From Riordan with love
SEIU721REFORMERS
Melody,
Thank you for sending this document for us to read.
Rafe
***
Mayor Riordan's 20 page Proposal Re: Our Pensions
SECTION ONE. FINDINGS AND DECLARATION OF PURPOSE
A. The City of los Angeles faces a fiscal emergency, heading towards bankruptcy . On its current trajectory, the City will not have the abil ity to honor its pension obligations, nor will it be able to offer essential city services, including trash collection, open parks, filling of pot holes, street and sidewalk repairs, etc. Even public safety may face cuts.
B. It's simple math. In 2002, Los Angeles contributed $220 million to its three pension funds to pay for pensions and other retirement benefits. By 2011, the City's contribution had skyrocketed to over $1.2 billion . The nonpartisan City Adm inistrative Officer forecasts that the City's contributions will continue to grow dramatically over the next decade. Some estimates predict that the City's pension fund contributions will exceed $2 billion by 20 17. If the pension funds fail to earn their assumed 7.75%, which is probable, contributions will exceed even that amount.
C. A decade ago, the Los Angeles pension funds were fully funded -meaning that they had assets sufficient to pay for the benefits owed to employees and retirees. Today, they are underfunded by more than $9.9 billion. The City Council's recent attempts to close th is staggering debt have been incremental at best and not commensurate with the scope of the problem.
D. In an April 6, 2012 report, the City Administrative Officer warned that Los Angeles faces "fiscal insolvency" if it does not restructure its expenses. Contribut ions to the City pension funds are one of the city's largest expenses, its fastest-growing cost, and the most direct threat to the City's future and its ability to provide vital services to its citizenry .
E. The cost to the City and its taxpayers for pensions and post-retirement health care is much higher than most citizens either believe or understand.
• The average salary for a non-publ ic safety employee of the City is approximately
$72,000 per year. When you add the City's contribution to that employee's pens ion
and retiree health care benefits, total annual compensation is more than $90,000 per year.
• The average salary for an employee of the Department of Water and Power is approximately $98,922. When you add the City's contribution to that employee's pension and retiree health care benefits, total compensation is over $149,000 per year.
• The average salary for police and fire personnel is approximately $100,056. When you add the City's contribution to those employee's pension and retiree health care benefits, total compensation is more than $130,000 per year.
I N
F. The City's pension boards have been responsible for investing pension ft,tJids, setting actuar ial policy and projecting future investment returns. Taxpayers bear the entir , burden when investment returns fall short of projections. 01
G. Since 2000, the three City pension boards have projected investment returns of approximately 8% annually. Actual investment returns fell fall short of those projections, resulting in higher required contributions from taxpayers and over $9.9 billion in unfunded pension and retiree health liability owed by city taxpayers.
H. . The City's ability to provide necessary services like police and fire protection are threatened. With a debt of$9.9 billion, the amount is so large that raising taxes is not an option, and would not be approved by voters.
I. Current City retirees, who depend on their pension checks for their retirement income, are at risk ifthe City Administrative Officer's warning of"fiscal insolvency" comes true.
J. The City spends hundreds of mill ions of dollars per year paying for health insurance subsidies for its retirees . This retiree health care, which very few employees in the private sector receive, can exceed $16,000 per year. These benefits are in addition to the monthly pension received by a city retiree.
K. . Therefore, pursuant to Section 5(b) of Article XI of the California Constitution, the people, exercising their reserved power of initiative to regulate "compensation", hereby amend the City Charter and enact the "Bankruptcy Avoidance and Pension Protection Act of 2013" to prevent bankruptcy and to protect the pensions earned by current retirees by:
• reforming the current pension systems to require all city officers and employees to contr i bute at least an amount equal to the City's contribution towards their pension and to prohibit future salary increases from being used to increase pension obligations while the pension funds are underfunded;
• creating a new retirement system for future city employees like retirement plans
offered to most private sector employees; and
• declaring that each element ofthis Act is intended to be functionally, grammatically, and volitionally severable and that the voters would have enacted each provision separately on its own merit, even if another provision is determined to be invalid, as necessary to address the present fiscal emergency .
L. The people hereby declare their intent and desire that the City Council place this
Charter Amendment on the first municipal election for which the measure qualifies.
SECTION TWO. FAIR SHARE PENSION CONTRIBUTIONS
Sections 1122, ll24, 1126, 1128, 1130 and 1132 are hereby added to Article XI of the Los Angeles City Charter to read asfollows:
Sec. 1122. Employee Pension Contributions.
(a) On or after the effective date of this Section, all city officers and employees who are members of pension plans under Parts l-3 of this Article, inclusive, shall contribute an amount equal to or greater than the amount of the City's actual cost, as defined in Section 1126 (c), to fund their respective pensions, except that:
(I) no officer or employee shall be required to contribute more than one hundred percent ( I 00%) of the normal cost of their respective pension ; and
(2) the employee's contribution shall not increase by more than three percent (3%) of payroll per year for employees who are members of pension plans under Parts I and 3 of this Article, and not more than five percent (5%) of payroll per year for employees who are member s of pension plans under Part 2 ofthis Article.
(b) This section sha ll not apply to any existing contract, collective bargaining agreement,
or memorandum of understanding in effect as of the effective date ofthis section.
(c) No new, amended, or extended contract, collective bargaining agreement, or memorandum of understand ing shall be valid or enforceable that violates, reduce s, or offsets the minimum employee contributions required in subdivision (a). This section shall not proh ibit collective bargain ing with respect to the amount of employee pension contributions in excess of the minimum employee contribution required in subdivision (a).
Sec. 1124. Post Retirement Health Benefits.
(a) On or after the effective date of this Section, all officers and employees who are members of pension plans under Parts 1-3 of this Article, inclu sive, shall contribute an amount equal to or greater than the amount of the City's contribution to fund their respective post retirement health and welfare benefit plans, except that:
(I) no employee shall be required to contribute more than one hundred percent (100%) of the normal cost of their respective post-retirement health and welfare benefit plans; and
(2) the employee's contribution shall not increase by more than three percent
(3%) of payroll per year for employees who are members of pension plans under Parts 1 and 3 of this Article, and not more than five percent (5%) of payroll per year for employees who are members of pension plans under Part 2 ofthis Article.
(b) This section shall not apply to any current retiree, or any existing contract, collective bargaining agreement, or memorandum of understanding in effect as ofthe effective date ofthis section.
(c) No new, amended, or extended contract, collective bargaining agreement, or
memorandum of understanding shall be valid or enforceable that violates, reduces, or offsets the minimum employee contributions required in subdivision (a). This section shaH not prohibit collective bargaining with respect to the amount of employee health and welfare contributions in excess of the minimum employee contribution required in subdivision (a).
Sec. 1126. Emplovee Compensation and Pension Funding Limitation.
(a) No increase in the base salary of an employee shall be used to calculate a pension benefit under Part 1 or Part 2 of this Article ifthe amount paid by the City for the benefit ofthat employee for the actual cost of the pension benefit exceeds fifteen percent (15%) of the employee's base salary in any fiscal year.
(b) No increase in the base salary of a public safety employee shall be used to calculate a
pension benefit under Part 3 ofthis Article if the amount paid by the City for the benefit of that employee for the actual cost of the pension benefit exceeds twenty-five percent (25%) of the employee's base salary in any fiscal year.
(c) Notwithstanding the language in Section 1248 or any other provision to the contrary, "actual cost" means the sum of the City's contribution and the amount paid by the City towards the liquidation of unfunded liabilities and administrative expenses.
The "actual cost" shall be determined by the following factors:
(I) City Contributions. A sum equal to a percentage of the salaries of all members of the retirement system, which percentage shall be the same as that shown in the last actuarial report rendered, as herein before provided to be the percentage required for members of departments with no past service.
(2) Liquidation of Unfunded Liabilities. A sum sufficient to liquidate the unfunded over period as specified by the respective pension board, over a period of up to 30 years, any accrued unfunded liabi lities assumed by the System .
(3) Administrative Expenses. At the discretion of the City Council, the administrative expenses of the System.
(d) Notwithstand ing the limitations of this section, employees who are promoted or are found to be working outside of their classification shall have related salary increases applied to their pension based pay during any pension pay limitation period under (a) or (b) above.
Sec. 1128. Death and Disability Benefits.
(a) This Act shall not apply to or impair or limit in any way the death and disability benefits of current beneficiaries or members of the Defined Contribution Plan provided in Part 1- 3, inclusive, of Article IV.
(b) Employees who are covered by the Defined Contribution Plan in Article XI, Part 4 shall be eligible tor death and disability benefits pursuant to Section 1800(e) of Part 4 as though they were members and in the same manner as other employees in the same job classification of those respective Plans. Public safety department members hired after the effective date of this section shall be eligible tor Part 3-Tier 6 death and disability benefits.
Sec. 1130. Transparency.
(a) In that pension cost increases are driven partially by salaries, and partially by changes in actuarial standards, the City Council shall publish on the City's website the budgetary impact, in dollars and percentage terms, of all salary increases negotiated in MOUs for the life ofthe contract, for each year that the contract shall be in effect.
(b) The City Council shall publish on the City's website the budgetary impact, in dollars and percentage terms, of all cost-of-living increases negotiated in MOUs for the life of the contract, tor each year that the contract shall be in effect. Additionally, cost of living allowances granted by the pension boards under Parts 1-3, inclusive, of Article XI shall be published on the City's web site with a similar analysis of their impact on payments from the pension funds, and their impact on future required actuarial contributions from the plan sponsor into the pension fund.
(c) The City's pension funds, under Parts 1-3, inclusive, of Article XI shall publish, in their Comprehensive Annual Financ ial Statements, a sensitivity analysis showing the impact of changes in investment return and discount rate assumpt ions. The sensitivity analysis should project employer contributions for a period often years assuming investment returns equal to, and three points greater or less than, the current assumed return. Thus, as an example, a plan that
assumes a rate of7.75% will publish a ten year forecast assuming 10.75% returns, 7.75% returns,
and 4.75% returns.
(d) The City's pension funds, under Parts 1-3, inclusive, shall annually publish a list of the retirees' primary residences showing the number of retirees who live in the City of Los Angeles and those retirees that live outside the State of California. Noth ing herein shall require the release of the addresses of any individual retirees.
Sec. 1132. Uniform Final Average Salary.
Notwithstanding any other language to the contrary in this Article XI , Parts 1-3, inclusive, Final Average Salary means an amount equivalent to a monthly average of salary actually earned during any thirty-six (36) consecutive months of service as a Plan Member as designated by the Plan Member. In the absence of such designation , the last thirty-six (36) consecutive months prior to the date upon which retirement would become effective shall be used as the basis for the calculation ofFinal Average Salary.
For the purposes of detennining Final Average Salary for periods during which the Plan Member receives less than full salary on account of injury or illness, pursuant to any applicable ordinance of the City, the Final Average Salary shall be based upon the pension based pay established in salary for the thirty-six (36) consecutive month period excluding the time period when the Plan Member receives less than full salary on account of injury or illness.
Overtime compensation , bonus payments, or payments of money to the member not designated as salary by this Charter, an ordinance or Memorandum of Understanding shall not be considered for purposes of calculating Final Compensation using Final Average Salary.
SECTION THREE. AMENDMENT TO PENSION BOARD COMPOSITION
Article XI, Section II 04 of the Los Angeles City Charter is hereby amended to read as follows: (language added is underlined and language deleted is designated in strikeout format)
Sec. 1104. Pension and Retirement System Boards.
(a) Board of Fire and Police Pension Commissioners. The Board of Fire and Police Pension Commissioners shall consist of eleven ftffie..mcmbers. Seven H-Ye-shall be appointed by the Mayor, subject to the approval of the City Council. One shall be an active sworn member of the Fire Department as defined in this Article and elected by the members of the Fire Department. One shall be an active sworn member of the Police Department as defined in this Article and elected by the members of the Police Department. One shall be a retired member of the Fire Department as defined in this Article and elected by the retired members of the Fire Department. One shall be a retired member of the Police Department as defined in this Article and elected by the retired members ofthe Police Department.
(b) Board of Administration for LACERS. The Board of Administration for LACERS shall consist of nine se¥eR-members. Six .f<ew: members, one of whom shall be a retired member of the system, shall be appointed by the Mayor subject to the approval ofthe Council. Two members shall be active employee members of the system elected by the active employee members. One shall be a retired member ofthe system elected by the retired members of the system.
(c) Board of Administration for WPERP. The Board of Administration for the WPERP shall consist of nine se¥efl: members .Three members shall be ex officio, three members
shall be elected, and ooe- three member shall be appointed. The ex officio members shall be the General Manager of the Department, the Chief Accounting Employee of the Department, and one Board of Water and Power Commissioner selected by that board. Three elected members shall be active employee members of the system elected by the active employee members. One member shall be a retired member ofthe system appointed by the Board of Water and Power Commissioners. Two members shall be appointed by the Mayor subject to approval of the City CounciL
(d) Terms of Board Members. For the Board of Fire and Police Pen sion Commissioners and the Board of Administration for LACERS, each elected board member shall serve for a term
offive years. For the Board of Administration for WPERP, the appointed retired member and each elected board member shall serve for a tterm of three years. For Board of Administration for WPERP, the two of the three appointments shall be made by the Mayor and shall serve at the pleasure of the Mayor . The terms ofboard members on all boards shall be staggered as determined by each board. In case of a vacancy of an appointed seat on any board , the appointing authority for the seat shall appoint a member to serve out the unexpired term of office. In case of a vacancy of an elected seat on any board that has more than six months remaining before expiration ofthe term, the applicable board shall conduct an election to select a member of the group represented by the vacant seat to serve out the unexpired term of otlice.
(e) Restrictions on Board Membership. No person who is employed in any capacity by the LACERS or by WPERP shall be eligible to file for election to or be appointed to the board of their respective systems. For each retirement board, two of the Mayor's appointees shall have financial, accounting or investment management expertise.
Section Four: Part 4 is hereby added to Article XI of the Los Angeles City Charter to read
asfollows:
Article XI
Part 4
DEFINED CONTRIBUTION PENSION PLAN
Sec. 1800. Purpose (Los Angeles City Employees' Defined Contribution Plan).
(a) There is hereby created, established and adopted a retirement system for all officers and employees of the City of Los Angeles not now included w ith in any other pension or retirement system under the provisions of this Article. The benefits of the System's Plan shall be adopted by ordinance in accordance with Section 1804 of this Part 4 and shall be set forth in the City Admin istrative Code.
(b) As of July I , 2013 or the date when the California Secretary of State approves the charter amendment adding this language, whichever is later, no new employees will be enrolled in LACERS, WPERP or the Police and Fire Pension Plan established in Sections 1100 -1120 and Parts 1-3 of th is Article XI, inclusive.
(c) New employees, hired on or after July I , 2013 or the date when the California
Secretary of State approves the charter amendment adding this language, whichever is later, shall be enrolled in the City's Defined Contribution Plan, the federal Social Security Program or a
combination of both as determined by the City Council under applicable federal and state laws, as established in this Part 4.
(d) Nothing in the General Provisions for Pension and Retirement Systems or Parts 1
through 3, inclusive, shall apply to this Part 4 unless specifically incorporated hereunder.
(e) Subject to the conditions ofSection 1822, employees who are subject to Part 4 shall be eligible for death and disability benefits authorized by Parts 1-3, inclusive, as though they were members and in the same manner as other employees in the samejob classification, of those respective Plans. Public safety department members hired after the effective date of this section shall be eligible fbr Part 3-Tier 6 death and disabil ity benefits.
(f) Except for federal Medicare benefits, and disability benefits granted hereunder and in
Sections 1128 and 1828, no retiree medical or health and welfare benefits shall be authorized for Part 4 members.
Sec. 1802. Definitions.
The following words and phrases shall have the meaning ascribed to them in this section
unless a different meaning is clearly indicated by the context:
(a) Accumulated Contributions: Th e total of the amounts paid into the fund by the member and any interest credited to the member 's account.
(b) Beneficiary: Persons entitled to receive a benefit from the Defined Contribution Plan.
(c) Member: An officer or employee of the City of Los Angeles, including those
working for the Department of Water and Power, who meets the membership requirements of the Plan as further defined in ordinance(s) establishing the benefits of the Plan .
(d) Plan: The Los Angeles City Employees' Defined Contribution Plan as adopted by the
City Council under authority of Article XI, Part 4.
(e) Retired Member: A member who has ceased employment with the City of Los Angeles and is receiving benefits from a Part 1-3, pension, or Part 4, defined contribution withdrawals, from the Plan.
(f) Compensation: For purposes of the Defined Contribution Plan established hereunder,
compensation shall equal the employee's base hourly salary, excluding (to the extent permitted by applicable state or federal laws) any add-on elements of pay that may be authorized by the
City Council from time to time, multiplied by the employee's standard hours for each pay period.
Elements of pay to be excluded from Compensation include, by way of example and not limitation, special assignment pay, shift differentials, industrial leave, pay in lieu of annual leave, paid overtime, workers' compensation benefits, long-term disability benefits, bonus awards, suggestion awards, termination payoffs for accrued sick leave and annual leave, retirement of deferred compensation benefit payments and any death benefits) and any other element of pay required to be excluded by applicable state or federal laws. "Compensation" for any individual employee may not exceed the amount allowed for that employee under Internal Revenue Code section 401(a)(l7), as amended.
(g) Date oflnitialllirc: The initial hiring date shall mean the date on which an employee is first hired , elected or appointed in service to the City. "Date of Initial Hire" shall also mean and refer to the first date on which any City employee, who has previously been employed by the City but who left the City's employ before vesting in the Defined Benefit Plan and has not vested in that Defined Benefit Plan through employment with another public agency, is re-hired by the City on or after the effective date of the Defined Contribution Plan.
(h) Defined Benefit Plans: The Defined Benefit Plans shall mean that retirement systems known as the Los Angeles City Employees ' Retirement System (Part I: Section 1150 et. seq.), Water and Power Employees ' Retirement Plan (Part 2: Section 1180 et. seq.), and the Police and Fire Pension Plan (Part 3: Section 1200 et. seq.) of this Charter.
(i) Defined Contribution Plan: The Defined Contribution Plan shall mean any defined contribution plan or deferred compensation plan authorized under the Internal Revenue Code and adm inistered by th e Defined Contribution Plan Admini strator, and in this Article shall mean and refer to that retirement system established by the City Council pursuant to Part 4 of this Charter.
G) Defined Contribution Plan Administrato r: Defined Contribution Administrator shall
mean and refer to the Administrator of the Defined Compensation Plan, appointed and authorized pu rsuant to Part 4 to manage the Defined Contributi on Plan.
Sec. 1804. Esta blishment of the Los Angeles City Employee Defined Contribution Plan.
(a) The City Council shall, by ordinance and such other enactments as are necessary and appropriate to carry out the intent of th is Part 4 of Article XI, establish a Defined Contribu tion Plan for the reti rement of all City employees whose Date of Initial Hire is on or after the effective date of the Defined Contribution Plan. This Plan shaH meet the legal requ irements
established by the United States Internal Revenue Code in order to allow the City to retain its Social Security Safe harbor status, under the Internal Revenue Code, as amended, unless the City enrolls in the Social Security System under the restrictions established hereunder. Any
ordinance adopted under this section shall take effect immediately if the City Council finds that the Ordinance must take immediate effect to meet a legal deadline for compliance with this Charter, other law or regulation . In no event shall the City contribute in excess often percent (10%) of each non public safety employee's Compensation, including employees of the Department of Water and Power, in any single fiscal year unless required to do so by federal law.
In no event shall the City contribute in excess of twelve and a half percent (12.5%) of each public safety employee's Compensation in any single fiscal year unless required to do so by federal law.
(b) As an alternative, the City may enroll new employees in the Federal Social Security System with a supplemental Defined Contribution Plan at the discretion of the City Council, subject to the veto of the mayor. In no event shall the City contribute in excess often percent (10%) of each non public safety employee's Compensation , including employees ofthe Department of Water and Power, in any single fiscal year unless required to do so by federal law.
In no event shall the City contribute in excess of twelve and a half percent (12.5%) of each public safety employee's Compensation in any single fiscal year unless required to do so by federal law.
(c) The Plan shall be a defined contribution plan, the benefits from which are payable on an empl oyee's termination of service, retirement, disability or death. The amount ofbenefits payable to the employee shall be the balance in the employee's individual account, comprised of the accumulated contributions by the employer and employee, adjusted for investment gains and losses allocated to the employee's individua l account. The Defined Contribution Plan
establ ished pursuant to this Part 4 shall be designed and implemented so as to maintain its status as a qualified defined contribution pension plan that meets the requiremen ts of applicable sections of the Internal Revenue Code.
(d) The Defined Contribution Plan Administrator shall develop the Defined Contribution Plan document and shall make recommendations to the City Council with respect to the element contained in the Defined Contribution Plan, including appropriate levels of employee contribution . In addition to such elements of the Defined Contribution Plan as are specifically
established in this Article, the Defined Contribut ion Plan Administrator may recommend, and the City Council may include such terms and provi sions in the Defined Contribution Plan, including but not limited to term s concerning investment options, rollovers, loans, in-service withdrawals, breaks in service, forfeitures, or other terms and provisions customarily included in a qualified defined contribution plan , consistent with the best interests of the employees and sound fiscal management.
(e) To the extent allowed by law, the City may offer plans that allow employees to convert their defined contribution retirem ent account into an annuity or other city-approved investment instrument as of their date of retirement. No conversion under this section shall require the City to contribute additional funds to convert the defined contribution retirement account to another approved investment instrument.
(f) Years of service accrued by any participant in the Defined Contribution Plan shall not be credited towards vesting or calculation ofyears of service in any ofthe City's Defined Benefit Plans under Parts 1-3, inclusive, except tor the purposes of a death or disability pen sion under Section 1128 and 1828. The implementation of this section shall be subject to the requirements of applicable law incl uding, but not limited to, applicable labor relations laws and the
requi rements ofthe Federal Internal Revenue Code, as amended.
Sec. 1806. Employee Contributions (Defined Contribution Plan).
(a) Employees shall be automatically enrolled in the Defined Contribution Plan as of his or her Date of Initial Hire, and shall thereafter contribute to his or her individual account an amount equal to a percentage of his or her Compensation, measured from July I to the following June 30, such percentage to be determined by the City Council in approving the initial Defined Contribu tion Plan and any amendments thereto. The contribution shall be deducted from the employee's Compensation at the end of each payro ll period and cred ited by the Plan Administrator to the employee's individual account. Employees may elect to contribute additional amounts, up to the maximum permitted by Internal Revenue Service laws and regulations, but such additional amounts shall not be subject to the City's matching contribution under Internal Revenue Code, as amended.
(b) To the extent required by law, employees shall be allowed to elect not to participate
in the Defined Contribution Plan. The Defined Contribution Plan shall set forth specific
procedures for employees in the Defined Contribution Plan to elect not to participate. Employees who elect not to participate in the Defined Contribution Plan shall not be entitled to participate in the Defined Benefit Plan, nor shall they be entitled to any other compensation or benefit in lieu of participation in the Defined Contribution Plan.
Sec. 1808. City Matching Contributions (Defined Contribution Plan).
The City Council may, by ordinance or resolution, as necessary, provide for a dollar-for dollar employer matching contribution, up to a maximum ten percent (10%) of the non public safety employee's Compensation, and up to a maximum of twelve and a half percent (12.5%) on the public safety employee 's Compensation.
Sec. 1810. Vesting (Defined Contribution Plan).
Subject to applicable Internal Revenue Code requirements, as amended, the City matching contributions shall vest in participating employees on the following schedule:
Less than one year from Date of Initial Hire: 0% vested
1-2 years from Date of Initial Hire: 2-3 years from Date of Initial Hire: 3-4 years from Date oflnitial Hire: 4-5 years from Date of Initial Hire:
5 or more years from Date oflnitial Hire:
20% vested
40% vested
60% vested
80% vested
100% vested
Upon a finding of disability by the Defined Contribution Plan Administrator that prevents an employee from working for the City or upon the death of a City employee subject to this Part 4, the participating employee shall fully vest in the Plan and be entitled to receive 100% of the City's contributions to the employee's Defined Contribution Plan account, subject to applicable Internal Revenue Code requ iremen ts.
Sec. 1812. Defined Contribution Plan Administrator Implementation.
The Defined Contribution Plan Administrator shall propo se in the Plan specific terms for the timing, valuation and pre-requisites for distribution of benefits upon a participating employee's retirement , death, disability or termination of employment with the City.
Sec. 1814. Additional Provisions (Defined Contribution Plan).
To the extent consistent with the intent of the electorate, custom and practice in the establishment and implementation of defined contribution plans, and the specific provisions of this Article, the City Council is hereby authorized and empowered to enact, by ordinance or resolution as necessary , such changes to the Defined Contribution Plan as may be advised by the Defined Contribution Plan Administrator to protect and advance the best interests of the employees participating in the Defined Contribution Plan.
Sec. 1816. Defined Contribution Plan Administrator.
(a) The Defined Contribution Plan shall be managed by an Administrator ("Administrator"). The Plan Administrator shall be a fiduciary within the meaning of state and federal trust law for purposes of plan administration. The Plan Administrator shall be a chief administrative officer, appointed and removed in the manner set forth in Section 508 of this Charter for departments not under the control of a board of commissioners. The initial Defined Contribution Plan Administrator shall serve as Defined Contribution Plan Administrator for a period of one (1) year. The Initial Defined Contribution Plan Administrator shall be responsible for the development and implementation of the Defined Contribution Plan. Thereafter, a new Administrator may be appointed and removed in the same manner as other chief administrative officers of departments not under the control of a board of commissioners.
(b) The Plan Administrator shall have the full power to administer the Define.d Contribution Plan and to apply all of its provisions on behalf of the City. The Defined Contribution Plan document adopted by the City Council shall include specific provisions to define the scope ofthc Plan Administrator' s rights , duties and responsibilities ; to the extent such provisions are customarily included in such plan documents, consistent with this Charter, other applicable law and the interests of the Defined Contribution Plan participants.
(c) The Administrator shall be authorized and empowered to select a reasonable number of investment choices to allow employees a full range of investment vehicles to choose from when investing their contributions made to their individual portion of the Defined Contribution Trust Fund. The Administrator shall establish mechanisms for investment of employee funds that have not yet been invested by the individual employee and shall obtain the
services of financial planners to be available to consult with enrolled employees. The Administrator shall act as a fiduciary within the meaning of applicable state and federal law with respect to the investment , management and control of the Defined Contribution Plan Trust Fund.
(d) Subject to the above-described limitations and requirements, the City Council
may adopt, subject to the veto authority of the Mayor, and the Defined Contribution Plan Administrator shall have the authority to recommend to the City Council, such changes to the Defined Contribution Plan as in the judgment of the Adm inistrator will advance the best interests of the Defined Contribution Plan participants. Nothing in this Charter shall be construed as limiting or excluding any provisions of the Defined Contribution Plan, consistent with the
express requirements of this Article and applicable law.
(e) The Admin istrator may engage such legal, financial, investment and other experts and consultants as they deem necessary or appropriate, in their sound discretion, to aid them in the administration of the Defined Contribution Plan. The Trust Fund may reimbu rse the Administrator for all necessary and proper expenses incurred in carrying out duties under the Defined Contribution Plan.
(t) The Board of Fire and Police Pension Comm issioners, Board of Administration for LACERS and the Board of Administration for WPERP established pursuant to Section II 04 of this Charter shall not have any authority or responsibility for administration of the Defined Contribution Plan. Said retirement boards shall retain applicableju risdiction over the payment
and administration of death and disability benefits to employees covered by Part 4 and Section I.
Sec. 1818. Termination of Defined Benefit Plans.
(a) Subject to applicable vested rights of employees and obligations to employees covered by parts 1-3, inclusive, the Defined Benefit Plans may be term inated by the City Council , in accordance with applicable law, by any lawful method including, but not lim ited to the following alternatives.
(b) Conversion to Defined Contribution Plan. To the extent permitted by applicable law,
and consistent with the provisions of this Article, the City Council may direct the Defined
Contribution Plan Adm inistrator to develop a transition program whereby employees who are participants in the City 's Defined Ben efit Plans may terminate their participation in the Defined Benefit Plans and begin participation in the Defined Contribution Plan. The transition program ,
which shall be subject to City Council Approval, shall be designed and implemented to both protect the employees' vested rights in the Defined Benefit Plan and also protect the independent tax-qualified Defined Contribution Plan.
(c) Lump-sum or Annuitized Payout. As permitted by Jaw, the remaining participants in the Defined Benefit Plan may be given an option of either a Jump-sum or annuitized pay-out of their benefits under the Defined Benefit Plan.
(d) Other lawful means. The City Council may determine to utilize any other lawful means for terminating the Defined Benefit Plans.
(e) Any plan or program to terminate the Defined Benefit Plans, or to transition any Defined Benefit Plans parti cipant into the Defined Contribution Plan, must consider the fiscal impacts of any such transition, including specifically the impact of such termination or transition on the City's Annual Required Contribut ion to the Defined Benefit Plans. Any plan for termination or transit ion may require that termination or transitions arc time-limited or controlled, by bargaining unit or other lawful means, to enable the City to absorb the cost of any such termination or transition.
(f) Pursuant to generally accepted accounting and auditing standards applicable to local government, the closed defined benefit pension funds shall be permitted to continue to use the same amortization methods to liquidate their unfunded accrued actuarial liabilities as they have
in the past. LACERS and Los Angeles Fire and Police Pension Fund, which use the level percent of payroll method, shall be permitted to continue to use this method while applying the percent of payroll calculation across all employees, including new employees hired under the Defined Contribution Plan. Should either continue to use the level percent of payroll amortization
method, the amortization payment from the employer will apply to total covered payroll, regardless of whether the employee is a member of the applicable Defined Benefit Plan or Defined Contribution Plan. New employees hired under the Defined Contribution Plan shal l not contribute funds from their pay to the closed Defined Benefit Fund s.
Sec. 1820. Adoption of Administrative Rules to Comply with Federal or State Law.
If at any time federal or state law should become preemptive or controlling with respect to the provisions of this Plan, Program or the provisions of any Tier, the Admin istrator shall have the power to adopt such rules as may be necessary to comply with such federal or state Jaw. Such rules shall be adopted upon the advice and with the concurrence of the City Attorney.
Sec. 1822. Funding of the Defined Contribution Fund.
(a) Creation of Funds. A separate and distinct fund is hereby created and established for record keeping, actuarial and other administrative purposes related to this Part 4, one of which shall be known as the "Los Angeles City Employees' Defined Contribution Fund", established
by Section 1804 of this Part 4.
(b) The Los Angeles City Employees Defined Contribution Fund shall consist of:
(I) all monies appropriated to the fund by the Council for the purpose of required matching contributions;
(2) all contribut ions of City employees into their individual retirement accounts;
and
(3) all interest, earnings and profits resulting from investment of such monies.
(c) Use of Funds. The monies in the Fund shall be used, other than for the investment
thereof, exclusively for the benefit of the employees covered by Part 4 in the manner required by
law. Each individual sub-account held of the benefit of an individual employee shall be managed and maintained in accordance with the requirements of the Federal Internal Revenue
Code, applicable City laws and policies and any applicable requirements of any Memorandum of Understanding entered into by the City with a recognized bargaining group.
Sec. 1824. Compliance with Certain Internal Revenue Code Provisions.
(a) The benefits payable to any person who becomes a Part 4-Defined Contribution Plan Member shall be subject to the limitations set forth in Section 415 of the Internal Revenue Code, as amended.
(b) If any of the provisions of Section 415 of the Internal Revenue Code should be
repealed, the provisions of this section shall be deemed repealed to the same extent.
Sec. 1826. Social Security Participation.
(a) Implementation Procedure for Social Security Participation. Should Social Security partic ipation be mandated or made available to Plan Members by federal legislation amending the Social Security Act or by action taken by the City or by Plan Members as provided by law,
the following provisions shall govern the manner in which such participation by Plan Members is
to be implemented and the limitations hereinafter set forth shall be controlling unless federal law is contrary to these provisions, is in conflict therewith and is clearly intended to be preemptive. Should applicable provisions of federal law in any respect differ from the provisions contained in this section and should they be determined to be preemptive as to any part thereof, then and in that event, those provisions ofthis section not affected by such federal law shall remain in full force and effect.
(b) Council Authority to Coordinate Benefits and Contributions. As to the rights and entitlement to benefits of Plan Members part icipating in such Social Security coverage, the Council shall have the power and authority, subject to the veto of the Mayor, to adopt ordinances modifying the benefits and conditions of entitlement provided in this Part 4, including adjustments of Plan Member contributions to the Defined Contribution Plan as hereinafter more specifically provided and subject to the limitations stated herein.
(c) Integration of Social Security and Defined Contribution Plan. Any participation in Social Security coverage shall be by integration with the benefits provided by this Part 4. Integration is to be defined in harmony with the provisions ofthe Social Security Act and must be in substantial compliance with the rules and regulations governing the Act. The level of integration may be periodically adjusted by the Mayor and Council to ensure an adequate level of integration.
Sec. 1828. Funding of the Death and Disability Fund .
(a) Creation of Fund. A separate and distinct fund is hereby created and established for record keeping, actuarial and other administrative purposes related to section 1800(e), which shall be known as the "Los Angeles City Employees ' Death and Disability Fund."
(b) The Los Angeles City Employees Death and Disability Fund shall consist of:
(1) all monies appropriated to the fund by the Council for the purpose of required matching contributions;
(2) all contributions of City employees in amounts at least equal to the amounts contributed by the City; and
(3) all interest, earnings and profits resulting from investment of such monies.
(c) Usc of Funds. The monies in the Fund shall be used, other than for the investment thereof, exclusively for the benefit of the employees covered by Part 4 in the manner required by
Jaw and in accordance with the requirements of the Federal Internal Revenue Code, applicable City laws and policies and any applicable requirements of any Memorandum of Understanding entered into by the City with a recognized bargaining group.
SECTION FIVE. SEVERABILITY.
If any section, sub-section, sentence, clause, phrase, part, or other portion of this measure, or application thereof, is held to be invalid or unconstitutional by a final judgment of a court of competent jurisdiction, such decision shall not affect the remaining portions or provisions ofthis measure . It is hereby declared by the people voting for this measure that this measure, and each section, sub-section, sentence, clause, phrase, part, or portion thereof would have been adopted or passed even if one or more sections, sub-sections, sentences, clauses, phrases, parts or portions, or the application thereof, arc declared invalid or unconstitutional.
SECTION SIX. CONFLICTING BALLOT MEASURES.
This measure is inconsistent with and intended as an alternative to any other initiative or measure placed on the same ballot that addresses the same subject matter as this measure. In the event that this measure and another initiative or measure addressing the same subject matter as this measure, or any part thereof, is approved by a majority of voters as the same election, and this measure receives a greater number of affirmative votes than any other such initiative or measure, then this measure shall prevail and control in its entirety and said other initiative or measure shall be rendered void and without any legal effe.ct.
SECTION SEVEN. AMENDMENT BY THE PEOPLE.
This Charter Amendment shall only be repealed, amended or modified by a vote of the People.
SECTION EIGHT. LIBERAL CONSTRUCTION.
The provisions of this Charter Amendment shall be liberally construed to effectuate its
purposes.
SECTION NINE. VESTED RIGHTS.
This Charter Amendmen t shall not affect the vested rights of employees who enrolled under Parts 1-3, inclusive, of Article XI of the Los Angeles City Charter prior to the effective date of this Charter Amendment.
SEIU Local 721 Reformers is an email address attempting to share information with SEIU Local Members, Stewards, Officers, Staff and Officials.
Rafe Garcia, Steward, is the custodian of this email address.
Those of us sharing, exchanging and participating in this forum are attempting to engage the membership to further the concept of a member driven Union.
We, you and all the rest of us have the best interests of the rank and file members, over 70,000 strong.
FOUNDED AUGUST 31, 2008