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Agenda Item
ASR
Control 12-001799 |
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MEETING DATE: |
01/15/13 |
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legal entity taking action: |
Board of Supervisors |
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board of supervisors
district(s): |
All Districts |
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SUBMITTING
Agency/Department: |
Human Resource Services (Approved) |
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Department contact
person(s): |
Steve Danley (714) 834-2836 |
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Nick Chrisos (714) 834-3303 |
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Subject:
Retirement Reverse Pick-up
Agreements
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ceo Concur |
County
Counsel Review |
Clerk of the Board |
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Concur |
Approved Agreement to Form |
Discussion |
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3 Votes Board Majority |
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Budgeted: N/A |
Current Year Cost:
N/A |
Annual Cost:
N/A |
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Staffing Impact: No |
# of Positions:
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Sole Source:
N/A |
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Current Fiscal Year Revenue: N/A |
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Funding Source: N/A |
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Prior Board Action: N/A
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RECOMMENDED ACTION(S):
Approve the written agreement reached between the County of Orange and the Alliance of Orange County Workers for the Operations and Service Maintenance bargaining unit requiring employees hired on or after January 1, 2013 ("new members" and "new employees," as these terms are defined in the Public Employees' Pension Reform Act of 2013), to pay the Reverse Pick-up for the incremental cost of the 2.7% @ 55 retirement formula provided to certain County employees, effective January 11, 2013. Incorporate this written agreement into the Operations and Service Maintenance Unit Memorandum of Understanding.
SUMMARY:
Approve and adopt the written agreement reached between the County and the Alliance of Orange County Workers requiring employees hired on or after January 1, 2013 in the Operations and Service Maintenance Unit to pay the Reverse Pick-up for the incremental cost of the 2.7% @ 55 retirement formula.
BACKGROUND INFORMATION:
The Public Employees' Pension Reform Act of 2013 (PEPRA) generally prohibits employees from being required to pay more than one-half the normal rate (employee's share) of retirement without a written agreement between the public agency (County) and the exclusively recognized employee organization.
Under the terms of collective bargaining agreements (Memoranda of Understanding or "MOU") between the County and exclusively recognized employee organizations, the County agreed to grant to certain employees the 2.7% @ 55 retirement formula, and to other employees (i.e., those hired on or after a specified date) the option of the 2.7% @ 55 retirement formula or the 1.62% @ 65 retirement formula along with an option to participate in a defined contribution plan with a County match up to 2% of the employee's salary. An essential component of this agreement is that the County is not responsible for any of the increased cost of the enhanced 2.7% @ 55 retirement benefit. As such, MOUs with specified employee organizations requires that employees who receive the 2.7% @ 55 formula or instead, who choose the 1.62% @ 65 option, pay the proportionate share of the increased cost. The MOU language, however, does not specifically state that new employees hired on or after January 1, 2013, who do not have the option to select the enhanced retirement formula (2.7% @ 55), will have an obligation to pay the Reverse Pick-up.
As a result, there is uncertainty as to whether the County can automatically require these new employees, as defined by PEPRA, to make such a Reverse Pick-up payment without a written agreement from the applicable exclusively recognized employee organization. Since the 2.7% @ 55 retirement benefit was designated to be at no additional cost to the County, in the absence of new members paying the Reverse Pick-up, employees covered by the County's current retirement plans will be solely responsible for the Reverse Pick-up. This will eventually result in significant increased costs to employees covered by the County's current retirement plans in future years, as the costs will be spread among an ever-decreasing group of employees.
The County recently offered employee organizations which have the 2.7% @ 55 retirement benefit the opportunity to sign written agreements to have all employees, including new members under PEPRA, pay the Reverse Pick-up for the 2.7% @ 55 plan. This Agenda Staff Report brings before your Honorable Board the written agreement between the County and the Alliance of Orange County Workers (AOCW) for its new employees under PEPRA to pay the Reverse Pick-up. If your Board adopts this agreement, all new members (as defined by PEPRA) of the Operations and Service Maintenance Unit will be required to pay the Reverse Pick-up for the 2.7% @ 55 retirement plan, effective with the first day of the pay period following Board adoption.
FINANCIAL IMPACT:
There is no fiscal impact on the County under any scenario regarding the payment of the Reverse Pick-up for the 2.7% @ 55 retirement plan. The responsibility for payment of the Reverse Pick-up will either be borne by all employees (signing agreements), including new hires within the meaning of PEPRA (as is requested in this ASR), or only by employees covered by the County's current retirement plans.
STAFFING IMPACT:
N/A
REVIEWING AGENCIES:
County Executive Office
County Counsel
EXHIBIT(S):
Agreement with Alliance of Orange County Workers