REPORT TO COUNCIL
SUBJECT
Title
Adopt Resolutions (1) Paying and Reporting the Value of CalPERS Employer Paid Member Contribution (EPMC); and (2) Amending the Salary Resolution to Remove EPMC and Revise the Schedule of Pay to Increase Salary Ranges for Pay Plan Category F (Unclassified Department Directors)
Report
BACKGROUND
Unclassified department directors (Pay Plan Category F) are at-will employees, appointed by the City Manager. Category F employees are not organized and do not negotiate for any changes to their wages, hours, and/or other terms and conditions of employment.
This report recommends eliminating the CalPERS Employer Paid Member Contribution (EPMC) for Category F positions. Prior to the Public Employees' Pension Reform Act (PEPRA), EPMC was used as a recruitment and retention tool in the public sector. It allowed employers to pay all or a portion of the employee share of the required CalPERS retirement contribution, typically 7% or 8% of salary for Miscellaneous members and 9% for Safety members, on behalf of the employee. The City has contributed 4% EPMC on behalf of Classic Miscellaneous members and 6% for Classic Safety members since 2016.
EPMC made compensation packages more attractive for Classic CalPERS members, especially for hard-to-fill positions, without increasing base salaries. EPMC was seen as a cost-effective way to enhance take-home pay while deferring some of the long-term fiscal impact of higher base salaries for employers.
CalPERS retirement reform under the Public Employees' Pension Reform Act (PEPRA) changed pension benefits for new employees hired into the CalPERS system after January 1, 2013, including higher retirement ages to receive the maximum benefit, caps on pensionable compensation, and a requirement to contribute at least 50% of the normal cost of their pension benefit.
Over time, concerns about pension transparency, equitable compensation for PEPRA and Classic employees, and rising retirement costs led...
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