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HomeMy WebLinkAbout02/12/2001 Work Session , . MINUTES OF THE WORK SESSION OF THE SPRINGFIELD CITY COUNCIL HELD ON MONDAY, FEBRUARY 12, 2001 The Springfield City Council met in Work Session at Springfield City Hall, Jesse Maine Meeting Room, 225 Fifty Street, Springfield, on Monday, February 12,2001, at 5:30 p.m., with Mayor Leiken presiding. ATTENDANCE Present were Mayor Leiken, Councilors Ballew, Fitch, Hatfield, Lundberg, Ralston (arrived 5:32 p.m.) and Simmons. Also present were City Manager Mike Kelly, Assistant City Manager Gino Grimaldi, City Attorney Joe Leahy, City Recorder Kim Krebs, Human Resources Director Bill Spiry, Benefit Manager Ardis Belknap and members of staff. 1. Potential Oregon Public Employees Retirement System (PERS) Integration of General Services Employees in Current Money Purchase Pension Plan. . Assistant City Manager Gino Grimaldi and Benefit Manager Ardis Belknap were present for the staff report. Mr. Grimaldi said the purpose of the work session was to provide council with an overview and status report as it relates to the potential PERS integration. He said this has been ongoing since 1991. He said the ultimate result of the evening was to gain council permission to continue to look at PERS in order to bring some closure to the issue. He also asked council to provide feedback to staff regarding any issues that council thinks may need further review. He said the financial impact to the City is not known yet, but staff will provide that information to council as soon as it becomes available. He said staff has scheduled some employee information meetings that are scheduled to begin on February 13,2001. Ms. Belknap provided an overview of the information that was contained in the Council Briefing Memorandum (CBM). She said when this meeting was originally scheduled staff had hoped to have the actuarial numbers available, however they are not. She said they have asked the actuary to do the study from approximately 24 different variations, and because of that, the study has been delayed. Ms. Belknap said there is a Rule that is currently in front ofthe PERS Board of which a decision may be made as soon as tomorrow regarding pooling local jurisdictions. She said the actuary is looking at this from a pool point of view and a non-pool point of view. She further explained the difference between the Rules process and the Legislative process as it relates to PERS. She continued by stating rules that cannot be handled by Rules is a Tier 3, which wold reflect different benefits, and taking the employers contribution as a lump sum at the time of retirement, these two rules must be done by the Legislature. She said through the Rules system there have been a number of changes to the PERS system over the past two years. She said she is a member of the task force that has been working on these issues. Ms. Belknap provided further explanation of the different rules that have come before the PERS Board. She provided some information regarding the PERS Task Force and highlighted the many steps that have taken place over the past few years. She said she has seen some very positive change during the past two years in the PERS system. . " Springfield City Council Work Session - February 12, 2001 Page 2 . Ms. Belknap said that moving to PERS represents a decision by the City that could not be reversed. In addition, moving to PERS results in a loss of control of both the cost and the benefit levels to retirees. She said the PERS Board governs PERS, and that is another reason why staff has been proceeding cautiously in this review. Ms. Belknap explained the differences in the two Tiers and said the legislature is reviewing the possibility of a Tier 3 addition. · Tier 1 - any employee hired before January 1, 1996, with a guarantee of 8%; · Tier 2 - any employee hired after January 1, 1996. Councilor Hatfield said there are three items that council would like to have answered. 1. Comparisons of the overall cost to the City; 2. What is the variation of potential future costs; and 3. How would the City benefit by this integration to PERS. Councilor Hatfield also stated that he was surprised after reading the information in the Agenda Item Summary (AIS) that a defined contribution plan was suddenly more expensive than a defined benefit plan to administer. . Councilor Simmons said he agreed with Councilor Hatfield's comments and that the cost definitions are very important. He also said that when the information becomes available, the council would need to have a thorough discussion. Councilor Ballew said that when the financial information is prepared and staff brings this item back to council, she would like to see a side-by-side comparison, which would show comparisons of a Defined Benefit Plan versus a Defined Contribution Plan. It would also be helpful to include the dollar amounts. She would also like to see how it would impact the organization as a whole. She said she would like information regarding the existing unfunded liability, and how the City stands on this. Ms. Belknap said the City's pension attorney is reviewing the unfunded liability issue. She said the PERS rule is that you cannot go into the system under funded by more than 3%, which would require a 97% funding level. City Manager Mike Kelly said that staff wanted to make sure the council understood the status of this item tonight and that they endorse the continuance of the study as there are educational and information meetings scheduled to begin tomorrow for employees. He said that staff will bring this item back to council probably towards the end of March 2001 for an update, and is slated tentatively for final approval in July 2001. . Mr. Kelly said that most public employers offer PERS as their retirement system. He spoke about the issue of retention and recruitment and that it holds a greater value for employees. He said the benefits received by the employees are usually greater under the PERS system compared to any private plan. He said staff believes it might cost more than our existing system, but they won't know definitely until the numbers are in. He said the question then would be how do you value more cost compared to increase in your recruitment and retention ability of employees. He said one of the issues the City would give up by going to PERS is the issue of having local control. .! Springfield City Council Work Session - February 12,20.01 Page 3 . City Attorney Joe Leahy introduced Everett Moreland from Hershner Hunter. He said Mr. Moreland has been advising the Human Resources Department on this issue. He said that from his perspective, Mr. Moreland is one of the premier people in the state involved in this area of the law and he has full confidence that Mr. Moreland is providing good advice to the City. Ms. Belknap said that staff would bring this item back to council sometime in the latter part of March 2001. Councilor Hatfield informed Mayor Leiken and fellow councilors that his cancer had returned and he would be undergoing an extensive round of treatment that would begin on February 16, 2001. He said he is unsure at this time what the extent of his treatment would be, and that he may be looking at taking a possible 3-month leave of absence. Maybe Leiken approved the leave of absence, and said he wanted to allow council an opportunity to review the current committee responsibilities that Councilor Hatfield has in order to determine how they would cover those responsibilities in the interim. He said he would like to discuss those assignments at the next regular council meeting scheduled for February 20, 2001. ADJOURNMENT The meeting was adjourned at 5:55 p.m. Minutes Recorder - Kim Krebs ... . ATTEST: ~~ro~ .