc~ ~.ll ~ntere~ted ~'~~; ~~.~} B~~rd: c~'~'rust~es rneeti~~ +~ Ja~:uat l ~ ~~~ ill icl~~e discussion on a subject that ~~,~ be ~~"i~tere~t to alb merners and ~.pl~~er~ o~f ~e s~~ci~~i~r dsc~ssio~ aftl~e infa~rm~~.cin and re~edmendatic~ns p~esente in the Legal inion Leger from SCE,. ~zd~cl~r~ +aunscl to The Board ~~'~.etirement. ~~~ letter ec~ncerns Final Camp~ensatlo~ aa~d Retirement Benefits, sp~eif pally, ~hioh elements are considered in "Final ompe~satzon" calculations, The formation ~~ of Interest to man s~stern n~embers~ x.11 part~cs ire invited to attend. Please be advised ~t na action mill be ta.~en b~ the. Board a~` ~.etircment ~~; this meeting. however, this .~.~eting is an impor~;an.~ part off' e process in detern~i~in ~vh.e~ther m~d~hcat~~ns may be mado m ~e fut~xe. T`h~ c~~te fir the meetig is ~londa~, Ja~a~~ry 1 1, ~~~~}, at ~ a,n~, and l~ he held at e Concord ~:Cilton, l ~~~ diamond ~lv~.., t~nc~r~., +~A. 'e invite tau to attend this * ~ 9 meetln~ anal le~~n ~cr~ ~.hout this cri~c~:l sub~~ct, ~cer~l~ ~. F f F ~ar~l~n Lce om ChiefE~ecutive c~~~ccr f ~~~~~~ .Dece~n~er 3 ~, ~Cl~~ Ta .~.~ interested ~"ares: ~EA.'s' ward ~.f ~ru~tees meeti~~ tin Janua~ ~ 3, ~~l 1 a ~lI inclct~e ~:~sc~s~an and ~ass~~bie ~ctia~ are a subjee~ that may b~ t~~`inter~st t ail mem~er~ aid e~~layer a~`~e ~ssca~iali~n: ~.e ~eeis~c~n ~y tie +~E.~.'s ~aar~. ~~' ~'~.stees to depaci~ assets and liabilities ~y em.~lQyer ~~en ealc~la~tin un~u~nd~e~ liabilities and c~~.tri~ution rues far ~~E~.A n~e~ber~ and em~Ivyers. e~al ~a, C~~ER~'s Aett~ary, will present ~.e results of the depc~c~ling o~ assets and liabilities and the paten~al effect an cantrib~utian rates, aswell ~~ ~raviding edueati~nal present tan a~ tb.e 41 ~~~} 1in~its~ ~'.~~ ~.etirement ~aaard ~d~ministers #~e end for the bereft a~'all ~ne~:ber ~nps ~'r~stees roust vc~eil~ :~ merits t~~' alb ~al~cie~, plus as~~ss e e'ec~ eye rn~nda~es a~ have + active, retired ~nc~ err}~la~y~r ~~m~ers~ A ~alar~ced au~lc~c~l{ is imperative, ~l mem~e~s are vitally rn~artant t~ system s~stainability. e i~~v~ite ~r~u tt~ att~~d this eetin~, ask questions and ~e~ more about this critical. subject, ~~aril~~n Leeotn ef~:~ec~tiv ~~er ~~L,'s1 Central Contra Costa Sanitary District December 30, 2009 T0: Board of Directors VIA: James M. Kelly, General Manager FROM: Randall M. Mus raves Director of Administration ~' 9 Cathryn Freitas, Human Resources Manager ---' SUBJECT: CCCERA Retirement Program and Benefits At the December 17, 2009 Board meeting information regarding the retirement program ranging from a one page bullet listing if information and issues to the history of the District's involvement with CCCERA was requested. Since the December 1l, 2009 meeting, a memo advising the Board regarding Mr. Borenstein's questions and contacts with the District has been distributed and Mr. Borenstein's newspaper article has been published. Given the importance of this issue, staff has prepared a one page summary of the issues and facts around spiking and terminal pay. In addition, staff is providing a summary of the issues with legal or contractual implications, a summary of vacation and sick leave benefits, a list of retirees for the past five years displaying the impact of the enhancements or spiking, a detail listing of pay items that are included in the final year compensation calculation (base pay), the history of the District's involvement with CCCERA, the news article written by Mr. Daniel Borestein, the memo dated December 18, 2009 "Dan Borenstein v. Public Pensions", and the legal opinion to the CCCERA Board regarding Final Compensation and Retirement Benefits. This packet of information is large, however, we believe that the need for full disclosure, the public's review, employee's concerns, and the complexity of the. retirement compensation calculation warrants the amount of paper and information. A Board meeting with Closed Session has been scheduled for January 6, 2010 at 3:00 p.m. for the Board. This material has been prepared to assist in the understanding of the issues and options the Board will consider. cc: D. Clinton, Esq. RETIREMENT FINAL YEAR COMPENSATION AND SPIKING SUMMARY Issue The Contra Costa Times has raised issues with the spiking of the final year compensation for retirement benefits. A memo from the CCCERA Attorney has questioned the legal requirement to include the straddling of vacation hours (160 hours}, and has suggested CCCERA has erred in including the vacation pay out. On January 11, 2010 the CCCERA Board will begin public meetings regarding the advisability and legality of including the straddling of vacation pay out in the calculation of the employee's final year of compensation. There are two areas for the District Board's consideration regarding spiking; accumulated vacation and sick leave. Vacation Upon termination the employee is paid all accumulated vacation. Of that, up to one year . accrued vacation is counted in the final year compensation for retirement. The District, per MOU, allows an employee tosell-back up to 160 hours of accumulated vacation per calendar year. Employees are allowed, and are informed by CCCERA, on increasing the. employee's final year compensation by selling back two 160 hours payments within the final year for retirement calculation, referred to as straddling by Mr. Borenstein. Sick Leave Upon termination the employee is paid a percent of accumulated sick leave based upon their Tier and time with the District. The employee is also credited longevity (service time} for the full accumulated sick leave. This practice of payment for accumulated sick leave and credit for service time, double counting by Mr. Borenstein, is unique to the District regarding CCCERA employers. All CCCERA employers credit accumulated sick leave as service time, based upon their MOU, at retirement. Holiday Compensation Employees can. accumulate up to 104 hours of holiday compensation which is paid off at termination or retirement. The payment is included in the final year retirement compensation. Other Pay Types Used for CCCERA Calculation Attached is a listing of all pay types comprising "base pay" subject to CCCERA's calculation of final year compensation. The second page of the list indicates the pay types that were added due to the Ventura settlement. The pay types used for the final year compensation calculation were directed by CCCERA. p1 cQ c~ m cc' ~' cQ 0 a~ 0 ~, m 0 0 ~' -a _ ~ ~ ~ ~ (~ .-' ~ ~ ~ ~' (D ~ ~ Al ~ _ ~' n s ~ ~ D C7 ~ ~ o ~ 2 ~ ~ ~ ~ o ~ ~_: ~' ~ ~ ~ - ~ ~ ~ ~' ~• --i ~ ~ -~ ~ sv I ~ ~ ~~ ~~ ' ~ ~ m cn ~ . 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Ila~ation sfiraddling allows an addifi'ional 1~0 hours added to the final year.. E faoa~ion cash out upo, r~ tern~inafiion is added to ~e final year, Tier l~ employees (hired prior to Ida ~ "~ ~5~ accumulate ~ o hours der anfih ~ , a ~ . Tier l accumulation is as follows: . Years of `la~afiio ~ lax Rcc~mulate . t er~rce ~llowar~ce and D~fierred . 0-~ years ~ days ~o days ~-1 o years '~~ days . 3~ days _ o-~ ~ years days , 34 days a 5-2o years ~o days ~ 4o ays , , ~ 0-25 years - ~5-days - ~o days 25-~o years ~ 3o days ~ ~ ~o days . ~0 & aver ~ . ~~ days„ ~~ days ' 3 ~ Fier li en~ploye~s ~h~red after fay ~ ~ ~~ acGUn~~late~ ~ ~ days per years ~~ ~"~er ll ' accumulation is as tollo. , s ,.. a • R Years o~ ~acati~n I'~a~ Aecur~ulated ervGB Allowance and ~etorred .; , o-~ years ~ ~ Q days ~+~-days -5 years 5 days ~ 3o days . "1 ~ days -~ o years ~ days Y 4-1 ~ yours ~ ~ da~rs r 34 days ' ' ~ ~-zo years ~o days ~o days. ~`0-25 years ~~ ~ days ~ 5o days ~~ ~ V.~er 4 ~o gays ~ ~o 'days ~~ ~ ' r. ~a~at~an pay oufi for ore year cannot e~cceed~ ~ ~0 hours. . ~ ? Straddling of vacation ~a auk is allowed b Y fihe ~lstriet and ~~CERA for final . ~ year compensation. - ~ . ., ,. ~ . See ~p~ages 14~ ~ ~ of fine 11~~C l~IQ~U end pages ~-~ of General 'l~lotJ. ~. A. ,?' d.. ,. i ~w e ~~ 4 ... 3 :1 i S.. .. ~ 4 r ;., ae . ,. ~ :, - , ~~ok 'Leap Sick have pay cut up to I~m'rts farrier ar bier II employees:, s ~lnused aacu~ulated sick leave is credi#od as longevity upon retiren~:ent. iahc leave accumulation has no maximurn limit. ~, s ~`ier l employees hired riar to ll~la ~~ ~ ~g85} accur~ulatel5 days por year ~ p y . Fier I i~ paid ~5a/a of total accumulated at re~ire~m~ent e~ termir~~tion. s il Tier II amplayees ~hi~r~d after gay ~ ~ ~9~5} accumulate 12 days per yeas, Fier Il ~s paid as fallav~rs~ ~ ~ a dears of ~ ~'ay off credit ~ ~'ay off Credit . service . ~ A at Terr~inator~ ~ ~ at Retirement .. w~ years . o p~rcant ~ ~ o ~ercenf 5-~o years... 5 percent ~~ pe cent -25 years ~ a percent ~~ percenf . 5 & over ~~ percent ~o porcenf .. ~~ll unused accumulated sick leavo~ at the time of retire~rner~t is credited as Ian~gevity upon retiremen~"~ `phis is referred to as "double-counting". Please note that this practice was established to neourage employees to`rninim~e use of sick leave, t - ~ A . fee-pages 1 ~ ~ ~ of the >5~~ ~..~ ~ nd~ pages ~9 ~~ tha General MC-~ . ~~he~ ~a T ~ ~a~d. fc~r ~~~~~ ~~~ou~a~ar~ _. 'bight ~~.~°,~~~ ar~d sv ing ~a.o°~a~ shift~differ~ntials ~~ but t~f Class gay -- l~llinir~uim. ~f one salary step after tu~a~ creeks ,~ standby pay . l~ledical V~aiver ~- Currontl~ a~ ~~~ per month. . Cafeteria Plan has ~ . r ~lanagern~nt 2 per anth ~~lC - 1 ~Q per month . , . ~ , Genera Ei"np~loyees ~~ per month scheduled ~#~olday day -~ dditi~ona,~ ~ .~ of norrr~a# pay ~3 holidays a~ ~ times}.: rn ~ 4 g ,. ' e _ t _ l~Reti~err~~ntl~pi~kincg Mer~~o to hoard 1 ~ ~~ ~~.doc CCCSD RETIREE FINAL YEAR OF PAY JAN 2005 -DEC 2009 WITH ENHANCEMENTS c (D v n I ~i N ro m ~ ~ ~ fv N fJ N N N N N N N N N N N N N fJ N N N N N N N N N N m =~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 tp tj ~ v O ~ ~ OW ~ O O ~ O J O ~ ~ O ~ ~ O ~ ~ O O v ~ O ~ ~ rp Al ~ ~ .~-t N W ~+ N W N W N N W N N N tU N W W W N N W W N N D ~ O 07 ~A O Op O W Ui to 1 N W O W ~ -!`. -... 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C~ ~ d' d• N 00 h 00 N O ~+- t~7 OO tn N d1 I~ 0 O N O O a0 r N O t1~ p = 00 00 07 00 07 00 0) OO CA CO C~ O 07 N •~- IQ OD d' O (~ 00 d' C~ r d' f~ C7 ' O 3 ~ •M~ pj ln h• ln d' Lp d' 0) 0) LO d' 0) I~ O ~- C1~ C11 CV O r O N CV f`r d r V~ p C~ ~•~ T T r T T r r r r T T T r T T T T r N t~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 O 0 O 0 O ~ N 0 O 0 0 0 0 0 0 0 0 0 0. 0 0 0 0 ~7 0 0 0 0 0 L 0 0 0 0 0 0 tO © 0 0 0 0 0 0 0 00 tQ t0 0 0 0 0 (O t'~ N N O O C ~ N N d• N N N N N N N N N N N CU I.t) r r N N N N N d' C~ r ~O d• p p C4 CrJ r C9 C4 0) 0) C~7 07 07 0) 0) Q~ f9 r N 07 N 07 0) 0) 0) 0) ~- 0) ~- +• ,~ U N ~ N 0 O r r C7 x 00 00 0) (O d7 0 lt~ N O tD O d' N O) OD CO Cp *- O N r ~- 0 0 0) 0) 0) t,n O O tD ~' N ~4 tt7 00 07 (O N tS~ O f`~ O r h~ 00 0) 0) C7 tY7 d' O f`~ N 0) 0) '~ 0) N OO tOi N Q~ O © C~ C~ CT1 t~ O .00 ~ f`~ tCi O) d' OO N O~ (~ O I~ CQ C N (O r f,~l r O O t~ C4 ~ C~ tT1 CO 0 tl~ 0 N d' ~- r 00 N (~ 0) O Cn ~ N QO f~ {0 d' 0 r (O O d• N d' C4 C7 d' 0)' O C~ C~ O C~ OO OO r N r r O tO d• CO 00 II. (~ ~ dw 0) d' C~ tA d• tn r aO r r r ~ 0 Iln 0 C~? 0 00 0 x0 O) 0) (77 t0 r '~ O 0) O tn fA 0) fA I~ 00 N 0) ~ CO 01 CO 00 I~`• 0O I~'~ 0) I~ CD I~ to I~ ('~ ~.Q r (D aD lt~ C p N N r r r r T T T r ~U c L Q~ • +r N N L ~ p C = L ~ N V ~ (~ _ C Q1 p ~' p p N •C N .Q C S ~ .p L ~ •> C ) N C C N C C N 'p ~ ~ ~ t7' (~ ~ 0 .O ~ •> ~ N .Q C S ~ p ~ N O ~ X • 0 L U ` ' ~ t~ 0 U •- O .C - N L ._ p ~ 0~ N ~., N Q7 ~ ~ Q? 0~ 0 p ._ d? .C p p u. U ~ ~ ~ ~ S CL Q (3 (,3 C~ ~ 2 ~ cA Y ~1 00 ~ ~ 0 ~ ~ ~ 1- J ft~ ~. ~ c~ a~ to - n. ~ ~ N ~ p Cft~ (~ O .D N ~ .C ~ 0) N ._ fU .Q 1 •~ N '= V C ~ ~ C C ~ O N C ~ OO Y ~ 2 00 ~ 2 U u. L~ dC tn = Cfl U (~ U t~ C'3 N 2 tA 00 0~ ~ Y [n W ~ O O N rn ~ rn r• 0~ h rn O 0 t0 rn ~ 0 ~ ~ 00 r• m ~ h 0 (~ ~ N OD c0 0 0 0 0 0 0 0 0 0 0. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N. N N N N N N N N N N N N N N N N N N N N N ~ r ''` r '` (p r O0 00 00 0 0D N j~ 00 (p ~ r C0 0) 00 0D O OO d~ IS? 00 ~- 0 0 1`~ tf1 ~ ~-• .. oO 0 r ~ 0 T N ., N cO ~.. C~ r ~.. N r ^,. O) r ~.. 0) (V ~. 0) r ~. d' ~ d' N N ~, O `" d' 07 ~.. CO r ~.. f~ r r, 00 r ~.. r r ~. I~ r ~, C~ r ~. N - ~ ~ ' ~ N • C,~~ ` ~ 00 (~ T N ~ C7 ( 0 (~ d C7 0) ~ rn (~ N (~ O N h C4 O C~ O (~ o~ C9 rn C~ r (ti's O C~ O (~ O N N ~- O (~ O (~ h N T- C~ to M ~ N c~ CrJ c0 (~ T- d' O d' t~ (~ ao T O T oo N h O G~ O o o o o o ci o o o o o o o o o © o o o o o o o o o o © © o ~ c a~ a~ 1 U -• L •~ /Q~' V / ~. h 00 DO C9 M O O d' In r (0 h r CO h O d' N N d' N N C9 CC1 Cfl LO CO (0 d' I.n O d' (37 u? (~ ~ ~ O N C~ T- a0 h ~ N N d' O O h r Oq d' r r r In CO ~ ~j -~; (~j r ~ 00 0rj r r- C9 d' tD t~'} ~- tll N O d' N O t~ N N d' t~ CA (U OO N to N (n t0 0 0 07 0 r tf) ~- d' r ,- d' C4 t0 0 C0 1`- r l`~ OD f7 0 h d' C~ d' t!3 N- ~ r 00 C9 h h d' t0 d' h l,n ltd C7 ti) O o0 O N N d' N O h O O r O r I,n C7 ~ ='N r N C7 01 CrJ O C~ C+1 d' ~ (fl t0 O aD 00 r h N OQ t"~ lA r d' ~ OD O h C4 00 C C N C4 1.f) CU ~ t~ h (0 (0 (O I.f) Lt~ d' (0 t!) ln ln l.~ d' (~ lf~ d' ~ d' C4 r r CY3 N r ~ (~ h C~ ,- t0 01 O d' O CO ~ 00 N t'9 d' ~ N ,- 00 , d' d0 O ~ O N h 00 O C~ (~ CO h h h CO h d} (~ r h h h 0 to h d' O d' CD d' T O t~ N N O d7 oa 00 (0 0 0 to d' C~ O h d' T- h h 0 CO -.{') Cfi a O t0 d' O ~ d' O r ~ N O h ?'~ ~ N O d' 01 (~ C4 (~7 O O O O O d' d' to C9 O O N d' O d' O O O h ~ O ~ h O to h N CO OD d' O d' Cr1 C9 N O O N C~ h (~ ~ h -.t) h. N C0 t{3 N ~ h _ • ~ d' C~ I.n h tD h 00 h h h C4 CO C~ h t0 to tD I.t) N ~ O ~fi O d' t'~ r r C4 T 0 ~ 3.i. ,- CI' c~ In h N O T oo t0 N d' ~+- (~ C4 t0 h Q d' O N d' d'~ C~ N (~? t0 d' O O r O h T r h o0 t0 to h B ~- O Ln O 1.~ u7 CO h N d' O N O m O (~ 47 N O CO h 00 d' r h to r CrJ N O N 00 0~ O N t3~ C~ r O r N ~ CU d' h C~ ~ N Cr? OD N h O h N l~ r N Cf7 O N O N N *- N 'd' O 00 r 00 O C4 d' d' (0 O ~ O d' N (0 ~ In -.f) C4 r C~ h t0 CO to 00 d' CD r O Cr? O h CO r- r W O ~ O O~ h d' Ln C~ ln ~- o0 ~ d7 Cfl N ~c7 ~.A r tO N O O N '~f' 00 ~ (A tA ,- ,- c37 0 ~ ~ c~ d' (D O~ h rn 0 00 a0 o0 1'r l`~ d' d'~ t~O CO h f'~ C~1 u7 h N l`~ ~.c'7 d' N N r4 r r Q O W O O C~ r O Q O N O O O N O O D O O CU O 00 O N O N O 'd' O O O 00 h l?7 0 CO ('~ r 0 C4 0 CO 0 O 0 O 0 00 0 a 0 d' 1 `~ 01 O N C4 r- h l~ O m r (D h O 0 O 0 O 0 a r N O 0 I.f) +- d N CO O C7 O h N d' O N t.L) ~ d' tO 00 r Q N O h 0 O 0 C7 T- h O d' t~ h d' (~ d' 00 ~+- T- t~ ~. N o N o N o N o N a N o N o N o f.1f o N o N 0 r o r o N o N o r o N a r o N o N o N o r o N 0 N 0 N 0 r 0 N 0 N 0 N 0 ~ o o o o o ci o o o ci o o o o o ci ci o o o o o o ci o o o o o U t~S LL Cf~ O N O I~ r O ' l0 0 0 r .- (~ C~ O ' c~ ' CV C9 (O ' N ~ h a0 0? c~ T- O h 0 0 N d' ~ O O OO N C9 N N lf7 N r- ~f r h r *- 0 N 0 T- 0~ N O O N (Q C9 d N d a 00 c~ 0V T d T t ? N O ~- O tn (n ~t (~ O r .N O 0 L0 0 0 0 0 0 N °' ~ a 0 o 0 o 0 o 0 o 0 o 0 o 0 ci 0 © 0 o 0 ci 0 ci 0 o 0 o 0 o o o o o o o o o o o a ci o ci o o o o o o o o 0 o 0 0 0 0 0 0 u , c~ p ( j i ~ N ~ U ~ >,,C c~ c~ oo oo r c~ rn h o o N .n ao c~ oo ~n c~ -n co rn N ao c~ h h c~ ~r o o L co d' ~n (0 O 00 O tn CO ~- rn tn rn h h N rn ln N tf' h O ~D N ~ h r- tD ~ tn h d' (,0 r 00 CrJ tn h it7 Cr} t~ (~ o r h O O Cr1 h CCl t~ (~ 00 (~ o IQ N C'? ~ p 0~ (fl d' I`~ P~ d' ~- h tA dO N N tr1 ,- IO h O'~ d' C9 Q'a ,- ~f7 0 -n 00 t'~ C9 N d' N'V '~''~ N N (fl d' ~- O N N N r C~ C9 ('~ h N O (~ a cr1 (O N rn N OD ~-- C~ tY3 r ('~ c~ C7 ~ N N C~ O N N N N C4 d? N d' C~ rn N r N O T r~ T h N ~ t~ N ~ 0 I- o O O N to Q O h h O 00 N OQ QO t'~ ~ N O O ~ N ~ ~ d' d' Lt) O d' O O d' O h h N C4 h h O O N 0? l~ r (p d' ('~ Cn N to to h N r N 0 DD 0 0 N ~, QI r O O O C~ CO (O C~ T- h Ca tn d' h d' lt7 O 00 O 0 h 1f} O h (~ (O T- tD I~ (O ~- C~ OD f~ C~ O N r t(~ C~ t~ N d' (Q (O I`~ N ~(7 'd" 0 0 00 0 0 0 0 0 ~ o ~ T o o o f o o o o o o o o r o o o o o o o T T ci © o o o ci ~ ~ U ' L U ~ ~ ~ ~ d' r C'9 11) C4 C7 C~ (~ C9 (~ C7 th N N O O O O N N O I.C) h (0 O O O O t~ O C) C~ C~ C~ t~ 7 (0 ' ~' C'~ C9 h Cfl O O C~7 tr? N ~ C~ O N t o C9 C9 O O O O O N ln h (O (Q QO O OO O OD ~ a0 O N I`~ tt7 N O N I.C) h O t~ t0 r 0 O 0 O 00 h 0C7 ~.t X CO 0 d' 0 CO 0 r d' 0 I `~ 00 O C~ C~ C~ N r d' C7 C~ N N tf) N C~ d' ~ p p r cp d' te r. r N h O O tn 07 00 N O M ~t7 N O N r 0p M d? r (S7 C7 f~• t,f? ~ ~ v N r N N t'~ C~ N C~ CO N N r C+~ ~ M N CYJ N N CrJ N C~ N N ~- T- N N N N ~ A N 0 N N h d' O' tO CO h r CO N t3~ O d' d' (O h t~ ~ O d' d' d' N ~ O h h CA t~ 0 C~ 0 r 0 C9 0 N 0 ~ 0 C~ 0 C~ 0 t~ 0 (rJ 0 CO 0 N 0 ~- 0 C~ 0 C7 0 N 0 N 0 C~ N C~ C~ C~ C~ C~ r r N O O ~~ C C (U ~ 0 0 0 0 0 0 0 0 0 0 0 0 Q L ~ ~ U N 0 ,~ 0.. U c 0 6i O h 03 C'~ I`~ N O OO C~ CO Cr1 0 d' O O QO h T- I'~ O O ~ O h ('~ m 0 00 ~ T T N h CU O O h 00 r W ~ N h CO LQ r N ('~ ~ C4 O ~ O N OQ OD (~ h ~ O (~ h t~ h C~ tp d' d' O P~ i (') tO (Q h I'~ h r 0 0f? C4 ~' l{) OO O OO N N {0 (4 t~ r 0~ a C~ r ~ p d' d' d' r r t n , d' N t n O OO N h d' h O l,Q t~ f,O h (0 ~ C7 t A N N CA O h l Q r O O r d' O h Q O O CO r h O h ~ N N OD h r r ~ fl . 00 OC? ~ ~t ~ N ~ d' 01 'd' O OQ (`h tQ ~ 0 00 (Q Q'? N r Cf' ~- l~ h h h l.() ~ n,~ L O C'3 C O f~ O ~ C4 ~" lf1 T N T N T d' T d' T ~ T C~ T M T N r N T N r N T N t- r T r T r T r r r r O T O T O OQ aD C4 C~1 tD U RETIREMENT COMPENSATION PAY TYPES G~NTRA~. CONTRA COSTA SAId1TAR'~ D~S~'Ri~~' - ~'AY CQDE ~.IST~NG ASS RELATED T(~ REY1R~~~NT PAYN~~1~T5 PAY TYPE 'INCLUQfQ IN.;BAS~ SALARY S'ub e~# tc~ Re~ire~en~ y - REGULAR HOURS ~ Payfor Regular hours • straighttime . CR CAPITAL REC IJLAR regular hours worked on Capital Projects • straight t#me 6 HaLI~AY Pay for a Cistrict Holiday observed - straight time j - ~` COMP T11UjE USED . famed overtime hours used * straigh tfrna VACATION Vacation hours used -straight time , . ~ SICK LEAVE S#ck Leaue.haurs used • stra#ght t#me .. ~ HOLIDAY COMP TAKEN hiolfday Comp hours. used - stra#ght tims~ . } `~~ ADMi'NISTI~ATIVE LEA1~E Adminlstra~va i_eeue hours used- strai~hfi time , J'U RY DUTY Pay for time off to serve ort a, Jury -straight time MILITARY I~'UTY ~ Pay for time off to serve In the Military =straight time- 21 OTH.~~ AUTH. A~S,Ef~G ~ ~ pay for authorized absences that do not fail into a reg.: Category 2~' SIRTHDAY:ROUDAY Birthday Holiday hours used ~~e~erai Employe~s~ strafghttime SA SYSTEM ADJUSTMENT Makes up cliff. between actual monthly hears & avg. of 1x3,3933 - LP LONGEVITY PAY 2112~o Differentfal for service -angeuity hover ten years serviced Add-'Pay R RE"TIflEMENT SUBVENTION ~ Cash supplement equivalent to and in lief, of District payment... Add-P~y of smpbyee retirement aarrtributions (9/1173, 3a Years, Soo.) ,. RQ RE~iIST~~TiON DIFFERENTIAL- , ~~~ Dffferem~# for certain cart#fioaMons.. - ~ Add-Pad ., . - PLAY T~f PAS (N. AbD~'It~N ~~? BASE SALARY S b"ec~ ~~. Ret~r~ite~t . r _, . ,. AR CUSS;^~S LICENSE PAY' ~ ~ddit#ana! pay #or p~osi~#ans requ1rfn~ a cuss A pr B flcrense ..,. y ; ~ .:;: ,,, .. .. ,. _, ._. C1~C2~~~ ~AF ~~~#~., PLAN SASH ~ . E ., aid r Section t ~5. I'lsn o t#on Cash el~ount p,. p~ p C~ . CAS ~ `ERIA KLAN B~NEFI~'' 1 - ~I'r ', ~ I , ,- , Contrioutwns to Section t ~$Plan options ether than cash, .. M1~ I~:EC~IA~.~ IIVAI~/ER payment fn ilea of theDistrict's meoical insurance OC OUT .OF CtAS.S Additional pay far working in a higher classification: VV ~IACATION PAYOUT Payment of accumulated vaca#lon time A SALARY ADJUSTMENT {R~T~ Adj. that is subject to retirement • usua(y terminal pay, see b~iow ~A 'ER~`INA~. C4M`PEI~SATION" Portion of Terrnlnai Comp that is subject. to f3e~-ement ~rre year accrual of suck or vacation, ar actual past, whichever fs less MA MEAL A~LO~VAIVC~ Set amt, paid (current{y $12.00 meal allowance far overtime°~ work under certain circumstances (defined In the M.U-~lf~ SWING w ' additional amount .per hour far swing shift work 5 NIGI-IT - '& Additional amount per hour for night shift work 12 STAIN I~B1~ . Payment at 1 tl2 times fur tieing .an-colt - _. _ . . .. ,:., . _. ~ SCHE4U~ED HOLIDAY , .~ ,~.. . ~ ~ . 1 t/2 tlrhe~ pay in addttian:to'rdg`ular'salary when tl~e regular ~ - .. ., work schedule includes a holiday ~ ,, ,~~ SGHEUULED HOLIDAY S1N ING 157.~go tlrnes pay In addltton to regul~ salary when the regufe~ . r. swing work sched~c#e fnciudes a holiday , SCHEDULED HOLIDAY NIGH' QT 161.25% t#rnes pay #n addition to regular salary when'the regular r night ~ror'k sctteoule Includes; a f toiiday ~~ SCI~EDULEa HOLIDAY DT 2 Ames pay lr addition to regular salary when file regular work . scht~e 1lnclutles i~lanksgiving; Ghrist~as or flew Years pay OTHE :.... .~.,. ,. . RA's: T~fPES.: ~i~ Sub ~c~ ~v. ~~~irerri~r~~ . ~ve~ri`iine i~at is tef ~e~-ut~e~ is n~o~~ subs ~ec~ fa ~e~'~®rr~sn~ ~~ ' y, OVERTIME AT 1 p~% Pay at straight time for employees on a reduced wcuic sahedute _ who work additfonal hours not exceeding ~ weekly) hears totet 2 REGULAR OVERTIME f 112 times pay for ove~ims haurs worked . ~~'` CALL OUT OVERTIME; 1 112. times pay far bed ca#ted out to work while an Standby CO CAPITAL OVERTIME ,AT ~ ~% 1 112 times pay for overtime hours worked an capital Projects . h. ~ 3 COMP EARNED Earned -time off banked ~ 1 112 time$ in heu of overtime pay ` S~I11NG OV~~RTI II~E . ~ t 57,500 times pay for overtime worked during swing sh%ft 15~ NI+SNT 01fERTjME - 1'61.25°/4 tlrnes pay for overtime worked during night shift ~ ~ STAID"BY CREDIT Earned time off banked ~ 1 1i2 tinter in Lieu of standby pay .., . DOUBI~~ ~V~RTIME 2 times pay In addi##an to regular salary for overtime haurs,warkad . during Thanksgiving, Christmas or New Years lay hol#days , . ' OD CAPITAL OVERTIME AT ~(j~%~ ~ times pay for overtime haurs worked on Capital Projects during Thahksg'cving Christmas oC New Years oay ha~ays ~ COMP t~VERTIME AT 21]0°~Q ~~ Earned tints off banned ~ ~ tirrtes In Ilea of`dauf~ie-time pay ,: ~ ~. Q H~?LIDAY CG`I~P EARNED Earned time of# banked atstraight erne v~hen a hviidayfalls on the ~mpiayes' scheduled day off. CF` COMP GVERTIME PAID payment of accurnulatecf framed Overtime (camp time) IBS I~~tNUA~, SALARY ADJUSTMENT rt used to adjust salary for various reasons {when: adjustment is not subject to retirement] - 5~ ABSENT Uli'ITHCIUT PAID r ~-me oif witttaut pay (reduces base salary F~AY-CODES AS TI~IEY RELATE TO RETIREMENT ,: ~Nrt~ ~CONi'~A C~S~`A S~ANITA~~' ~1~~~~~ µ . ~~bruar~ ~S, 20Q PAS' C~a~ ~IST'~fi1~ AS BELATED TQ~ ~~ETIR~i~ENT 'A~C~Ef~`~ INCLUDABLE Pi~i~R TQ 1~EN~'URA `t}EClSlON It~3ERNAl.~CC~s Desaiptio~, AD~~IIlNiSTRATlVE LEAVE ~ AA,11 ~4dm~i~tragve eve hoop ,BIRTi~IDAY HC~l.lDAY ~8~3~ ~ B~thday leave i~or general employes . . .~ CAPITAL I~E~ULAI~ ~ ~ x ~ ~ regular hours cu- capital pro~eda C~l~P T! IUiE TAf~EN & ADJ AG,~' Stralt~ne pay- of earned averttme l°i4LiDAY AM,~ Stra~t•time p~ for ho~days yC~LfDAY COMP TAf CEN 1 C? , Streigltt-tr~a past of earned ar~e~ta c~ a ttoll~ay . ~1k~RY DEfTY r - ~ ~~, , ant-tee looms ale ~n~uy der I~ILiTARY LEAVE y ~ 9 ~ Straight-t~rta lours wt,~e on miyr assignment aTHER AUTHC~Ri~LD ABSENCE <as ~tra~tt-~me t that da not halt t over cater REG'ULAi~ H~U. }~ .. • ~a~,ter atrat-time lrs x ,, ~ e SICK LEAVE & adj a AS, Sidcfeave 1 WW V YY~Y SYSTEi~I ADJLlS`~~iENT ~b> ~ ~~ ~ Maka~ ~ dit~ret~e befixepn aduai mor~riy'hot~s~ rand avg~ of 173.3333 VACATiC~N~`& ACID AV,$ Vacat~rt hours used i.~NGEVITY PAY L~" ~ ~ diaeriai to sew kmgevlty ~~ REG~STRATi.4N Did ~ RD . 59~ inaesee ~ salary for c~tair« certificates . RETiRENi-ENT SuBVENT1C3t~ ~~ YRB~ ~' ~ ~ .Amount to employee rather than. cc~ iet#~t system VIEW PAY C~[3ES PER VENtUf~- N~?W SU ~~ . Nl~HT ~ A~ittanatam~rrt per hour~arn#ght shiflwork . QUT Q~ CLASS s ~C ~dd~oi,al pay 1'or work~tg ~ ~ higher cJassigCation- , STANDBY 1 Paymeet ~ 112 #intes. Por being'ort-call SWli~ . Additional amount perhourtcr swing shHtwdrk ... CAPE`PERIA PEAK CAS~~ C~,C2,C3 Cad ~ncunt paid p~r,$ectforr 128 plan option ~,~ R syI~EDICAL iNAiVER k lS~i~ Pa~me~,tin-lle~ c~ Dis~ict"s maa~at ~$urance ~; ,! ~ , r ~' ~ ~ll8 ~ A!!0 , C@ a c ~~ ~ ~ s :Set amount paid t~ $12.O~y why an ~mpby~ woks a speafl~f a~taunt oir ov . ~ ~.: Cat~tera Plea at~ter than cast ~ , than ~. ~otlort 1as cc~t~s to apticns other ,~ . . ,pay. , . Vacation " =outs ~ .~ . Any type ~ vacati~ p~ayy-cut,. harc~f~ or r~terwiss :. ~ ~ . , _. Terminal! Pad - last ~te~r a~ccruai ~ actaa{~ ~ ~ ~ ~rarrr retkrnent Corm completed at temt~ation, indudo with jai payman# to regremenk pad, Whichever~l5 ie~S ::: Manual ~aiar~r ~dj sul~j~ect tQ Retirement RA ` Retro a~ other than overtime ~d aver adl to pay awed to~ redn~ner~ Scleduied N©li~ay. (Plant 4perator~) , ~~ pad overtime pork®d on a i~i~axt when the emplc~ee was prevTousl~ sd~erluted t~ ~t ~. - Sc~teduied Night. Holid~~ (operators} : i ~2. . . Scheduled` Si~i~~~'~Holiday ~t~peratars} ~ . - ~ ~. ~... , N~~` l~B~I~DTj'Ct~ R~TtR~N[I'': ,, ABSENT I!U{~;H~~T PAY ~ ,. ~ 5l`~ Leave with nc pad . r, s , , GT dVERT') (tllE ~ t 50°~O GAP~~'Al. PRA E . ~W CQ` :., a . ... averse ~ t 1l2 #imes on capital ed'hcwrs ~ . . , , ., 'CAPl7~41~ Pi~~~~T OVERTIME ~ COQ° r CD double avertirrte for rap~al project worl4 done ors a holiday ~r-A ~i~~P TlME~AR~iED ~ vi f_arrted tlme oft banked ~ 1 ~~ t~11~6 ,.; ,. ;. CE~I~P' T~IWf~ E~1~~iED ~ ~t~~% ~Ht~LiDA1~ ~ ~ ~ Eanted time-off t~anlted ~ ctcru~Ie-t~tar ~vo~ dortet~llda DOUBLE QVEI~T~.II~E (HOLIDAY} r 3 Pay for overtime- art a holiday ~ :. i-IOLIQAY C~,P EARNED ~ 24 Earned time-otY banlted ~ ~ 112.times tar wori< done an g ~II,A~Y A[~JUSTMENT ~ ~AN~AL ~ MS ~ UsedA:to eau, ~~ ~~~~ ~ ~ :I ~. ... stpay for varlass reasarts t~ suct o retfrernertit, taste ~ rode} f~l~f"l' ~VER~'Il~~ .~ ' ~ t~rertm~e p~ ~ 11'l~ titnea while an night shift r } ~ REGULAR .a1/ERTi>~#E ~ ~ . aveitkn®paid ~ ~ 1~2 Mmes STANDBY ~i~EaIT ~CQMP Tll~liE} . Stiby based ~ ~ 11~ times tcrbeing ca-ietl et~t to wank while on star Si~IN ~ F C-VERTIf~E - overtime patrl ~ 1112 times while cn swing-shift piLE:N:1lNP~C31RETpAYC3 - Qtl~TTR~ PEtCJ p11. ,., ,. RETIREMENT PROGRAM /BENEFIT HISTORY Central Contra Costa Sanitary District December 18, 2009 T0: HONORABLE BOARD OF DIRECTORS VIA: JAMES M. KELLY, GENERAL MANAGER / RANDALL M. MUSGRAVES, DIRECTOR F ADMINISTRATION FROM: CATHRYN R. FREITAS, HUMAN RESOURCES MANAGERS SUBJECT: RETIREMENT "HISTORY"-ABBREVIATED VERSION At the Board meeting of December 17, 2009, Board member McGill requested staff to prepare some background materials on the District's pension program with the Contra Costa County Employees' Retirement Association CCCERA). Specifically, he asked how the October 2009 CCCERA legal opinion might affect the District retirees and employees. Staff s response was that it is too early to discern the impact of the legal opinion. The CCCERA Board has not discussed the opinion in open. session, other than to schedule the January 11, 2010 Special Board meeting and direct their staff to gather information about the costs and impacts to CCCERA if a change is made in how pensions are calculated. Staff plans on attending the January 11, 2010 CCCERA Special Meeting, as well as the January 13, 2010 CCCERA Regular Board Meeting. The Board will be kept abreast of any actions made by CCCERA. Staff will provide the Board potential policy options under separate cover prior to the January 7, 2010 CCCSD Board meeting. With help from the Secretary of the District, the "history" of recorded District actions regarding retirement is listed in chronological order: • April 7,1949-Sixty years ago CCCSD joined CCCERA. Attachment A • April 30,1969--The compulsory retirement age changed from 65 to 70. Attachment B • June 3,1971-CCCSD supported .CCCERA basing the retiree's benefits on the highest year's salary rather than on the highest thirty-six months average salary. Attachment C • June 24,1976--CCCSD Board voted to increase the sick leave allowance to "meet the desired needs of the employees for retirement." It was noted in the minutes by District Counsel that State statute permits unused sick leave to be added to retirement for service credit. Attachment D • June 15,1977-CCCSD Board records indicate approval of shift differential of 5% for swing shift and 7.5% for grave shift. Attachment E C:1Documents and SettingslcfreitaslMy Documentslretirementhistory mmo 12-18-09.doc • July 1977-000SD Board added longevity pay of 2.5% after twenty years as a benefit. In 1985, twenty years was changed to twelve years. In 1988, longevity pay became effective after ten years. Attachment F • August 1977-The policy for payment of accumulated vacation was adopted by the Board. "Payment (of vacation) shall be considered if the applicant can demonstrate the need for payment to alleviate serious financial problems." The "financial problems" language was deleted in 2000 in the Local One and MS/CG MOUs. Attachment G • December 1997-The District joined CCCERA in the Paulsen lawsuit. Attachment H. • September 1999-The Paulsen lawsuit was settled, granting retroactive pay to retirees per the court decision in Ventura. Ventura established which pay differentials should be included in retirement. Attachment • April 2003--Holiday Compensation was limited to accumulating a maximum of one year (104 hours). Attachment J • Other documents discuss retirement as well. The CCCERA Members' Handbook, pg. 6, discusses "Contribution Amounts." "The pay on which your Plan contributions are based may be different than your base rate of pay. The pay on which your contributions are based includes: All payments for services and special skills (i.e., merit pay, longevity pay, bilingual pay, etc.); cash payments for items of "advantage" that you would otherwise buy with your salary; overtime pay fortime you ordinarily work; and lump-sum cash-outs for annual accrued time or accrued time at termination." Attachment K • Attachment L is a copy of the CCCERA document, "Estimate Your Retirement Benefit." It shows the CCCERA formula for calculating an employee's retirement: Monthly salary (plus one year vacation accrual, holiday compensation, differentials applying to retirement, one year sick leave, etc.) times years of Service Credit times the Retirement Age Factor (based on table) equals the employee's estimated .monthly pension. • Attachment M is correspondence from CCCERA to the District re. types of pay included in retirement calculations. • Attachment N includes copies from the District's MOUs, first negotiated in 1982. The language in the MOU provides for "Sick Leave Accumulation." It states, "All unused accumulated sick leave at the time of retirement is credited as longevity upon retirement." Under "Sick Leave Incentive Benefit," sick leave incentive formulas (depending on hire date) are discussed. The MOU states "payment for all credited sick leave will be made upon retirement or termination..." • Attachment 0 is a March 2006, Retirement Comparison With Other Agencies PowerPoint presentation to the Board. The slide entitled, Vacation Buy out Spike, on page 8, showed: "Only CCCSD, --Maximum of 160 hours for each of two years • One calendaryear priorto retirement • Year of retirement" C:1Documents and SettingslcfreitaslMy Documentslretirementhistory mma 12-18-09.doc 2 In 2006, with spiking, CCCSD's retirement ranks third of our five neighboring wastewater and water agencies. Without spiking, CCCSD's retirement ranks last by comparison. • Attachment P is a copy of a memo on Terminal Compensation sent to the Human Resources Committee and copied to the Board in August 13, 2009. • Attachment Q is a September 2009 memo from District labor counsel responding to a Human Resources Committee request for information on the calculation of retirement benefits. • Attachment R is a December 7, 2009 memo from General Manager Kelly regarding CCCERA with a copy of the October 21, 2009 CCCERA legal opinion attached. • Attachment S is a memo from Human Resources Manager Cathryn Freitas regarding a pending article in the Contra Costa Times and the December 27, 2009 editorial from Contra Costa Times Political Editor Daniel Borenstein. If you need further information, please do not hesitate to contact Director of Administration Musgraves at ext. 305, Controller Ratcliff at ext. 326 or me at ext. 308. attachments cc: E. Boehme D. Clinton, Esq. J. Kelly R. Musgraves D. Ratcliff A. Woodall, Esq. C:1Documents and SettingslcfreitaslMy Documentslretirementhistory mmo 12-18.09.doc 3 ~^ •/ I rn z D ~~ ~ G APPOINTMENT OF INSURArt"CE AGENT It tn~ae ~Yoved by Member Will, seconded by Member Toland and c~.rried, that tr,e Board, s.ccept trie recommendation of the Contra Costa County Insurance Association a.s presented in letter of April 7, 199. It wa.s ~~oved by Member Smitten, seconded by Member Toland that the BoaY~d appoint John T, Schroder as Insurance Agent. Carried. 100 PAYMENT To SAhi G, STEWART ET UX _„_,_ L_ I, D.. Pd~O. ~1,0 PARCEL 90 It was loved by Mem'oer Smitten, seconded by Member Tcland And carried, that the Board grant the payment of X100.00 to Sam ~. and Arys 'u~. Stewart for severance damages to their property, mown ae Parcel 90 of Local Improvement District No. 10. ESTABLIuHING MEhIBERSHIP IN CCNTRA COSTA COUNTY EMPLOYEES ~ AS~oC iATION The following resolution was offered far adoption by Member Smitten, ascended by Member Weill: RESOLUTION N0. 44l f~REAS, the District Board of Central Contra Costa Sanitary District of Contra Costa County, State of California, is. desirous of having the employees of said District, who are eligible, become members of the Contra Corte. County Employees Retirement Association, NO~;;, TI~REMOF.E, BE IT RESOLVED that the Central Contra Costa Sa.nit~ry District ue included in the Contra Costa County Employees' Retirement Association, and that all eligible employees of said District shall become members of said Association on the first da.y of the month after the adoption of this Resolution. PASSED AND ADOPTED by the District Board of Central Contra Costa Saritsry District of Contra. Costa County, State of California, at a regular meeting of said Board, this 7th day of April, 1949, by the following called vote; AYES; Members Smitten, Toland, Weill anu Wadsworth OES; M~mbere None , A~5ErdT; Ntembar Johnson /s/ R.E. !Wadsworth, President of the District Board of Central Contra Costa. Sa~~1 ~~ary District. CountprsignQd; Neill C. Cornwall, SecrAtary of the Di;~trict Board of Central Con;ra Gosh. Sanitary District. REI~IBURSEMENT OF PETTY CASH FUND ,~....r It was moved by Member Neill, seconded by Mpmb4r Toland, that the Board reimburse the Petty Cash Fund in the amount of X48.36. Carried. PAYMENT OF BILLS It was moved by Member Smitten, seconded by Member Toland that the Board approve the payment of bills as audited; 04 07 49 Attachment A ~^ •/ I rn z 00 ... Ir ~.~ : , Mr. Dernetz, Assistant Cfty Manager of Martinez, stated that he had attended the meeting to observe. When questioned by the Members of the Board, he stated that the City had determined to take unilateral action to detach from the District and presently was going to wait for the outcome of the election before proceeding further. He stated that if the bonds fail the City will seek detachment. Mr. Dernetz stated that the City had updated all reports used in its determinations prior to election to annex, and, when questioned by the Board Members as to the economics of going alone or with the District, he stated that over a twenty-year period it would be a standoff as to continuation of the present District plan. Continued to April 17, 1969. VII. NEW BUSINESS CHANGES IN COUNTY RETIREMENT Mr. Horstkotte, General Manager-Chief Engineer, presented a letter from the County relative to change in the retirement system. Retirement compulsory at age 65~- now 70 - and increased costs for certain ages with increase in retirement benefits. Mr. Horstkotte stated that the Employees' Association voted 53 to 2 to approve the changes. It was moved by Member Allan, seconded by Member Boneysteele, that the District notify the County that it approves of the County retirement system changes as proposed. Carried by the following vote: AYES: Members: Boneysteele, Rustigian, Mitchell, Allan and Gibbs NOES: Members: None ABSENT: Members: None LETTER FROM THE AMERICAN PUBLIC WORKS ASSOCIATION RESEARCH FOUNDATION Mr. Horstkotte, General Manager-Chief Engineer, presented a letter stating that the American Public Works Association would initiate a research project on infiltration of ground and surface waters into sanitary and combined sewers if sufficient interest is shown. Estimated project cost $118,636 Public agencies share 29,65 9 Funds expected from Federal Water Pollution Control Administration 88,917 District share 975 No action. CLAIM FOR DAMAGES, R. C. DUNLOP, 20 NORMANDY LANE, ORINDA~ $958.85 1 I -~~! Mr. Horstkotte, General Manager-Chief Engineer, presented a claim from Mr. Dunlop as the result of sewer backup and overflow, and stated it was the staff recommendation to pay: It was moved by Member Boneysteele, seconded by Member Rustigian, that the claim of Mr. R. C. Dunlop in the sum of $958.85, the result of sewer backup and overflow, be paid after receipt of signed Release in Full Settlement and Compromise. Carried by the following vote: AYES: Members: Boneysteele, Rustigian, Mitchell, Allan and Gibbs NOES: Members: None ABSENT: Members: None Attachment B 04 03 69 ~^ •/ I rn z l03 Attachment C DISTRICT SEWERING PROJECT 1985, BISHOP LANE SYPHON RELOCATION After an explanation from Mr. Horstkotte, General Manager-Chief Engineer, it was moved by Member Allan, seconded by Member Rustigian, that plans and specifications for District Sewering Project 1985, Bishop Lane Syphon Reloca- tion, be approved and the call for bids authorized. Carried by the following vote: AYES; Members: Boneysteele, Rustigian, Mitchell, Allan and Gibbs NOES: Members: None ABSENT: Members: None SEWER CONSTRUCTION AUTHORIZATION FOR DISTRICT SEWERING PROJECT 1917, SUMMIT ROAD It was moved by Member Rustigian, seconded by~Member Allan, that $1,400.00 be authorized from Sewer Construction funds for District Expense.; District Sewering Project 1977, Summit Road. Carried by the following vote: AYES: Members: Boneysteele, Rustigian, Mitchell, Allan and Gibbs NOES: Members: None ABSENT: Members: None AUTHORIZATION TO EXECUTE REVOCABLE LICENSE TO THE CITY OF LAFAYETTE FOR THE USE OF THE FORMER SACRAMENTO NORTHERN RAILWAY RIGHT OF WAY FOR TRAIL PURPOSES After an explanation and upon the recommendation of Mr. Bohn, Counsel for the District, it was moved by Member Rustigian, seconded by Member Allan, that the President and Secretary be authorized to execute a Revocable License to the City of Lafayette for the use of the former Sacramento Northern Railway right of way for trail purposes; said Revocable License to be in the same form as that prepared for execution by the East Bay Municipal Utility District. Carried by the fallowing vote: ` AYES: Members: Boneysteele, Rustigian, Mitchell, Allan and Gibbs NOES: Members: None ABSENT: Members: None ACCEPTANCE OF EASEMENTS It was moved by Member Allan, seconded by Member Rustigian, that easements from Peter Ostrosky, Job 1759, Parcel 2, Henry Hoffman, Job 1759, Parcel 3, Westgate French Company & Fidelity Subsidiary Corporation, Job 1945, Parcel 2, Leverage Funding Systems Incorporated, Job 1945, Parcel 3, Western Title Guaranty Co., Job 1934, Parcel 2, City of Pleasant Hi11, Job 1947, Parcel 2, and Russell J. Bruzzone, Inc., Jab 1991, Parcel 1, be accepted and their recording ordered. Carried by the following vote: AYES: Members: Boneysteele, Rustigian, Mitchell, Allan and Gibbs NOES: Members: None ABSENT: Members: None RECOMMENDATION TO BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY RE RETIREMENT BENEFITS After an explanation from Mr. Horstkotte, General Manager-Chief Engineer, it was moved by Member Allan, seconded by Member Boneysteele, that a letter over Pre- sident Gibbs' signature be sent to the Board of Supervisors of the Contra Costa County recommending affirmative action on the proposal undex consideration which would base the retiree's benefits on his highest year's salary rather than on his highest 36 months average salary now in effect. Carried by the following vote: AYES: Members: Boneysteele, Allan and Gibbs ABSTAINING: Members: Rustigian and Mitchell NOES: Members: None ABSENT: Members: None EQUALIZATION CHARGE FOR CONNECTION MADE THROUGH LOCAL IMPROVEMENT DISTRICT 0R SPECIAL ASSESSMENT PROCEEDINGS After an explanation from Mr. Horstkotte, General Manager-Chief Engineer, Mr. Bohn, Counsel for the District, introduced and read proposed Ordinance 18. 06 03 71 ~^ •/ I rn z v 812 Attachment D D. Adding 1/4 day per month to earned sick leave to make sick leave and vacation. earnings uniform. Member Mitchell queried the Personnel Committee as to their justifi- cation for this proposal, Member Allan stated that the present formula does not meet the desired needs of .the employees for retirement. President Boneysteele stated that additional sick leave allowance should not be considered as a method of increasing retirement allowance. Mr, Bohn, Special Counsel for~the District, stated that there was no Iegal hindrance to this proposal. The State statute says that unused sick leave can be added to retirement longevity. After further discussion, it was moved by Member Allan, seconded by Member Gibbs, to add 1/4 day per month to employee sick leave benefit, making sick .leave and vacation accruals uniform. Motion carried by the following vote: AYES: ,Members: Gibbs, Rustigian, Allan NOES: Members: Mitchell, Boneysteele ABSENT: Members: None E. Continuation of health benefits for spouses of retired, deceased employees under terms and conditions set forth in the retirement system, far life, ar until remarriage, not to be retroactive. After discussion, it was moved by Member Gibbs, seconded by Member A11an, that the District health insurance benefits for spouses of retired deceased employees who retired under terms and conditions set forth in the retirement system, for life, or until remarriage be approved (not to be retroactive). Motion carried by the following vote: AYES: Members: Gibbs, Mitchell, Rustigian, Ai1an and Boneysteele NOES: Members; None ABSENT: Members: None ~F. After explanation by the Personnel Committee and discussion by the Board, it was moved by Member Gibbs, seconded by Member Allan, that 7-1/2% salary and wage adjustment for all staff employees, excluding the Counsel and five management positions, for the year beginning July 1, 1976, through June 30, 1977, be approved. Motion carried by the following vote: AYES: Piembers: Gibbs, Rustigian, Allan, Boneysteele NOES: Members: Mitchell ABSENT: Members: None The Employees' Association representatives indicated that they were empowered to accept the action of the Board to grant a 7-1/2;~ salary in- crease to a1i employees except Counsel and five management positions for the 1976-71 fiscal year and did so accept. The Board suggested that management provide the Personnel Committee with more information and a solid proposal regarding their salary adjust- ments. Member Allan expressed his thanks to the emplayees'Negotiating Com- mittee.for their cooperation and flexibility. 2. PERSONNEL ACTIONS REQUESTED BY THE PLANT OPERATIONS DEPARTMENT a. After. explanation, it was moved by Member Rustigian, seconded by Member Gibbs, that Louis Swain be promoted from Plant Operator to Senior Plant Operator, Salary Range 65-D ($1,597, effective June 1, 197b, and that a Resolution be adopted to that effect. 06 24 76 ~^ •/ I rn z rn Attachment E After review of Mr. Reagan's report, Board Members requested that the cost calculations should be based on specific area rather than the unincorporated area and the City of Walnut Creek, Mr. Dolan commented that the financial reports are based on unaudited statements and he would recommend that, in the future, we work.fram audited statements. He also stated that i t has been the pract~ ce of the Sanitary District to work on projected garbage costs because of the inherent uncertainty of projections. Mr, Doi an suggested ~t would be more reliable i n the future to work from an established cost increase. Staff is now requesting that the Board seta hearing date for the garbage rates. After discussion and comment, it was moved by Member Carlson, seconded by Member Allan, that the hearing for garbage rate increases be set for July 21, 1917. Motion carried by the following vote: DYES; Members: Carlson, Rustigian, Allan and Boneysteele PlOES: Members: None ABSENT: Members: None 2, 1971-18 BUDGET - EMPLOYEES ASSOCIATION RE UEST AND PRESENTATION TO THE BOARD Mr. Doi an advised that the Personnel Committee had met this afternoon with representatives of the Employees Association at the District Office and referred to Member Allan, Chairman of the Comm ttee, fora report. Member Allan advised that the Personnel Committee had a series of three meetings, two with the Employees' Association and one with management. The resulting recommendations of the Personnel Committee concerning the various items of the Employees Associations's request are as follows: Exhibit A: Off Job Disability Inusrance ..^_r... ^ . , , . Personnel Committee recommends denial of this request. Exhibit B: Revision of Cha ter 4 of the District Code Pertainin to Promotional Examinations Personnel Committee recommends that this item be deferred for further study. After discussion, it was the consensus of the Board that this item be brought back for further consideration at the first meeting i n October. Exhibit C: Blue Cross Drug Program Personnel Committee recommends denial of this request. Exhibit D: Benefits for Dependents of Deceased Employees Personnel Committee recommends approval of this request, using IRS description of dependents. , Exhibit E: Shift Differential Pay , rr • r r• F,rr r ~ ^ Personnel Committee recommends approval of Shift Differential Pay requests of 5.0% far swing shift and 7.5% far graveyard shift. Exhibit F: Longev~^ty Pay .... _. , Personnel Commi tte recommends approval of a 2-l /2% career service pay increase after 20 years employment, exc]uding management personnel, Exhibit G: Certification Fees Personnel Committee recommends denial for the employees request that the District pay job related certification fees. G b 1;, '7 ~ D D n 2 rn z 1068 After discussion, it was moved by Member Allan, seconded by Member Carlson, that a resolution overruling protests and adopting the report pursuant to Section 5473, Neal th and Safety Code be adopted. RESOLUTION N0. 77-139 A RESOLUTION OVERRULING PROTESTS AND ADOPTING THE REPORT PURSUANT TO SECTION 5413,~H LTN AND SAFE Y CODE YW~1 \ ~~i1 ^^~ I^^~^-mill ^^^ ^ .^/ ^ ice. ~~~r^ ~~ ^ ^ ^ V •__ Motion carried by the following vote: AYES: Members: Carlson, Rustigian, Allan and Boneysteele NOES: Members: None ABSENT: Members: None Mr. Carniato, Counsel for the District, requested that the Board divert from the agenda so that he might report on the status of the BARTD parcel, as there was an interested party in the audience. The Board voiced no objection. U T T T RKPf]RTC 2. COUNSEL FOR THE DISTRICT a. Mr. Carniato, reported that he was successful in having the proposed public auction of the BARTD parcel(213-010-02} called off. With Board authorization to negotiate for the purchase of the BARTD parcel, he met with staff and interested parties, and secured a document title to purchase the property for $25,500. Mr. Carniato requested Board authorization to execute, the document and purchase the property and authorization to negotiate a lease agreement with the owner of the adjacent property for parking on the subject parcel. After discussion, it was moved by Member Rustigian, seconded by Member Allan, that the President be authorized to execute the title document and Counsel for the District be given authorization to purchase the property for $25,500 and negotiate a lease agreement with the owner of the adjacent property to use the subject parcel far parking purposes. Motion carried by the following vote: AYES: Members: Carlson, Rustigian, Allan and Boneysteele NOES: Members: None ABSENT: Members: None President Boneysteele reverted to the agenda. Vi. OLD BUSINESS 2. PERSONNEL BUDGET ADJUSTMENTS AND MANAGEMENT REQUESTS Mr. Dolan, General P~anager-Chief Engineer, advised the Board that the proposed adjustments and requests have been reviewed by the Personnel Committee and referred the matter to P~ember Allan, Chairman of the Personnel Committee for presentation. Member Allan stated that Member Rustigian and he had met with management and reviewed each of the issues and the committee is making the following recommendations: a. Continuation of Health and Dental Insurance for Dependents of deceased employees- recommend approval b. Longevity Service 2-1/?~ Career Service Pay - recommend approval c. Salary Increase for Management Personnel 7-1/2~ recommend approval Member Allan advised that the Personnel Committee recommended a 10~ salary increase by advancing 2 pay ranges and one pay step for the newly appointed General Manager-Chief Engineer, however, Mr. Dolan requested that a 1-1 /2~ increase by advancing 3 pay ranges would be appropi ate. 07 0'7 7~' Attachment F ~^ I rn z llo~ g ~~` Attachment G The adoption of the resolution declaring the intention of the Board to proceed with Stage 5B treatment enlargements pra~ects will certify to the State and Federal Government that the 56, Phase II sludge can be adequately handled by existing centrifuges and incinerators. To provide mare information to the State, we wi 1 l have to direct Brown and Cal dwel 1 to produce a brief report which will indicate haw much additional sludge will be produced and how existing facilities will be used to process it. President Boneysteel a introduced to the new Board Members Mr. Jerry Gilbert and Mr. Perry Schafer of J. B. Gilbert and Associates. Mr. Dolan referred to Mr. Gilbert who made further comment concerning the EIR/EIS. Because there was insufficient time to process an EIS and because the EPA felt there was no significant adverse environmental impact, the EPA intended to proceed with a Negative Declaration in lieu of an EIS. Far that reason, Gilbert and Associates were directed to issue an EIR by modifying the volume they have a]ready prepared, eliminating any reference to an EIS. Mr. Dolan then went on to give a detailed explanation of the twelve items contained in the resolution. Discussion followed. Mr. Dolan then referred to Mr. Schafer who reported that with the adoption of the resolution and some changes in Volume 2 of the EIR, it can be used as the final EIR. After further discussion, it was moved by Member Allan, seconded by Member Rustigian, that a resolution certifying the Final Environmental Impact Report on the Central Contra Costa County Wastewater Management Program and approving the Stage 5B enlargements, be adopted. RESOLUTION N0. 71-222 A RESOLUTION CERTIFYING THE FINAL EIR EIS ND PPR VING T GE 5B TREATMEN PL NT ENLARGEMENT PROJECT Motion carried by the following vote: AYES: Members: Campbell, Carlson, Rustigian, Allan and Boneysteele NOES: Members: None ABSENT: Member: None ~/ 4. POLICY FOR PAYMENT OF ACCUMULATED VACATION TIME ;' Mr. Dolan, General Manager-Chief Engineer, reviewed the proposed ' policy for payment of accumulated vacation time: "POLICY FOR PAYMENT OF ACCUMULATED VACATION TIME ~~ ~~ It is the policy of the Board of Directors of the District that the ~~t; responsibility for decisions concerning payment to employees for accumulated ~~ vacation time shall be delegated to the General Manager-Chief Engineer, I.; whose decisions shall be in accordance with the following policies and shall be final except in cases of extreme hardship, in which case the applicant may appeal to the Board of Directors for additional consideration: 1. Payment of accumulated vacation time wi 11 not be considered unless the applicant's leave record indicates a practice of taking at least ten days' vacation time off per year and that the applicant shall have taken or will have accrued sufficient vacation time to take a minimum mandatory ten days` of vacation time off within the calendar year of application. 2. Payment may be considered if the applicant can demonstrate the need for payment to alleviate serious financial problems. 3. Payment may be considered for excessive accumulated vacation time that wi l l be lost by the applicant i f not taken by a particular date, on]y if it is determined by the applicant's Department Manager or by the General Manager-Chief Engineer that 1107 it would be highly disruptive to the Department if the applicant used vacation time during the particular period, then payment may be authorized by the General Manager-Chief Engineer i n 1 i eu of vacation time off , 4. ,The maximum number of days which will be considered for payment in any one year shall be twenty (20} days. The above policies do not apply to termination of employment or ~~ After further discussion, it was moved by Member Allan, seconded by Member Rustigian, that the policy for payment of accumulated vacation time be approved. Motion carried by the following vote: AYES: Members: Campbell, Carlson, Rustigian, Allan and Boneysteele NOES: Members: None ABSENT: Members: None VII NEW BUSINESS 1, ACCEPTANCE OF EASEMENTS AT NO COST TO THE DISTRICT AND ADOPTION F RESPECTIVE RESOLUTIONS AND AUTHORIZE REC RDING After discussion, it was moved by Member Allan, seconded by Member Campbell, that the easements, as listed below, be accepted at no cost to the District and that respective resolutions be adopted to that effect and their recordation be authorization. Grantor Jab No. _~__,__ Parcel C. R. Johnston, et ux 2903 1 J. V. Lipovac, et ux 2884 1 R. E. Seastrom 2884 2 W. H. Cowan, et ux 2816 BSJ, Inc. 2869 3 BSJ, Inc. 2869 4 BSJ, Inc. 2896 2 BSJ, Inc. 2896 3 BSJ, Inc. 2896, 4 L. E. Kimmich, et ux 1541 Misc. R. M. Davis, et al 2889 1 L. Qu eirolo, et al 2909 1 L. P. Robinson, et al 1851 2 N. H. Christensen, et al 2833 ] RESOLUTION N0. 77-223, A RESOLUTION ACCEPTING AN EASEMENT AT NO COST TO-THE DISTRICT FROM CHARLES R, JOHNSTON AND HELEN E. JOHNSTON, ALAMO AREA JOB N0. 2903-PARCEL N0. 1 RESOLUTION N0. 17-224, A RESOLUTION ACCEPTING AN EASEMENT AT NO CO T THE DISTRICT FROM J E H V. LIP VAC AND JOYCE L. LIPOVAC ORIND REA, JOB N0. 884 - P RCEL N0. RESOLUTION N0. 77-225, A RESOLUTION ACCEPTING AN EASEMENT AT NO ST TO THE DISTRICT FROM RICHARD E. SEASTR M RINDA RE JOB N0. 2884-PARCEL N0, 2 RESOLUTION N0. 71-226, A RESOLUTION ACCEPTING AN EASEMENT AT NO C S T THE DISTRICT FROM W. H. C N AND EDITH G. WAN MARTINEZ REA, JOB N0. 2816-PARCEL N0. 1 RESOLUTION N0. 77-227, A RESOLUTION ACCEPTING AN EASEMENT AT NO TO THE DISTRICT FROM BSJ, INC., M RAGA ARE , JOB N0. 2869-PARCEL NO,~ 1} RESOLUTION N0. 77-228 A RESOLUTION ACCEPTING AN EASEMENT AT NO COST TO DISTRICT FROM BSJ, INC., MORAGA AREA JOB N0. 2869-PARCEL N0. 4 08 25 '~7 ~^ •/ I rn z z85 Attachment H Department Managers may have dissipated some of his concerns; however, staff took the core concern of a District-wide report to heart. Controller Debbie Ratcliff and Accounting Supervisor Collette Curtis-Brown have developed a plan whereby beginning July 1998, the monthly expense reports will display overtime figures for. operations and maintenance (0&M) and capital. Mr. Dolan stated that he appreciated Member Lucey's insight and staff believes that the change will provide an enhanced degree of cost control. 51 Mr. Dolan, General Manager-Chief Engineer, stated that Mr. Jay S. McCoy, Infrastructure Division Manager, has drafted alternative language to deal with concerns expressed by Member Boneysteele relating to the Rebate Section of the District Code. Before bringing this to the full Board, staff would like to have an ad hoc committee meeting involving 'Member Boneysteele and anyone else interested in discussing this in greater detail before any proposal is presented to the full board for decision. Members Boneysteele and Hockett will meet with staff on the subject of rebates prior to the presentation to the full Board. Mr. McCoy will set up that meeting. fit Mr. Dolan, General Manager-Chief Engineer, stated that a presentation is planned for the January 8, 1998 Board Meeting dealing with expenses and revenue figures related to settlement of the Acme Landfill lawsuit. More work is needed to determine the final figures; however, the District has collected more money for settlement of the Acme dispute than the costs to the District for the Acme dispute. There are some interesting policy issues that must be considered. Solid waste customers have not paid for insurance premiums on old liability policies. That fact could be ignored, reimbursement could be denied because of it, or a share of the premium cost on an actual cost or a present worth basis could be pro rated and the cost of the recovery backed out. Vllhether and how to return any surplus to the ratepayers must be considered. Options include payment via the garbage company for credit against the solid waste bill or payment to CCCSWA. Direct payment to solid waste customers may be considered. Options relating to funds in the legal impound account lessentially Valley Waste Management (VWM1 balancel include return to CCCSWA with conditions, or payment to the customers. In these considerations, the Board may also wish to consider taking steps to ensure the success of CCCSWA, and strengthening relations with the Cities and Towns. Following discussion of alternative methods of returning surplus funds to the ratepayers, Member Boneysteele stated that it would be helpful to have a position paper setting forth the alternatives and the pros and cons of each. Mr. Dolan stated that it is planned that this matter will be discussed under Reports at the January 8, 1998 Board Meeting and a position paper will be presented at the following Board Meeting. b. COUNSEL FOR THE DISTRJCT 1- Mr. Kenton L. Alm, Counsel for the District, stated that the Board will recall from discussion in closed session that the District has been sued on a cross complaint in the matter entitled Vernon D. Paulson, et al v. Board of Retirement of the Contra Costa County Employees Retirement Association, et al, Contra Costa County Superior Court No. C96-02939. The suit alleges ~2 18 97 286 there are certain pay differentials which have not been included in the calculation of final compensation that should have been included. Hence, the retired employee plaintiffs allege the final compensation amount should be greater than currently calculated. The plaintiffs are also asking for attorneys' fees and three years of retroactive increased retirement compensation. The lawsuit is being handled far the District by the Trucker & Huss law firm. There has been a settlement offer by the Plaintiffs. Mr. Alm stated that this information has been made public and no decision is requested from the Board, so no closed session is required at this time. This matter is being presented to advise the Board of significant potential changes relating to calculation of retirement costs. In a recent California Supreme Court case arising from Ventura County, h ruled in favor of the retirees on issues similar to those set forth in the Paulson matter, although it was broader in scope. As a result, a second lawsuit has been filed in this county on behalf of retired employees. This new matter, the Waldon case, incorporates the full breadth of the Ventura County case that went to the Supreme Court. There are issues outstanding that may or may not be resolved by action. To be taken by the Contra Costa County Retirement Board such as: ~ Shoup there be any payment made retroactively to retired employees for the last three years for the incremental amount they arguably should have received? To what extent do there need to be additional monies paid in by employeeslretirees for the employees' share of the retirement contribution? Mr. Alm stated that the real point of this discussion is to highlight that the Ventura County case and 'the filing of the second lawsuit by retired Contra Costa employees has changed the nature of the issues facing the District. Mr. Alm stated that except for overtime and contributions to 457 and 401(a) Plans, all other cash payments of any sort may have to be included in the calculation of final compensation, The costs to the District for retirement will likely increase some and the issue of retroactivity must be resolved. c. SECREZ~~Y OF THE DISTRICT None d. BOA MEMBERS 1) Member Hockett reported on the December 11, 1997 Central Contra Costa Solid Vllaste Authority (CCCSWA) meeting at which the transfer of the Christmas tree recycling program from Valley Waste Management to Browning Ferris Industries iBFI) was approved, baseline rates were adopted, and 3,000 customers were added in the Orinda-Moraga area that were not part of the rolls at the time the new contracts were let. In addition, CCCSWA adopted a resolution and held a reception recognizing the District for its contributions to CCCSWA. President Menesini requested that a letter of appreciation be sent to CCCSWA thanking them for the recognition and the festive occasion. 2) Member Lucey reported on the December 11, 1997 Personnel Committee meeting at which the Employee Recognition Award Program was the main topic of discussion. Also at that meeting, authorization was given to fill the vacant Accounting Technician Illl position. Discussion followed in which the Board expressed caution about avoiding any possible perception of the Employee Recognition Award Program as a ~2 1s 9~ ~^ I rn z Attachment I 15$ 9) Mr. Batts, General Manager, announced that on Saturday, September 25, 1999, there will be a mobile household hazardous waste collection event in Lafayette provided under the contract with Phillips Services. Last year there were 240 cars at this event. So far 68 people have signed up this year. 101 Mr. Batts, General Manager, announced that in conjunction with Pollution Prevention Week this week, the District is beginning its mercury awareness effort. Mr. Batts showed the digital thermometer display that will be used in the District's Mercury Awareness Program. b, COUNSEL FOR THERE D1STR~~,,T, 1) Mr. Kenton L. Alm, Counsel for the District, reported that on May 20, 1999, the Board held a closed session to consider the Vernon D. Paulson, et al, v. Board of Retirement of the Contra Costa County Employees Retirement Association, et al, Contra Costa County Superior Court Case No. C96- 02939. At that time the Board voted 5.0 for approval of the proposed settlement which has now been lodged with the Court. All parties have signed the settlement. The litigation matters have been fully settled. c. S~~R~TA~BY OF THE DISTRICT None d. BOARD MEMBERS 1) Member Boneysteele, Chair of the Budget and Finance Committee, introduced Ms. Deborah Ratcliff, Controller, who reported the results of the 1998.1999 Internal Audit of Accounts Receivable, the Internal Audit of Capital Project Files, and the Internal Audit of the Payroll System. In conjunction with the internal audit of the Payroll System it is recommended that amended Expenditure Lists be approved. It was moved by Member Boneysteele and seconded by President Lucey, that amended Expenditure List dated March 19, 1998 including Manual Payroll Check Nos. 48031-48034 and Regular Payroll Check Nos. 48035- 48297, amended Expenditure List dated April 16, 1998 including Manual Payroll Check Nos. 48298-48307 and Regular Payroll Check Nos. 48308- 48411, amended Expenditure List dated May 7, 1998 including Manual Payroll Check Nos. 48412-48421 and Regular Payroll Check Nos. 49007- 49106, amended Expenditure List dated June 9, 1998 including Manual Payroll Check Nos. 48422-48424, Replacement Payroll Check No. 48423, and Regular Payroll Check Nos. 49107-49198, amended Expenditure List dated July 16, 1998 including Manual Payroll Check Nos. 48425-48428 and Regular Payroll Check Nos. 49199-49319, amended Expenditure List dated August 6, 1998 including Manual Payroll Check Nos. 48429-48435 and Regular Payroll Check Nos. 49320-49440, amended Expenditure List dated September 3, 1998 including Manual Payroll Check Nos. 48436.48461 and Regular Payrol! Check Nos. 49441-49531, amended Expenditure List dated October 15, 1999 including Manual Payroll Check Nos. 48462.48476, Replacement Payroll Check Nos. 48477-48478, and Regular Payroll Check Nos. 49532-49609, amended Expenditure List dated November 19, 1998 including Manual Payroll Check Nos. 48479-48489, and Regular Payroll Check Nos. 49610-49684, and amended Expenditure list dated December 17, 1998 including Manual Payroll Check Nos. 48490-48497 and Regular Payroll Check Nos. 49685-49760, be approved as recommended. There being no objection, the motion was unanimously approved. Ms. Ratcliff presented the staff recommendation that Cash Deposit System and the Sewer Service Charge System be audited in the coming year. The Board concurred, 09 16 99 D n 2 3 rn z .~ L L U ~ V Z D D Z O~iC~ O ~ ~ ~ Z Attachment J r • ^I/ ~ Z .` ~ V O ~ ',~3 O .: ~ ""~ o m '~ ~ o 0 ,.. ~ o ~;,,,~, o ~ a q„r ~ ~~!- r~ N ~ N _ ~ oo ~ t~ !w" Q j•. • ~ i,,,,, V CZ 4~ a ~o ~ ~ ~ ~ ~ 4 4 ' ~ ~' p ~ ts„ ty Q. V .. Lid ~ r '~ w~ n :: .. ;, N m +. ~ V1 4 E3~ao•€c ~c~ „~o +~ r E~~o ... ~ »- cE~o~~.e~ c.o~ ~~'- ~ oho $~ ~ ~'x3 ... ~;' ,Q~ ~ca ._c~EQ~.E~ ~ •-mac aE~,3n~ ~ ~~ - ma~~ ~~od~ '1 ~ ~ EW~~~ ~~c~co~ E~~ ~ c~ +~ V 3 ~ ..~ cam •p cn ~ ~ •~ ~• ~. a~ N ~'~~~~°~ °~~ aci~a~~ 3~~ ~~ cis ~~oEv,~~ ~ ~ c ~v m~•-~' c Ec ~ ' a~ c v, `~. ~ °~ ~.E.~., E °,o ~ ~- 3~ ~ c o o; ~ W~3rCAw o- ~~ mo~-- a,*'~c~~c~3~ we ~ ,~ ~~~~ a'~~°'a°' ~°~ ~~,~o~o~N ~ ~,aa~ ~m~•~~ ooc.,~~NE m~ .. •- r .o c L .~ _ m ::.>.:: ~ E ~ .~ rr • ..x,, ,,.._.... ,.:_ , : .~ . , ~....,~:. _~.~._~~~_.w ,,~Y.._ _. _....:; _ _ ~~ ~ ~u-C ~ C~ NFL ~ ~ ~.. ~~ ~~ L ~~ ~ o.~ L ° ~~ N p cd~ ~ ~ m ~' t 'p +0) ~ o O ~ ~- ~ n'S C _ Q NQ ~~~ d~.QZ7~ ~C?~C~ E~ ... ,~,, c~ c~ c c~ ~ o ~ a c C .~ ~ N Lj,a ~ N m ~ ~ ~ ~ ~ CA '~ ~ c ~ V .., •- ~~ QGi © t13r,,,C CtvN.~ ~~C~~ '~ E ~, - ~ >•,a ~c Ca-c-~ to3° z ~j O :~h>: h ~ i ,mow /"'`~ ~ ~" ~• ~ ~~ ,~ •IA c~D dp :.., et ,.• sNOisu-oaa ~a~ns ~ o ~ ~~, ~ ~ E~ ~~' ~~O .~= 03 EJ~ ~ o- .~ ~ ~ ~ ~ ,,, O o ~ ~ ~ ~. ~ 3 ~ U o- U ~ ~ F= cu ~'~o ~~~ ~~ ~~~ ~~c a~'V ~~-a~i >> ~'~~ L~ .~'~~ .3~~ 30~ ~ c ~ ~ oU~ ~U ~ m a~ to ~~,~ L ~ -gma~ • c ~ ~, - ~ ~ N - o~E ~ ~~ N~~ Qcn~ m~0 ~o a o .~ $ '~ `~ ~ ~' ~r '_r c a c oN "'C~~ ~-`~~ r~ ~~: E~ _~~ ~~ ~ ~ ,~ ~ a er ~ m , a~ E ° o~ ~~ w~c~ ~.~~m~ ~~ ~'D `a°'Y~. ~ c N ~ ~'~ ~fm~•~ ~`' ~c_n a ~ ~r o c E ~ ~ N ~ ~ ~ ~ p ,~~C~'~ ~~ ~d o~,E ~a~ sE .. ~ ~ ~~ ~ ~ ~ ~ oE~ c~ ~'o Ecoo°ov 3~ '~~ ~~.~'c5ai •NE co c ~ ~ N p r d o ~ N o -. ~.~3E~~ ~~ ~- ... -' ~ ~c ~ o ~~_ ~ c~ a t ~ ~ ~ m ~ a~ t~ O ~ N ~ E ~ Rf 't3 •V_ c~~oa~ tic ~~ a~'~.c~ a~~ o ~crn ~E~~oQ ~~ `-c E;~, oW ~ a c c ~ a ~ v ~, E ~©~ o~ ~.cQ Q O •X j, ~ ~ ~ ,C ~; ~ 4) ~- to ~^ •/ I rn z ATTACHMENT K IS THE BOUND CCCERA MEMBER'S HANDBOOK ' @@00008@000@@0008@000@@00.0.0@000$@@00@000@@@@@@@@@@@@@@@@@@@@@@000@@00@@@.000@@@@@@@@@800 y y gg y g ~ .............~.~~ for is bused under lots of details. This new editidn of the ~CCER~ Members' Handbook has been designed to address that problem, We have reorganized information about the Plan to make it ~ ~ ~ ~ ~ ~ ~ ~ easier for you, the General Member, to find what you need. ~ asically, this Handbook describes the Plan in three levels: ~~ ~. ~ d. ~_ W The ~as~cs is only about 13 short pages and covers the routine items u Y ~ 4 J 0 OF ~ that eve member will robabl encounter. rY p y ~~y~AN~~, ,~ 6 Routr°ne ~~~inten~nce spends a page or two on each of a number of Y ~`~~~ ~ issues that are fairly common,. but that don't apply to all members. ~1• ~; V ~~ O 4F ~ . ~Uy~ES ~~ : ` 6 ~peci~l Futures deals with several issues-most Plan members well ~~~~ ~ U never have to .address, but the. information you need is provided just d ;, :'% V °~ t~ Q, incase. a of ~° The final two sections, Administrative Info and Worksheets, contain miscellaneous infor- oration you may want to refer to, and various worksheets for estimating your retirement benefits. Please share this information with your spouse and/or beneficiary s~ that they will be able to m~e informed life decisions even if you're not around. There are. phrases throughout the Members' Handbook that are marked in `.`~~ ith~~-~~~~ numbered boxes in the right margin. It Is recommended that you refer to the page noted in the box for more information about the highlighted phrase, ith retirement plan booklets, it's often difficult to find the information you need when ou need it. That's usuall because the nu et ou're lookin You will see this phrase often throughout the Members' Handbook. This Handbook tries to give you enough general information so that under most condi- tions you can use your Plan to your best advantage. However, the County Employees' Retirement Law of 1937 and its amendments govern the Plan and are very complex. The 1Vlembers' Handbook does not include every detail or legal condition of the Plan. However, the 1937 Retirement Law, as amended, is the final authority when determining your eligibility to participate and the benefits you well receive under the Plan. To fully understand the law, you may need to contact the Retirement Office at: CONTRA COSTA COUNTY EI~Pi.OYEES' RETIREIVIENT ASSOCIATION '1355 WILLOW WAY, SUITE 22"1 CQNCORD, CALIFORNIA 94520 PHONE: (925) 646-5?4~ FAx: {925) 646-5?4? Office hours are Monday through Friday: ~ 2:30 P. ~I. - 5:+D4 P. M. The Retirement Office is closed on weekends and holidays. ~NT~CT THE ETIREMEN'T ~F"I~E II How to contact the Retirement Office Haw Much Your Benefit Till Be After Yau Retire: IJpdating Personal Infar~natlan what Happens If Yau L}ie If Yau ... Terrr~nate Emplayn~ent Qr Become Ineligible If Yau ... Return to Work Before Retirement ~ In general; Tier I; Tier II ~'embership starting date; membership enrollment affidavit; benejciary Service credit; how to earn; when you don't earn; making up Who contributes; who doesn't contribute; how to contribute; contribution amounts; interest; plan balances '7 Annual benefit statement; request by mail ~ Active members; part-time members; deferred members Pre-retirement schedule; Workshop; documents; meet with Retirement Off ice; application; receiving payments ~ ~ How your benefit is determined; estimating ~ 2 Address; telephone; withholding; EFT payments; late checks ~ What are your survivor's benefits; survivor notifications; death certificate ~ °7 ~Vlember enrollment off idavit; who to name; living trusts; retiree considerations ~ Select an option; your retirement benefit; unmodified option;, option one; option two; option three; level income option; reductions; special beneficiary rules; special disability retirement rules; burial allowance; .other employee benefits 1Vaming spouse as new benef iciary; if spouse isn't your benef iciary~; automatic option for marrieds Separation; review beneficiary; dividing community property; domestic relations orders; at retirement; after retirement Review options; terminating employment; reciprocal plans,: job changes Rejoining the plan; refunds; deferrals ~ort~nan T~v~©a 0 0 e. URES k ~.:. a ~ ~ ~~:' : U U ~~ , ~ u ,ti<.:. v '~ 4 J 0 OF ~ ~a~t~n~n ~n~iv~ s ~~VE 0p z - ~;; , z o o ~ a. Q 4~ INFO If You .. , Return towork After Retirement If You ... Become Disabled If You ... Take a Leave of Absence Taxes on Refunds or Lump-Sum Payments ~P'ECIAL FEATiJREs Estimating Your Benefit Purchasing Service Credit Deferred Retirement Membership Getting a Refund Plan Reciprocity Far Survivors of Active Tier I Members For Survivors of Active Tier II Members ADMINISTRATIVE INF'C The Retirement Office About CCCERA Employers That Are in the Plan How the Plan Works Social Security iv ~ who may rejoin; Tier 1 retirees; Tier II retirees; non-participating employers ? Job-connected; non job-connected; approval; when to apply; Tier I benefits; Tier II benefits; selecting payment options 30 Contact Retirement Office; paid leave; unpaid sick leave; unused sick leave ~ Mandatory 22 percent withholding; taxable portions; under $200; direct rollovers; indirect rollovers; penalties if under 55; contact the Retirement Office ? Estimating yourself,• info you need; your statement; Retirement Of ice estimates; benefit determination; .cost of living adjustments; taxable income ~9 Why purchase; eligibility; leave of absence; time prior to membership; prior public service; military service; redeposits; DROs; when to purchase; cost; paying; lump-sum purchase; payroll deductions; combination payment; posting credit; uncompleted Purchase Contract 4~~ .Eligibility; job changes; .requesting; reciprocity; refunds; starting retirement benefits; death benefits A~~ Eligibility; restrictions; contact Retirement Office; tax implications; applying; time limits; redeposits ~ Who has reciprocity; how reciprocity works; arranging for reciprocity Job-connected death; non job-connected death Job-connected death; non job-connected death Address; telephone number; office hours; conveying sensitive information Plan basics; founding; Board responsibilities and members Participating employers Overview; legal requirements; valuations '7 Call for estimate: 800-772-1213; full retirement age; other information from Social Security ~~~~lo~ ..FZ?le ~~ HEETS ®RKS a Tier I Benefit: Members Covered by Social Security ~ .worksheet Tier I Benefit: Members. Not Covered by Social Security worksheet ~~ ~ ~ T Tier II Benefit ~ worksheet ~. Tier II Social Security {Jffset ~ worksheet ~~:: :.:~:::. ::x~.~::~.. ~, '" ~ 0 Factor Table ~~ Tier 1; Tier II; Tier 11 Social Security tiG S "'°'1 Q' w x G S i W U C~ V 4 J section one eooooo0000oooooaaoooooooas a s ooaoaoaooooooo~ 0 0 0 0 e ~±± ~~++ L7~GR~~ 0 0 0 e o e e s You must be a permanent employee working at lust half time for the County or ;,: other p~i'~.k~p~~~ ~~~~~:~~~~~ Yoe will be covered under either. , ~~aua:•r,~w.w aw av ho ~.:av. av aawxw w:ava.~:.u.w.w»s;.a+a.a,..~...vw~„~.a,,i,,.w.w.+.+..w..,a.a,.,.,.+~en ., v.. ~w.~~.u .u r~,ov a+„wa .w>max•.v:wou..w„waw..,.,.~.>.u ,w.s.«....r. ~„w.,w s, s. m.w n. ... o .Ye qn: • Tier I, or D 0 Tier IL 0 a Elected officials are not automatically covered, but must contact the Retirement Gffice and request coverage. a o 4 0 FOR. TIER I • • You're in the Tier I Retirement Plan if you. are employed in a general (non-Safety) ser- vice position and belong to at least one of these groups: • s e • General members covered by Social Security and hired e s before July 1,1980, 9 General members. not covered by Social Security, 0 General members who came to CCCERA with ~~~pr~~c~~ '!from o another agency and elected Tier I membership, or a 0 • General members who are employed by participating employers that have not adopted the Tier II Retirement Plan. s oR 'TIER 1 ~ 0 s • • 0 0 I'ou're in the Tier II Retirement Plan if you are employed in a general (non-Safety). ser- m vice position and belong to at least one of these groups: a 0 0 General members covered by Social Security hired on or after 0 e July 1,1980, whose employer adopted the Tier II Plan, ® General members whose membership began after the date their a participating employer adopted the Tier II Plan, or a 0 Tier I Plan members who elected to join the Tier II Plan before May 31,1981. (These members will receive a total benefit that combines Tier I and Tier II participation.} a 0 0 • 0 e a e 0 • 0 s 0 e ,~5 P ' ~ Qj 6 tt W W .................: ;............... Z i ~d 4d 199 Lei +~ ~ Y u 4 q, YN~9'~ ~~ ~~~~ 6 Q F ~ O .................: Et~~G1B1.6IP~BI'TI~a :................. The Basics a®,~®®.s~~~®®.®®a®~®~aeo®®~g.4~®®~~~.®®Q®e®.®~ma®e®~o®®v®®®®~~o®®~®~~~~~~, l GR l You automatically become a member of the Plan on the first day of the calendar month after you start work in an eligible position. ~n other words, if you're hired on May 9, you'll become a member of the Plan on June 1. INPi.TE Q iH1i~~ L, ?° F'FI ALIT You will receive a Members' enrollment Affidavit from your payroll clerk. You must compete and return the A, f '~idavit. Please feel free to ask the retirement Office if you're not sure about anything on the Affidavit; it's important that the information is accurate. If you're married, however, and want to name someone other than your spouse as your beneficiary, you must submit a written waiver from your spouse. +~ RE I~° R Y oR 1NI°IA-T IS ~ERIOE OREIT Service credit refers to haw long you've been contributing to the P1an..Re~irement ser- vice credit helps determine when you are eligible to retire; service credit deterrrunes what .your benefit well be. As described below, the service credit you. earn usually counts toward your eligibility for retirement and the amount of your benefit. It is passible, however, to purchase service credit that counts toward the amount of year benefit but not toward your eligibility to retire. These situations are described below. TOW YOU E1~RN RETIREMENT ~ER1/IGE ORE®IT You earnretirement service credit for the time you work andfor sometimeyou :~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ .aren't working. . ~~RVICE For Work ~ ~ ~ ~ ~ ~ You earn retirement service credit by working in an eligible position ~ ~ ~~ ~~ ~~ __ for the County ar another ~tep~~t~~~ ~~~~~1~~~e~~ .. ~®~v ~.~~~ ~rOV~v~ ~~~~ cON~rR~~uT~N~ The amount of retirement service credit you earn each month :................ TO -~~ ~~~~, ®v~ is based directly. on how your regular work schedule relates to ~ ~ ~~ 1 ~ ~ ~ ~ ~ a T v ~ v ~ ~~~ a full-time work schedule. v~~ ~~~~ ~~v~ ~~~~~~~~~T~ ~®~ Far example, if your regular schedule is a full 4~-hour week, you ~ ~~ ~ ~ ~ ~ ~ ~ ~ earn one month of retirement service credit far each month of f all- ~ ~ ~ ~ ~ ~ ~ ~ T~~ ~MOVN~r time wank. ~ ~ v ~ ................. ~~N~F~°r. If your regular schedule is 3o hours of a 40-hour week, your regular schedule is 75°10 of full time. Sa, you earn o.75 months of service credit far each month you work your. regularly scheduled hours. ~Jnused Sick Leave If you retire directly from active. employment with the bounty or another participating employer, you may. be eligible to .convert your unused sick leave to retirement service credit. The conversion is made on anhour-far-hour basis In ether words, if you have three months of unused sick leave when you retire and you're scheduled to work an eight-hour day, your unused sick leave can be converted to three months of service credit. 3 The Basics ~'ou do not earn any service credit under CCCE~1~ for time spent: • on unpaid leaves of absence, in military service, or * working for the federal government, State of California, or any county, city or agency within California or a district within Contra Costa County that does not participate in CCCERA. Service credit will count toward your eligibility for retirement and the amount of your benefit if you purchase it to make up for: unpaid leaves of absence due to illness, • time worked for a participating employer before you become a Plan member, • service credit lost under a ~~~~~c~ti~~ ~..~~t~~~~ ~°~~r~ or - v ~V :JM qT M SP~.Y N .-0e .Y? fOM /A NSA fin W. •:p tl4p'A3 hC0 iN> a%.WL iN OLV i~61W k0 * up to five years of time you spent in the military (provided you received an honorable discharge), Purchased service credit will count only toward the amount of your benefit, but nat toward your eligibility to receive a Plan benefit, if you purchase it to make up for: prior public service with anon-participating employer, or time beyond five years that you spent in the military. 4 AKIN G ~~ ~ d a= t+! tJ U = U Y fj i 000000000000000400008000000000000840000000000 JQ' 4 F `1 0 10 CONTRIBLlTE~ All eligible, actively employed members are reclulred to contribute. Em to ers must also contribute to their employees' retirement plan. dome employers py even pay member contributions o~ the member's behalf.. WHO ~~E:SI~I'T HAKE T ~NTRIBUTE You don't have to contribute if you: were a CC~ERA member on or before March 7,.1973, • have been a member continuously since then, and have accumulated 30 years of retirement service credit. ~'i HC~1Al Ta CONTRIBUTE Your contributions are usually made through regular payroll deductions. And, based on your employer, your contributions are made up of: before-tax dollars, or after-tax dollars Before-tax dollars are taken from your pay before taxes are withheld. This reduces your taxable income and, therefore, the amount you pay in current payroll taxes. You will be taxed on these contributions and any interest they earn when you receive them as a pay- ment. After-tax dollars are taken from your pay after taxes are withheld. This means you pay the taxes u front and ou won't have to pay taxes an those contributions again when p y you receive them as a payment. However, the interest on after-tax contributions will be ~_' taxable when you receive it. dome employers pay their employees' member contributions. If your employer pays your contributions with before-tax dollars, they are called employer pick-up contributions. Em to er ick-u .contributions are included in the account balance that is available for p::::::::;~' p p ............................. a ~t~~~ .a~wa z.ua+a»ma.aea,mwA~nv.r...e,.+w wi ewe a+a xw xa ra. mo mo as za x.+rime•m ms a.~..v»vwx.ww.w. ow am ~ra ooo wr an ooa aoc av.wu.,>v ~w .vn w,~., w:, •ra~w x+~an.vn wa ,mar--,wwa;pv.m<ma nro aN ra.+.+v.w..a±,+...m•~w..wa.vwe.w oz aw•w.a:~mwi, a. y.: era mr we +~«.... ax ro+!+a.w~w If our em to er a s our contributions with after-tax dollars, they are called employer y py pyy subventions. Employer subventions are not included in the account balance available for a refund. The Basics ~QNTRIB~uTIQN A~o~NTS dour contribution rate is based on your pay and yaur age when you enter the Plan. Contribution rates are determined by ~t~"~ ~~~a~ and may be adjusted if recom- mended by the Plan's actuary, The pay on which your Plan contributions are based maybe different than your base rate of pay, The pay on which your contributions are based includes: All payments for ser- vices and special skills (i.e., merit pay, longevity pay, bilingual pay, etc.); cash payments for items of "advantage" that you would otherwise buy with your salary; overtime pay for. time you ordinarily work; and lump-sum cash-outs for annual accrued time or accrued time at termination, The pay used to determine your contributions and benefits is shown on your pp-qn p00p fii C.IOOC i01 ON OOU %.>4p+001 tl00 WY ~A.1% Nn AK fOV I{Y iW M'SR!.+N.»M HOt'K 000 Oro 00o kp i0Y OM M¢~MNt'm NW 00: 0}}x%9: tle NhW 00i 9iG9Vi ~H}lPt itN 4H Cw+nM MMI'~1e7 ^.sV INTEREST QN CONTRIBUTIt3NS All contributions credited to your account earn interest as long as they remain in the Plan. On June 3o and December 31, the interest your account balance earned for the previous six months is credited to your account. The current interest rate, which is set by the Retirement B oard, is published in your annual benefit statement. WHQ IS ENTITLE© TQ 'YQl! R PLAN BALANCE The money that is set aside for your retirement is meant to be used only by you. It can- not be sold, borrowed against, assigned, garnished, or attached in any way. There are two exceptions: If you are divorced, the Plan must obey court orders. This .. ::: includes Io~~~I~ ~.~~.~~ ~;~ '~~ ~~~~, which are used by the court in a divorce to settle property rights, pay child support, or pay alimony. If you have a federal ar state tax lien file against you, your Plan balance may be used to satisfy. part or all of the lien. C=~ DIN C T G ~' ti y _ m 6 a ~ W = U G Y V osooo®aoooooomoooomoAO Q, J ,~ a OF The benefit statement also shows the amount of pay used to determine your contributions and benefits, since pay for retirement purposes maybe different than your base pay. The pay on which your contributions are based includes..All payments for services and special skills (i.e., merit pay, longevity pay, bilingual pay, etc.; cash payments for items of "advantage" that you would otherwise buy with your salary; overtime pay for lime you ordinarily work; and lump-sum cash-outs for annual accrued time or accrued time at termination. Review all retirement information carefully; contact the Retirement ~Jffice if you think any of the information is incorrect or out of date. SE1~ID I~+i A REQUEST F'+~t~ L,~IE In addition to the annual benefit statement that the Plan provides, you may request your account balance at any time. lust send to the Retirement Office a written and signed request, including your address and your employee number or Social Security number. ~i • The Basics HEN Y O U A Y E T I you are eligible for service retirement: IPART-TAME MEMBERS If you are apart-time CCCE~.A. member, you may take service retirement when you retire directly from your part-time job with a participating employer. ~'ou are eligible for part-time service retirement if you: • are age 5~, have held a position with the County or another participating employer for ten or more years, and......... .. * have five or more years of el~~~ ~~ '~~t. .. ... ~ wW.W.Hf NAW'M+w'MA Mw. ~M bMa1 NY HV 00. OX .ENO TV in WY aW M000.0000 DEFERRED RETIREMENT MEMBERS If you terminate your employment and you chose to d~~~~ y~~ ~t.~~~`benefits, you _, may begin receiving your benefits as of the date you would have been eligible fora ser- viceretirement if you stayed in active employment. E ~~~ STS ~~~~~ ~~T~~~ME~so GO TQ THE PRE-RETIREMENT PLANI~ILNC WORKSHOP Contact the County's Training Institute and. sign up for the. CCCERAPre-Retirement Planning Workshop. This workshop will let you know: • what you have to do to start collecting your retirement benefits, • what your various options are, and • same general infar~nation about making your transition into retirement smooth and pleasant. ASSEMBLE THE NECESSARY OOOUMENTATION About a year before you retire, we suggest that you start gathering the documents you need to apply far your retirement benefits.. If any are missing, this will give you plenty of time to get copies. The documents are: All Members ...:................................. • Your birth certificate (or praof of date of birth} • Birth certificates of your beneficiary(ies) 1Vlarriage certificate ~If your spouse is your beneficia.~~y) ~T~EME~r ~~ ~T A~aT®MA°r~~a T~~~ ASE E~TA~ .................. ~~~~ AFL EM~E~ M~~T ~M~~ET~ T~ ~~T E~~~T~e ~l~e .~~sics ooreaaeeeeeeseseoeeoeeeoeeoeooeeoaeaeoaaeeeoaoeoooooeooooooeoeeoaooooooeoooooeeooooooooeesoooeseeosoeeseeooeeeoeeoesoosaooooeaooeo•oooooooaeo,.n;. 1~14a11V U.11 tA1Jf1V111L11111114 ~i'i411 {.11Y 1iV1~11V111V114 V111VV s.v 1.~v v r wa wi+ v~ ~ ~+~~ ~^~-------- ------ -- review your benefit calculations. The Retirement Office will help you determine the actual date of retirement that's best for you and give you an Application Form. Bring all documents discussed in Section .You will be tall at your meeting if you need any additional information for processing. SUI3MI"T AI~I APPIwICATI~I~I Complete your Application Form and return it to the Retirement Office. You may do this as early as two months before the date you will begin your retirement. APAIVCE "T~ DECEIVE Y~DUR PA'~C`MENTS You well receive information from the Retirement Office that describes the payment options available to you. 10 C' h P ~ 6 a W W ~ W U Y U ?° ~4 qF r .......~ L~ I~ . .~.®®Q.4®m,~~~~®~m~~p~~~®~4~®~~aa.®®g~®®oea.~®~.®e4~.e~~~.~.~omg~d.ms~~m.,®.s.~~o As you buildup credited service and as your salary increases, your potential C~~EI~A retirement benefit also increases.. The Basics F T E R Y O U R E I R E PDA G p ER50NAL~ •iiiiiiiiiiii•ii T AH 1~ A~1D~~~ aid T~~C~H1E U If you move or change your telephone number, write t~ the Retirement Office immedi- ately. Include your full name, employee number or Social Security number, current address, current telephone number, and the effective date of change. T® ~.HAI~It~E Yt~UR WITHHOL®INts AN1~Ul~iT If you want to change taxes withheld from your retirement benefit, contact the Retirement Office to request a new Form w-4P. Once you receive this form, complete it and return it to the Retirement Office. T~ HA~iGE C~~ CANCEL. ~F'"C ~EPt~SIT If ou wish to cancel your Electronic Fund Transfer DEFT) deposit, write to the y Retirement Office immediately. If you wish to change .your EFT deposit, you must com- plete anew set of forms. Contact the Retirement Office.. LATE ~H~~~c~ If our retirement check is more than. seven business days late, call the retirement y Office. YOUR SLIRVIVR 1V1LI~T' I7°IFY T"I~IE ETIEMEI~I"f F°F°IE Your spouse or beneficia~~y .should .call to notify the ~etiremen~ office as quickly as possible after your death. E'T SICI~IIEI~ I~IE THE E,ATI•I EI~"TII~'I~-"TE A death certificate will have to be sent t~ the l~etire~nent office before your survivors can receive benefits. Your survivor should make sure to ask for several signed. copies of the death certificate. Section two a s v 0 • • sosesssssasssseasososesosseoess~sassesessosass+assssoosssoosssssoooassssssssssses~sosessoos s 0 s e 0 0 GI~°TAIN A M£ I3Es NE~t)LLMEN°T AF"F'II~AVI You must name a beneficiary when you complete your lVlembers' Enrollment Affidavit. a To change your current beneficiary, you must complete a new Member's Enrollment a Affidavit,. which can be obtained from your payroll clerk or the Retirement Office. You'll have to complete this form and either mail it in or return it in person. Your changes will not take effect until the Retirement Office receives the Affidavit. a a 0 You may name your spouse, a dependent child, a living trust or a trustee of a living trust, or anyone else you want to be your beneficiary. e If you are married and wish to name a beneficiary other than your spouse, you must con- tactthe Retirement Office and re nest a S ousal waiver Form. Your spouse must sign, q p notarize and return the fo~cn to the Retirement Office. Four selection is not valid until the Office receives the form. a It is critical that you keep your. beneficiary designation up to date because your. most recently named beneficiary will receive your benefits in the event of your death. a a ~1ote that you may not assign your retirement benefits to anyone while you are living, not a even to living trusts with you as the trustee, a a a 0 • Ih" YGU NAME A LIVING Tt~UT • If you choose to name a living trust or a trustee of a living trust as your beneficiary, the trust will receive slump-sum distribution of your contributions. Living trusts are nat eli- a gible for a continuing benefit. g s e You must .provide the Retirement Office with the mane and date of the trust, and the name and address of the person with whom the trust is on file. a a ~ENEFI~IA~Y Ct3N~ii~l~~1'IC?N~ F°GR RETIREES 0 You can designate anyone as your beneficiary for p~y~~~ ~;~p~~. ~~ I~;~z a~. ~~~w .;x aaax, aar:ace vav ao x+n xu~sswi zx ox awnua If you are married, :however, you still need permission from your spouse ~o name a bane- . a ficiary other than. your spouse. 0 a a a If you name a living .trust as your beneficiary, your contributions and retiree death bane- ~. ~ fit will be paid in a lump sum to the trust. ~~NAN~~, ~~ ~ ~~~ ~ ~: ~ f~'. ~ ~ '~~~; u .. r ~: ~ `~~, t, ~ ~;~:;> 0 ¢ ~4 ~fl OF .Routine ~~~intendnee the ~Jnmodified Option: Survivor receives 60% of your monthly benefit Option One: Survivor receives your remaining benefits in a lump sum • Option Two: Survivor receives 100% of your monthly benefit Option Three: Survivor receives 50% of your monthly benefit • the Level Incame Option A Retirement Counselor will explain each of these options to you in full. The payment option .you choose well affect the amount of your retirement benefit and your survivor's benefit. Q YOUR RETIREMENT BENEFIT The Retirement Office will calculate your benefit and your survivor benefit under any of the payment options that interest you. RETIREMENT BENEFIT OPTIONS Unmodified option . This option provides the highest monthly benefit to you in your retirement. The survivor benefit of this option pays 60°10 of your monthly retirement benefit to your eligible spouse each month for the rest of his or her lifetime. ....................................... Generally, to receive survivor benefits, your spouse must have been married to you for at least one year before the date that you retire and must be your ........:........ named beneficiar . If ours Dose does not meet these re uirements, the ~ ~~ ~ y y p .. ~ 60°10 survivor benefit will be aid to our eligible dependent ~~ ~ ~ ~' p y children until your youngest child. marries, reaches age 1 ~ 22 if a full-time student or dies whichever occurs first. ~ ~~~"~~~ ~~~~ F~ { )~ :................. ~u~~~~' ~~~~~-r. 18 Option One This optioh provides you with a lower monthly .retirement. benefit than the unmodified option, However, after your death, your named beneficiary will receive all of your remaining contributions in a ~~~~~~s~~~ py~~~ , .. ,.m.mm. .. ra+.oe, m..o ..:m x~~n. r~r i. rr. ~ ~., r. wo i v,»+.n,a: ~nm.r pie a..a,n..auH:...... va ~ws >r, ux ~,oR x~.»wa~a rri ~x .w. m. The amount of your survivor's benefit will depend on how long you have received retire- mentbenefits. That's because a portion of your monthly retirement benefit comes from your account balance. As a result, .each month you receive retirement benefits, your account balance gets lower. Therefore, the amount available to a beneficiary after your death is lower each month you are retired. Option Two (Jption two provides you with the lowest monthly retirement benefit. However, after your death, it continues paying 100°10 of your monthly retirement benefit to your named beneficiary for the rest of his or her lifetime, Option Three This last option pays you a reduced monthly retirement benefit for life. After your death, it continues to pay 50°10 of your monthly retirement benefit to your named beneficiary for the rest of his or her lifetime. Level Income Option If you retire before you reach .age 62 and are covered by Social Security, this option is designed to provide you with the same retirement benefit before and after you start col- lectingSocial Security. . This option assumes that you will receive an estimated Social Security benefit beginning at age 62. When you retire, your C~CERA retirement benefit is greater; the amount is based in part on your estimated Social Security benefit. When your Social Security bene- fit starts at age 62, your ~CCEP~A benefit will be reduced accordingly. The result is a level retirement income before and after you start collecting your Social Security benefit. "]Level income" is an assumption, not aguarantee-it should be considered .carefully because the level income option is based on an estimated Social Security benefit. EDLlG1"IDNS 7"D DLII~ ~ENF'IT' LlNDI~~ DP1"I4N 'TWD AND "ThI1E ~f you elect option two or option three, your retirement benefit is reduced based on your .life expectancy and that of your beneficiary. once benefit payments start, if your benefi- ciary dies before you, your benefit will not be increased-you will continue to receive the same amount. And, you will not be allowed to name a new beneficiary. '19 .routine 1 ~~~inten~nc~e aRE~IAI. ~~I~~FIC~ARY RI,L,ES F"~1~ C)PT14~~ t~l~l~, T'~~ A1~ THREE you can designate anyone as your beneficiary for options one, two and three. ~Iowever, if you are married and wish to name a beneficiary other than your spouse, you must contact the Retirement Office and request a Spousal waiver Form. The form must be signed by your spouse, notarized, and returned to the Retirement Office. dour selection is not valid until the office receives the form. ® oT~~~ ~~~~v~~ ~~~aT Any other employee benefits to which you are entitled after service retirement are deter- mined byyour employer's policies, not ~CCEI~A. So plan your retirement carefully and contact your employer to make sure you know what other benefits you have earned. 20 ~~giAN~F ~~ 4 ,y g C iti 1 Z t Y t 7 f~ ~ ~ ® ~ eoeaeeeaaeoeeeoeoeeeoseooeeosoeeoeooooeeooooe ~ '~% Q'' ,~ 0 0f TO NAME OllR NE1~ BPOE A BE EFICIA To change your beneficiary, complete a new 1Vlembers' Enrollment Affidavit, which you can obtain through your payroll clerk or the Retirement Office. Complete the form and return it to the Retirement Office. IF 1fO~)R ~POLIE I~ NOT '~OL1R BENEFICIARY At retirement, if you elect td have your benefit paid under. options one, two or three, you ,can name anyone you wish as your beneficiary. If your beneficiary is anyone other than your spouse, however, you must contact the Retirement Office and request a Spousal Waiver dorm. Your spouse must sign, notarize, and return the form to the Retirement Office. Otherwise, a surviving spouse or minor children maybe able to override your designation.. Your selection is riot ,valid until the Office receives the forma AUTOMATIC BENEFIT OPTION FOR MARRIED C04JPLE5 :::::::::::::::::::::::::::::::Y::::::::::::::::::::::. If you are married, your benefit option well automatically be the ~~~~~~~~~~ ~p~~~ ~~~~~~~ ~~ _- unlessyou specify otherwise. ~TT~ N~ N ~~FECT ON ~0~~ ~~ PEA MM~E~~~~ ~N~~~~ ~O~ ANT TO :.:.........:..... NAME ~ ~~®u~~ As ~0~~ N EN~~~C19~~e MAR17'Ai~ SEIPARATIO 1Vlarital separation does not have any definite effect on your retirement benefits. However, it may be a good time to become familiar with the implications of divorce on your retirement Plan account or your future benefits. Dote that although you may want to review your beneficiary designation, you still need your spouse's approval to name a beneficiary other than your spouse, REVIEW YOUR BENEFICIARI~ DESIONATIOI~ Your beneficiary. is the person who will receive your account balance if you should die. .Many who are married designate their spouses as their beneficiary; in fact, your spouse is automatically your beneficiary unless you and your spouse indicate otherwise in writing. Divorce is a time to review your beneficiary designation and, if you wish, to update it. DIVISION OF BENEFITS The retirement plan benefits you've earned during your marriage are considered commu- nity property. If you divorce, these benefits may be divided equally between you and your former spouse. There are two methods of division that are generally used for active members. They are based on factors that are unique to your circumstances. The first method, a Domestic Relations Order, divides your account at the time of divorce. The second method divides your benefits at retirement. If you are retired when you divorce, your benefit payments may be divided. DIVIDING 'YOUR ACCOUNT UI~ON DIVORCE (A DOMESTIC RELATIONS ORDER If you are an active member at the time of divorce, you and your former spouse may choose to split the contributions and service credit accumulated during your maz~iage into two separate and distinct accounts. This is accomplished through a Domestic Relations Order (DRC~}. once the DRS is filed with the court, each person may choose the method and timing of their distribution, completely independent .................. of the other person (to the extent allowed under retirement law}. TAE E~~ECTS .................: TEAT A ~~~O~C~ :................. ~A~ ~A ....~..........., COT~~ ,......,... 22 TERMS Off' 1( tJ~ D11t49F2G~ ~DRDER l1f~ 1~3 "M'ii C~4.MRT'. • A I~R~, in effect, creates separate, distinct accounts for you and your former spouse. I~ou each have complete control over your account, within the confines of retirement law. • Your spouse's. account under a IRO will generally be created by ta~~ing the portion of your service credit specified in the DRC~ and depositing it into an account in your spouse's name. • Any activity in your. account or your spouse's account will be kept confidential from the other person, except when either person receives a refund. • A DRO may. be ordered either before or after retirement and may affect the amount of pension benefit you will be or are receiving. You do not lose your vested status because. of the I~RCJ. • Your former spouse gains the right to :name his or her own beneficiary and to begin receiving a retirement benefit when either you or your former spouse becomes eligible for retirement. • The status of your former spouse's account does not depend on any action you may take. • If your former spouse takes a refund, his or her rights to future benefits are waived, Within five years after your spouse's refund, you may elect to repurchase as a ~~ ,` ` the service credits your ._ former spouse has forfeited, 1DIVII3II~C~ YOUR BEI~EI~I? e4? RIB?IREIHEI~I? Active members and their former spouses may decide to divide the community property portion of their plan when the. benefits actually become payable at retirement or termina- -- tion. In this case, the court usually orders the member to elect a specific survivor option for the benefit of his or her former spouse. DIVI®INC~ Y®UR RE?IRBI~EI? hA~YN1BI~I'T IF" YC~U AR1E RIr?IRE If you are retired at the time of your divorce, you have already selected a retirement pay- meat option. The court cannot change this option. The court may, however, divide the monthly payments you receive. At your death, all payments to year former spouse will. end. A former spouse does net qualify as a surviving spouse and is not eligible to receive a monthly survivor's benefit. 23 ~'I~I~ I~'I l~I I~"I If for any reason you become ineligible for membership in the Plan, contact the Retirement office for complete information and for assistance in understanding the options available. generally, you have one of three options based on the conditions under which you became ineligible. Read Sections ,and below to see which conditions apply to you. If you want, you may then read mare about the options in this I~andbaok: Less Than Five Years of Service If you stop working for a participating employer before completing five years of service, you may request a refund of your contributions and interest. If you start working for an employer that offers a reciprocal retirement plan and you want to take advantage of plan reciprocity, you must leave your contributions in the Plan. At Least Five Years of Service If you stop working for a participating employer after completing five years of service, and you don't want to take advantage of retirement plan reciprocity, you have a choice. Yau may elect to: ® request a refund of your contributions and interest, or • have a deferred retirement membership (this is the default unless you notify the Retirement Office and request otherwise. If you continue to work for the same participating employer but ~;h~:ing~x ~:o ~~ job :hat makes you ineligible to participate in the Plan, your contribatlo~as ~~ s:~:~y ~~~ th~~ Plan and continue to earn interest. 24 t3 T EJII "f E you rejoin the Plan when you are rehired in an eligible position with the County or anoth- er particf pacing employer. service credits start accumulating on the first day. of the calm- dar month after you start work. IF' YC3 T'G30K A FtEF~I E LEFT If you took a refund when your employment terminated, you may choose to: • redeposit the refund, or • take no action. Redeposit Once you are rehired, you can re.e~osthe full amount of your refund plus the interest it would have earned during your absence from the Plan. You wi11 receive service credit-for your earlier service when the contributions and interest are redeposited. in your account. You will rejoin the Plan as a Tier II member (unless your employer participates in Tier I only}. Your rate of contribution will be adjusted to match your current age, and your membership date will be adjusted accordingly. when you retire, your benefit will be calculated using the service credit you earned both from your earlier employment and after you were rehired. o Action If you take no action when you: are rehired, you will have no service credit in the Plan for your previous employment. when you retire, your benefit will be calculated using the service credit you earn after you are rehired. If you d~~'~rr~` your retirement benefits when your earlier employment ended, .your con tributions from that period of employment are still on deposit and still earning interest. dour rate of contribution will be adjusted to match your current age, and your member- ship date will be adjusted accordingly. 'The contributions and service credit you earn after rehire will be added to your deferred service credit when your retirement benefit is calculated. .Routine ~~~inten~nc~ ~~~ ooosoaoooooeooooo00oooooeooeeooooooaooao®ooooooooaooooeooooooooeooooao __ REJI I0. ! ~E 1°L You may return to active employment with an employer participating in ~CCERA and rejoin the Plan unless you are employed as: ®a juror or elected officer, • a field officer for voter registration, a member of the Retirement Board, or in a temporary position. To rejoin ~CCERA, you need to contact the Retirement Office for the necessary forms, complete them and return them to the Retirement Office. If you rejoin the Plan, your cur- rentretirement benefits will be suspended. `T[ER 1 RET[REES when you are rehired in an eligible position, your Plan membership will be based on the nature of your jab and the Tiers in which your employer participates. Your retirement benefits will end during your re-employment; they will start again the next time you retire. T[ER 11 RE°TIREE~ when you are rehired in an eligible position, you will re-enter the Tier II Plan. If your employer participates only in the Tier I Plan, you will enter the Tier I Plan. The next time you retire, your benefits will be recalculated and payments started again. VU~?RI~ FAR ~, ~IC?pI~.A-RTICIPATING ENiPLt~I~ER Employment by any employer that does not participate in CCCER~ has no impact on your benefit from C~CERA. You will continue to receive your full ~CCER~ retirement benefit in addition to any income your new employer pays. 26 Ft~R DIBABILITIEB I~IETE `T~ `~LII~ Jt~B If your disability is .caused by your job, you may be eligible for a disability retirement regardless of your length of service. FUI~ DISA-BIL.ITIEB I~C~T ~UI~II~IE+~CTEZ3 T® Y®UR JAB There is a service requirement to be eligible for disability retirement benefits for non job- connected disabilities. APPR~AVAL FQR >~ISABILIT~( RETII~EIVIEhIT All disability benefits must be approved by the Retirement. Board, which relies on medical experts in making its decision. If you meet all of the Plan's requirements for your Tier, you will be eligible for a benefit. Once granted, dlsab111ty benefits will continue for your lifetime. as long as you remain disabled. Tier I Plan Members To be considered disabled, an illness or injury must have caused you to be permanently unable to perform the duties of your job. Tier II Plan Members The Board must. agree that you are permanently unable. to engage in any substantial gainful employment. 1~lHEI~ T~ APPhY FC?I~ I~IBABIi~I`T I~ETIEMEI~IT You must apply for disability retirement either: ® while you are still employed; within four months after the date you stop working due to your disability; or any time after you stop working, as long as you are continuously unable to perform your duties from the time you stop working due to your disability until the time you apply, °~ ~~L~ T'1 I~ THE .Routing 1~~l~inten~nce 00000oooooeooeoooeooooeaeooeooooooooaooooeoogoooooeooooooooaoeoooooooooosooaoeoo~~ oeoooooooooaee _..,....... ~r ~~®e g® ~~~~~C~~Y~~~i~~~e The amount of your benefit and how it is paid depends on whether your disability is connected to your job. Dzsabil~ties Connected to Your Job Benefit amo~cnt: Your disability retirement benefit is the greater of: one-half of your final compensation, or your regular service retirement benefit. Payment o~t~ons: Far disabilities connected to your job, the automatic payment option is the u~od"~ i~~t~.~~~ which pays you the maximum benefit for life. I~owever, for Tier '~~';: ~ .,w.a. ~w aw aw vaam~v xawrv d.rav.x ~~rwm+m+mo,».m~ww~m+.~~,ar..+rmv,~.w:,w.ww.w.r.va.w,.rw.~.:~varv.r...v. yi~v..:i~.wwn:;:..aa:,ram:o-xx»aWk:aa.vw aw ws sn na ern me no-: ~wnivnmw.~wn.r. asaw»~.r za~as ae ao-w»z~ooo, ~ I benefits for job-connected disabilities, upon your death, your surviving spouse receives 100%~ of your monthly disability benefit. If you do not have a surviving spouse, the bene- fit will continue to your unmarried children until they reach 1 ~ years old, or if they are full-time students, 22 years old. If you are not married and want your beneficiary to receive a survivor benefit,. you lay elect ~~~~'t~~~ o~ c.~t~~~~ .arc.. Both pay you a reduced benefit for life. option two con- . ~n MU m..v+.v«+..«.w,.... +., .»..x +,~v.wx..i.. x., xn vx .vin.,,~..~~,e.a..~.a:a~w.wsa.,.aw+aa:a wo- am na a;.aswrhv aw nw..:~.r v2a wwa w.~v av a~.w~,av av,U..a»na na wx ~m~. mma an roa.w..'.n aw wo as ua. ...,...;: ~,. w. w. tiV. times 100% of your benefit to your beneficiary; option three continues 50%. isabi~~t~es Not Connected to Your Job Bene,~it amor~nt: Your disability retirement benefit is the greater of: . a formula which, for most members, will equal one-third of your final compensation, 1.S~Io of your final compensation for each year of retirement service credit, extended as if you had worked until age 65, or your regular service retirement benefit. Payment options: for disabilities that are not connected to your job, the automatic pay- went option is the ~~~m~~f~~ ~p~on~, which pays you the maxirnumbenefit-for li e. Upon ~a'i MYa Mf~W. !M ~Yn Yq'KK`p ..~~aw+AN\`\V ~U~a\U\.\v ~~~:u+Y.w~w+.wr.w.+M n~~mu ~w ~`W~ti•.N+.MY.NY Vn`wiN ip~.tiNVn JVi V~\*H'~Y J~M}h%AwWvN JN.W/.%~4~~ta W%tiG VN.w~kW WiFiS dV bF'I44' your death, your eligible surviving spouse well receive 60°10 of your monthly disability benefit. If you do not have a surviving spouse, the benefit will continue to your unmarried children until they reach 1 ~ years old, or if they full-time students, 22 years old. If you are married and want your eligible spouse to receive a survivor benefit equal to 100°10 of your disability benefit, you may elect ~~~~~~. ~, which pays you a reduced .i.WM%%M1.WbNV \ww Me.N~~r. We'.w vaf .tx..wn v.4 vrv ryw Nn.Y. rwxV rew m'.Wnw.%xM..vR.v>: +W VA ie Nw Wn va.W +M .W XOL benefit for life. If you are not married and want your beneficiary to receive a survivor benefit, you may t elect ~~l~o ~ ~~~~~ ~~° ~~ ~~~~ tree~~Both pay you a`reduced-benefit~for life. C~tion~two, con ~.~~ times 100°10 of our benefit to our beneficiary; option three continues SO°I0. y y 13ene~ a~n~~nt; Regardless of whether or not your disabilit is connected to our 'ob, Y Y ~ the amount of your. disability benefit is the same:.. • 4~°I© of your final c~n~pensation, and 10% of your final compensation for each of your minor children, up to three children. disability benefits from CCCE~A will be reduced by any disability payments you receive from other county or government plans, except Social Security and workers' compensation. .Payment options: The payment options for your disability benefit are the same regard- . less of whether or not ,your; disability is connected to your job. The automatic a went pY option is the ~~~l~~~d ~~~; which a~s~yQU-the maximum ,benefit for life, upon,.\\..q,a:,~~~~~ your death, your eligible surviving spouse will receive bo% of our monthl disabilit Y Y Y benefit. If you do not have a surviving spouse, the benefit will continue to your unman- ried children until they reach 18 years old, or if they full-time students, 22 ears old. Y If you are married and want your. eligible spouse to receive a survivor benefit equal to At the. time of your disability retirement, you will be asked to select aeon the Plan's ... _ g ~~~~ ~~~1~~~~~ ~~y~~~~~t ~~to~~~~~~~ ARetirement Counselor will explain each of these options to , vntr vn xv'M. OP NO MY'ab[IXrn~ry,Epp kV%R NP M4 NV\ivv:YrnH+1+~+1R??!)vyv'\Ub}Pq INWaV~`•U:0.JV Na Mt r~!nv \H.ta`wa` \\\~.\N W!\M aVt Jq \~~tV ~•rm,vrv rn•wrnY.w Nfl M?YR)M.~~JPI.~%•»MY>YN WA N~^rk k~4w.H rx nn tM.YM YH you ~n ~ull~. ~...v ti~v.~~~. .................. ................. YOUR ................. FINAL COMPENSATION .................. IS THE AVERAGE OF Y~ll12 HIGHEST MONTHLY COMPENSATION F'AR 36 . CON~ISECUTIVE MONTHS' F(~t~LlJDINC~ EI.,IGBBL.E DIFFE~tENT1AL~. Z9 .Routine .~l~inten~nce A V .. E E 0 • 000000000000000000800®#080000000000004000000000001000000000000000000040000.#! 0 0 0 0 0 0 0 0 0 0 0 0 0-0 0 ~4NTACT THE RETII~ENIEI~T t?F'F°IE A leave of absence well sometimes have an impact on service credit. whether service credit is affected depends on the circumstances of the leave. you should contact the Retirement Office if you have questions about a particular leave. PAID LEAVES In general, you remain eligible and contribute as a regular member during any paid leave of absence. 30 q~.NA~~F ~~ ' ~ 6 :f. d ~ f. f. ~ f~• Z , . U .. ~!.> ~ ~ U o ~; v d ~ ' w ~ ~ 0 OF ~ 0 0 0 0 0@ 0 0 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0@@ 0 0 0 00 $ 0 0 0.0 0 0 0 0 0 0 0 0 8 6 There are many tax-related issues that can have an i~pact on your retirement benefits. This section describes some tax regulations that affect refunds and lump-sum payments, but there are many other tax lawn that can apply to other aspects of your retirement bene- fits. It is a good idea ~o contact an accountant or tax advisor because these laws are com- plex and change frequently. MANDATARY '~ ~' PERCENT TALC W~THHOi~DINC~ ~ refund or lump-sum payment from the Plan is usually referred to as a distribution. .Federal law requires that 20 percent of taxable distributions be withheld to help cover the recipient's ~i.e., you or your beneficiary} federal income taxes. State law requires an additional 2 percent withholding to cover state income taxes.. The recipient may also be subject to state income tax and, if he or she is less than 55 years old, federal and state tax penalties.. . The law does not .apply to contributions. made with after-tax dollars or to payments of taxable amounts less than $200. The 22 percent withholding can be avoided with a direct rollover into an Individual Retirement Account (IRA) or retirement plan. These options are discussed below. WHAT ARE THE TA~ASLE PORTICyNS CAF A DISTR~DUTIC~N The taxable portions of a distribution: are: ® contributions made. with before-tax dollars, interest on contributions made with before-tax dollars, and ® interest on contributions made with after-tax dollars. FDR AMAUNTS ~,ESS THAN ~, ~ If the taxable portion of your distribution is less than $200, you will receive the full a - py ,~ :................: meat without 22 percent withheld. ~ REQIlII~ED ~` L,A11U TA ~`ITHHC~LD TAXES N DI~TR~~I~T'INSi .................. AVt}~D PAYING TRENT TAXES, DYER HAKE THE :.......:........: ~T~IE~UTIGN BADE YAELE ~E~TI.Y 3 'I Routine 1~Ir~inten~nee 0000000800000i00000000800000000000l0000®0®0000000068060000046000600000000000®®0080040004b008000®860000600g000000g000000000000f OOOOOOi00000mtlao Before any payments can. be made,. you must submit a Letter of Certification from the new employer's retirement plan or the institution issuing the IRA. The letter must con- tainthe following information: About the IRA: • name of institution • address to which the check should. be sent • account number • verification of .your participation About the retirement plan. • legal name of plan • address of plan • plan number • employer tax identification number (EIN} A check for the taxable portions of the distribution will be made out to the IRA or plan; the balance will be made out to you. The taxable distribution may be made payable to you and you may then roll it over into an IRA or retirement plan within 60 calendar days of payment. This presents a few diffi- culties, however, because you receive the money directly. This means: • the 22 percent withholding is still deducted, and • the 22 percent withholding is considered part of your income and you have to pay income tax and penalties. 32 To prevent being taxed and penalized on the. 22 percent. that was. withheld you must: make up the withheld 22 percent out o~ f your own resources, combine it with the 7$ percent you received,. and within 60 calendar days, deposit the .entire amount in an IRA or retirement plan.. The 22 percent of your distribution that was withheld will be applied to your federal and state income tax liability in the year of the distribution. But it will not be tared as income nor will it be subject to penalties. IF YOU ARE LESS THAI~I 55 YEARS CLD The taxable portion of your distribution was given special tax advantages to encourage retirement saving. Therefore, if you receive a distribution .before you reach 55 years old, the taxable portion of the distribution will be subject to an additiona110 percent federal tax penalty and 2112 percent. state tax penalty when you file your tax returns. CONTACT THE RETIREMENT OFFICE Please contact the Retirement C~~ice for more information about tax regulations and your options. Dote that CCCERA cannot provide tax advice. It is a good Idea to discuss your alternatives with an accountant or tax advisor. 33 4 U W a s O F ~o W U U V 4 37 Special Features REVIEW YOUR ANNUAL BENEFITS STATEMENT Your annual benefits statement has estimated projections of your retirement benefit. ~~ T Tt~M~T ~~°~~ T T~MAT~ ~~ w~°~T To et an estimate, of our benefit based on the actual facts and circumstances of your g y membership, make a written request for the information and send it to the Retirement Office. If you want your retirement benefit calculated using your .actual Social Security earnings records, include a co of our earnings .report -from 5~~ 5~~~~~~~~' Py y .:' .,~ .':..\'~'vC m~rix a"~tiw»vWi.1W aN Sl4W~H?YNY/A:Hf iM. ~.l. Mxh'+H.~pM++f w•~v wV ~a n~b'v 'phis is your personal information-the Retirement Office will not give out this informa- tion over the telephone. Instead, it will be mailed to you.. or you can schedule a meeting with a Retirement Counselor. Ht3'l1U YC?UR B~MEFIT 1S D~TERN~1~I~1~ Your retirement benefit is based on a number of factors such as years of credited service, solar histor , a e at retirement, Social Security status, age of your beneficiary, and the y Y g ~~~b~~~~ i~t ~~y~~~cn~ i:~~~~~n, you chose.. ~ ~d~ri ~~ .~..:M-~.~~..~~~~.~- As you buildup credited service. and. as your salary Increases, your potential retirement benefit also increases. If you are covered by Social. Security, your potential Social Securit benefit also. increases radually until you reach the maximum Social Security y g benefit. ~~-ST ~JF ~,~V'~1V ~®~lU~TM1EYVT~ Your benefit will not change after you've started retirement except that you may receive cost of livin adjustments from the Plan. These adjustments reflect .the prior year's cost g J of living index and are made on April 1. The maximum annual ad'ustment is currently 3 percent for Tier I members and 4 percent J for Tier II members. ~T~REM~~T ~~~~'T ,~~~ T~-t~~ Retirement benefits are generally taxable as income except in a very few, limited cases ~e.g., disability retirement). You should ask your accountant or tax advisor about taxes as you prepare for retirement. If you want to have taxes withheld from your retirement benefit payments, complete the necessar withholding forms at the time you retire. Each year, CCCERA will send you a y Form 1099 for use in filing your income taxes. If you decide to change your withholding amount after yon ret~.re, contact the Retirement Office. 38 RCI-ISIING I-I~~K SOUR EL~ICI~II~IT~' F't~R PL1R~~IIC~ EI~~ICE ~R~DIT You can purchase service credit if it was interrupted for one of the following reasons: Unpaid Leave of Absence Due to Illness If you were paid during your leave of absence due to illness,. your contributions probably continued and you continued to earn service credit. Call the Retirement office if you are unsure. If your leave of absence for illness was unpaid, you stopped earning service credit. You maybe able to purchase service credit for up to 12 consecutive months of the leave once you have returned to active employment. If you are eligible, you will have to contribute the amount of contributions you would have made during your .leave plus any interest those contributions would have earned. Time you worked Before Becoming a Plan Member If you worked for a participating employer and were not eligible for Plan membership (e.g., you worked less than part time or in an ineligible position), you may purchase cred- it for the time you worked before you became a Plan member. If you are eligible, you .will have to contribute the amount you wouldhave contributed during that time if you had been eligible, plus any interest those contributions would have earned. Prior Public service You maybe eligible to purchase service credit for service with: the federal goverl~rrrent, including the military, the State of California, or any county, city, or agency in California, or district in Contra Costa County that is not participating in CCCERA. .................. .................. ~~~~~ T~~T ~~ ~T~~~~~T ~~v n~a~ ~~ ~~~~~~~.~ T~ ~~~~~ ~~cK~9 ~~u~ ~~~T ~~~~~ ~~~®~TQ Special Features To be eligible to purchase Credit for earlier public service: If you are eligible, you must pay two times the amount you would have contributed if you had been a CCCERA member for that period plus any interest those contributions would have earned, This service credit does not-count toward retirement. It's important to note that pur- chased credit for prior public service does not count in meeting the requirements for ser- vice or disability retirement. This service credit does, however, increase the amount of your retirement benefit. Military Service You maybe eligible to purchase service credit for the entire time you were in military service if you: • were a member when you left to serve in the military, and • received an honorable discharge. You must-pay two times the amount you would have contributed if you had been a CCCERA member for that period plus any interest those contributions would have earned. This service credit does nvt count toward -retirement. L1p to five years of purchased service .credit for military service does count in meeting the requirements for service or disability retirement. All purchased service credit for military service increases the amount of your retirement benefit. Redeposit of Refunded Contributions If you took a refund when you terminated employment with a participating employer, you may be able to redeposit that amount into the CCCERA Plan once you are rehired. If ou do, you will also have to deposit enough money to cover the interest those contribu- y tions would have earned if they had remained in the Plan. You will receive service credit for the prior service when contributions are redeposited. Domestic Relations Orders If part of your service credits were awarded to a former spouse or dependent children through a `~e~i~~ ~at~~~~s ~~d~° and your spouse, took a refund, y~~u ~~aay be able to purchase service credits equal to those awarded. 40 ORES 4 _:_. ~P ~: b y a u W U 4~ V roo•oooeooooeoseoseoomsosooooo00ooooosoo•o•ooosoooooooooaooaooomeooomaoooeeoooooaseooeooosaooosoeooooeoo.ssaoooooaoesooooooooom ~' 4 ~a J a .. 4 F V V~EI~i Tt~ PURCHASE SERVICE CREDIT You can purchase service credit at any time that you are an eligible member of the Plan. You may even purchase service credit within 12o days after. your retirement date. DETERMII~+IE T'HE C+DST DI~ YDLIR SERVICE CREDIT Write to the Retirement Office and request an estimate of the cast to purchase your eligi- ble service credit. Your cost is based on what. your contributions and interest would have been during the period of service you. are purchasing. you will be sent written natifica- tion of the amount. PAYING FOR Yt~UR SERVICE CREDIT The plan offers up to three ways. to pay for service credit: • lump-sum payment, payroll deduction (if available through your employer), or a combination of lump-sum and payroll deduction (if available through your employer}. You must sign a Purchase. Contract if you. well use-payroll deductions to pay for the purchase of any service credit, LUMP-SUM PURCHASE t?F SERVICE CREDIT You may purchase your service. credit with a single payment of after-tax dollars. If you are purchasing service credit within the 120-day period .after you retire, you must use this method. service credit purchased with a lump sum will be posted immediately to your account. Note that you cannot use a rollover from a 401(k) plan or other retirement plan to purchase service credit. Tt3 PURCHASE SERVICE CREDIT i~UITI-I NICNTI®LL.Y PAYRC)LL DEDIJCTI~I~S You can purchase service credit using monthly payroll deductions. You may choose to have deductions made either before tax or after tax. Each has its. advantages anal disadvantages.. ~~ Special Features Limlt~ on P~ymen~ schedules Most types of service credit can be purchased in one-year increments, except for rede- posit. of refunds. There is na limit on how much service credit you can purchase and pay for in a year. All payroll deduction Purchase Contracts must be paid in full by your retirement date or date of termination. The longest you can take to pay for any type of service credit, except that for "Leave of Absence" or "Time Before Becoming A Plan I~Iember," depends on the amount. The longest you can take to pay for service credit to make up for an "Unpaid Leave of Absence" or "Time Before Becoming A Plan IVlember" is the length of service credit being purchased. In other words, six months of service credit must be paid for in six months or less. ~2 ~UgES ~ P f,. ~ 6 v ~ a W U U ~ U ~, v ~ ~. ~Q OF ~'he date your account. is credited with purchased service credit depends on how and when you pay for It. Lump-Sum Payment If you pay for .service credit in a lump. sure, it wi11 be posted to your account irnrnediately. Payroll Deductions If you pay for service credit through before-tax or after-tax payroll deductions, it is post- ed to your account when you have completed your obligations under the Purchase Contract. ~j IF YOU CAN'T COMPLETE THE PURCHASE CONTRACT Pro-Rata ~redzts Pro-rata credits wi11 be posted to your account if you are purchasing any type of credit except a redeposit.and you do not meet your contract obligations because you: * germinate employment, receive a disability retirement, or die while an active plan member. Refunds for Redeposits x.11 of your contributions and interest will be refunded and no credit will be posted to your account If: you are using payroll deductions to redeposit a~ earlier refund, and you do not meet your contract obligations because you - die while an active plan member, or - do not pay the balance due within 30 days of :being granted a disability retirement. Special Rule for Disability Retirees and ene~iciarles If you are using payroll deductions to redeposit an earlier refund and you are granted a disability retirement, you have up to 30 days to pay the balance due on your Purchase Contract. If you don't, no service credit will be restored and all contributions you have made will be refunded. If you are using payroll deductions to purchase any type of service credit except a redeposit to restore an earlier refund and you die before fulfilling the obligations of your Purchase Contract, your beneficiary has up to 3o days to pay the balance due, If your beneficiary doesn't pay the balance, your account will be posted with pro-rata service credit for which you paid through the date of your death. 43 In the meantime, your contributions will keep earning interest. SUBMIT A REQUEST FOR DEFERRED RETIREMEI~IT If you are eligible, .you will automatically be given deferred retirement membership unless you otherwise notify the Retirement Office. If your employment is terminated, a Request for Deferred Retirement Form will automatically be sent to you when you become ineligible for membership in the Plan. You should complete this form and return it to the Retirement Office within six months after you terminate employment or within twelve months after a layoff. You will contin- ue receiving interest on your account regardless of when you submit the form. QUALIFYII~IC FOR RECIPROCITY You will qualify for ~i~~cit if, within six months after your employment terminates is K.. erne ao ar-iex+n.wmxn .row.>an rx x..wN. a~ee~aw as w+w~nr o-van za »v aa•w een oa .n+s..wan!e+>+vr.v~a.w.wa~+.vna,.. sw ~os,w,wfa aw au nw wr raw.na xe aow wa sx a. aW a.~x. w. na.w~aw +• <. (twelve months after a layoff, you are employed by: • another 1937 Retirement Act county, or • a public employer that participates in, or is reciprocal with, California PERS. You must leave yaur contributions and interest in the Plan and you must request reciprocity by completing and returning a Request for Deferred Retirement Form. TO REQUEST A REFUND You may request a full ~°~`~~ any time before you retire, unless-you have reciprocity and~~- f are still working. TO START DEFERRED RETIREMEI~IT BENEFITS You may receive deferred retirement benefits any time after the date on which you could have started ~r~~ie r~~~~~c~if you had remained in active employment. ~~yRES tiP '. 4 b M ~' SL 4 ~' W _ ~ '~' \' U U ~ ~~ U ~ .,~3r G ;~~. pB 00!0000000000000000@4.090®000900000f 00000000004000000000000080000l0000000090080000000080000000008000000000000000000000000000000 ~ Q• a ~° OF i you must begin receiving retirement benefits under the ~~1~~°~ ~~~~~~ beginning no later than. the month after you reach the compulsory retirement that applies to you, if any, or on the April 1 st following the year you become ~o l/2 years old, if you have stopped working. STAY III[ TC3UCH WITH THE RETIREMEI~IT ~I~F'IE Vince you become a deferred member, please keep in touch with the Retirement Office so we can notify you of changes that could affect your retirement benefits. 45 Refunds are not permitted if you become Ineligible for Membership in the Plan but are still working for a participating employer. This would occur if you started working less than half time or if your position was moved to temporary or intermittent status. In these circumstances, your contributions remain in the retirement plan earning interest, whether you are vested or not, until you terminate your employment, as described in the paragraph above. R~:~T"1RI~TIC~v ~ REFU~~~ There are no restrictions on refunds if you terminate employment. There are, however, some restrictions on refunds if you are ineligible for Plan membership but continue to work for a participating employer, as described. above. In addition, employer subventions (employer-paid member contributions made with after-tax dollars) are not included in the account balance available for refund. Within ~0 days of your termination, the Retirement office will. send you a packet of materials that describe all of your options and the amount available to be refunded to you. Please read the materials carefully and schedule an appointment with the Retirement office to discuss the information and other alternatives, such as delr~ ~~lii~~~~~~~~~~ _...",~~~~,~r ~„~.~~ membership. For more information on refunds, contact the Retirement office and give them your full name, Social Security number, employee number, date of termination, current address, and current telephone number. There are likely to be ta.~k~ ~~~~~1 ~~~~lt~~~~~~.due on at least part of your refund, so it's,,.a~,w~„ ~. ~~~~. Vn\\T~.W~Ynt'.[~Y»wrV M+NSO M~+'~n ~m xm ~/nh++f.`sw wr wxT+N~~W xq ~%V.W a~~P.v NV aU\V,k~~.~\v~1~\V.W WN A}. RS MO NA'fp %h Hf NA !!^e!. A... good idea to discuss your decision with an accountant or tax advisor. If the contributions to your account were made with before-tax dollars, your entire refund could be taxable as regular income and subject to federal and/or state penalty taxes. If the contributions were made with after-tax dollars, the taxes on your contributions have already been paid but the interest could be taxable and subject to penalty taxes. 4C ~~RES ti~ 4 b v ~y Q W U U W ~ ~ U ~ ~ ~ ~ 0 0 F '~ 1 Ilol~ ~~~~ 1 ~.i 1'~~4.# Rr~ 1 e~i You must request a refund within certain time limits or else you will forfeit your right to your contributions and interest. They will then become part of the pension reserve fund. If you became a member of the Plan .before January 1,197, you have 1d years from the date of your termination to request your refund. If you became a member on or after January 1,197b, you have only five years to n~al~e yaur request. F'IJT'U~E REEP~-SLT' Once you take a .refund from the Plan, your account is closed and you no longer have any rights to benefits from the Plan, ~Iowever, if you become eligible for Plan membership at ___ a future date, you can reestablish your earlier service credit by ele~f~s~~i~~`thegc~ntribu ~~~ bons that were refunded, plus the interest they would have earned during your absence from the Plan, S ecirzl Features .~' E P R oooeooooooooeoooeooooooaoooooeooooooooeoooosoooooooaaoeooooooaoooooooats•'i WHO HAS REO[PROAL RET°~RENIENT' PLAN Employers with retirement plans under the 1931 retirement pct (like ~C~ErA~, or that participate in or are reciprocal with California PErS, often allow for retirement plan rec- iprocity. HOV4~ PLAN RECIPROCITY 'WORK If you qualify for reciprocity, a new employer may base your retirement contribution on your age when. you first entered into any reciprocal retirement plan, This could result in your paying lower contributions. When you retire, the benefit you receive from the Plan will be based on the highest pay you received under all reciprocal retirement plans, not necessarily the latest plan, TO ARRANGE FOR PLAN RECIPROCI7"Y Contact the retirement Office to see if your prior or new employer offers reciprocity with the CCCERA Plan. If there is reciprocity, you must do the following within 18Q days (or one year after a layoff): terminate your membership in the prior plan, • leave your contributions and interest in the prior plan (if you are leaving the CCCERA Plan, you must submit a completed request for f~eferred retirement Form to qualify far reciprocity), and become a member of the new reciprocal plan, ~= An additional .monthly allowance may be payable to your eligible minor children if .your job-connected death results from external violence or physical force. If you do not have an eligible spouse or minor children, your beneficiary will receive: • your contributions, • the interest on your contributions, and • one month's salary for each full year of service credit, not to exceed So% of your final compensation. 1~~H°JC)E-C~I~INECT~L~ ~E~4TH The benefit depends on your length. of service at .the time of death. At Lean Five Years of Service If you have at least five years of service at the time of your death, your eligible spouse or minor children will be entitled to: 60% of the disab~l~t retirement be , :: • ` ` y nefit you ;would lave received if .you were eligible for a ~~~~~jo~~~~~~~~~~~~~~ d~~~itt °t~r~.~~t immediately before your death. If you: do not have an eligible .spouse or minor children, your beneficiary will receive. • your contributions, • the interest on your contributions, and • one month's salary for each full. year of service credit, not to exceed 50% of your final compensation. Less Than Five Years of Service If you have less than five years of credited service at the time. of our death, our Y Y beneficiary will be entitled to: • your contributions, • the interest on your contributions, and • one month's salary for each full year of service credit, .not to exceed 50% of your final compensation. 49 ~ eci~l.Fer~tu~es ~' 0 0 0 0 0 0 0@ 0 4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ®0 0 9 0 0 0 0 0 0 8 0 0 0 0 0 0 0 0 0 0 0 0 ®0 0 0 0 8 0 0 0 0 0 0 0 0 0@ 0 0 0 0 0 4 0 0 0 1 J1° ~T dour eligible spouse or unmarried children who are less than 1 ~ years old {or if full-time students, less than 22 years old) will be entitled to the greater of: 60°10 of the ~c~»~,~°~~ ~~~~i':~~~~~~~~~~~ ~~~~~~elnit or j~~1~~~~~.~~~~~~~ce~. ~~~~a~~~~, ~~z~~yc~r~~~~~ benefit ~..~ ~. ~..w. ~. ,~v~ ,.. ,. ~ w {paid under the unmodified payment option) to which you would have been entitled at the time of your death. This benefit well equal at least 24% of your final compensation. In addition, each of your minor children {up to two children} well receive: • 20% of the service retirement benefit {paid under the unmodified payment option) to which you. would have been entitled at the time of your death. The maximum total benefit paid to your family is 100°10 of the service retirement or dis- abilit retirement benefit {under the unmodified payment aption) to which you would y have been entitled at the time of your death. The maximum will be .the greater of the two. The minimum total benefit paid to your family is 60°10 of the service retirement benefit paid under the unmodified payment option. 1VC~~1-Jt~B~~~NN~~TE~ E~4'T The benefit depends on your length of service at the time of death. At Least Ten Years of Service If ou have at least ten ears of service at the time of your death, your eligible spouse or y y minor children well be entitled to the same benefit as if your death were connected to your job. This benefit is described in Section ,above. Less Than Ten Years ~f Service If you have less than ten years of credited service at the time of your death, your benefi- ciary will be entitled to: ' yflur contrlbutlonS, the interest on your contributions, and • a $2,000 lump-sum payment reduced by any .lump-sum death benefit available from Social Security. 50 ~~[VE ~` n._ ~d~ninistrative In o 1~ Section Four f a > a E T E a oaoraaeaoeaaaeaeaoeaaaaoaseaaoaaaas•baaaaosaeaoaaaaeaaaa+ • a a • 9 ~, a ;'~; a { 8~ E. ~ 4iY ~ Jm0' 6 E ~ E # 'ROF' E l T ~ I.d~ E l `i # 4 9 9 you can reach us at: 0 a i a • a Contra Costa County Employees' Retirement Association a 1355, Willow Way, Suite 221 e a Concord, California 94520 v (925) b46-5741 a a 0 a (925) 64~-5747 a ~ . a 0 RETIREMENT ®FFICE HOURS . 4~ The Retirement Office is open from Monday. through Friday, 8:00 a.m. to 12:00 p.m., and from 12:30 p.m. to 5:00 p.m. The Office is closed on weekends and holi- a days, although a voice mail ..system will take messages when the office is closed.. v a a i Whenever possible, please make an .appointment before coming to the Retirement Office. We will be better prepared to assist you if we have the o ortunit to review pp Y a our files before our visit. y y a a a a e SENSITIVE INFORMATION a a For your security, all requests .for information about our account must be trade in y s writing.: . . a a a Please note the Retirement Office will not accept chap es in beneficia ,address, g ~' withholding, electronic fund transfers, or requests for: refunds over the telephone. a a a Nor will the Office give out account balances, refund information, or benefit a N. estimates over the telephone. 9 a . ~; a a a a 0 0 a a >~:.. 0 ~{ 0 ~~~. a ~. ; a a 0 a a 0 a a 0 .y' a :<~. `' a 0 a 0 0 0 0 ~~~ 9 ................ 9 '::.. a a a a a 0 0 -~ :....~.........,.. ...... ............ a a ' a ! I~ a 7 ~~ I~6e9 ~[IEEHSIT q 9 ' ~ 8 .................: ~~ ~ M ~ ~ ~ ;........, ~ E ~P ~~~~~~~E TO ~~ h ~~ ~ Z ............... ,............,.... ~ ~,~ o g~g~ 0 ` ~~~~~~ ~ ~N~OSa8~9J-1 ! ~ON d 4 ~~, ~ 6~N@.~ F~~~~~Tf-'~4~eE 9~E~~~®96r~ ~ N ¢ 0 ~~ ~T9!'i~IYBE®~T ~~~Na ~: .Administrative In o 0 0! 0 0 0 0 0 0@ 0 0 0 0@ 0 0 0 9@ 0 0 0 0 9 0 0 0 0 0 8 0 0 0@ 0 0 0 0 0 0 0 0@ 0 0 0 0 0@ 0 0 0 0 0 0 0 0 0 8 0 0 0 0 0 0 0 0 0 0 0 0@ 0 +k !k`.S In ~lovember 144, the citizens of Contra Costa County voted to establish a retirement plan for County employees under the guidelines of the County Employees' Retirement Law of 1 X37. As a result, on duly 1,1 X45, the Contra Costa County Employees' Retirement Association was born. CCCERA's plans are available to eligible employees of the County and participating ublic agencies located in Contra Costa County. So, 'even though CCCERA operates p under state laws, the plans it offers are not state plans. A Retirement Board made up of nine members plus one alternate manages the Contra Costa County Employees' Retirement Association. There are four County residents appointed by the Board of Supervisors; two Active General members of CCCERA who are elected by the Active General members; one each retired, safety, and alternate safety member elected by their respective memberships; and the County Treasurer. Except for the County Treasurer, each member's term is three years, The. Board is responsible for managing the Association. This includes management of the Plan's assets and investments and administration of retirement, disability, and death ben- efits. The Board operates the Retirement C}ffice and also contracts with outside professionals as needed. Legal counsel is provided by County counsel as well as outside legal counsel, Independent actuaries, retained by the Board, assist in valuing the assets and liabilities of the fund. The County's health officer provides medical advice to the Board. Other med- icalexperts are sometimes called upon to help in deciding disability claims, Investments are made by professional advisory firms according to policies set by the Board. Retirement Board meetings are usually held on the second Tuesday of each month at 1355 willow way, Suite 221, Concord, California. Meetings are open to the public. Comes ondence, requests, or inquiries requiring the attention of the Board should be sub- p muted in writing to the Retirement Gffice. 54 Bethel Island Fire Protection Distr~c~ Bethel island .Municipal improvement District Pyron, Brentwood, K:nightsen lJnion Cemetery District Central Contra Costa Sanitary District City of Pittsburg Contra Costa County Contra Costa County Employees' Retirement Association Contra Costa County Fire Protection District Contra Costa Mosquito and Vector Control District Delta Diablo Sanitation District Diablo Water District East Diablo Fire Protection District Housing Authority of the County of Contra Costa Ironhouse Sanitary District Local Agency Formation Corr.~mission ~oraga-Orinda Fire Protection District Rodeo Sanitary District Rodeo-Hercules Fire Protection District San Ramon Valley Fire Protection District 55 ~l~ministr~tive In fo How TAE P sooooeoooeeo®oooooao®oaooooo0000oooooaooooo00000000ooooos~s Broadly speaking, the purpose of member and employer contributions is to provide the funds CCCERA needs to pay for the benefits described in this IVlembers' handbook. This amount is determined through a set of fairly complex calculations that consider, among other things: • the benefits CCCERA currently pays, the benefits CCCERA will likely pay in the future, * the number of members in the plan, • how long contributions for each member are likely to continue • potential inflation, and • potential. earnings on investment of plan assets, Independent, outside actuaries hired by the Retirement Board conduct these calculations, referred to as "valuations." The results of these valuations determine if employer and member contribution rates will support the Plan's obligations or whether contribution rates need to be adjusted. The Retirement Board is required by law to have actuarial valuations every three years. Currently, however, CCCERA has a valuation performed annually. 56 ~~~ ~ P h z ~~~ ~ ~ ' ~;~ '' a o a ~ 4~ iNf ~ ~ ~ Ask for a Request for Earnings Benefit Estimate Statement. They will send you a simple form to complete and return. When you return this form, the Social Security Administration will mail back your com- plete earnings history along with estimates of your benefits for early retirement, full retirement, and retirement at age 70. They' 11 also give you an estimate of the disability benefits you could receive as well as the amount of benefits payable to your spouse and children due to your retirement, disability, or death. If you are age 60 or older, you can get an estimate of your retirement benefits by telephone. Td3 DECEIVE FULL SOCIAL SECURITY BENEFITS There are. minimum retirement ages established by the Social Security Adrrllnistrationfoy receiving full Social Security benefits. Fear Of .Birth Full Retirement Age 193 or earlier 65 1938 65 and 2 months 1939 65 and 4 months 1940 65 and 6 months 1941 ~~ and 8 months 1942 65 and 10 months 1943-1954 ~~ 1955 66 and 2 months 1956 66 and 4 months 1957 66 and 6 months 1958 66 and 8 months 1959 66 and 10 months 1960 and later 67 CTI°IER INF®RNITIC FRCIVI T}~E CCIa4L SECURITY ADNfINISTRATICN You can call the Social Security Administration and get the latest information ®n a number of issues that can affect your Social Security benefit. Some of these are: how much of your income is replaced by Social Security reducing your benefit if you work after collecting Social Security reducing your benefit if you retire early increasing your benefit if you delay retirement 57 _ ~ E' ~ anss~ronn+~ a~r~rema~a~x~eeRe~~ ®e~~ammsa~muAasw~m~~aw~a~awsa~eec ~ssa~maa~anmasRSsgee+sse~~~~a~s~e~a~~~_e~a~aeam.ee~aa~,asro~a~aa~mer~a ?~~a r .»wrwww,a.,,,,., ~ » p ~ `6[ ~ ~J A 4 ~~ x ~~ +~ ~' ~' ~~> ., ~.+Cna~#'~mmb ~,3:r wroMy.UTU„.w.,uv.wMw 4~a~auSY#~1~~~~1~lib ~~'~>~! ++.wnryii.iiin%%//f//N/% N// rr i,'~~~~~:I~.Mh YY}MW Ytlr~gY~fi~~6ttlY6rY0~et~dNiirY~~S~~i+l'~rtl~ SUVf «vH.. /:n..w....w~....w...w.. .......p ............ '...~ .._:.:'.:::..i ~d~iti~dsbd?itiaibl6#7040~u~au~iititi~0a~~u~e~oS~~t~3~&iti3~-~~4i~~dei'avreg,~Elaai~~s+~,~ 6 '1 ~lo~~sheets x#oese##eeoe##eeo#eseoe®®#seeee#•##e®+1er~ o~ E BERS o-r vERE B v O C 1 A L ECU R I T Y AIa.U~ATI.. YOUe~ ~I~A~ A ^ E~A~~' MTH~ ~o4~M~E~+~niAT~ Add your monthly base salary for your highest 12 consecutive months, then divide by 12: 12 Month Total = $ divided by 1 ~ _ $ Write the result in the space below provided for this step., YOUR TIED l AGE FACTOR On the Factor Table at the back of the Handbook, find your age, then look up the Tier I factor and write it in the space provided for this step. MATH Multiply your final average compensation by your Tier I age factor. YEARS OF SERVICE Enter your years of service. YOUR MONTHLY RETIREMENT BENEFIT Multiply the result of Step ~ by your years of service to estimate your monthly retire- ment allowance under tY~e Unmodified Retirement Benefit option. f#RRk,RRkA 1:4`#R#R:#RR##:#,R #R.~#R!!##.#kk#e.: a~RRR#:?RRRRR.###a4 R:Ra} R#R#afR#RORRR4,4#RRa!i.##RRR~:###R#~Rk(lRR::R##•R##kR#:R 1CkRRks Cta/#,# ~~~~oo z .~~~ o ~, ~'~ R ~ '~}3,J, ~` * ~~~~uuiw» e+s##ees~ e6xx+t+eree~+l~-e ~` ~ ~ ~ l arr++a+rxe`eexx+~'eeeee+-eleebxaoo'es ~au..,,....r~imr.~~.M.w..~..a~ eedxuwrr~xerr~exr~r+eeyx+o+,-mac+eel+lermle~r+~ael~n+ameeeex~~`• ~CLI~LT 1JR I'VE ASE T L, T~ Add your monthly base salary for yohr highest 3b consecutive months, then divide by 3b: 36 Month Total = $ divided by 36 = $ t~R TAR 'I E FT~DR Can the factor Table at the back of the ~landbook, find your age, then lookup the Tier ~I factor and write it in the space provided for this step. A MATH Multiply your final average compensation by your Tier II age factor. Q YEARS OF SERVICE Enter your years of service in the Tier II Plan. ~c~uR ARE®~'~'~T ~~,~,w~~~ 1Vlultiply the result of Step by your years of service to -get your allowance before the Social Security offset. SC3~~~. E~~RIT~ F'F'E1° Enter your Social. Security offset from the Tier II :Social Security offset Worksheet. Y~LIR N1t~THLY RET[R~MEI~iT REEF~T ..Subtract your Social Security offset amount from your pre-offset allowance to estimate your monthly retirement allowance under the unmodified retirement benefit option. µ ~~ ~~ 63 ~Iorksheets T RRSRRRSR#RR#RRRR#RRRRRR##oRloR#RRRRR#RRRRR#!RloR##RO###RRRR#!#oRR#a Q MATH Multiply your Social Security benefit by your years of service. TIER 1I :SOCIAL ~ECURIT~ F"ACTC~R On the Factor Table at the back of this Handbook, find your age, then lookup the Tier II Social Security factor and write it in the space provided for this step. 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O O O O O r 0 O ' N' ch O r 0 O (0 O O e- 0 O O O O N O O '~t ~- O N O O O N ~ N. O O O 'cf O N O O N O , O N O O cD c0 O N O O C0 ~ O N' O O N O O N O O' d' G e- N O O a0 r- ~- N O O 0 M r N O O et tt e- N O O O ~d e- N O O O f` r N O 0 0 0 0 0 o c o 0 0 0 o c o 0 0 0 0 0 0 0 0 0 0 0 0 0 o c o c o 0 0 a~ a,o Attachment L ~.~..,,..~....__.... _ .._... ~ ~.~...~..._ _.._.~...... ~ a ~~ ~ U ~.. .~ ~ ~ ~ . ~ ~, ~ ~ ~ ~ ~ C ~+' ~- v ~ ., . ~ ~ ~ v ~ ~ ~ M . ~ #~: ~ ~ o ~ FFFiii ~ °,; .~ Cif ~ N ~ ~ Q,~ ,~ W ~ N :~s, w . '. ~ ,,' v -~ : , ~ ~ ~ ~" ~ .~.., ~ ~ ~ '~ n r-I L 1 ~ ~ ~ ~ ~ ~ • M ~~ O ~ r~ ~ ~ ~ `` . r .. ,, `,fi .s •.~. v ~ ~ ~ ~ :~' Y .~ ~ v '~~ ~°. W ~--, . 1~r :; ~~ W ` ~ ~` ' ~, w ~p~ . l'~~C;~~10~ U ~ ~ U a w ~- O N ~ N N N GO O ~ : N ~ N C0 00 N N ~ to ar- 00 00 GO ~ 00 00 00 00 ~- 00 N 00 N 00 N O. M O:. 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Contra Costa County Employees' Retirement Association Afitachment M 1355 Willow Way, Suite 221 ` Concord, CA 94520-5728 Tel: (92S} 646-5741 Fax: 925 646-5747 February 18, 2000 Debbie Ratcliff, Controller Central Contra Costa Sanitary District 5019 Imhoff Place Martinez,. CA 94553 Dear Debbie: Earlier this week, I received a telephone call from Colette with a question on how Central San should apply the payment of Holiday Compensation time for Retirement purposes because one of your employees has decided to cash out his accumulated hours prior to retirementltermination. It is my understanding that Central San currently has no policy on the application of the payment of this pay item as to how much may be accumulated or when this item may be cashed out other than at the end of a person's employment. The Holiday Comp pay item is part of the original list approved by the Retirement Board as an includible pay item after the. Ventura decision was handed down. In applying the Retirement Board Ventura policy amended 1/13/98, lump sum payments of items such as vacation, holiday or sick leave paid at termination is limited to time that could be earned/accumulateddunngthe final compensation year .(with .the exception of sick leave for Central San). In addition to the previous items, annual "cash-outs" of vacation, holiday or sick leave that is sold back to the employer under a cash out agreement is includible in compensation earnable. Central San currently does not have an agreement in place per Colette. CCCERA's position on the application of the payment of Holiday Compensation sold back prior to termination is that it should be includible in compensation up to the limit of what maybe accumulated (earned) in a 1 year period. For example, if Central San has 13 holidays, then I3 X 8 =104 hours would be includible for Retirement purposes. We also are requesting that Cenl7ral San develop a written policy regarding the accumulation and sell-back limits for its employees in order to avoid the uncertainties that could occur with future cash-outs. I -youhave any queattans-r please: don-'_ t-h~s~tate_ ta,call or-write,- . _ _ _ _ . _- - -..._ __ _ __..-. -. Sincerely, ~ ~~ % I r 1 f Rick Koehler Retirement Accounting Manager cc: Cathryn Freitas, CCCSD Nicole Diller, Trucker-Huss 11CCCR_FS!SYS~SI~AR~D!AccountinglDistrictsiCeniSan ~~oliday Camp ltr 2-18-OO.doc Retirement Planning -How Does Ventura Affect You?? The following information is informational. If you need help planning your retirement or have specific questions, contact the Contra Costa Employees' Retirement Association at (925) 646-5741. VENTURA SUPREME COURT DECISION: • Ventura Decision effective October, 1997 • Allows additional types of pay in addition to base salary, to be included for retirement purposes • Definition of base pay =regular salary + longevity (for service over 10 years) + registration differential (if any) + retirement subvention (for service over 30 years) • Overtime is not included in your retirement calculation • Additional pay types included due to Ventura: • Night shift • Swing Shift • Standby • Out of Class • Cafeteria plan -all options • Scheduled Holiday (Plant Operators) • Medical Waiver • Meal Allowance • Vacation pay-out Employee's retirement calculation based on final compensation period - (usually the last twelve months of pay) Terminal compensation is also included in the employee's retirement calculation. Terminal pay is the lesser of the employee's last year of vacation and sick leave accrual or the actual amount paid for time on the books. • Example One: Employee's accrual is 4 weeks vacation and 3 weeks sick. At termination, the employee is paid for 5 weeks of vacation and 20 weeks of sick leave. For retirement purposes, 4 weeks vacation and 3 weeks sick leave are included. • Example Two: Employees' annual accrual is 4 weeks vacation and 3 weeks sick leave. At termination, employee is paid for 1 week of vacation and 1 week of sick leave. For retirement purposes, 1 week of vacation and 1 week of sick leave are included. Holiday Compensation (earned at straight time) paid at termination up to one year accrual 113 holidays times 8 hours) Note: Administrative Leave is subject to use-it-or-lose-it rules. If there is time left at time of retirement, employee will lose these hours and they will not count towards retirement. So, use these hours first! PAULSEN/WALDEN DECISION: • This applies to retirees who retired before 1997. Allows for an adjustment to their retirement compensation based on Ventura rules. March 1, 2000, file: ventura notes ~^ •/ I rn z z Attachment N ~ z'~ ~ - 0 0 z Q ~~~ o ~ W W 0 ~ z ~ o~ ~ ~ 0 1 4J a ~~ ~~ ~o .~ o~ ~~ 'i ~- ~ Vhf .... V ~ 1-A~$!• ~ ~~ ~~ ~ ~ ''`' ~ '~?r 0 ~ ~ ~ ~. ~ ~ ~, '~ H ... ~ °~~oHir'toS.~ CU 4~ O n.r V •~ a 0~ o °o O ~N N ~ •0~ DO ~ r• ~~ ~ L ~„', ~. N ,~ 0 a w qC m Q C ~N ,0 a a 00 V Q • w .c ~ L ~ ~ __ o s- .yORf ,~41 "' L.,~N Nc 0 a00 ~Q N3~ ~~o N .~~~ ~H~ •o~ ~~a~ °a~, ago a~~~ ~~ ~~ ~~~ UsQ c 4? ~ .0N N4?.0 ~~V c a ~ ~ ~ ~ ~ ,N L ~ 4? ~ C > ca oc ~m_ V a. 'S .y ~ ~ ° ~ 0 • 'Q ta•0 C Q fl.U p ~ 0 - U .. +-+ N O Q ~ iIS a~i3 oc~am.~ ~°~ 0 t0 ,(? 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Y/ 0a•vs p~.+~N~XU~ ~~0 ~Q00~ 0.-L~ ~~ Q3Q~~C=~s~ 'p 0 ~ N („~ ~- ~ OLD ~ O C ..'..'~, >.L L wC ~~ N 0 0 .~.~ Q O G} 3 ta.~-~ o ~ C~Ot~ ~,tn>+L>+3c N~Q1 ~~~ ~~'~d00NS43•~~ '~.p~~~VYONN=,-~+.- Y O.a tQ~00Qy0 QL.C '. ,~U '~,C."'*'' ~ Q' wcU~'pc03t~'fl m~:r= ~ 0 0 ~?'~-- 7,),Q Q v N~ w 3 0 ~ to t~ 0 `- w >"Q >-0 to ~0 to Q} Lp a.co~.~ca o~,c~ ~~ ... ._ ~ ~.V~4~= ~°cac> > E a ~~rca _ ~cc.N~ a;o ~ ~ ,~~ ~~~>-°°c~-° G3~~~~0~_~~0 N°°0 M0c00~0 ~0c ;~ !'L>+~~U~~~NtU ~t~0=3~.nLWO~.~U M M D n 2 3 rn z 0 Attachment 0 Board Minutes of Apri16, 20p6 It was moved by Member Boneysteele and seconded by Member Nejedly to authorize the hiring of 26 students for seasonal employment. Motion passed by unanimous vote of the Board. d. ADOPTA POLICY ON HIRING DISTRICT RETIREES General Manager Charles Batts stated that the Board has been asked by the Budget and Finance Committee to hold this issue over. The Committee has asked to review the alternatives again before they make a recommendation to the Board. Member Hockett inquired why the matter was being deferred. She expressed concern regarding the proposed policy, and objected to the implication that the current process is not "transparent". She stated that, in her opinion, District staff has made good decisions regarding the hiring of retirees over the years, and she did not feel it appropriate to micromanage the administration of the District. The item was continued to a future meeting at the request of the Budget and Finance Committee to allow the Committee the opportunity for further review. e. RECEIVE REPORT ON RETIREMENT SURVEY General Manager Charles Batts stated that the MOU's negotiated for MS/CG and Local One require the District to conduct an internal survey of retirement formulas in the third year of the contract. The intent of the survey language was to report the findings to the Board and the bargaining units. There is no obligation forthe Board orthe bargaining units to meet and confer, or to change the retirement formula unless all parties mutually agree to do so. Human Resources Manager Cathryn Freitas summarized the findings of the survey. She described the three types of retirement plans used, and presented the retirement rates of East Bay Municipal Utility District (EBMUD), Contra Costa Water District, Union Sanitary District, Delta Diablo Sanitary District and Dublin San Ramon Sanitary District. She described the bases for determining salary and discussed the employer and employee contributions by percent of salary. She compared each agency's sick leave credits, vacation buy-out policies, and social security contributions. Retiree benefits, cost of living, longevity pay and deferred compensation contributions were also compared. She concluded that, considering all factors, the District ranks fifth out of the 6 agencies for basic salary at retirement, and third out of six for enhanced retirement benefits. She concluded that staff recommends taking no further action on the survey at this time. 10. REAL PROPERTY a. AUTHORIZE THE GENERAL MANAGER TO EXECUTE AFIVE-YEAR LEASE AGREEMENT, WITH COUNTY QUARRY PRODUCTS, LLC, FORA CLEAN FILL OPERATION ON PROPERTY LOCATED OFF IMHOFF DRIVE General Manager Charles Batts stated that the District solicited proposals fora `clean fill' operation lease of the Kiewit property. The proposed lease will allow a private party the use of the parcel as a `clean fill' receiving site for the purpose of obtaining revenue and to improve the site for possible future uses. Three proposals were received from Evans Brothers, Ghilotti Brothers and County Quarry. A public hearing was held at the August 11, 2005 Board meeting declaring the leasina of the property comaatible with District operations Chair Nejedly and Member Menesini As we stated at the January Personnel Committee mtg., staff is required by the Memoranda of Understanding to conduct an in-house survey of retirement compensation at our sister agencies in the East Bay. Randy and I met with reps. from the bargaining units on three occasions to agree on the survey parameters and methodology and to review the survey results. The parameters included both comparisons of salary and benefits for a total compensation approach. We believed this was consistent with the desires of the Board. The bottom line is that Central San's avg. retirement pay ranks third out of six agencies. Our retirement benefits rank first for all District employees until age 65, and then in the middle for Tier II employees after age 65. In terms of methodology, I personally spoke to HR Managers and staffs at other agencies, reviewed their MOU's, and compared agency data available on-line. Then, C2B, our Finance Administrator, e-mailed the results of my study to her finance contacts for verification, and in some cases editing. I also attended a CALPers workshop on calculating retirement to better understand the State system. Every effort has been made to provide accurate information. A couple of notes need to be made before I begin my presentation of the results of the survey: • First, one of our goals was to estimate take-home pay for a retiree of age 55 with 20 years of service. As you will see, it is very difficult to achieve a true comparison. Adjustments to salaries are typically earned for individual reasons or hours worked, and are not given to all members of the bargaining units. For ex., we did not include performance bonus pay because in most cases, it is given to managers and not rank and file. In the case of DSRSD, it is given to employees, but different amounts from 3-9% are given to different bargaining units. Additionally, we did not include some pays that would normally be part of retirement compensation that are given on an individual basis such as stand-by, registration differential, out-of-class, holiday comp., bilingual pay, transportation subsidies orteam coordinator pay. • Second, there are two tiers of benefits for Central San employees. Tier I includes 149 retirees and 97 spouses and dependents, as well as 19% of the current work force. For purposes of this survey, I have used Tier II benefits because 81 % of the current workforce will receive Tier II benefits X206 employees), as do 17 current retirees and 17 spouses and dependents. My plan is to explain Attachment One in your booklet by use of a power point presentation, and then briefly review Attachments Two through Five. HR Analyst Darlene Ross is here to answer any tough questions about retiree benefits, and C2B is available to respond to any questions you may have regarding the calculations for take- home pay. This is intended to-bean interactive presentation for the Committee members. Please stop me at any time to ask questions. D D n 2 rn z At~achr~~n# Central Contra Costa Sanitary District August 1, 0~ Calculations for ~lla~cimum Terminal Comoensation V11ith 4 Years of Service Tier 1 1 Yr. Vacation Vacation 1 Yr. Sick Holiday Comp. TOTAL Accumulation Pay-off for Leave For Employees 2 Yrs. Scheduled to work Holidays 2ofl Hours. 320 Hours 12~ Hours 104 Hours 744 Hours .Tier 11 ..._.~._ 1 Yr. Vacation Vacation 1 Yr. Sick Holiday. Comp. TOTAL Accumulation Pay-aff for Leave For Employees 2 Yrs. Scheduled to Work Holida s 200 Hours. 3~fl Nours 96 Hours 104 Hours 720 Hours The ane year of accumulated vacation and sick leave payoffs are included in the final year compensation based on the Ventura decision. The holiday compensation accrual and ~o additional vacation, payoffs ~~p to 1 ~0 hours each. calendar years are based on the District's Memoranda of Understanding. In summary, the sick leave accrual payoff, holiday compensation payoff fc~r select employees, .and .payoffs o f accrued vacation. increase the final year of compensation for retirement. Also, based on the Memorandum of Understanding, all accrued sick leave is converted to service time credit on an hour by hour basis for retirement service calculation. Background The rules for calculating terminal compensation. are derived from CCCSD Board actions--some dating back to the 1970's the Ventura decision as it affects 1937 Act County retirement systems, and the Contra Costa County Retirement Association Board. Please note the following information... Tierl and Tier Ilemployees -have different rates f or terminal compensation. Tier I I empl©yees accrue .less sick leave than Tier I employees.. Again, the differences are detailed in the Memoranda of Understanding, attached: Holiday Compensatory Time is predominantly accrued by Shift Supervisors and Plant Operators, who are scheduled to work holidays. However, any employee who works an alternate workschedule (i.e., 9I8fl~ and whose normal day off occurs on a holiday, would also accrue holiday compensatory time. z r ,~ r • Less than one-halfof the employees actually comp close to maximizing their . terminal compensation. Many empfoyee~ use .sick leave and vacation as they get older for themselves and their families' so they do not have the maximum number of hours of leave available to be cashed out. The. definition of compensation ,for calculating the highest year or base salary was refined ~y ~~GERA based on the Ventura court decision. The f ollc~wing pay types are also included in compensation for retirement purposes.. - Nightshift work - Jut of Mass - standby - Swing shift - cafeteria Plan Benefit . Medical Waiver - Meal Allowance - Scheduled Holiday, Night Holiday and swing Holiday cc: Board of Directors E. Boehme C. Curtis-Brown U - / ,' , ` k ~ : i Sal p• ~"1~ L.. ~ /- /~~~.~\s / ;~~/6r' ref ~~~F W. U 4- R3 s. C ~ U ~- N ~: r- ~ , , .... _.. ~,~ _ 3 ~A LV " C -`. ,' , t6 fl. C tU U ~ 7 U ~ U3 ~ ~,,, 4} ~ tU tU ~ v Q} .Q ~.. tU -~ >+ {t1 R~ 0 C ~., ._ ,; ~, ~, J >, > ~, ~ it ~ N C -,°. N >, ~4tU~QV y ~~,C C~.CS2 ~~~4t6R3 °~ s.. }N~ U7' c+-j ~ ~ ,- ~ 7, C- ~ ~ ,{yy C- tt3 +~ ~ ~ ;{C, ~'" Q. N ~ ~- ~ > ~ ~ Z3 ~ ~ ~ . ¢ tU ~ }, ~ ~-, ~ RS U ~ q} ~ ,Q : _ ~+ ~ .-~. ~ ,~,, J'C,., ~ ~~ ~ RS ,U tU L '~ t2 (~ s3 ,... , >' :w C .~ ~ ~ ,y { ~. ~ 4) .N ~ Q T3 t~ C C} 0 ,=, 'C ~L"~ ~' ,t? 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C: V t1? ~ U ~ ~ ~ ~ d ~'• ~ ~ ,U to V} {~ to V3 to U7 tVi tt~ tt1 tt3 tt5 t6 . tt1 a ~ ~ ~ ~ ~ ~ lntUh*Qlf}pl{~ r-~-x"NNtY?{~ t~~t~~ttS~3~ NNNNcUN(~ ~ r t"'" ~. ~, ~. h ~* ~!~ ~ ~ ~Y t ~ ~ ~ ~ . }V~*.'~ ~ `~ V V .L ~ ~ ~ ~ '~, rte! .~ ~ _ 0~~~ p ~~~ R~~~R~~~~ Oi~LIC~G~C~Cl ,~ ~ ~a ~~ Q ° ' ~ > C ,~ QQtVd OQt ~~ ~ ~ ~.~ ~ ~ ~ - N~~to'd`~~ +s~~~++++. ~. a V L. ~` *... .~ ~ ~ r +~ +~ ~ L 1 V ~ "'' 5(J~f~ +~~, nR ~'~ ... ~~~~ ~ ~ ®~I~1{~d~~ tt3{,pC7 fl dt¢~'~3 .°" ~ ~~ pu7COh~4~O rr~e-ttilNc'~ ~ ~ ~ Q Q ~ ~ ~ (Z} . O C37 N ciy '`° ~ ~ r ~. ~,. ~~~~" ~~ } ~NN~ ~ ~^' ~ t W (~ t (~} Yom/ Q? N ~ ~ ~ ~ / / (' } / om f.L. e~ 1J ~ ~ q; ~1AtiV ~! .y 1' 1 L! ~ ~ ~ ~ {~ ~ ~ o::. Ca ~"° ~"'"', ~^ I rn z 'Attachment Q HansonBridgett ~' MEMORANDUM CONFIDENTIAL -SUBJECT TO ATTORNEY-CLIENT PRIVILEGE TO: FROM: .DATE: Chair Barbara Hockett FILE NO.: 21690.111-1 Member Gerald Ducey Human Resources Committee of the Central Contra Costa Sanitary District .Board of Directors . W. Daniel Clinton, Esq~ ~ September 29, 2009 RE: Calculation of Retirement Benefits The Human Resources Committee of the Board of Directors has requested a review of the manner in which pension benefits currently are calculated, with the goal of ascertaining which elements of the calculation of terminal compensation are fixed by law, by the retiremeht. plan,. and the applicable MOUs, and whether certain elements of the calculation can be monitored or calibrated to prevent unreasonable and unjustifiable "spiking" of such compensation. The Contra Costa County Employees Retirement Association ("CCCERA") administers the District's retirement program. Benefits are based upon age, salary and years of service- in the retirement system. The CCCERA long ago adopted a provision that the compensation component of the. calculation of benefits would be determined on the basis of tiie highest-twelve (12) consecutive months of compensation for the employee who is retiring. It does -not appear that this decision was based upon any statutory requirement. For example, other public retirement plans make this calculation based upon an average of compensation over, a longer time period, such as 36 months. Also, in the CCCERA Members' Handbook, there are different formulas for Tier I members (in which the highest 12 consecutive months' standard. is applied), and Tier. II members (for whom the compensation calculation is made based upon an average of the highest 36 consecutive months).. Most CCCERA members, including CCCSD employees, are Tier I members. The other primary factor in this equation was the application ,of a decision of the California .Supreme Court in 1997 in Ventura County Deputy Sheriff's Association v. Board of Retirement of Ventura County. As a result of thaf decision, most retirement plans concluded that they were mandated to include as part of the calculation of compensation during the highest 12-month period the cash value of vacation pay received; either through the sell back of vacation, andiorthe cash-otat of accrued vacation pay at the time of retirement. In addition, the' Hanson Bridgett LLP . ~ zo5527a.t 425 Market Street, 26th Floor, San Francisco, CA 94105 hansonbridgett.com Memorandum To: (~ Chair Barbara Hockett _ _ CONFIDENTIAL- SUBJECT TO I Member Gerald Lucey ~ ATTORNEY-CLIENT PRIVILEGE Human Resources Committee of the Central Contra Costa Sanitary District Board of Directors ~' September 29, 2009 Page 2 ' cash out of sick leave accruals was determined to be part of the calculation of compensation during this 12-month period, which for obvious reasons, is typically the final 12 months of employment. The Ventura decision also required that other types of compensation factor into this computation for purposes of arriving at the total compensation. in the- highest 12 months. In addition to-the base rate of pay, all payments for "services and special skills" are to be included, such as longevity pay, merit pay, and registration differentials. The CCCERA Members' Handbook states that for purposes of retirement, compensation includes "cash payments for services or special skills" and cash payments for "items of advantage that you would otherwise + buy with your pay," including such things as overtime that is part of a regular schedule, cash outs for accrued time, and lump sum cash outs at time of termination, "if the time was earned in ~ the last 12 months."' -The combination of allowing the computation of benefits to be based on the highest 12 months of compensation, and the requirement that. most aspects:: of compensation during this period be included; created a situation where employees could; in effect, "spike" the amount of base compensation by creatively maximizing the amount of compensation through various. means, largely ones permitted by agency agreements with their bargaining units. These: means of maximizing final compensation for retirement purposes are even highlighted, in the documents provided to prospective retirees by the CCCERA. The Memorandum of Understanding ("MOU") with~Local One and MS/CG-for this District specifically permit the enhancement of retirement benefits through several- means (references to MOU provisions are cited to the MOU with Local One; these same'types of provisions are found in the MS/CG MOU). 1. Payment of Accumulated Vacation Time Article IV, Section 2.6 of the Local One MOU permits employees to request a payout of accumulated vacation, provided that they have used at least 10; days of vacation in the calendar year of application, or have accrued sufficient vacation that~they would otherwise be required to take a mandatory 10 days of vacation within that calendar year of application. .The maximum payment in any one year is 20 days, or 160 hours. This option can be exercised in the calendar year prior to the calendar year of retirement, and again, in the next calendar year when that employee retires. If both options are exercised within the final 12 months of employment; they can increase the base pay in that amount for purposes of computing the retirement benefit. (For example, if Employee A decides to retire on August 1, 2010, the employee could take a cash out of accrued vacation in November 2009, and another cash out of accrued vacation in June One anomaly of. the Ventura decision is that overtime that is not regularly scheduled is not included in the calculation of compensation in that 12-month period, even though almost every other aspect of compensation is included in one form or the other. 2055278.1 111 _ Memorandum To: I Chair Barbara Hockett CONFIDENTIAL - SUBJECT TO Member Gerald Lucey ~ ATTORNEY-CLIENT PRIVILEGE Human Resources Committee of the Central Contra Costa Sanitary District Board of Directors September 29, 2009 Page 3 2010, and since both of these payouts would occur in the last 12 months, they would both be included). In addition, employees receive a payout of accumulated vacation pay at time of termination or retirement. This amount also may be included in the total compensation for that final 12-month period; however, this amount is limited by the terms of .the CCCERA Plan to the annual accrual rate for that person (under the example above, an employee whose years of service provides an accrual of 20 days per year would receive a maximum credit for 20-days of compensation for purposes of calculating the final year's compensation, even if the vacation accrual payout at retirement was more than that). Altogether, these payouts of accrued vacation .can add up to 320 hours, plus the amount of one's yearly accrual, to the final year's compensation. 2. Payment of Unused Sick Leave Depending on their date of hire, .District employees covered: by the Local. One MOU accumulate either 12 or 15 days of sick leave per year (Article IV, Section 4:1). ,The leave accumulates from one year, to the next, and'. there, is no maximum accumulation:" As an "incentive benefit," employees receive a percentage: "pay-off credit" at their. retirement:. For- employees hired before May 1985, this pay-off credit is 85 percent of accumulated yearly . unused sick leave; for others, the pay-out cari be as much as 40!` percent (Section 4.5): The . pay-out is made at the time of retirement or termination; and becomes. added. to the kiase pay in the final 12 months for purposes.. of calculatingahe benefit. ~ However; similar #o vacation pay; the CCCERA Plan limits the maximum amount that: can be added to: the, base" pay ,for this purpose to the amount of sick leave that can be accrued in one year, regardless,ofthe amount accrued and paid off. (For example, if an employee accrues sick Jeave at the rate' of 12"days per year, and has 500 hours of unused sick leave at retirement, that employee `receives a cash out of 35 percent of those hours at time of retirement; however, the amount of pay that can 6e added to terminal compensation is limited to the equivalent of 12 days, or 96 hours.)- In addition- to this pay-out, all unused sick leave is "credited as -longevity upon retirement" (Section 4.4), which also enhances the calculatioh of the retirement benefit. This longevity credit also is included in the CCCERA Plan. 3. Holiday Compensatory Time If an employee's regular day off falls on a holiday, the employee earns "Holiday Compensatory Time" at a straight time rate, and can be accumulated to a maximum of 104 hours (Article II, Section 4.3). This accumulation also is paid out, at the time. of .termination or retirement, and is included in the calculation of.total compensation for that 12-month period. This accumulation is most likely to occur with the Plant Operators, who are scheduled to work on Holidays, or in situations where an employee is working a 9/80 schedules. Although there 2055278.1 (' . Memorandum To: Chair Barbara HOCkett CONFIDENTIAL -SUBJECT TO Member Gerald LUCey ATTORNEY-CLIENT PRIVILEGE Human Resources Committee of the Central Contra Costa Sanitary District Board of Directors September 29, 2009 Page 4 appears to be little flexibility possible with respect to the Operators, Holiday Compensatory Time could be reduced to some extent if 9/$0 schedules are eliminated or reduced. • 4. Registration Differential Article IV, Section 1.11 of the Local One MOU provides for salary merit increases to I employees who achieve a registration or license as a Professional Engineer, Land Surveyor, or Certified Public Accountant, in the form of a one-step increase of the employee's basic salary. Although this is not the usual scenario, an employee could seek to obtain such an increase in the final year of employment as an additional means to enhance compensation in that final 12- month period. 5. Stand-8y Pay Article II, Section 5.2 of the Local One MOU provides that employees on Stand-By are to be paid at the overtime rate for one hour per weekday and 3 hours per weekend day or holiday. Under Section 5.4, Call-Out Pay, employees receive a minimum of three hours of pay at the overtime rate. Employees also may elect to have stand-by pay credited as earned time off, and this would also be paid at the time of any retirement, and is included as compensation for that final year. 6. Out of Class Pay Article II, Section 1.5 of the MOU provides that employees who are assigned to work in a higher classification in the absence of their supervisor receive aone-step increase after one continuous week in that classification. If the .assignment. is for less than a full week, the increase applies only to the. actual hours worked in the. higher classification. Such assignments (._ in the final 12 months could. provide an additional basis for increased compensation during that period, and there may be some ability to exercise some control over such assignments during ~ the retirement year. . 7. Cafeteria Plan Article IV, Section 1.14 (A) of the MOU allows employees to receive up to $50 per month as a cash benefit (the MS/CG MOU has a higher amount). This amount, when taken as cash in the last 12 months of employment, also is added as an element of compensation for purposes of the calculation of compensation in the last 12 months. In summary, the items listed above are, for the most part; fixed by either the CCCERA plan or the applicable MOUs, or both. Such things as Holiday Compensatory Time, Out of Class Pay, or Stand-By Pay can be managed to some extent to reduce .the amount of compensation in the final 12 months, but these amounts are minimal compared to the overriding f factors, such as vacation and sick leave accruals and payouts. Those areas would have to be the subject of future negotiations with the bargaining units. ~-- 2055278.1 l Memorandum To: Chair Barbara Hockett Member Gerald Lucey Human Resources Committee of the Central Contra Costa Sanitary District Board of Directors September 29, 2009 Page 5 CONFIDENTIAL - SUBJECT TO ATTORNEY-CLIENT PRIVILEGE Any change from a 12-month averaging to a longer period for new employees, such as 36 months, would require first Board approval and a request for approval of the CCCERA Board, as well as bargaining with the employee groups involved. Please let me know if this memorandum leaves any issues unanswered, or if there are additional issues which need to be discussed. As the Board requested, this memorandum and its analysis has not been reviewed with staff, although I requested and received from staff information regarding CCCERA, as well as information about the District's payroll practices regarding the amounts included in the calculation of the final year's compensation. I have tried to be as complete as possible in responding to the Board's request; but staff may have other information to contribute to this analysis that is not included. WDC/tev l ,_ 2055278.1 ~^ •/ I rn z ~o Attachment R ~. a.. Central Contra Costa Sanitary District December 7, 2009 TO: HONORABLE MEMBERS OF THE BOARD FROM: JAMES M. KELLY, GENERAL MANAGER SUBJECT: CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT ASSOClATiON On January 11, 2010, the Contra Costa County Employees' Retirement Association (CCCERA~ Board will meet and receive ublic comment on the le al review re uested p g q_ by the District. Board, as contained in the letter from the law firm of Reed Smith (attached. The purpose of this memorandum is to rovide the. District Board with p further information relative to some of the statements made in that le al anal sis, and to . 9 Y determine if the Board. wishes to take a public position as to the recommendations contained in that analysis. It also inquires as to whether addition information needs to be provided to the District Board for further consideration at the January 7, 2010 District Board Meeting. As you may have noted, the legal analysis presented to CCCERA points out that much of the confusion and apparent misunderstanding of the applicable law by employers has been the result of statements by CCCERA in its own policies. The report then states that some members "may have taken advantage of this Policy statement"~b cashin Y 9 out more. than .one year s accrual of vacation at the.. time of termination and including. all of this cash out as part of terminal compensation. In fact,. the Member's Handbook itself specifically states tha# payment for "unused vacation pay" is to be included in the. retirement calculation, and adds that em to ees . .. p Y who are ~n a fob classification that "includes the abii~ty to sell vacation. hours, the value of vacation sales within the final average salary period before ou retire will also be Y used in calculating your final avers a sale ". There is no indication in this olic g ry p Y statement that such sales of vacation hours applies only to hours earned in the final year. In addition, the District's Controller received a letter from CCCERA's Retirement Accounting Manager in the year 2000 that states that in addition to "lump sum payments of items such as vacation" which it said were limited to the amount earned in the final year, "vacation, holiday or sick leave that is sold back to the employer under a cash out agreement is included in compensation earnable". These are some of the principal reasons that the District, and others, have relied upon the CCCERA policies and included these amounts in the final calculations. In addition, the form developed by CCCERA for the agencies specifically requires that these amounts be included by an agency's payroll department for each retiree. Under these circumstances, it is the District's intention to continue to follow those policies until they are changed or modified by CCCERA with respect to all of the members. N:1General Manages ©irectory~Baard Documents120091000ERARnswer for Milo McGill CF.dac It is uncertain what action, if any, the CCCERA will take in response to the legal analysis prepared by their counsel. The recommendations include determining whether changes to CCCERA's "policies and practices would be appropriate in order to bring the system into compliance with currently applicable faw", which seems to presume that its own practices and policies have been, at least in part, responsible for this situation. Another recommendation is that CCCERA determine to what extent "it is appropriate to take corrective measures as to current and future retired, active and deferred members of the system, including recalculation of benefits, arrears contributions and other actions". It may be that the District Board ma wish to take a ublic osition at the Y p p CCCERA mee#ing on January 11, 2010 with respect to any of those issues. Staff is seeking the District Board's input as to whether it wishes to take an osition on the Yp range of options available to CCCERA, or whether it prefers to make that determination after the meeting,. based upon additional information as to the intentions of CCCERA. At the District Board meeting on Janua 7, 2010, this matter could be further ry discussed, and additional information provided. to the Board,. based on the Board discussion. at the December 11, 2009. meeting, cc: Randy Musgraves, Director of Administration Cathryn Freitas, Human Resources Manager Elaine Boehme, Secretary of the District Debbie Ratcliff, Controller Daniel Clinton, Hanson Bridgett H.IGeneral Manager's DirectorylBoard Documentst20091CCCERARnswer for Mike McGill CF doc ReedSrnith Narvey L. Leiderman Direct Phone; +1 415 659 5914 Email; Hleiderman(~reedSmith,com Qctober 21, 200 C4NFIDENTIAh~ AND FRI'~ILEC~D ATTQRNFY-CLIENT CQiV1MfJNIC~ITION ATTORNEY WORK PRODUCT Board of Retirement . Contra Costa County Employees' Retirement, Assn, 1 ~ S S '~Uillow ~U'ay, Suite 221 Concord, CA 94524- Reed Smith ELP 141 Second Street Suite 1800 San Francisco, CA 94105 +1 415 543 8700 Fax +1 415 391 8269 reedsmith.com Finat Compensation and Retirement benefits Dear Members of the hoard: ~'ou have asked us to advise the Board as to current issues affecting the retirement system's. determination of the "Cnal com ensation" on which members' retirement benefits are. calculated.. p Following is a summary of the outstanding issues together with our legal analysis, conclusions and::. recommendations :for further Hoard consideration.. - SUIVIN~ARY O~ fSSUE~ - CCCERA has a statuto obli ation to ay the proper amount of retirement benefits to each of its rY g p members and beneficiaries, as provided b~ law, Indeed; it "cannot fulfill fits fiduciary].. mandate unless it investi ates a ~ ~ lications and pays benefits only to those members who are eligible for them."' g Pp . hlc~n r~ v. Santa Barbara C'o~nt~ Employee,~`Ret. S,~s~ t200I) 9l Cal,App,~th 730, 73~. In order to . ~' .. ... discharge. that obligation, ~t is the-Board's. responsth~lity to determine. the proper elements that ga mtoa calculatn a member's benefit, as recognized by the laws governing the retirement system: As those g laws evolve over time, the Board's policies must evolve with them. A CCCERA member's service retirement allowance is based an four factors: ~ 1 ~ the statutory benefit formula a pliable to that member, (2} the member's age at retirement; (3) the member's years of p credited service; and ~~} the member's "final compensation." In order to properly determine a member's final compensation, the retirement system must. clearly s ecif the elements of remuneration that are and are not includable in the calculation. This requires p y .. . that the reporting system between CCCh~RA and each participating employer is sutfc~ently preczse so as to enable CCCERA to distinguish between items of remuneration that are and are not properly included in a member's final compensation. Nf:~1t YORK ~ 1ON00N + HONG KONG ~ CHICAGO ~ WASNINGTON, O.C. ~ 9ElJiNG + PARIS ~ LOS ANGELES +- SAN FRANCISCO ~ PNILAOELPNIA ~ PITTSgURGN QAKIAND ~ MUN(CH ~ ABU OHA91 ~ PRINCEtON ~ NORTHERN 1r'IRGINIA ~ VU1L~1~lNGTON ~ SILICON ~JALLEY ~ QUBAI ~ CENTURY CITY ~ RICHMOND ~ GREECl: Confidential and Privileged Board of Retirement October 21, 209 Page 2 ReedSmith CCCERA's current policies and definitions used in determining its members' retirement allowances were last revised over a decade ago. Since that time, developments in the law and in public employee compensation practices have evolved in important ways. In addition, recent public attention has been focused on certain employer and employee practices that have led to unexpectedly inflated retirement allowances being received by certain CCCERA members; the media has labeled this "pension spiking." It is prudent at this time, then, to revisit CCCERA's policies and definitions and consider revising them in order to assure that the system and its stakeholders continue to be aligned with applicable law. This letter reviews the current rules for determining a member's "final compensation," addresses some of the s ecitic areas of concern that have been raised and makes recommendations for .further Board p consideration. LEGAL ANQ FACTUAL. ~ACKGRQUNI~ DeterminingA~ lVfember's Final Compensation Tinder CERL Yn 1997, the California Supreme Court explained: "t"l']here is a logical progression in the statutory framework under which a [CERL] pension is calculated. Application of section 31464 is the f rst step, since an item must meet its broad definition of `compensation' if it is also to fall.. within the narrower cote ~o of `com ensaton earnable' def ned in section 31461 and thus farm the basis for the calculation ~~~' p. of final compensation on which the pension is based pursuant to section .. 3146. l . Ventura. Count Deputy Sheriffs' Assn v. Bd. of ket. (1997)1 d Ca1.4th 483, 493-94. Thus in order to determine. a member's final compensation the retirement. system must ~a through the following three step pracess:~ STEP ONE: The system must determine which employment remuneration and advantag~;s properly „ . ~ , , ~ constitute "compensation..:. Section. 31460 provides. "` Compensation means the remunerat~o~ bald in cash out of coon or district funds lus an amount deducted from a member's wages for participation. ..___... ~ p Y in a deferred compensation plan , .. but-does not include tho monetary value of board, lodging,. fuelx laundry, or other advantages furnished to a member.' • This defcnrtion fil tern out any item of val zee that vas not paid in cash tv the member, STEP TWO: Once "com ensation" is determined, the retirement system must determine hnw much of p that "compensation" qualifies as "compensation earnable." CERT. Section 314b1 provides: "`Com ensation earnable' by a member means the average compensation as determined by the board, p far the period under can oration upon the basis of the averagee number of da s ordna~rii worked by persons in the same grade ar class of positions during the period, and at the same rate of pay.... Compensation, as defined in Section 314b0, that has been deferred shall be deemed `compcnsatian carnable' ~~vh__ en earnedi rather than when paid." • This chef ninon hers t~v~~ ~~ritfinr~y itr~pucts: (1} it f liters o~~t corri~erisution for o~~~rtime tirork, hecaicse it is rtvt bcr.~~ec~ on the "crl~c~ra~~e nr~mber of guys ordinarily ~vc~t•kecl " by cnrrzparabl e Confidential and Privileged Board of Retirement October 21, 2009 Page 3 ReedSmith c~mplnyees; and (2} it filters out compensation that vas yarned c~i~tsicle of the f nal cvmpensarron period, wen xf it y~a.~~ aid durr'r~g that period. STEP T~ iREE: The retirement system must determine how much of "compensation earnable" qualities as "final com ensatidn." Section 3 l ~l~2. I provides: "`Final compensation' mean$ the a~~erage annual ,p compensation earnable by a member during any year elected by a member at or before the time he files an application for retirement, or, if he fails to elect, during tlz~ year immediately preceding his retirement." . ~ This.. de rnition means that ~'CG'ER~ m~~st r`nchcde in f nal cwmpensation vnly the amounts. o, f ,~ "corn ensatr`on earnable "that were paid a~uring the single, cantigzcous 36~-day period chosen p by the m~rnber as his or her " rr~al compensation" perivcl (usually the last year of employment when satyr and benefits ure at their highest.}j Distilling this three•step process, ~ general rule' emerges: To be included in final compensation an amount. must be b tb (a) earned by the member and (b} aid (or pa~able~ to the member during the member's final compensation year, and it must not p represent overtime l~aY. Case .haw .lnterpretrng ~'~'.R In the Ventura case cited above, the California Supreme Court ruled that CERL systems: had, fob many years, been improperly excluding: many pay items .from- .members' final compensation. ,Such items included a merits in cash for bilingual premium pay, uniform. maintenance allowance, educational pY incentive pay, additional compensation for scheduled meal periods, pay in lieu of annual leave accrual, holiday pay, motorcycle bonus, field training: officer bonus and a longevity incentives A#~er Ventuxa, twos cases in the lower appellate courts addressed the ghestion of whether accrued leave than could. be converted. to cash o.~ upon. ermination should be included in a member's final= compensation. Botf~ courts answered-that question in the negatiWe. In the 2003 case, In re retirement Gases (2003} 110 Ca1.App.~th X26, the First District Court of Appeal which reviews appeals from the Conlra Costa. County Superior Court) explained: "where an employee C cannot or does not elect to receive cash in lieu of the accrued time off prior to retirement, the benefit remains one of`time rather than cash. The right to a termination pay cash-out arises only upon retirement...; the right does notarise prior to retirement or during service." The court. wont on to state: "we hold that termination pay that is received upon retiretncnt is not required under CERL to be ~ Some CCCERA members are subject to the three year final compensation period ender section 3162, in which c~~se their "final compensation" is the average of each of those #inal three years.. l~nr ease of reference in this analysis,. tive will refer to a one. year final compensation period. "i'he principles discussed herein also ~~ppiy to a throe year final compensation period. Confidential and Privileged Board. of Retirement October 2 l , 2009 Page 4 ReedSmith included in the calculation of pension benefits." Icy. at 476. The court found this result clear under the statute: "This fan ua a is not ambiguous; it plainly excludes [compensation paid only atj retirement and g ~ ~~~c will not rewrite the statute." Id. at 475. A car later the a ellate court for the Fourth District Co~u~t of Appeal San Diego} addressed the same, y ~ PP issue under GIRL and ruled in the same way, explaining: "As In re Retirement Vases makes clear, a blic em to er's decision to rovide cash reimbursement for unused. leave,. after separation from pu p y P nts cannot service, does not alter the noncash nature of the leave. Such one-time post-termination payme be considered art of final compensation without creating the risk of substantial distortion in the p ~ ~~ rat la ees Retirement retirement benet~ts otherwise payable. to employees. Sulus v..San ~Iego Cai~nt~ E p ~ CaI.A .4th ?34. "There is nothin in CERL which suggests. the Legislature intended assn. (2004} 11? pp g . ensigns should v so widely on the basis of accrued and unused leave rather than an the basis of age,. P ~' years of service and salary." Id. at 740. Saws was consistent with the same a ellate court's interpretation of the analogous law governing.. pp CaIPERS in Hudson v. Bd. of 'Admin. (1997) 59 Cal.tlpp.4th 1310,132.1, where the court ruled. that " -xclusion of final settlement a from com ensation was intended. to eliminate distortions caused ~t]he e p y p by extraordinary increases just prior to retirement." ' ' t the exclusion of "final settlement" or "terminal" ay from final compensation, Satus also In addition o p noted that Ili~dsvn had. excluded from final compensation payments made solely on condition that the em to ee retire. Xn H~~dsnn, a PER5• articipating .city had agreed to convert noxl-cash benefits to cash p y p saiar in certain managerial employees'- final year of employment to encourage them to retire v~nih a . Y hi~her benefit than they would have otherwise received. The appellate. court found that such 1{ • ~ ~f , conversions should not be included m ~~nal compensation, to avoid the improper sp~kxng o~`penslon benefits. See, Salu.~,11?~ Cal.App.4th at ?41. f.~isto ofF1na1 ~'om ensatiou ~leterminatxons by CCC~~ ~' P in December 1997 the CCCERA hoard ado ted a Policy.called.:"Determining: . Following. t~entura, , ~ 'Which Pa Items are 'Com ensation' for Retirement ,Purposes," in order to implement the court ruling. Y p, , . The Folic itemizes the pay items that would and would not. be included when determirun~ a member's. y tonal compensation. The Policy was amended a few weeks later. See Attachment A. Meanwhile, after Y'enrura, litigation arose or was threatened in most CERL counties (including Contra Costa} over (a} several additional pay items that. were not specifically addressed in Ventura, and (b} ~vhether Verttt~ra a lied to members who had alread retired before the ruling.: This is the. litigation that pp y ultimately resulted in the In Re Retirement case discussed above, ~vhcre the claims of active and retired members and fans onsors in CERL counties across the state ~vere coordinated into a single proceeding p p in San Francisco County Superior Court. The litigation involving CCCERA, the County and CCCLRA's participating districts resulted in a court- approved ~ettlcment agreement in 1999 known as the Pur~tsvn settlement. 'Che treatment of` most participating emplayees' pay codas vas specified in exhibits to the sLttl~:ment. See Attachment B. Confidential and Privileged Board of Retirement October 21, 2009 Page 5 ReedSmith The CCCERA Policy and the P~ulsvn settlement allow for the inclusion of ~unounts paid at termination to the extent those amounts were earned (but nqt,,, nec~ssaril~,payablo) d~u~ng the final compensation period. This treatment became inconsistent with the later rulings in I» Re Retirement and Salus (discussed above), because under those rulings no terminal pay should. be included in final compensation unless it was both {a) earned and. ~~ .payable ("cashable"} during empiayment Anticipating later legal developments, however, the 1'tzulsa~ settlement expressly states: "All Parties agree that any subsequent determinations by a court of competent jurisdiction that enlarge, define,- narrow, or in any other. gay relate to the scope of the decision of the [Ventura cased or the items of compensation to be included for benefit purposes under [CF~Lj shall have no effect. on this Settlement or its terms." .Thus, the parties to Poulson (including CCCERA} agreed that, even if a court later ruled that. all termination cash. outs should be excluded from final compensation, that ruling wauldnot- impact the class members' rights under the settlement to have termination cash outs included. if the cashed-out time was earned during the final compensation period, The Paulsv» litigationwas brought by retired CCCERA members, to increase their retirement benefits. The. Settlement A cement b its terms. onl a lied to those alread retired as of Se tember 3~ 1997, Active .employees. were .also threatening.. suit, at the tune, and their counterparts had already filed similar litigation in other CERh~ counties. For that reason, the CCCERA .Board determined that it would valuntaril apply the same terms to all members, regardless of active, retired ~r deferred status. Asa matter of Iaw, however fhe Paulson settlement: is not binding as to any member who retired after September 30,199, and the ward is not bound by the Paulson settlement as to ~Y such members or their beneficiaries.: ANALYSIS ~'i~tax Compensation Property In~tt~rl~s 1'~`ore T~ran ~'itst Base Salary Before. addressing the areas of concern, it is important to note that, under the binding Ventura precedent, more than just base salary is properly included in a member's final compensation. For example,-items like "management incentive pay" (additional cash payments for managers), "vehicle allowance" (cash payments to employees who use thc;ir own cars for work purposes} and "stand-by pay" (cash payments in recognition of members.' availability after normal .working hours} are properly included in the calculation. of a member's final compensation under both CERL and the Pc~ulsnn settlement. These inclusions do not constitute. improper "spiking" of benefits, as has .been contended in the media. Under law, the CCCERA Board m t include. these items in members' final compensation for the purpose of calculating their retirement allowances. It has no discretion to do otherwise. Confidential and Privileged Board of Retirement R€',e~S~tll October 21, ?009 Yage 6 areas of Cvnc~r» "Strclc~dling" ' 'cash out of accrued vacation or leave can sometimes be structured so that twos The timing of a member s ation enod. arned in two different fiscal years will fail. within a single 365 day final compens p c,a5h outs e e it one cash out ex fiscal year, but even with. that restriction, it may be Many employers only p rm p worth of ' choose a final cam ensation period that "straddles" two fiscal years' possible for a member to p ~ ion cried h outs. Althou h both cash outs are laid during the member's chosen anal compensat p , cas g ~ riod. ~lccordn l , at least one of .the they are not bath fully earned during the final compensation pe g Y d-from the. member's final compensation (and no tame should be Included if cash outs: should be exclude ~ it tivas earned before the member's fnal compensation year). t v accrued Vacution or ~cuve ~Curned in Prior Yeurs C a.~h flu f • ~ ~ « ~ ~ ' me such as vacation, holida or sick leave, that is CCCERA s Policy states, The value of accrued ti Y er b the em to ee each ear under a `cash-out' agreement, is includable in sold back to the employ y p Y ~' aut ' " The e~chibits to the Paulson settlement also state that annual vacation. cash • compensation earnable. . ' this statement in the Folic is generally consistent with the Ventura precedent, ~t is pensionable... ~Vh~le Y ' ~ cause it does not ex ressly require the vacation time cashed out to have been. appears incomplete be ~ be 'n rh ~ final cam ensation. enod. Thus, some participating employers and members may e~ i ~ p p ~ ~ the''earned" and re ortm vacation cash out as ensionable compensation, .when it does meet both p g p "cashable" legal requirements. ken advanta e of this Poiic statement by cashing out It also appears that some members may have to g Y ear of accrued vacation in their f nal year of employment and then reporting to CCCERI~ as one y ' ensation another ear's worth of accrued vacation cash out at termination,. This has pensionable comp ~ Y ~ the im act oi' including two years worth of vacation accrual. in a single final compensation y ar. p . ~ final cam ensation ear,. b deCnitian only one Although both years of vacation accrual were paid in the f p Y Y en earned in that ear.. Under a plicable law, members should not be allowed to (at most) could have be ____~.. y p ore. ' - han one ear's worth of accrued vacation cash out in their final compensation (or no m include more t y ' worth of accrued vacation cash out if the member has a three year final compensation than three years period). Z some circumstances a member maybe able to achieve a higher retirement allowance Under ~ ,could.. t e of "straddlen " that is consistent with Cb~RL and the 1'uulson settlement, This through a yp g .~ m to ee is allowed to cash out in one fiscal year less than she may have earned during occur whc,n an e p y le i~ a member Darns 160 hours of vacation each f seal year, but is allowed to cash that year. For ex mp , - bird of that time each fiscal ear, the member -could legitimately "straddle" two fiscal out only ono t Y 'h uttwe-thirds other earned and accrued 164 hours (~ 107 hours). Under this scenario, years and cas o cation cashed out would have been both earned and amid (or payable} during the final all 107 hours of va ' us all lU7 hours `Mould be rc~ erl included in the member's final ~ompensatton period. Th p p Y compensation. Confidential and Privileged Board of Retirement Reeds'~.~.th October 21, 2009 Pale ? G"rrsh flats t1~on 1'ermiriation As explained. above, CCC1rR.~ has historically applied the terms of the Paulsen settlement to all of its members even though. the settlement is only binding, with respect to members who were retired on or before September 30, I997. Under thr Faulsvn settlement, cash- outs at termination are includable iri final .compensation to the extent the time ca.Shed out was earned during the final compensation period. This aspect of the pa~~lson settlement would be inconsistent with 1'n Re R~tirQment and ~~'al us if members were. able to include: more cash outs in their lanai compensation than they could have converted from time to cash,in during the final compensation year of them employment. wile the Paulson settlement bound the Retirement Board to this practice with respect to members who retired on or b~for~ September 30,1997, it did not bind the Board with respect to members why have retired. after that date, Thus, for members retiring after September 30,1997, case law indicates. that cash outs payable onl at termination ought not be included in final compensation: EXAMPLE To better illustrate how these (sometimes overlapping} issues play out, below is an example of a member whose $83,95 8 annual retirement allowance was recently highlighted in the Contra Costa TYr~es. In addition. to a $22,507 base salary} the employer reported to CCCERA the fallowing compensation as having been paid to the member.tn his final compensation year-: • $4,90 -- "management pay'' • $11,074 -- "stand-by pay" • $8,400 .. "auto allowance" • $18,,810 --160 hours of administrative leave cashed out in his final compensation year • $18,838 -• 160 hours of vacation time cashed out in his final compensation year • $28,121 •- 2~0 hours oi'vacation time cashed out at termination In this example, the first three items were properly included in the member's final compensation under case law and the 1'auhsor~ settlement. 'fhe problems appear in the amounts uf' cashed out administrative Dave and vacation time the member had included in his pensionable compensation, Regarding the administrative leave, it is our understanding that this member earned 80 hours of administrative lease per year and could cash out up to the same amount each year during employment. During his final year, hotivever, he was permitted to receive (and submitted to CCCER~ as additional Confidential and Privileged Board. of Retirement October 2l, 209 Page $ ReedSmith "final compensation"} the cash value of 164 hours' worth of administrative leave (by "straddling" two fiscal years with his final compensation year. This means that he had 80 hours of leave cash out included in his final compensation that at a minimum vas not e~ during his final. compensation year. rl`hus, half of the administrative leave figure may have been improperly included in his final compensation, resulting in: excess final compensation ot` $9,05, Re arding the vacation cash outs, it is our understanding. that this member earned.2,44 hours Qf vacation g er ear, but he was only allowed to cash out a maximum of $Q hours each year,. ~e was also permitted p ~ cc to cash out at least 5l4 hours of accrued vacation at the time oT his term~nat~on. By engaging ~n lawful straddlin '' see footnote 2 above this member would have been able cash out up tQ l60 hours of g~ accrued vacation that would have been both earned and paid (or payable in, cash during his final. compensation period That amount is properly included in his final compensation. However, the addition 2~4 hours above and. beyond that amount was not permitted to ae included,.: Including this overage resulted in excess final compensation of $28,121. In the above exam le, the member's final com ensation appears to have been overstated by: at .least p p $37,52h. With 30.2? years of service credit, his annual retirement benefit may be overstated by approximately $34,000 per year, plus compounding.. COLA increases on that. amount, for the rest of his life (presumably another 20 to 30 years}. 'T'hus, we can see how just one example of what the press labels. "pension spiking" .(albeit an extreme case) could result in a benef t cost approaching a million dollars over time. . C(}NCi,USYC}N ANTS RECOMMEN~ATIaNS Many items of remuneration that members are paid in addition to their base. salaries ark properly included in calculating their final compensation. 'T'his is not "spiking." The word "spring" should be reserved far the purposeful manipulation of a member's final compensation in order: to increase a retirement allowance. beyond what. the law allows. . It appears that CCC~RA's Policy and. inconsistencies in the reporting. systems between.. CCCIERA and some of its. participating employers may be enabling an overstatement of pensionable compensation by some members of the system. It would be prudent now to consider appropriate adjustments to CCCIRA's policies and practices in order to avoid potentially substantial future unfunded costs. to the system, its participating employers, and ultimately, the county's taxpayers. we recommend that the Board proceed as follows: 1. Research and evaluate selected employer pay and reporting practices to determine whether and to what extent the overstatement of final compensation may be occurring in the retirement system. ?, Determine whether ~~nd to what extent employer and employee contributions have been collected on elements of compensation that are not properly includable in final compensation. 3. Deterrnzne what changes in C;CCE1~1's policies and practices, if any, tivouict be appropriate in order to bring the system into compliance with currently applicable law. Confidential and Privileged Beard of Retirement Uctober 21, 2004 Page 9 KeedSmith termine whether and to what extent it is appropriate to take corrective measures as to current and 4. De future retired active and deferred members of the system, including recalculation of benefits, arrears contributions and other actions. 5. Determine whether recent im rovements in the reporting and processing of retirement benefit p ~ tem. calculations will im ro~re the delivery of the proper level, of benefits to the members of the sys p we will be leased to address these issues with the Board at its upcoming meetings, p Resp ctfully, ~'C1 H y L. eiderman c: Marilyn Leedom, Cl~~ t~aren Levy, Counsel ~^ •/ I rn z Attachment S Central Contra Costa Sanitary District December ~ 8, X009 T+C: H~JN~RABLE B{~ARD ~F DI~E~TC~R VIA: JAMES M. KELLY, GENERAL MANAGER ~ RANDALL M. MUSGRAVES, DIRECTOR ADMINSTRATION ~M FRAM: CATN~I~N R. FREITAS, HUMAN ~.ES~}UI~CES MANAGER" SUBJECTK DAN BC3RENSTEIN V. PUBLIC PENSIC}NS At the Board meeting of December ~?, 2009, Boardmember Lacey requested aone- page, bulleted memo on issues under review by Contra Costa Times Editorial UVriter Daniel Borenstein. Mr. Borenstein has asked about the following aspects of District retirement calculations: • Sick leave accumulation---Per Mr. Borenstein, sick leave is "double-counted." !n other words, the fins! year of accrual and unused sick leave is reporked to CCCERA as pensionable earnings per their rules. !t is also included as service time, • Vacation leave accumulation--Under CCCEF~AA's rules, an employee can sell one year's worth of accumulated vacation within the last twelve months prior to hislher retirement. !f one year is sold. prior to Dec. 3~, and one: year is sold after Jan.1, then two years are reported to CCCERA and included as pensionable earnings. This was referred to as "straddling" by Mr~ Borenstein. Per our Memoranda of Understanding, District er~ploye~s may sell up to a total of 1 ~~ hours per year or 32Q hours in the Tina! year under the above mentioned circumstances. Under County Memoranda with general employees, they may sell up to 8o hours per year or 1~o hours in the final. year as noted above.} • F~eview of twenty-nine District retirees' pensions for retirees who separated service within the fast five years--Mr. Borenstein focused on the pension of the former general manager, Charles Batts, Mrs Batts final compensation was ~23~,1~3. U11ith sick leave and vacation payoffs, his total compensation bras $~08~,4?~, or an increase of 32~1~. I informed Mr. Borenstein, .per his inquiry,.. that Mr. Batts had twenty-five years. cif service. and was General Manager for his fast seven years with the District. DDERA gave Mr, Borenstein the pensions of all twenty-nine employees. The percentage in cor~pensation increase for all twenty- . nine employees ranged from ~°14 to 37%. As of this writing {Noon, Mr, Borenstein just called and asked far Boardmerrtber's names and contact numbers. Moreover,. he asked about the thirteen days of holiday C;1Dr~cumer~ts and Settingslcfreitasl~y Documentslretirement mma tc~ bd re Borenstein requests t2-~ ~-09,doc cc~mpenstion that shut workers and these an alternate work. schedules may accumulate. der the Il~maranda o Understanding, any employee why works a holiday primarily plant C}perators and shift Supervisors receives addition~il pay. Helhe may bank up tonne-hundred and four hours of I-loliday Dompensatian, any Holiday Compensation earned in excess cif these lour is paid in the next paycheck, SERA allows Maliday Compensation to be included in pensionable earnings. Additionally, Mr. Barenstein asked about the vacation terminal compensation pay and how employees can receive more than one=hundred and sixty hours. This is passible because any vacatit~n aver ten hours per month is given as a lump sum on an err~plcyee's anniversary date.. In other wards, if an employee earns six weeks of vacation per year, three weeks car ane-hundred end twenty hours are given on the anniversary date .and ten haurs are earned each month, for a tote! aftwn-hundred and forty haurs. If an employee retires after hislher .anniversary date, he/she may have more than ane-hundred and sixty hours on the banks for a final year vacation payoff. This practice of paying vacation an an ~inniversary date has beep inexistence since at least the first Memorandum of Understanding ~M~l~} in ~ 98~. ~`he M~~ by itself dpes not make and determination about what is properly . included as pensionable compensation. C~CGERA is responsible, for determining what should. be included as pensionable compensation. It is staff's understanding. that the District's pr,~ctices and matters have been consistent with CCC~RA policies and procedures. District legal counsel has been asked to review and analyse the manner in which retirement benefits are calculated at the District. However, any changes to past practice and/ar the l~~Us can only be made through mutual agreement of the District and its bargaining units or renegotiated in the next labdr contract negatiatians. cc: E. Bc~ehme C:tD©curnents and SettingslcfreitastMy C~ncurnentstretirement mmr~ #~ bd re 8c~renstein requests 1 Z-~ 8-09.dt~~ ~an~el orens~ein: Pennon sp~k~ng s~r~s a~ the sa~i~~ dis~rc~ ~ onraostaT~es.co~ r . Page 1 of 4 aniel orenstein: Pension spiking stinks at the sanitary district ~t~ ~~~~~~~~~ ~~~ta: ~ ~ r~~2~~~ ~ ~:~a:oo ~ PST service. l analyzed the records o ~ sanitary district pensioners who retired in the past five years. Batts' case is .the most. lucrative because, as general manager, he started v~ith a much larger base salary than anyone else in the group. Updated. 12/2712009 04;00:19 PM PST U~~fEN 1T CAME time in 2(}0~ tt~ calculate Charles Batts` pension, the departing general manager of the Central Conga Costa Bantary District boosted his retirement pay by cashing out nearly 1 ~ weeks of unwed vacation and sick leave time: That helped him spike his pension by 37 percent to $2~-7,21 a year, or nearly ~s much as the $234,163 he earned during his final year on the job. At the sanitary district, he is not alone. Indeed pension spiking there is the norm -- aided in large part by unusualCy generous provisions allowing aN employees to sell back, and receive pension credit for, accumulated vacation time and unused sick leave. C}fficially, the district offers its employees a retirement plan that factors in age at retirerrient, top salary and years of work. The formula is °'2 percent at ~5," .meaning that a worker who retired at age 55 would receive an annual pension equal to his highest 12 months' salary multiplied by 2 percent multiplied by the number ofyears worked. Thus, an employee with 39 years' experience would get 60 percent of his top salary. In practice, it's much mere because of rules that. allow workers to fatten the numbers by boosting ~ :their final salaries and adding on to their years oi' That's because seine of the pension spiking techniques usually reserved else~uhere for managers are available to all 2B7 ern~leyees in the sanitary district, which serves central and southern Contra Costa. unitary district compensation policies that drive up pensions are much more generous than those available to, for example, the much larger group of Contra Costa County employees who belong to the same retirement system. The sanitary district provisions allowed most of its retiring workers during the past fve years. to add between $10,00o and, in Batts° case, $.58,986 a year to their pensions. To understand the system, le#'s examine houu the former general manager boosted his pension calculation. A~verfisement http:llwow.c~ntracostatimes.co~~/da~iel-bore~~~~{c~_407~53?e~c~_c~leek-~ 1~/~~f~Q~ ~. I~an~el Borestein; Penst~n s~~kin stinks a~t the. sa~i~ary ~striet - ~antrac~staTr~es.cor~ Pale of f . ~~ lJsing those numbers, he would have been anti#led to a pension o abput ~5~,3BO a year. But that was just the starting point. Ta increase his pension, retirement system retards shag, Batts boosted his final ~2 months` salary four different ways; ` Vacation sail-bark. The sanitary district allows workers to sell .back up to four weeks of unused vacation during each calendar year. If that occurs during an employee's final ~2 months; the income is added to the salary figure used for pension calculations. In Batts' case, that added 17,4. Va~atiort sell•back ~°straddling." The district alEaws an employee to sell back vacation once durit~ a calendar year. ~Jn the ether hand, pension calculations aye based on rho fine[ ~ ~ mcnths° compensation, which means that time can overlap fi~ro calendar years. So, far example, an employee retiring in larch tan sell back vacation time in December of the prior year and February of the year of retirement and have income frorr~ both sales taunt toward his pension. The practice. is known as ''straddling.° It enabled Batts to sell a second four weeks of vacation and also count it toward. his pension. That added. another $17,413 to the salary used for pension calculations. A~vertisemeni ick leave wiil receive extra pay open tern~inatian. N can taunt income from up to three weeks of that leave toward the final compensation used for calculating his pension, Batts received all of that, adding 1 x,39. Daniel ~orens~ein: Pensia spiking stinks at the sar~~ty d.istr~ct ~ o~t~aos~aTr~es.o s r _+~ Pale 3 of4 aunty's level; they should be eliminated. The baseline 2 percent at 55 forrnula is more generous than most private sector v~arkers can ever hr~pe to enjoy. A 3o-year employee can retire with 6Q percent of tap salary at age 55, or 7 percent of top salary at age 5~. That should be enough. Spiking beyond these levels should be eliminated. Interestingly, the sanitary district is part of the Cants Costa County Employees' Retirement Association, which administers pension benefits far c ounty workers as well as empiayees in ~fi ether public agencies including the.. sanitary district. The aunty is the largest participant,., A comparison shows that the sanita~r district spiking prouisic~ns are much more generous than those available to aunty ~uorkers. Vacation time should. be for workers to take t%me ofl: tc~ refresh themselves. dick leave should be available far illness. These. shouldn't be hidden tools fcr spiking. pensions that will usually last fc~r decades from retirement to death. The way the systa~ works new, employees in retirement called the value of the unused vacation and sick leave aver and aver again, approximately every year and a half, far the rest of their lives. Some of the pension spiking practices can also be stepped by the retirement association beard. Prompted by earlier columns I wrote about pension spiking techniques, the retirement association's attorney in October advised the beard that payments at termination far morns such as unused vaoatian, sick leave and holiday pad should net be included in pension calculations. The board is scheduled to consider its "terminal pay" policies on Jan.1 ~ . Finally, there is earns good news... In the .past, the cast of the sanitary. district's .pension spiking had been passed. on to taxpayers throughout the cpunty. That's because the dostrict is part of a larger pension pool ghat includes arric~st ell the public ht~p:llwu~w.contracastatimes,c~~~/da~i~-~c~~~ste~~/ci_14~7~~ 3`?nci~k~c~eck=1 ~12/2~~~ x tx t .. '.. w.< ,. 4 Pant P~~ve~e < ~ p k ~ } ~~~~; l.~a~~~ orenst~~n~ Per~s~an spiking sinks a~ the sanit`Y dzs~ric~ ~ ~ntra~s~aTi~ne,cc~ Pale 4 ~~' ~ http.l/v .cantracosta~l~s,ca~~l~an~e~b~~e~s~e~~lci_14~~~ ~ ~?~fck_ce~k=1 12/28/2C~~9 ~: CCCERA LEGAL OPINION FINAL COMPENSATION AND RETIREMENT BENEFITS l~~ Central Contra Costa Sanitary District December 3, 2009 ' - TO: ` ~ HONORABLE MEMBERS OF THE BOARD - FFZbM: JAMES M. KELLY, GENERAL MANAGER SUBJECT: CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT ASSOCIATION. TERMINAL COMPENSATION UPDATE (AG A ITEM# 6~a 3)____1 , ',` a ~_ _-- ___ .,. , ;: ,,. The Contra. Costa County Employees' ,Refinement Association (CCCERA) Board of Trustees.announced .a, Special Board Meeting that will discuss,:fhe information and ; , recommendations presented in the Legal Opinion Letter from CCCERA Fiduciary Counsel to the Board of Retirement (attached). This letter concernsFinal Compensation and Retirement Benefits, specifically, which elements are considered in "Final Compensation" calculations. As the information is of interest to many CCCERA system members, all. parties have been invited to attend;'' In order to provide adequate seating, CCCERA is holding the meeting at the Concord Hilton, located at ,1970 Diamond Boulevard m Concord. The agenda will be posted on the CCCERA website in early.January~2010 , , - The CCCERA Board of Ret ' irement voted in October 2009 to take initial steps toward , .... ,_ "depooling°' (costaharing) the nsk associated with large employers that participate in CCCERA 1n order to.correctly attnbu'teahe unfunded liability for each employer, ..: ., - CCCERA's actuary, the Segal Company is performing special studies to separate CCCERA's experience and bassets (AAL UAAL and normal cost) by each employer -:~ (with'50 or ~mo're'empl6yees) separately; commencing with the December 31, 2002 = ~ ~ . valuation and going forward from that date: This study was tentatively scheduled fog ' ~ ' presentation to the CCCERA Board on December 9, 2009.' Due to the complexity of .the study, the actuarial presentation will not be completed by December: The study will~be ' ;: presented at the January 13,'2010 CCCERA Board meeting ~ ~~. ' y - District staff. will attend both: meetings .and report .back to the. Board. ... , cc: Depai-tmert.Directors ' -` Debbie Ratcliff .Colette, Curtis ..Brown ~ , , .-:. .. ~ ; ~: - Elaine~Boehme .; - . Attachment , JMKaIc H:1General Manager's Directoryl6oard Documents~2009\000ERA Terminal Pay Update 6.a.3. Dec 3 2009.doc ReedSmith Harvey L. Leiderman Direct Pfione: +1 415 659 5914 Email: HLeidermarl@reedsmith.com: , October 21, 2009 ..~ CONFIDENTIAL AND. PRIVILEGED - `'' ATTORNFY-CLIENT CO1VIMlJNICATIUN ATTORNEY WORK PRODUCT Final Compensa"tion~and Retirement Benefifs ,.., : . Dear Members. of the Board: Reed Smith t_~P 101 Second Street Suite 1800 San Francisco, CA 94105 +1 415.543 87(10 Fax +1 415 39:1 8269 . reedsmith.com You have asked us to advise'the Bard as to currerit issues affecting'the retremert'system's .: ,. determination of the "final compensation" on which members'-retirement benefits are calculated.: `" Fo,}lowing is a summary of the outstanding issues together with our legal analysis, conclusions and . ,: recamineridatiozis for fiirther`Board consideration::. ~ ' ` SUMMARY OF.ISSUFS CCCER~ has a statutory obligation to pay the proper amount of retirement-benefits~to each of-its. members~and beneficiaries; asprovided by law. Indeed;~it~"cannot fiilfill [its fiduciary] mandata:unhSs it investigates applicatigns azld pays benefits only to those members who are eligible far them." McIntyre u. Santa Barbara County FmPloyees' Ket. Sys. (2001) 91 Ca1.App.4th 730, 734: In order to: discharge that olligatiori, it is he Board's responsibility to determine the.proper elements that go into . calculating a mcznber's benefit, as recognized by ;the laws governing the retirement system. As hose -.:.. laws evohve aver tune, the Board'spolicies'must`evalve with them. A CCCI•/RA member's service retirement allowance is based on four factors (1) the statutory-benefit formula applicable to that member;: (2) the meixiber's age at retirement; (3) the member's years of credited- service; and (4') the member's "final campezisation:" In order to properly determine a member's final compensation, the retirement system must clearly specify the elements of remuneration that are and are not includable in the calculation This requires that the reporting system between CCCERA and each participating. employer is sufficiently precise so as to enable CCCERA to distinguish between items of remuneration that are and are not property included in a member's final compensation. NEW YORK a LONDON a HONG KONG a CHICAGO o WASHINGTON, D.C, a BEIJING a PARIS a LOS ANGELESo SAN FRANCISCO a PHILADELPHIA • PITTSBURGH OAKLAND o MUNICH o ABU DHABI s PRINCETON s NORTHERN VIRGINIA a WILMINGTON a SILICON VALLEY a DUBAI o CENTURY CITY a RICHMOND a GREECE ~on~dentiai and Privileged Board of Retirement Qctaber 21, 20x9 Page 2 ReedSmith C~CERA's current. policies ~.nd definitions used in determining its members' retirement allowances were last revised over a decade ago. Since that time, dev~lo n~ents in the law and in ublic em to ee p _ p la y compensation practices have evolved in important ways. Yn addition, recent ublc attention has been p focused on certain employer and employee practices that have led-to unexpectedly inflated retirement allowances being recezved. by Certain. CCCERA members; the ri~e~ia has' labeled this "pension spiking." Yt is~ prudent. at this tine, theh, to revisit CQ~E's policies and. definitions and canslder rewisin there g in order to assure hat the. systerri and its ~stakel~old~rs continue to be aligned with. applicable law. This letter reviews the current ides for determ~nln a member's "f nab compensation," addresses- sorrre .: of the speeif~ areas of~concern that have been raised and ales r~carnrz~endations ~'or ~~r: Board .. cons . eratlori.:.::~ ,. L~~A~ AND FACTUAL B~A-~K~R~UN Dete.~mi~~~g A Member's .Final C.o~pe.~sa txov under C~.RL In l X97, he California Supreme court. explained: "~1']heze is a. logical progression in the statutory framework. under which a jCEI~I,~ pension is calculated. A~ leat~ari of section 3 ~ 460 is the ~rs~ ste a -pp p since an item must meet-its broad definition of `com ensation' if it is also to fall within the narrower....: p . category of `compensation earnable' defined in section 31461 and thus form. the basis for the calculation o~~`fnal Compensation' on which the pension is-band ursuant to section ... ~ 1462.1," ~`entura Caun ~. p ~ Deputy ~S'her f fs' ~ss'n v, .Bd. of Ret: (1997 1 d Cal4th 483,. 493 -94. • .: .. Thus ~n arde~ 'to det~rnane a~ member's final cnxnpensat~or% the retirement syste~t must ~o thorough the.:, following three step~pr~+cess:` ~~ STEP .ONE: "1'hc. system. mist detern~inc which emi : loyment re~uneraton and advanta es ro ~ erl . . .. p y :.. ... ., , ~. constitute ".cempensatlon~," ..,.Section ~ :14:0 provides: "` Com ensation' mea~s~ the remuneration :aid ~iri. .. : -, ~ p cash out of .county: or dlstr~ct funds, ~l~is any amount deducted f~o~m a nae~mber's wags for. participation .,. xn a defenred co~npe~saton ~plan~..... but dries eat include tie n~onetaiy value of board, lodging,: fuel; Iai~n ..dry, or~~oth~r adwaritages :fur shed to' a. member:" + This dcf rnition filters out any item ~f value that was not paid in cash to the me~nbe~, STEP T~Vfl: C~nee ``compensation" is determined, the retiretent system ~riust determine how much of that "compensation" qualifies as "compensation earnable:" C~l~, Section 31.461 rovides: ~t~ ~ Compensation earnable' by a member means the :average compensation as determined by tl~e board, for the period. under considerateupon the basis of the ayera . e number of da 5 ordinaril woxked b . _.._.~...._. ~ ,~ .Y.~... y persons to the same grade ar class of positions Burin ~ the pe~od, and: at the same rate of pay.. , . CompEnsation, as defined in Section 31460, that loos been deferred shall. be deemed `com ensation p earnabl e' when. ea~ned,~rather than when paid." Thr:s def inr'tio~ hc~s Ewa ~rimax,~ iin acts: 1 it alters out cam en:~ation or ~ve~tr`~ne wog p (~ f ~ f ~ hecazcse it is not based on the ``avera~~e number Qf days a~dinaYily ~~o~kcd" by conz~arable Confidential and Privileged Board of retirement Qctober 21, 200 Page 3 ReedSmith e~~Ioyees; and (2) it filter, out compensation that was earned outside of the f~na~ compensation peri~df even i, f it was axd during that period. SThP T~IR~B: The retirement sysfiem must determine how muchof"carnpensation ea~nab.le" qualif es as "final compensation." .Section 31442..:1 provides: "`T`rial compensation' rnea~s the avenge annual compensation earnable by a member during any yeas elected by a member. at or before t1~~ .time he f Iles an application for retirement, or, if ~he fails to elegy during the year .immediately preceding his. retirement." ~ ~ . This definition »ieans that CCC'.ERA ~n:ust crude rn~inal eompensa~io~ vnly the -amounts of ~`com~ensaton ea~~able" th..at were paid d~r~in.~ chi si~gle,~ ~onti~uaus 36~-day period chosen . .. by the merirher cis h~ or her ` f nal eornpens~~trot~ ".~erivd (usr~ally tie list. year ~~'~employmerit yahen~ salary and bene rts: are at them hi ~~st)i .f g T~i~stilling~this three~step process, a general r?~le emerges: To be included in final comnensatxo~n an amount mist bye b..oth ta) e~rrned by the member and fib} paid. for p~~a~le} to the m.ei~~-er during the ~rieimber's~ final ~compensatari~ year; and it must not repr. eserit overtime day. . Case haw Ilzterp~eting C~'.RL In the` V'entuYa ease ,cited above, the. Cali:~o~rria~ Supreme Court ruled that CI~RL~ systems had, for many years, been improperly excluding many pay items from members' final compensation. Such. items included payments in cash for bilingual premium pay, uniform. maintenance allov~arice, educatl~nal incentive pay, additional compensation fob seli~duled meal :periods, pay in lieu of:arinual~ leave a~erual, h~~iday pay, motoreyole bonus, Meld training: oce`r banus~ arid~ a longevity incentiv~~el After ~Ye~tt~ra, too case~~ i~ the I:ov~~r app~.l~~te courts addressed the question 'of whether accrued leave ,. . that could b~ co~v~r~ed` to cash oil ~ ~ u ~~: termination ~shoul~ b~ i~.cl~u~~d~, ir~~ a~ member's ~~nal~' ~: ~ ' ; co~.pensaton. Both courts answered° that question in the negative. 7n the 2003 case, In re ~etireme~tt Ctascs (2003)11 ~ Cai,App.4th 426, the First district Court of A:ppea~ (which reviews appeals f ron~ the Contra Costa County Superior Court} explained: "where an employee cannot or does not elect to receive cash in lieu. of the accrued time off prior to retirement, the benefit remains one. of time rather than cash. The right to a termination pay cash-out arises only upon retirement..., the right does not .arise prior. to retirement or daring service." Tl1e court ~rcnt on to state: "we hold that termination pay that is received upon retirement is not required under C1JRl~ to b~e j Some CCCEK~ members are subject to the three year final compensation period under section 3146, in which case their "final compensation" is the average of each of those final three years. ~'or ease of reference in this analysis, we will refer to a one year final compensation.period. The principles discussed herein also apply to a three year final compensation period, Confidential and Privileged Board of l~et~rement October 21, 2x49 Page 4 ReedSmith incliuded ~m the calGUlation ~f pension benefts." Id. at ~76~. -The court: found this result clear under tho statutef ~ "This lari ~ arc ~ riot amb~~ uous; ~t` ' laity ec~ud~ ~co~pensaton laid only at] retirement and ~ g p tive will not rear%te t11e statute:" Ian, at- 47.5, ~ ~ ~ ~ : A ear Iater, the a ellate court for the ~our~h District. court o~ Appeal ~~ari f?ego} addressed the sane Y pp issue .under CARL and ruled in tl~e same way; explaining: "As In re ~Retrrem~nr Cases makes clew, . .. ublc em to er's decision to ~ ~ rov~ide cash renil~ursement fot unused leave, after se aration from p ~ Y p~~ p .. ,. service, does ~nct alter the zloncash nature of tl~e leave; Such doe-time post-termination payments: cannot be considered' art of fin~I tom ~ ensa~tio~:wiout `croatin :~ the risk of s~bsta.n~ial :distortion in the . .. .. p retirement benefits:: otherv~se - a agile to em ~.lo ees." Sa~u~; v. ~'an-~ze~ -o CQr~nt~ .~mpl~y~es ~Rettreme~t .;p y.. .. p. Y ~, - .slati`~ ~e~ intend ~ d A, ssn,~~ 2004 1:17 al,A .4th 734. , , There ~s noth~n `gin C~hL; wla~ch suggests the. Le i ur ... , e ~ ~~ :>?P g g ,, ,..: ,, v . p:enslons should, vary s~ vv~dely on the basis. o f accrued and unused;, eave, rather t1~an on the basis of age:; years of service and salary," la~~ at. fi40~. ~~. . ~' Salus was consistent with, the same appellate. court's interpretation of the anal~o~ous law governing CaIP~R~3~in ~1'u~so.~ Y. '~~. ~of admin. ~1~~97) 59 Ca1:App~:4th 131.~~~ I32:1, there he court ruled. that t hey exclcision of final settlement.-~~ a from:come ensatid ~ : as intended to eliminate di tortons caused. ,n .w by e~f~aordinary `aricreases just prior to retirement.' . Tri. addition tQ the exclusion o f " final settlen~ent~" or~ "terminal" a~ from final, c.ompebsatbn, Sutus also P .: r ~ ~ : , , ` ... , . ~ d ~ solel. on corid ion that the. . r~ot~d that .l~uc~o~ had excluded froth fn~,l con~pensat~on payents Via. ~ ..,, y. t em to ee xet~re.. ~ n ~`u~n a P~ftS- . ~c~ at~n c~t~, had.: a xeed to convert non-cash benefits to: dash; p ,y ~. part , ~ :g . ~ g .: .~: ., .. . .. ,; ., ::. salar : in; certain .an~i~ ~e~i~al em `~lo. ~: ees': f~nal~ ca~~ of ern to anent toy encoura e: them to retire; w~t~ a ` . ..: . ~. ~' highex benefit than they Mould have otherwise received. The,appellate court found that such ~onvers~ions should not be include.. d in final compensation, to avoid the improper "spiking" of pension benefits. See, Solu~s, .117 Cal.App.4th at 741. ~ ~ . h~r~tory o~".Frn~l Compe.~sation 1~etexr~r~at~ror~s ~y C~'~E~A ~ . hollo~wn ~~ntura gin. Decennb~er 1997 the .CCC..I~RA ward sdn ~ ted a Poizc~. ~~ called, "Determnin ., :: ~ y. .::., .. ~ a ..p . Y VUhxch lea Items are~'CQm `^ ensatlon' for ~etr~mont P~ oyes,,"~ an order to ern len~erit the eot~rt rul~n .y ~ ~~ The ~'ollcy ~ten~izes the pad items that wouid~ arid' would -riot be ~nel~uded when dete~rn~nx~g ~ member-'s. tina~ compens~.tion~. Tile Policy was amended a few Weeks later. See `~tt~chent ~. 1Vleanwhile, aver Ventura, litigation arose nr was threatened in most C~RI; counties ~in~iuding ~ontra~ Costa) over Via} 5e~r~ral additional pad items -that. were. not sp~ci~~ally addressed in ~entu~a, arid: (b) . whether Ve~tu~a applied to~ members ~vhp had already retired ~e~ore the ruling.:,'i~h~ is the litigation that. ultimately resulted'in~ the r~ .fie ,~etz~eme~t case discussed a~QVe,- hire the claxtr~s of active aid retired members and plan sponsors in C1Jl~.I, ~ount~es across the state were Gaordinatcd into a single proceeding in San Francisco County Superior Court. ~'he litigation invol~vit~g CCC~~A, the County and CCC~RA's participating. districts resulted in acourt- approved settlen~~n# agreement in 1999 known as the Pax~lson settlement. ~`he treatment of most participating employers' pay codes was specified in exhibits to the settlement. See A.ttachn~ent ~. Confidential and .Privileged Bo~'d of Retirement October Z 1, ZOU~ Page 5 ReedSmith The ~C~~R:A Policy and the Paulson settlement allow for the inclusion of amounts paid. at termination to the extent those amounts were earned (btit~net necessarily ~pa~abl~}during the final compensation erod. This treatment became inconsistent with the later rulings in ~'n Re Retrr~m~nt and -Sales p. ,, (discussed above}, because under those rulings no terrriinal pay should be included ~n final compensation unless it was both ta} earned and (b) payabfe ("ca~hable"} during ei~playrnent, Anticipating:. later legal de~r~lopmentsx hov~ever, the Paulsa~n settlement expressly stags: "All Parties . . agree, that any subsequent determinations b~ a court o f competent jurisdiction that er~ar~e, define narrow, or in an other way relate' t~ the scope of the: decision, of the. [ ~~~tura case] o~ the , ite~s~ of . ~. .;, .; ~ ~ :: ~ ; , , ,, :~ ~ ~, rio ; _ ~ ot: on this ~ettlem~nt~ compensation to be included forbe~.~fxt purposes under [C~l] shah ha a ., , ~ :fie , .,. ., ox it~ term. ~s. r' Thus~~ the artes~ tQ Paulson in~lu~n C~ER~ a '~~eed ~ahat~ even if a court later :rule .. s.. .~ ~ ~ .. . ~ p ~~ ::.' ` ~ ` ~ ,f~.o ~. fnal co en~~tion that r~lih `: would riot i act ~I~at all termnaat~on :cash,. outs should be excluded r m , ,, , . p .~ ~ .: ~ . ;, , ~ ., the class mern~ers~' xights under the settlement t4 Have teinatron cash oats .included if the cos a .-out;. t'1'~e~ was earned durin~ the final Compensation period. The Paulson litigation was brought by retired CCC~RA ~nennbers, to,ncrease their retirement benefits. . . The. Settlemcnt~ A xeernent b its aerrbs ~nl ~ ~ ~ Lied to.those~ dread retired as .of S.e tember 3~Q :...1997. ,~ctwe em la ees were-also. tl~reatenin~ suit at the tixrie, and their cQunterpartshad already filed smilax p ~' . .litigation in other CARL counties. For that reason, the. CCCER~ Board determined that it would valuritaxil . apply the same terns to all. members, regardless of active, retired :or deferredstatus. t~s a rriatter of law, however; the~Pau~son settl+errYent is not bndiri~ as to any :rnenaberwho retired. after S~epternber: 3Q,';l 997, and the Board ~~ note bound by the P~u~son settleriaent as to. any auch:.members or .:. .. . . ... :. thoiir b`ene~cia~~es. AI~AL'YSYS ~r~n~ Com~nensation Prope~l,~ ~'nc1 ~uc~es .~1'are~ x~ari ~'ius~ ,~~s~~ Salary ,:.: ~.. - , . ~ . g - ,,: ... p ~ .. ~ ~ ~ g ~ ~ tuna precedent,. ~efore~ addressln the, area of concern, ~t ~s ~~ oi~tant, to note thafi~ under the ~bind~n ~'~n . more than '~ust: base sale.... is ropers ~ ~~ included in a rnernber's final co~pe.~satian. ~'or example, tern J ~Y p y life "management incentive pay" (additional cash payments for managers}, "vehicle allow~.nce" (cash .a ents to em to ees who use their own cars for work purposes} and "standby pay" (cash payments p~ p y in reco ntion of members' availability aver normal working hours} are prt~perly included in the. ; g calculation o~ a m.emhe~'s final can~pens~.tlon under both Clal~~-and., the ~'~ulsa~t settlement; Then lnclusiori~ do not constitute ina ro - er "s ~ kin :" of benefits, as has been. contended in the media- CJnder° p p p g law, the CCC~~~ l~aard include these items in members' final c~mpensaton for the purpose of calculating their retirement allowances. It has no disereti~an to da othc~wise~. Confidential and Privileged Board of l~etire,ment (3ctober 2l, 2009 Page d Areas of Concern "Straddling" ReedSmith T e tlmin~ of:a meriaber's cash out of ~aecrued vacation o~ leave .can sor~etn~os be structured so that two. cash nuts earned in twv different fiscal years will fair within a single 365 da: final ~con~ sensation eriod. y .. P p Many employers odly permit orie cash .out per fi~cal~ year, but eves with: that restriction; ~ :t gay be pons%ble-.for a~~r~ernber fio choo. se~ a final compensation period: that "straddles'.' two ~sca~ :ears' worth of Y cash outs. Although. both ;case outis~`aro ~~~aid ~durin the rnembe~'s chosen final corn ~ ensation ~ eriad ,. . ..., .~ th~yare riot both full earned. du~~n ~ the~~~al earn erisat~on eriod -~-ccord~n. l ate:least one~~of Ihe~. ~~ cash:.outs should be excluded from the rriem :~ `~ ' `~ ~ ~ ~~ :.: ~ ~ , ~- :~ . ! ; : ` ~ ; . der s~...f inal~ com ensatlon and no time: should be ~neluded rf . p t ... .: . : . . ~t was. earned before the merbe~'s final compensation yeas}. ~ ~ ~ . . Cash ~~t`vf ~4:ccru~d~ ~acatio~ or,~e~ve ~Ea~ne~ i~ ~'rrv~ '~ars~ ~~ ~ ~ . CC~ERA'~ Policy.. states; "The. value of accrued tiny, such as vacation; holds or sicl~ leave fihat is ,, sold back to the employer by the etriployee each year under a~ `cash, out' ~ agr . otnent, ~s includible. rn compensation earnable.". The exhibits to the Paulsvn:aettlerrient also state that annual vacalan cash out is pensionable. while this. statement in the Policy ~is generally consistent with the Ve~nturu recedeht, it p appears ineorriplete~:because it does not exp~ressl~y require the vacation tine cashed -out tai have beef ,. e ini the final compensation period.. Thus, some partcipatri~ employers aril members may~be_ reporting vacation cash out .as ~perisionable compensation; when it does .meet both the "eared" and tr ~ it • . ;' cashable legal re~utrenlents. ;. t ~ ~ ,~ :~ zf also appears that some members ~riay~ have taken advarita e o4f this Folic ~~ tatem~nt b ~: cashin !out Y Y g . one year of accrued vacation in their final year of employment and then repor~.ing to CCCEI~ a~. pensionable compensation, another year's worth. of accrued vacation cash out. at tieilnat%on.. Thi~~ rias t ~ irrpac~ of including twro: years' worth o~ vacation accrual in a single f 'anal compensation year,. ... .. ,: Although bothyears of vacation ~accru~l-were: aid in. the final tom ensatior~ ear b ~_~ de~nitoi~ oril oa~e .. .: p p Y~ Y Y. at mast could: bade been earned in th:at~~. ear: ~nder~ a hcable laver me b~ s ~ haul n ~ ~ . e~:al ;:~' ~.;: .. ~ . .: m s d of h lowed; to: cl d , more than one Yeax ~ worth of .accrued vacation cash .out ~~ their final carnpensatrou :(or. ria more: , ~: ~ .: .. ~. . than three yews' worth of accrued ~vacatiari cash out~~if the ine.ber~has a three year final' ~co~pensatort: .. „ .perxod~~ . ~.:.~..~.~ ~.,,,,_,,,~.. ,. o 2 Under sonic circumstances,. a member may be able to achieve a higher retirement allowance through a type of "straddling" that is. consistent Frith CER)~ and the ~'a~crsvn settlem.ei~t. This could occur whop an employee is allowed to cash out in: ore t~~cal ear less than she ma have earned-Burin y .._...~- ~' g that yearl For exaim~le; if a member earns 160 hours of vacation each fiscal-year, btxt is ai~~ed to cash out Qnly one~third of that'tirrie each fiscal year, the .ember-~ could ~le~ ztirnatel "straddle' two. f seal g y years and cash out two-thirds of her eurnod ~~.nd accrued 160 hours (~ 107 hours}, Under this scenario, all I01 hours of'vacation cashed out would have been both ear and ~. for payable during the final compensation period. Thus; all 101 hours would be propo~ly inclr~ded in the member's final compensation. Confidential and Privileged Board of Retirement R(~'(~d~~.l~,n October 21, 2009 Page 7 Cash ~~~s U,~on ~'erm~natzon • $18 ~ 1 ~ -~ 164 hours of administrative leave cashed out in his final ~ompensa~ion year • $ I S, $3 S --164 hours of vacation tine cashed out iri his final compensation year ~ $~8~y ~ 21 ~ w- 2~4 hours ol`vacati~n tznrxe c~.shed out at terin~atxan~ his exam ~e thc~ first three iten~~ were ro er1. nc~ucled in the r~~mber's final compehsat~on under:.: . . t p~ :, p p Y case la~~v aid the ~~xu~~~on settlement; ~'he problems appear in ;~~e amounts oE' cashed out administrative leave and vacation time the member had ine~uded In his pensionable compensation. ~: ~: ~.e ardin tb.e adn~inistrativ~ ,leave ~ it is oar understanding that t~iis member earned 8a IIQUIS of g g administrative leave er ear ar~d could cash out up to~ the same amount each year during employment. .. p ~ ~ ~~ Du~•rng his tlnal year, I,a~wever, he was permitted to receive hand submitted to CC~~~ as add~t~onal ~~ Co~afidential and privileged Board of Retirement t~etober 2I, 2009 Page $ ReedSmith "#inal compensation".)the cash: value of 1 ~0 hours' worth of administrative; leave Eby "straddling" two fiscal years with his find. co~pEnsatlon year.) This means: that- he had 80 hours of heave cash out. included in his Final compensation that at a minimum was not earned duran his finial com ensation ear, ._-.-..-~ _ ~ P Y . hhus, half of the administrative leave fi ure ma have. been im ro erl included in his final g Y p p Y compel aton,'resultirig in excess final compensation. of $~,40~ ~ ~ . Regarding the vacation cash outs, it is our,understandn t~iat this member earned 24Q hours of vacation . g per year, but he was only allovtr~d to cash opt: a maximuril of~ 84 hours each ~~ar Ike was alsp ~ er~litted Y p to cash out at least 514 hours of accrued vacat~~n at the t~m~ of his, term~natori. By eriga~ng ~ ``lawful straddling". see footnote 2 ah~ve} th%s ~rie~her wo~~ld:,.have: bee~a able cash out up ta~~~ l ;b0: lhours of . ..: accrued vacation that would ha~ve~ beef both earned. and paid (fir payable .in. dash d~ru~ his final compensation p~ero'd.: That amount ~s ro ~ eri : included ~n ,his i~nal ~co~' ":er~satYQn ~Qv~e~rer 'the ., p p Y p add~t~~n 240 hQur~ above and, beyond had:amount. gas. not pernutted tQ be included, ~riclud4ing~~ thi overage resulted iri excess. final c~ompensatiprt of $28,12I. Ln the above example, the member's final. compensation appears to have been overstated by at least $37,S2fi. with 30.27 years of service credit, his annual retirement beneft ma be overstated b Y Y approximately $34,040 per year.,. plus compounding CDLA increases on that amount,. for -the rest of his life (presw~nably another 2D to 30~years), Thus, we can see how'ust one exam le of what the ress ,, ;.. J p p Zabels pennon sptlung'' (albeit an extreme case} could result in a benefit cost approaching a miYlon dollars over time. ~ . CUI~CLUSYQI~ ANSI CUNIM~NI~A'~~~N zany items of remuneration that. members are ~ aid in addition to their bas ~ alar' e ~ ~rl~ p e s x 5 are prope y included in calculating their final. compensation, `T`his is not "s ~ ikn ," The ~rord " ~s ikin . " should be . p g p g res_.erved for the purposeful manipulation of a~ member's final, co~nperisation: in order to increase. a. rctirei~~er~t allowance l~Vond wha the Ia~ allo~u~~. ~. It appears that CCCIJfZA,'s Pplicy and nco~sistenei~~ in the reporiin ~ .steams between. C+~C~I~A and .gY some of its partci ~ ate em . ~Ia ers rria. be enable ari overstate : `e : .~ : ~ : ~. ~ ~ .' p ~ p Y . y ... . g m._nt of pensionable compensation. by some members of the system, It would b~ prudent now toy con:sder appropriate adjustments to CCCB~A's policies, and practices in order to avoid potentiall substantial future unfunded costs to the Y system, its participating employers, and ultimately, the county's taxpayers, we recommend that the Board proceed as follows: . . l , ~.esearch and evaluate selected employer pay and reporting practices to determine whether and to what extent the overstatement of final compensation may be occurring in the retirerr~ent system. Z, Determine whether and to what extent employer and employee contributions have been collected on elements of compensation that are not properly includable in final cam ensation, p 3, I~ete~nine tivhat changes in CCCER,~'s~ policies and practices, if any, would be appropriate in arder to bring the system into compliance with currentl a ..licabZe law. Y pp Con~dcntial and Privileged Board of retirement October 21, 2009 page~9 ReedSmith 4. Determine whether and to what extent it is ap ropr-iat~ to tame corrective measures as to current and ~ .. future retired, active and deferred members of the systerri~ lncludin~ recalcu~at~on of benefits, arrears . cdntributions and other act~r~s. . Determine whether recent irn rovearnents in the re ortin and processing of retirement benefit 5. ~ ~ ~ calculations will im .rove the delivery of the. proper level. of benefits to the members of the system p we will be ..,leased to address. these issues with the Board at its upcoming meetings, p l~esp ctfully, ~ . . .. ~~ H ~ y L.. edermian~ c. Marilyn Leedom, CB4 Karen Levy, Counsel _ .