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1999-0208_ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM_Interim Agreement• hPFrw—an 6y 3a4.av CITY OF SAN JUAN CAPISTRANO INTERIM AGREEMENT FOR S1 JPPT.FMFNTAL BENEFITS This Agreement ("Agreement") is made and entered effective as of the 8th day of February 1999, by and among the CITY OF SAN JUAN CAPISTRANO, a public entity (hereinafter, "CITY"), CAPISTRANO VALLEY WATER DISTRICT, a public entity (hereinafter, "DISTRICT") and the ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM, a public retirement system organized and existing pursuant to the provisions of the County Employees Retirement Law of 1937 ("OCERS"). RECITALS A. OCERS provides and administers a program of retirement benefits for the employees of the County of Orange ("COUNTY"), and the CITY, DISTRICT and certain other public agencies which have elected to participate in OCERS. B. The Retirement Fund managed by OCERS includes an earnings reserve, identified as the "Unallocated Fund Balance" ("UFB"). C. OCERS and the COUNTY have previously entered into a Memorandum of Understanding Agreement, dated January 5, 1993, as amended ("County Agreement"), a true and correct copy of which is attached hereto, which establishes a procedure whereby funds derived from portions of the UFB known as "Employer's Share" and "Remaining Transferred Funds" are designated on the books of OCERS as an account known as the "Additional Retiree Benefit Account" ("ARBA") for the purpose of funding additional health benefits for certain retired members of OCERS. 10990:78930.1 D. Since in or about 1993 OCERS has designated on its books portions of ARBA for the purpose of funding additional benefits for retired members of the CITY and of the DISTRICT. E. OCERS and DISTRICT entered into an Agreement dated September 17, 1996 providing for the use of a portion of ARBA to fund additional benefits for retired members of the DISTRICT. The employees of the DISTRICT were transitioned into the CITY workforce as CITY employees on or about July 1, 1997 and may eventually retire from CITY service. F. OCERS, CITY and DISTRICT wish to enter into this Agreement for the purpose of designating a portion of the ARBA for additional benefits for retired CITY and DISTRICT employees who are members of OCERS, in amounts which reflect the proportion which the total contributions made to OCERS on behalf of CITY and DISTRICT employees bears to the total contributions made on behalf of all employees who are members of OCERS. G. CITY and DISTRICT acknowledge that OCERS is currently considering its policies regarding the use of excess earnings of the retirement system to fund ARBA for purposes other than additional health benefits and that this Agreement is entered into on an interim basis, pending OCERS' final decision regarding those policies. NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS: 1. Definitions. (a) SJC ARBA is the account described in Paragraph 2 of this Agreement, for the purpose of designating funds to make the additional benefit payments described herein. (b) Defined terms in the County Agreement shall have the same meaning in this Agreement. 1099M9930.1 2 .0 • 2. SJC ARBA. OCERS has previously designated a portion of the ARBA as representing the CITY's and the DISTRICT's share of ARBA. As of June 30, 1998, that portion totaled approximately $755,000. As of the Effective Date of this Agreement, OCERS agrees to continuing to designate such funds for the benefit of retired members of the CITY and the DISTRICT, and to designate a pro rata share of additional available funds, as set forth below, for the same purpose. All such designated funds shall be known as the "SJC ARBA." For purposes of this Paragraph 2, "pLo rata share" shall be a sum determined (1) by designating from all amounts being transferred after the Effective Date from time to time into ARBA from the "employer share" (as defined in the County Agreement) an amount equal to one percent (1%) of the CITY's payroll for its employees who are members of OCERS; and (2) by multiplying all amounts being transferred from time to time into ARBA from Remaining Transferred Funds (as defined in the County Agreement) by a fraction, the numerator of which shall be the total of all employee contributions to OCERS during the preceding five (5) full calendar years made on behalf of CITY and DISTRICT employees who are members of OCERS, and the denominator of which shall be the total employee contributions made on behalf of all OCERS' members to OCERS during the same period. Additional Benefits. (a) At the direction of the CITY, funds transferred to the SJC ARBA and any earnings credited thereto by OCERS, shall be used to provide a retirement income supplement ("Supplement") to eligible retirees of the CITY and the DISTRICT. CITY shall be primarily responsible for the administration of this program, and all expenses of administration associated 10990:78930.1 0 • with the program. CITY shall reimburse OCERS for any expenses of administration OCERS may incur in connection with this program, not to exceed $1,000 for calendar year 1999. (b) Effective July 1, 1997, the CITY entered into an operations and maintenance agreement with the DISTRICT. As a part of this agreement, DISTRICT employees were transitioned to the CITY workforce such that said employees became employees of the CITY and may eventually retire from the CITY (See Exhibit A hereto for a listing of transitioned employees). (c) To the extent funds are available in the SJC ARBA, the amount of the initial Supplement, for retirees of CITY except those retirees with prior DISTRICT service (See Exhibit A), will be (for each retiree) $10.00 per month for each full year of service performed by the retiree for the CITY while such retiree was an active member of OCERS, but in no event shall such initial supplement exceed $250.00 per month for any retiree. The initial Supplement amount for each retiree shall receive a cost -of -living adjustment annually based on CPI -U for the Los Angeles/Long Beach Area not to exceed five percent (5%) annually. In computing a retiree's years of service for purposes of calculating the amount of this Supplement, only years of service with the CITY, or any predecessor agency of the CITY, will be included, and service with any other governmental agency will not be included, whether or not such other governmental agency participates in OCERS. This Supplement shall be paid to retirees of CITY who have at least ten (10) years of credited service as of their effective date of retirement. As used in this paragraph the term "credited service" shall refer to service credit earned as a member of OCERS, but shall exclude service if any, with a governmental agency other than the CITY or a predecessor agency of the CITY. 10990:78930.1 0 0 (d) To the extent funds are available in the SJC ARBA, the amount of the Supplement, for retirees of CITY with prior DISTRICT service, will be (for each retiree) calculated as follows: Transitioned DISTRICT Employees retiring from the City from July I, 1997 through June 30, 2007 — The amount of the Supplement will be (for each retiree) $5.00 per month per each full year of service performed by the retiree for either the DISTRICT or the CITY while such retiree was an active member of OCERS, but in no event shall such Supplement exceed $150.00 per month for any retiree. In computing the retiree's years of service for purposes of calculating the amount of this Supplement, only years of service with the DISTRICT and CITY, or any predecessor agency of the DISTRICT or CITY, will be included, and service with any other governmental agency will not be included, whether or not such other governmental agency participates in OCERS. This Supplement shall be paid to retirees of the CITY who have at least (5) years of credited service with the DISTRICT as of the effective date of their retirement. Such payments will commence upon approval of this agreement by both CITY and OCERS, and shall be retroactive to July 1, 1997, unless the member retired after July 1, 1997 in which case the payment will be retroactive to the effective date of the member's retirement. 10990:78930.1 5 0 0 2. Transitioned DISTRICT Employees retiring from the City on or after July 1, 2007 — The amount of the initial Supplement will be (for each retiree) $5.00 per month per each full year of service performed by the retiree for the DISTRICT, provided such retiree has at least five (5) years of credited service with the DISTRICT as of the effective date of their retirement and $10.00 per month per each full year of service performed by the retiree for the CITY while such retiree was an active member of OCERS, but in no event shall such Supplement exceed $150.00 per month for any retiree for DISTRICT service and in no event shall such Supplement exceed $250.00 per month for any retiree for CITY service. The initial Supplement calculated for CITY service shall receive a cost -of -living adjustment annually based on CPI -U for the Los Angeles[Long Beach Area up to maximum of five percent (5%) annually. In no event shall the total Supplement payable to a transitioned DISTRICT employee retiring from the CITY on or after July 1, 2007 exceed the total of. (a) $150.00 per month (without inflationary adjustments) for DISTRICT service plus (b) $250.00 per month (subject to inflationary adjustments as provided in the preceding sentence) for CITY service. In computing the retiree's years of service for purposes of calculating the amount of this Supplement. only years of service with either the DISTRICT or the CITY, or any predecessor agency of the DISTRICT or CITY, will be included, and service with any other governmental agency will not be 10990:78930.1 0 0 included, whether or not such other governmental agency participates in OCERS. This Supplement shall be paid to retirees of the CITY who have at least ten (10) years of credited service with the CITY as of their effective date of retirement. (e) To the extent funds are available in the SJC ARBA, The amount of the Supplement, for retirees of DISTRICT, will be (for each retiree) $5.00 per month per each full year of service performed by the retiree for the DISTRICT while such retiree was an active member of OCERS, but in no event shall such Supplement exceed $150.00 per month for any retiree. In computing the retiree's years of service for purposes of calculating the amount of this Supplement, only years of service with the DISTRICT, or any predecessor agency of the DISTRICT, will be included, and service with any other governmental agency will not be included, whether or not such other governmental agency participates in OCERS. This Supplement shall be paid to retirees of the DISTRICT who have at least five (5) years of credited service with the DISTRICT as of the date of their retirement. Such payments will commence upon approval of this agreement by both CITY and Board, and shall be retroactive to January 1, 1996, unless the member retired after January 1, 1996 in which case the payment will be retroactive to the effective date of the member's retirement. In determining the amount of any retroactive payment hereunder, payments previously made from DISTRICT's portion of ARBA (before transition to the SJC ARBA) shall be deducted from the amount of the retroactive payment hereunder. (f) No retiree shall have a vested right to continued payment of any Supplement. No increase in the Supplement will occur on account of delayed commencement of 10990:78930.1 7 payment of the Supplement beyond the date on which a retiree first becomes eligible for payment. No Supplement will be payable to a former employee of the CITY or DISTRICT unless and until such person commences receiving a retirement allowance from OCERS based on service with CITY or DISTRICT. Payments of said Supplement to any retiree will cease upon the earliest to occur of the following: (1) the date as of which, in the sole opinion of OCERS the fund balance in "SJC ARBA" is insufficient to continue to fund all such Supplements; (2) for that portion of the Supplement paid under Subsections 3(c) and 3(d)(2) based on CITY service, the date of the retiree's Medicare eligibility; (3) the date benefits cease to be paid by OCERS to the retiree with respect to CITY or DISTRICT service, or the retiree's eligibility to receive OCERS retirement benefits with respect to CITY or DISTRICT service ceases; (4) the date of the retiree's death; or (5) the termination of this Agreement. No Supplement will be payable to survivors of any retiree, and the amount of the Supplement paid to a retiree shall not be included in the calculation of any survivor's allowance after such retiree is deceased. Each Supplement is intended to provide the covered retiree with an enhancement to his or her retirement benefit, and is subject to the provisions of the Government Code and other applicable law. Neither the CITY nor OCERS shall have responsibility to pay any Supplement to the extent sufficient funds in the SJC ARBA are not then available to be paid pro rata to all eligible CITY and DISTRICT retirees under the terms of this Agreement. (g) Specific provisions regarding eligibility for a determination of the Supplement will be set forth from time to time in a written policy adopted by the CITY. The terms and conditions of such policy shall be consistent with the terms and conditions set forth in this Agreement, and shall be subject to approval by both the CITY and OCERS. 10990:78930.1 0 0 (h) Funds in the SJC ARBA shall be credited with investment earnings of OCERS on a basis no less favorable than such earnings are credited to ARBA. OCERS shall provide to the CITY, at least annually, financial statements reflecting the balance of the SJC ARBA and all account activity therein. The direction contemplated to be given to OCERS by the CITY regarding the application of SJC ARBA, shall be given within three (3) months following the month in which OCERS and the CITY enter into this Agreement and as frequently thereafter as may be appropriate. Such direction shall include a list of the retirees eligible to receive a Supplement, and the amount of the Supplement payable to each retiree. CITY and OCERS, through their authorized representatives, will consult and exchange relevant information for the purpose of developing and maintaining the list. 4. Failure to Pay Supplemental Benefit. If during the term of this Agreement, as defined below, the SJC ARBA has funds which exceed current Supplements payable under this Agreement, and OCERS fails timely to pay those benefits to CITY or DISTRICT retirees, as the case may be, the CITY may pay such Supplements to such retirees directly and make a claim against OCERS for reimbursement of such payments. DISTRICT ARBA Agreement. The Agreement dated September 17, 1996 by and between OCERS and DISTRICT is hereby terminated and superceded in its entirety by this Agreement. All funds in ARBA previously designated for the benefit of DISTRICT retirees shall be included in the SJC ARBA as of the effective date of this Agreement. 10"M9930.1 9 6. Effect of Other ARBA Agreements. (a) In addition to the County Agreement, OCERS has entered into agreements relating to the ARBA with other districts and public agencies participating in OCERS. Nothing herein is intended to nor shall adversely affect any of the rights of the parties to those agreements, and no amendment, modification, or further agreement regarding ARBA between or among those parties shall adversely affect the rights of OCERS, CITY, or DISTRICT under the terms of this Agreement. (b) Notwithstanding the foregoing, nothing herein shall limit or affect in any manner whatsoever the right of the COUNTY and/or OCERS to alter, amend, modify, supplement, eliminate or supercede the County Agreement or any term thereof, provided however that the effect of such action on the CITY and the DISTRICT is similar to that on all other districts and agencies participating in OCERS with agreements relating to the ARBA. Term. This Agreement shall continue in force and effect though and including September 30, 1999, at which date it shall be deemed terminated and of no further force or effect, unless terminated earlier by either OCERS or CITY, as provided herein. This Agreement may be terminated by either OCERS or CITY by giving written notice of termination to the other, which termination shall be effective 90 days following the date of actual receipt of such notice by the notified party. In the case of OCERS, such notice shall be given to OCERS' Administrator. In the case of CITY, such notice shall be given to the Chair of the San Juan Capistrano Cit., Council. Upon termination, no further Supplement payments shall be made from the SJC 10990:78930.1 10 E 0 ARBA, and all funds previously designated to the SJC ARBA shall remain funds of OCERS, as provided by law. DISTRICT shall have no right to terminate this Agreement. 8. Indemnity. CITY hereby agrees to indemnify, defend and hold OCERS harmless from any and all claims, losses, damages, demands, causes of action of any nature whatsoever, and any attorneys fees, costs and expenses related thereto, made by any person, entity, public agency or district arising out of or related to the provisions of this Agreement or any action taken or to be taken pursuant hereto to the fullest extent permitted by law. 9. Representation of Authority. Each parry hereto represents that it is duly authorized at law and in fact to enter into this Agreement and that it has taken all necessary action to authorize the undersigned to execute this Agreement on its behalf. 10. Miscellaneous. The Recitals of this Agreement are true and correct and are incorporated herein by this reference. This Agreement represents the entire agreement and understanding of the parties and supercedes any other agreements, understandings or actions taken with respect to the subject matter hereof. This Agreement may not altered, amended, modified, supplemented, terminated or superceded except in a writing executed by each party hereto. This Agreement may be executed in counterpart originals, which taken together shall constitute one and the same agreement. 10990:78930.1 WHEREFORE, the parties have approved and executed this Agreement effective as of the day first written above. ORANGE COUNTY EMPLOYEES RETIRE�F�T SYSTE� BY:L1t' Q l Thomas N. Fox Its: Chairman of the Board of Retirement CITY= ITY I CAPISTRANO By: Its: ohn Greiner, Mayor VALLE,YWATER DISTRICT APPROVED AS TO FORM: Steefel, Levitt & Weiss, P. C. C. By; La /r e L. Leiderman Attorneys for Orange County Employees Retirement System John Shaw, City Attorney By: _ L)e K�� Attorney f r City of San Juan Capistrano And Capistrano Valley Water District 10990:79930.1 12 0 0 EXHIBIT "A" TRANSITIONED EMPLOYEES Pursuant to the Operations and Maintenance Agreement between the City of San Juan Capistrano and the Capistrano Valley Water District (DISTRICT) dated July 1, 1997, each and every DISTRICT employee, below the level of General Manager, became an employee of the City of San Juan Capistrano (CITY). Additionally, the benefits set forth in the DISTRICT Agreement for Supplemental benefits with OCERS are incorporated into the CITY Agreement for Supplemental Benefits with OCERS. The following is the list of DISTRICT employees transitioned to the CITY effective July 1, 1997. Emplovee Name Hire Date Ando, Stacie 05-18-97 Ando, Steve 02-21-89 Bauman, Eric 09-17-90 Best, John 09-02-69 Boessler, Harry 07-10-78 Brady, Karen 08-03-95 Brand, Neil 06-01-83 Clark, Bob 06-15-87 David, Conrad 05-06-91 Ducharm, Donna 04-23-90 Hams, Craig 07-09-91 Johnson, Tom 03-14-94 Kennedy, Francie 10-28-92 LaMothe, Jay 05-17-82 Martinez, Angel 03-05-97 Romero, Jeffrey 07-26-90 Scott, Georg'Ann 07-29-86 Smith, Michael 07-12-89 Vasquez, Rueben 04-21-69 Vaughn, Ray 09-12-88 Villalpando, Manny 10-02-79 Widner, Jim 08-12-91 Williams, Greta 09-07-89 10990:78930.1 13 ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM 2942 DAIMLER STREET, SANTA ANA, CA MEMORANDUM OF JNDERSTANDING This Agreement is made and entered into this r day of 1993 by and between the COUNTY OF ORANGE (hereinafter a political subdivision of the State of California, and the ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM ("OCERS"), a public retirement system organized and existing pursuant to the provisions of the County Employees Retirement Law of 1937, WHEREAS, oCERS provides and administers a program of retirement benefits for the employees of the COUNTY and certain other public agencies that participate in OCERS; and WHEREAS, OCERS is administered by a Board of Retirement, (hereinafter "Board") which is legally separate and independent of the COUNTY; and WHEREAS, COUNTY is interested in the operation of OCERS because COUNTY provides a major portion of the funding of OCERS; and WHEREAS, COUNTY and OCERS desire to maximize the level of benefits available to the members of OCERS while minimizing employer contributions thereto; and WHEREAS, it is the intent of the parties that this Agreement apply only to COUNTY and not to the other public agency members of OCERS; and WHEREAS, OCERS will negotiate separately with each other public agency member of OCERS regarding the disposition of the Remaining Transferred Funds not transferred to ARBA, NOW, THEREFORE, IT IS HEREBY AGREED between the parties as follows: 1. Definitions: "Adjusted Total Assets" are the total assets of OCERS less accounts payable and less any other reserve accounts that the Board deems appropriate. "Unallocated Fund Balance" ("UFB") is the fund created by annual earnings in excess of the amounts credited to contributions and reserves. (Gov't Code Sect. 31592) "County Advance Reserve" is a fund into which the surplus in UFB in excess of the amount reserved by the Board may be transferred. (Gov't Code Sect. 31592.2) "Remaining Transferred Funds" are the portion of the excess funds transferred from the UFB allocated for health benefit use. ORANGE COUNTY MEMORANDUM OF DECEMBER 14t r EMPLOYEES RETIREMENT SYSTEM UNDERSTANDING - AGREEMENT 1992 Page 2 "Additional Retiree Benefit Account" ("ARBA") is that portion of the "Remaining Transferred Funds" set aside exclusively for paying towards health insurance for present and future retirees of the COUNTY. 2. OCERS will establish a policy to maintain a reserve against deficiencies (Gov't. Code Sec. 31592) of 5% of the adjusted total assets of the retirement system that will become effective when the condition precedent set forth in paragraph 8, below, is satisfied. 3. Any funds in the "UFB" in excess of the amount so reserved by the Board will be transferred into the "County Advance Reserve" and "Remaining Transferred Funds" in accordance with the formulas set forth in paragraph 4. 4. From the excess UFB funds the Board will transfer this year seventy-five percent (75%) into the "County Advance Reserve" and to the County contributions to "ARBA" and twenty-five percent (25%) into "Remaining Transferred Funds". For the first year the County contribution toward "ARBA" shall be an amount equal to (1!%) of County payroll subject to retirement contributions. This is a one-time transfer only for the first year funding this Agreement. The "Remaining Transferred Funds" may be commingled with other funds of OCERS for investment purposes. In future years, the "employer share" of the excess UFB shall be determined by multiplying the excess UFB by a frac.'tc ,, the numerator of which is the employer's contribution to OCERS during the preceding ten (10) calendar years, and the denominator of which is the total contributions to OCERS during the same period. The "non -employer share" shall be the remainder of the excess UFB. Of the employer's share, an amount equal to one percent (1t) of County payroll subject to retirement contributions for those bargaining units participating in a retiree medical program shall be transferred from the excess UFB to "ARBA". The remainder of employer share will be transferred to the "County Advance Reserve." The non employer share shall be transferred to "Remaining Transferred Funds." 5. A portion of the "Remaining Transferred Funds" will be transferred to the "ARBA" account for the exclusive purpose of paying towards health insurance for present and future retirees of the COUNTY. To the extent that "ARBA" funds are available, the Retirement Board will transfer sufficient funds from the "ARBA" to the County Advance Reserve on a dollar for dollar basis to offset the County costs of providing a retiree medical program. The "ARBA" will be credited with the same assumed rate of interest for the County Advance Reserve to the extent that all other -reserves are credited and the Unallocated Fund Balance is in excess of 3% of ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM MEMORANDUM OF UNDERSTANDING - AGREEMENT DECEMBER 14, 1992 Page 3 the adjusted total assets of the retirement fund. In addition to the transfers described in 4 above and interest credits, the amount of funds to be transferred to the "ARBA" from the "Remaining Transferred Funds" will be based on the percentage of contributions from County employees during the previous five (5) years compared to total employee contributions to OCERS during the same time period. 6. If in future years OCERSI return .on investments is insufficient to credit the assumed rate of interest to all reserve accounts, such deficiency will be made up by transferring funds out of the UFB account but not so as to bring it below three percent (3%) of the adjusted total assets. If such transfer does not yield sufficient funds to credit the assumed rate of interest to all reserve accounts, then employer contributions to OCERS shall be increased during the ensuing fiscal year by an amount which is the lesser of: 1) the amount necessary to restore the adjusted total assets to three percent (3%); or, 2) an amount equal to one-half of one percent (1/2%) of the total assets; except that in no event shall such increased employer contributions be less than the amount necessary to maintain reserves of at least one percent (It) of total assets. 7. Investment earnings in future years shall be credited first to the reserve accounts of OCERS (at the assumed rate of interest) and, second, to the UFB. If crediting UFB brings the UFB to more that five percent (5k) of the adjusted total assets then any excess will be transferred into the County Advance Reserve, the Remaining Transferred Funds account, and the ARBA account in accordance with the formulas set forth in paragraph 4. and 5. above. 8. COUNTY will meet with representatives of COUNTY's recognized employee organizations to attempt to establish a funded Retiree Medical Care Plan for future retirees of the COUNTY and their eligible survivors. Unless and until mutually agreed to and signed written memoranda of understanding are reached with at least three (3) recognized representatives of employees of the County, this Agreement will have no force or effect except paragraph 9. 9. In consideration of the Board executing this document, COUNTY shall concurrently with its approval of this Agreement cause the Board of Supervisors by resolution adopted by majority vote make the provisions of Government Code Section 31529.5 applicable in Orange County authorizing the Board to contract for the legal services of an attorney in private practice. 0_ ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM MEMORANDUM OF UNDERSTANDING - AGREEMENT DECEMBER 14, 1992 Page 4 10. The effective date of the Agreement shall be the 1st day of the month after the Chairman of the Board of Supervisors executes the Agreement on behalf of COUNTY. "This Memorandum of Understanding - Agreement shall supersede and replace the Memorandum of Understanding - Agreement between the parties dated March 13, 1992." Date of Execution By OF ORANGE ("COUNTY") E ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM ("OCERS") Date of Execution - S' ni 3 By\\\Cr Chairman, Board of Retirement APPROVED AS TO FORM: TERRY C. ANDRUS, COUNTY COUNSEL Deputy C:MOUFNL12.14