Chapter 3.36

• 4 Retirement Fund

• 5 Service

• 5.5 Benefits Generally 6 Retirement for Service

• 7 Retirement for Disability 8 Survivorship and Death Benefits 9 Surviving Child's School Allowance 9.5 Optional Settlements

• 10 Contributions

• 11 Suspension or Termination

• 12 Increased Benefits for Certain Persons

• 13 Death While on Military Leave of Absence

• 14 Medical Benefits for Certain Persons

• 15 Dental Benefits for Retired Members and Survivors

• 16 Reciprocity

• 17 Plan-Approved Domestic Relations Orders

• 18 Purchase of Eligible Prior Military Service

Part 1

GENERAL PROVISIONS AND DEFINITIONS

Sections:

• 3.36.010 Establishment - Name - Scope.

• 3.36.020 Definitions and construction of terms.

• 3.36.020.1 "Accumulated contributions."

• 3.36.020.2 "City."

• 3.36.020.3 "Compensation."

• 3.36.020.4 "Employee."

• 3.36.020.5 "Final compensation."

• 3.36.020.6 "Member."

1961 POLICE AND FIRE DEPARTMENT RETIREMENT PLAN

• 3.36.020.7 "Month."

• 3.36.020.8 "Plan year."

Parts:

• 1 General Provisions and Definitions

• 2 Membership

• 3 Retirement Board and Other Officers

• 3.36.020.9 "Retirement" or "retired."

• 3.36.020.10 "Retirement allowance."

• 3.36.020.11 "Retirement board" or "board."

• 3.36.020.12 "Retirement fund" or "fund."

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§ 3.36.020.3

• 3.36.030 Use of masculine or feminine gender.

• 3.36.040 Effective date of this chapter.

• 3.36.050 Notices or orders deemed effective when.

• 3.36.060 Biweekly references to contributions and membership.

• 3.36.070 Grounds for termination of allowances or benefits.

• 3.36.080 Benefits exempt from execution.

• 3.36.090 Claimant to bear burden of proof.

• 3.36.100 Invalidity of portion of chapter.

• 3.36.110 Identification of system.

• 3.36.120 Termination of plan.

• 3.36.130 Plan year.

• 3.36.140 Limitation year.

• A. There is hereby established a retirement plan for all persons, hereinafter in this chapter specified, who may become members thereof pursuant to the provisions of this Chapter 3.36. This plan shall be known as the "1961 police and fire department retirement plan," and includes all provisions of this chapter.

• B. The 1961 police and fire department retirement plan is established as a qualified governmental defined benefit plan pursuant to Sections 401(a) and 414(d) of the Internal Revenue Code or such other provision of the Internal Revenue Code as applicable and applicable treasury regulations and other guidance of the Internal Revenue Service. The board shall be

authorized to adopt rules and regulations which are appropriate or necessary to maintain the qualified status of the plan. (Prior code § 2903.50; Ords. 28886, 29198, 29879.)

Unless the context otherwise requires, the definitions and general provisions set forth in this Part 1 govern the construction of this Chapter 3.36. (Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914.)

"Accumulated contributions" means the sum of all contributions made by a member and standing to the credit of a member's individual account. (Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914.)

"City" means the City of San José, a municipal corporation of the state of California. (Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914.)

• A. "Compensation" means the monthly remuneration paid in cash out of funds controlled by the City to a member in payment for his or her services to the City, excluding the monetary value, if any, of living quarters, board, lodging, fuel, laundry or other advantages of any nature furnished a member in payment of his or her services. Also, when the compensation of a member is a factor in any computation to be made under this Chapter, there shall be excluded from such compensation any payments based on overtime put in by a member except as expressly provided in subsection C below; any travel or uniform or expense allowance; any insurance or medical or surgical or hospital benefits; any workers' compensation benefits except as expressly provided in subsection G. below; peace officer standards training pay except as expressly provided in subsec-

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tion H. below; any retirement or death or survivorship benefits; any payments paid on a per diem, per hour or any other basis than a monthly basis; and any and all other fringe benefits or items of pay not expressly included in the definition of Compensation under this section 3.36.020.3.

• B. "Compensation" shall include holiday pay or any compensation paid to a member in lieu of holiday pay in the case of:

Any member who retires under the provisions of this Chapter, either for service or disability, on or after July 5, 1992; and

Any former member who separates from City service on or after July 5, 1992, and elects to allow his or her accumulated contributions to remain in the retirement fund pursuant to Section 3.36.1640.

Effective June 28, 2009, compensation in lieu of holiday pay paid to members of this Plan who are employed in the Police Department is incorporated into base pay and thus considered Compensation under subsection A for employees of the Police Department on and after such effective date. Effective October 7, 2018, compensation in lieu of holiday pay paid to members of this Plan who are employed in the Fire Department is incorporated into base pay and thus considered Compensation under subsection A for employees of the Fire Department on or after such date.

• C. "Compensation" shall include premium pay paid pursuant to the Fair Labor Standards Act (FLSA premium pay) for regularly scheduled hours for employees who perform fire suppression duties and are assigned to a work schedule in excess of 212 hours in a 28 day work period, subject to the following limitations:

  1. "Compensation" shall only include FLSA premium pay which is earned and payable on or after December 28, 1997.

  2. "Final compensation" including FLSA premium pay shall not exceed the one hundred eight percent (108%) limitation imposed by Section 3.36.020 5.B.2.

  3. This subsection C. shall apply only in the case of:

     • a. A member who retires under the provisions of this Chapter, either for service or disability, on or after July 5, 1998; and

• b. A former member who separates from City service on or after July 5, 1998, and elects to allow his or her accumulated contributions to remain in the retirement fund pursuant to Section 3.36.1640; and

  - c. A member who dies on or after July 5, 1998, while in City service for which the member receives service credit in this Plan. 
  

• D. "Compensation" shall include incentive pay for successful completion, on an annual basis, of training in Police Anti-Terrorist Tactics as certified by the Police Department to the City Finance Department. Effective March 22, 2009, incentive pay for training in Police Anti-Terrorist Tactics is incorporated into base pay and thus considered Compensation under subsection A on and after such date.

• E. "Compensation" shall include incentive pay for completing and maintaining an Emergency Medical Technician (EMT) certificate, but only such EMT incentive pay which is earned and payable on or after July 7, 1991. Effective October 7, 2018, EMT incentive pay is incorporated into base pay and thus considered Compensation under subsection A on and after such date.

• F. "Compensation" shall include anti-terrorism training pay received by members of the Plan who are employed in the Fire Department, but only such pay which is earned and payable on or after July 1, 2006. Effective October 7, 2018, anti-terrorism training pay received by members of this Plan who are employed in the Fire

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Department is incorporated into base pay and thus considered Compensation under subsection A on and after such date.

• G. "Compensation" shall include disability leave payments paid by the City to a member pursuant to which a member continues to receive full monthly compensation, including but not limited to, disability leave payments made pursuant to Labor Code Section 4850.

• H. "Compensation" shall include Peace Officer Standards Training (POST) payments paid by the City to a member except that only POST payments received by such Tier 2 member on or after March 31, 2017 shall be a factor for any computation made under this Chapter.

• I. Notwithstanding any other provisions of Chapter 3.36, "Compensation" shall not include any non-pensionable compensation increase, which represents a wage increase, that is effective on or after January 3, 2016. Compensation also shall not include any subsequent increases to non-pensionable compensation due to future increases to base pay, such as merit increases, step increases, and general wage increases.

(Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914, 26693, 28164, 28830, 29266, 29879, 30173, 30724.)

"Employee" means any person in the employ of the city, or who holds a city office, whose compensation is paid out of funds directly controlled by the city. "Funds directly controlled by the city" includes funds deposited in and disbursed from the city treasury in payment of compensation, regardless of their source. The word "employee" shall be deemed to include the word "officer."

(Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914.)

• A. For a member of this plan who retires, either for service or disability, before January 1, 1970, "final compensation" means the highest aver-

age monthly compensation of the member during any period of thirty-six consecutive months of city service for which such member receives service credit in this plan.

• B. For a member of this plan, other than a tier 2 member, who retires, either for service or disability, on or after January 1, 1970, "final compensation" means:

  1. For the purpose of determining the amount of monthly retirement allowance or monthly survivorship allowance payable for any month or portion of a month prior to September 1, 1970, the highest average monthly compensation of the member during any period of thirty-six consecutive months of city service for which the member receives service credit in this plan.

  2. For the purpose of determining the amount of monthly retirement allowance or monthly survivorship allowance payable for any month or portion of a month on or after September 1, 1970, the highest average monthly compensation of the member during any period of twelve consecutive months of city service for which the member receives service credit in this plan; provided and excepting, however, that in determining such final compensation no consideration or credit shall be given to or for that portion, if any, of the compensation paid or payable by the city to said member for service rendered during the last twelve months of said member's city service which exceeds one hundred eight percent of the compensation paid or payable to the member for city service rendered during the twelve months immediately preceding the last twelve months of the member's city service.

• C. If an employee leaves city service and subsequently returns to city service, months of service before and after the absence from service may be cumulated to constitute the period of

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thirty-six consecutive months or twelve consecutive months, whichever is applicable, notwithstanding the absence from service.

• D. If any benefit is dependent upon the amount of service of a member, and the member has less than thirty-six months of city service or less than twelve months of city service, whichever is applicable, then the amount of service the member actually has shall be used in the calculation of the member's final compensation.

• E. For tier 2 members, "final compensation" means the average annual compensation as defined in Section 3.36.020.3H. of the tier 2 member during the highest three consecutive years of city service.

(Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914, 28831, 29266.)

"Member" means any person included in the membership of this system, and includes those persons only who are specified as such in Part 2 of this chapter.

(Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914.)

Except as otherwise expressly provided, "month" means a calendar month.

(Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914.)

"Retirement allowance" means the service retirement allowance or the disability retirement allowance.

(Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914, 28886.)

"Retirement board" or "board" means the board of administration referred to and specified in Section 3.36.300 of this chapter. (Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914, 28886.)

"Retirement fund" or "fund" means the retirement fund specified in Section 3.36.500. (Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914, 28886.)

"Retirement system," "retirement plan," "this system," or "this plan" means the City of San José Police and Fire Department Retirement Plan described in Section 3.36.110.

(Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914, 27768, 28886.)

"Plan year" means July 1 to June 30. (Ord. 28886.)

"Retirement" or "retired" means withdrawal from city service pursuant to an order of the retirement board with a retirement allowance granted under this chapter.

(Prior code §§ 2903.51 - 2903.63; Ords. 24094, 24200, 25914, 28886.)

1. A registered domestic partnership that has been established by filing a Declaration of Domestic Partnership with the Secretary of State pursuant to Division 2.5 of the California Family Code; or

2. A legal union of two (2) persons of the same sex, other than a marriage, that was validly formed in a jurisdiction other than California if such union is recognized as a domestic partnership pursuant to California Family Code Section 299.2.

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• B. "Domestic partner" means a person who has entered into a domestic partnership.

• (Ords. 27712, 28886.)

"Tier 2 member" means:

• A. Any person who is hired, rehired, or reinstated by the City as an employee of the Police Department in a position covered by this Plan on or after August 4, 2013; or

• B. Any person who is hired, rehired, or reinstated by the City as an employee of the Fire Department in a position covered by this Plan on or after January 2, 2015.

• C. Notwithstanding the foregoing, the following persons shall not be considered Tier 2 members under this Plan and their benefits shall be determined under the same terms as those members hired prior to the dates specified in subsections A. and B. of this Section:

  1. Any person who was a member of this Plan as an employee of the Police Department prior to August 4, 2013, and terminated employment with the City without a return of his or her contributions, and returned to employment with the City in a position covered by this Plan on or after August 4, 2013; or

  2. Any person who was a member of this Plan as an employee of the Fire Department prior to January 2, 2015, and terminated employment with the City without a return of his or her contributions, and returned to employment with the City in a position covered by this Plan on or after January 2, 2015; or

  3. Any person accepting employment in the Police Department or Fire Department of the City on or after January 1, 2013 who is otherwise

eligible for this Plan and who was an active member in another California public retirement system with which this Plan has reciprocity under Part 16, and who has a break in service of less than six (6) months from that covered employment and employment with the City, other than those who meet the definition of new members as defined by Government Code Section 7522.04(f) as may be amended; or

4. Any person who, prior to September 30, 2012, was a member of the Federated City Employees Retirement System established under Chapter 3.24 or the 1975 Federated City Employees Retirement Plan established under Chapter 3.28 and terminated employment with the City without a return of his or her contributions, and later returned to employment with the City in a Police Department position covered by this Plan on or after September 30, 2012; or

5. Any person who, prior to September 30, 2012, was a member of the Federated City Employees Retirement System established under Chapter 3.24 or the 1975 Federated City Employees Retirement Plan established under Chapter 3.28 and terminated employment with the City without a return of his or her contributions, and later returned to employment with the City in a Fire Department position covered by this Plan on or after September 30, 2012.

(Ords. 29266, 29511, 29879, 30007, 30145.)

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§ 3.36.020.16

"Independent medical panel" means the independent medical review panel or disability review panel appointed by the retirement board as specified in Section 3.36.380 of this chapter. (Ord. 29879.)

"New employee" means any employee initially hired to the police department on or after August 4, 2013, or initially hired to the fire department on or after January 2, 2015. (Ord. 29879.)

Unless the context requires otherwise, as used in this chapter the masculine gender includes the feminine and the feminine includes the masculine. (Prior code § 2903.69; Ord. 23807.)

The effective date of this chapter and of this retirement plan is and shall be the first day of February, 1962; and the words "effective date of this chapter," as used in this chapter, shall be deemed to mean and refer to said first day of February, 1962.

(Prior code § 2903.68.)

Any notice or order given by the retirement board to any person shall be effective upon the deposit of such notice or order in the United States mail, postage prepaid, addressed to such person at the address of such member as said address is shown on the records of the retirement board. (Prior code § 2903.64.)

Notwithstanding anything in Chapters 3.16 through 3.44 to the contrary, whenever monthly references are used in connection with contributions or membership under the police and fire de-

partment retirement plan and/or the 1961 police and fire department retirement plan, such references shall be deemed to mean biweekly from and after the effective date of the ordinance codified herein. The purpose and intention of this amendment is to change the time at which contributions are to be made to the police and fire department retirement plan and/or the 1961 police and fire department retirement plan and to assure that no one is deprived of membership in either of said plans because of receiving salary on a biweekly basis.

(Prior code § 2903.71.)

• A. In addition to any other grounds which the retirement board may have by virtue of other provisions of this chapter for terminating or canceling any allowance or benefit which would otherwise be payable to any person or persons pursuant to the provisions of this chapter the board may, in its discretion, permanently terminate or temporarily suspend any allowance or benefit, or portion of any allowance or benefit, which would otherwise be payable to any person or persons under and by virtue of the provisions of this chapter if the person or persons to whom such allowance or benefit should otherwise be payable should wilfully disobey any lawful order of the retirement board or wilfully violate any provisions of this chapter. The board, in suspending any allowance or benefit, or any portion thereof, may suspend the same for such period of time as it may deem just or reasonable, and may impose such conditions as it may deem just or reasonable for reinstatement of any such allowance or benefit.

• B. In the event any service retirement allowance or disability retirement allowance otherwise payable to any person under and by virtue of the provisions of this chapter should be permanently terminated pursuant to the provisions of this section, and if the person who

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would have otherwise been entitled to such allowance should die thereafter, neither his surviving spouse nor his surviving child or children nor his estate shall be entitled to any allowances or benefits whatsoever under the provisions of this system.

(Prior code § 2903.67.)

• A. The right of a person to a pension, an annuity or a retirement allowance, to the return of contributions, the pension, annuity or retirement allowance itself, any optional benefits, any other right or benefit accrued or accruing to any person under the provisions of this chapter, and the moneys in the fund created herein shall not be subject to execution, garnishment, attachment, or any other process whatsoever, and shall not be assignable except as herein specifically provided or as specified in Subsection B.

• B. Voluntary deductions which are permitted by rules and regulations approved by the board of administration of the police and fire department retirement plan may be made from pension benefits payments where authorized in writing by the benefit payee.

(Prior code § 2903.65; Ord. 29035.)

Each and every claimant of any allowance or benefit under this chapter shall at all times bear the burden of proving all such facts, circumstances and conditions as must be established or otherwise proved to entitle such claimant to any allowance or benefit under this chapter. (Prior code § 2903.70.)

If any section, subsection, paragraph or portion of this chapter is for any reason declared to be invalid or unconstitutional, such decision shall not affect the validity of the remainder or remaining portion of this chapter. The city council does hereby declare that it is its intention to enact and pass each

section, subsection, paragraph and portion of this chapter independently of each and every other part. (Prior code § 2903.66.)

Notwithstanding anything to the contrary in Chapters 3.32 and 3.36 of Title 3 of the San José Municipal Code, the elements of the plan set forth in Chapter 3.32 and the elements of the plan set forth in Chapter 3.36 are components of a single retirement system known as the City of San José Police and Fire Department Retirement Plan. (Ord. 27768.)

• A. Upon the termination of this plan or upon the complete discontinuance of contributions under the plan, the rights of each member, former member and beneficiary to benefits accrued to the date of such termination or discontinuance shall be nonforfeitable.

• B. Upon the complete termination of this plan, the board shall perform all of the following:

  1. Liquidate the assets of the retirement fund.

  2. Pay all of the accrued administrative expenses of the plan, including the expenses of liquidation.

  3. Determine the rights of each member, former member and beneficiary to benefits accrued to the date of termination, and ensure that all such benefits have been or are paid to the respective persons.

  4. Allocate any assets in the supplemental retiree benefit reserve to the then existing retired members, survivors of members, and survivors of retired members using the distribution methodology most recently approved by the city council.

• C. Upon the termination of this plan and the satisfaction of all liabilities described in Subsection B. above, the board shall allocate any remaining assets of the retirement fund to the members of the plan on the basis of years of

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service and final compensation credited to the member at the time of termination of the plan.

(Ord. 27768.)

"Plan year" means the consecutive twelvemonth period beginning on July 1 and ending on June 30 of the following calendar year. (Ord. 28773.)

"Limitation year" means the calendar year. (Ord. 28773.)

Part 2

MEMBERSHIP

Sections:

• 3.36.160 Exclusions from membership.

• 3.36.170 Persons appointed on or after effective date to positions in police department.

• 3.36.175 Reserved.

• 3.36.180 Persons holding position in police department on effective date - Option.

• 3.36.185 Reserved.

• 3.36.190 Reserved.

• 3.36.200 Persons appointed on or after effective date to positions in fire department.

• 3.36.205 Exclusion of fire chief and police chief with no prior service credit in police and fire department retirement plan.

• 3.36.210 Persons holding position in fire department on effective date - Option.

• 3.36.220 New option for persons who failed to exercise option given them by Sections 3.36.180 and 3.36.210.

• 3.36.230 Option for fire training officer who was drill master on February 1, 1962.

• 3.36.240 Persons retired for disability prior to effective date, who return to active duty after effective date.

• 3.36.250 Persons holding positions in police or fire department not included in membership on effective date who become entitled to membership later - Option.

• 3.36.260 Persons holding positions in department of communication on effective date - Option.

• 3.36.270 Persons retired pursuant to this chapter for disability who return to city service in position other than position included in membership of this plan.

• 3.36.280 Membership in prior plan continued when.

Except as may be otherwise provided in this chapter, all of the persons hereinafter specified in this Part 2 and none other, shall be members of this retirement system and shall be subject to its provisions.

(Prior code § 2903.75.)

Anything in this chapter to the contrary notwithstanding, the following persons are excluded from membership in this system:

• A. Independent contractors who are not employees of the city.

• B. Persons in city service principally for training or educational purposes, whether or not they receive any compensation.

• C. Auxiliary or voluntary police officers or fire fighters, whether or not they receive any compensation.

• D. Persons serving or employed on a parttime basis. An employee is serving on a

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part-time basis when the employee engages in his or her duties for less time than is required of employees serving on full-time basis, even though the employee is subject to call at any time.

• E. Persons serving or employed or paid on a per diem, per hour, or any other basis other than a monthly basis.

• F. Except as provided in Part 16 of this chapter, persons who are members of any other retirement or pension system and who are receiving credit in such other system for services are, as to such service, excluded from this system. For purposes of this subsection, persons who merely are receiving pensions or retirement allowances or other payments, from any source whatever, on account of service rendered to an employer other than the City of San José and while they were not in city service, are not, because of such receipt, members of another retirement system.

(Prior code § 2903.85; Ord. 24681.)

• A. Subject to and except as otherwise provided by other provisions of this chapter, each person appointed on or after the effective date of this chapter to any of the following positions or classes of positions in the police department shall be a member of the plan as described in this chapter, and shall be subject to the provisions of this chapter, as of the date of such appointment to such position, as follows: chief of police; assistant chief of police; deputy chief; chief of uniform division; chief of detectives; inspector of operations; chief of technical services; chief of prevention and control division; police captain; police lieutenant; police sergeant (detective); police sergeant; juvenile officer; police officer; police woman; assistant police woman; and automotive registration technician, but only if the person

  • appointed to the latter position held the position of senior identification officer on February 1, 1962, and became a member of this retirement plan as of February 1, 1962, and was also a member of this plan immediately prior to his appointment to the position of automotive registration technician. If an individual is hired, rehired or appointed to one of the above specified positions on or after August 4, 2013, and meets the definition of a tier 2 member under Section 3.36.020.15, such individual will be a tier 2 member.

• B. A person retired for disability prior to the effective date of this chapter pursuant to the provisions of Chapter 3.32 of this Code who is restored to active duty upon cessation of his or her disability after the effective date of this chapter, shall not be deemed to be a "person who is appointed on or after the effective date of this chapter," as such words are used in this section; provided, however, if such person is rehired or reappointed on or after August 4, 2013, such person shall become a tier 2 member except as otherwise provided in Section 3.36.020.15.

• C. Anything hereinabove to the contrary notwithstanding, no person shall be deemed to have become a member of this retirement plan because of his or her appointment to any of the above-specified positions on or after the effective date of this chapter if as of the date of such appointment he or she is a member of the police and fire department retirement plan established by Chapter 3.32, unless he or she has been or is given and has exercised or exercises pursuant to other provisions of this chapter an option to become subject to the provisions of this chapter in lieu of remaining subject to the provisions of Chapter 3.32 of this Code.

• (Prior code § 2903.76; Ords. 27768, 29266, 29879.)

Editor’s note— Ord. No. 29879, § 22, adopted Feb. 28, 2017, repealed § 3.36.175, which pertained to tier 2 members on or after August 4, 2013, and derived from Ord. 29266.

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§ 3.36.180

• A. Except as may otherwise be provided in this chapter, each person who on the effective date of this chapter holds any of the following positions or classes of positions in the police department by virtue of an appointment made prior to the effective date of this chapter, and who, in addition, is on such date a member of the police and fire department retirement plan established by Chapter 3.32, shall have the option of becoming subject to the provisions of this chapter. Said positions are: chief of police, chief of detectives, inspector of operations, police captain, Assistant chief of police, police lieutenant, police sergeant (detective), juvenile officer, police officer, police woman, traffic analyst, senior identification officer, and identification officer.

• B. Each of said persons, in order to exercise said option, shall file with the secretary of the retirement board, a written statement, on a form to be furnished by said board upon his or her request, declaring that he or she elects to be subject to the provisions of the retirement plan as described in this chapter. Said statement shall be filed as aforesaid on or before and no later than the ninetieth day immediately following the effective date of this chapter; excepting, however, that any such person who on the effective date of this chapter is on temporary leave because of active service in the Armed Forces of the United States may file said statement electing to be subject to the provisions of this chapter with the secretary on or before and no later than the ninetieth day immediately following the date of expiration of his or her leave or his or her return to duty, whichever is earlier. Upon filing said written statement with the secretary in the manner and within the time hereinabove specified, such person shall be deemed to be subject to the provisions of this chapter as of the effective date of this chapter. Each such person so electing to become subject to the provi-

sions of this chapter shall cease being subject to the provisions of the retirement system as established by Chapter 3.32 of this Code as of the date he or she becomes subject to the provisions of this chapter and shall have no further rights under Chapter 3.32. Anything elsewhere to the contrary notwithstanding, no such person shall become entitled to the benefits provided under this chapter unless he or she exercises said option as aforesaid. (Prior code § 2903.78; Ord. 27768.)

Editor’s note— Ord. 27768, § 6, adopted June 20, 2006, repealed § 3.36.185, which pertained to withdrawal from plan by chief of police.

Editor’s note— Ord. 27768, § 7, adopted June 20, 2006, repealed § 3.36.190, which pertained to withdrawal of contributions by chief of police.

• A. Subject to and except as otherwise provided by other provisions of this chapter, each person appointed on or after the effective date of this chapter to any of the following positions or classes of positions in the fire department shall be a member of the plan as described in this chapter, and shall be subject to the provisions of this chapter, as of the date of such appointment to such position, as follows: fire chief; deputy fire chief; assistant fire chief; fire prevention chief; fire marshal; battalion chief; district chief; fire district chief; fire training officer; assistant fire marshal; fire captain; assistant fire training officer; senior fire prevention inspector; fire engineer; firefighter; fire master mechanic; and assistant fire master mechanic. If an individual is hired, rehired or appointed to one of the above specified positions on or after January 2, 2015, and meets

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the definition of a tier 2 member under Section 3.36.020.15, such individual will be a tier 2 member.

• B. A person retired for disability prior to the effective date of this chapter pursuant to the provisions of Chapter 3.32 of this Code who is retired [restored] to active duty upon cessation of his or her disability after the effective date of this chapter shall not be deemed to be a "person who is appointed on or after the effective date of this chapter" as such words are used in this section; however if such person is rehired or reappointed on or after January 2, 2015, such person shall become a tier 2 member except as otherwise provided in Section 3.36.020.15.

• C. Anything hereinabove to the contrary notwithstanding, no person shall be deemed to have become a member of this retirement system because of his or her appointment to any of the above-specified positions on or after the effective date of this chapter if as of the date of such appointment he or she is a member of the police and fire department retirement plan established by Chapter 3.32 unless he or she has been or is given and has exercised or exercises pursuant to other provisions of this chapter an option to become subject to the provisions of this chapter in lieu of remaining subject to the provisions of Chapter 3.32 of this Code.

• (Prior code § 2903.77; Ords. 27768, 29879.)

Notwithstanding the provisions of Section 3.36.200, any person who is appointed to the position of fire chief or police chief, with an effective employment start date on or after August 1, 2010, shall not become or be a member of this retirement system if on the effective date of such person's appointment:

• A. The person is not entitled to credit for service in this retirement system; and

• B. The person is not entitled to redeposit withdrawn accumulated contributions pursuant to Section 3.36.710.

(Ord. 28749.)

Editor’s note— Ord. 27768, § 9, adopted June 20, 2006, repealed former § 3.36.05, which pertained to exclusion of fire chief with no prior service credit.

• A. Except as may otherwise be provided in this chapter, each person who on the effective date of this chapter holds any of the following positions or classes of positions in the fire department by virtue of an appointment made prior to the effective date of this chapter and who, in addition, is on such date a member of the police and fire department retirement plan established by Chapter 3.32 of this Code, shall have the option of becoming subject to the provisions of this chapter. Said positions are: fire chief, assistant fire chief, fire prevention chief, battalion chief, fire captain, firefighter, and fire master mechanic.

• B. Each of said persons, in order to exercise said option, shall file with the secretary of the retirement board a written statement, on a form to be furnished by the board upon his or her request, declaring that he or she elects to be subject to the provisions of the retirement plan as described in this chapter. Said statement shall be filed as aforesaid on or before and no later than the ninetieth day immediately following the effective date of this chapter, excepting, however, that any such person who on the effective date of this chapter is on temporary leave because of active service in the Armed Forces of the United States may file said statement electing to be subject to the provisions of this chapter with the secretary on or before and no later than the ninetieth day immediately following the date of expiration of his or her leave or his or her return to duty, whichever is earlier. Upon filing said written statement with the secretary in the

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manner and within the time hereinabove specified, such person shall be deemed to be subject to the provisions of this chapter as of the effective date of this chapter. Each such person so electing to become subject to this chapter shall cease being subject to the provisions of the retirement plan as established by Chapter 3.32 as of the date he or she becomes subject to the provisions of this chapter and shall have no further rights under Chapter 3.32. Anything elsewhere to the contrary notwithstanding, no such person shall become entitled to the benefits provided under this chapter unless he or she exercises said option as aforesaid.

(Prior code § 2903.79; Ord. 27768.)

• A. Any person who was given by Section 3.36.180 or Section 3.36.210 of this chapter an option to become subject to the provisions of this chapter but failed for any reason to exercise such option, is hereby given a new option to become subject to the provisions of this chapter if he or she has continuously, from February 1, 1962 (the effective date of this chapter) to and including the date of exercise of such new option, held a position which would have entitled him or her to be subject to this chapter during all such time had he or she exercised such original option.

• B. Each of said persons, in order to exercise said option, shall on or before November 15, 1968:

  1. File with the secretary of the retirement board a written statement, on a form to be furnished to him or her on his request by the board, declaring that he or she elects to be subject to the provisions of the retirement system as described in by this chapter; and

  2. At the time of filing said written statement pay into the retirement fund:

     • a. A sum equal to the difference between what he or she would have

paid had he been subject to the provisions of this chapter from the effective date of this chapter to the date upon which he or she exercises such option and what he or she actually paid during said period pursuant to Chapter 3.32; plus

• b. Such interest thereon as the retirement board may deem reasonable. Only that sum designated in subdivision a. above shall be credited to such person's account and be considered accumulated contributions.

• C. Upon filing said written statement within the time and in the manner hereinabove specified, said person shall be deemed to be subject to the provisions of this chapter, as of the effective date of this chapter. Such person, upon electing to become subject to the provisions of this chapter, shall cease being subject to the provisions of the retirement plan as established by Chapter 3.32 as of the date he or she becomes subject to the provisions of this chapter and shall have no further rights under Chapter 3.32. Anything elsewhere to the contrary notwithstanding, such person shall not become entitled to the benefits provided under this chapter unless he or she exercises said option as aforesaid.

(Prior code § 2903.86; Ord. 27768.)

That certain person who on February 1, 1962 held the position of drill master in the fire department and upon abolition of such position was appointed to the position of fire training officer, is hereby given an option to become subject to the provisions of this chapter if he or she has continuously from February 1, 1962, to and including the date of exercise of the option granted by this section, held such positions of drill master and fire training officer. Said person, in order to exercise said option, shall on or before November 15, 1968, file with the secretary of the retirement board a

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written statement on a form to be furnished to him, upon request, by said board declaring that he or she elects to become subject to the provisions of this chapter and elects to pay into the retirement fund a sum equal to the difference between what he would have contributed under this chapter had he or she been subject to the provisions of this chapter from February 1, 1962, to the date upon which he or she exercises this option and what he or she has actually paid during said period of time pursuant to the provisions of Chapter 3.32 of this Code. Upon being paid said sum shall be credited to such person's account and be considered accumulated contributions. Payment of said sum shall be made in such installments, at such times, and in the manner prescribed by the retirement board. If such person or his or her survivors become entitled to any benefit under this chapter prior to the time that all of said sum has been paid, such benefits shall be reduced by the amount of said sum still remaining unpaid.

(Prior code § 2903.87; Ord. 27768.)

Except as may otherwise be provided in this chapter, each person who was appointed to and held, prior to the effective date of this chapter, any of the positions or classes of positions designated in Sections 3.36.170 and 3.36.200 and who, prior to the effective date of this chapter, received a disability retirement from such position or class of position pursuant to the provisions of Chapter 3.32, shall have the option of becoming subject to the provisions of this chapter, subject to all provisions of this chapter, if such person's disability should cease, and if in addition such person should be restored to active service pursuant to the provisions of Chapter 3.32 in the position which he or she held at the time of his or her disability retirement, provided and upon condition, however, that such person at the time he or she is restored to active duty is not fifty-five years or more of age. No such person shall become subject to the provisions of this chap-

ter if, at the time of such restoration to duty in said position, he or she is fifty-five or more years of age. Each of said persons, in order to exercise this option, shall file with the secretary of the retirement board a written statement, on a form to be furnished to him or her, upon request, by said board, declaring that he or she elects to become subject to the provisions of this chapter. Said statement shall be filed on or before, and no later than, the ninetieth day immediately following the date of such person's restoration to active duty. Upon filing said statement in the manner and time specified in this section, such person shall be deemed to be a member of the retirement plan and shall be subject to the provisions of this chapter as of the date of his or her restoration to duty. Each such person so electing to become subject to the provisions of this chapter shall cease being subject to the provisions of Chapter 3.32 as of the effective date of the election made pursuant to this section. Anything elsewhere to the contrary notwithstanding, no such person shall become subject to the provisions of this chapter unless he or she exercises this option in the time and manner specified by this section.

(Prior code § 2903.80; Ords. 27768, 29266, 29879.)

• A. Any person who has been appointed to and holds on the effective date of this chapter any position in the police department or fire department not included within the list of positions set forth in Sections 3.36.180 or 3.36.210, and who subsequent to said effective date is appointed to a position in the police department or fire department included within the list of positions set forth in Sections 3.36.170 or 3.36.200 without a break in service, and who immediately prior to his or her appointment to such new position is a member of the police and fire department retirement plan as

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described in Chapter 3.32, shall have the option of becoming subject to the provisions of this chapter.

B. Each of said persons, in order to exercise said option, shall file with the secretary of the retirement board a written statement, on a form to be furnished to him or her, upon request by said board, declaring that he or she elects to be subject to the provisions of this Chapter 3.36. Said statement shall be filed on or before, and no later than, the ninetieth day immediately following such person's appointment to the position entitling him or her to be subject to the provisions of this chapter. Upon filing said written statement in the manner and time hereinabove specified, such person shall become subject to the provisions of this chapter as of the date of said new appointment. Each person so electing to become subject to the provisions of this chapter shall cease being subject to the provisions of Chapter 3.32 as of the effective date of the election made pursuant to this section. Anything elsewhere to the contrary notwithstanding, no such person shall become subject to the provisions of this chapter unless he or she exercises this option in the time and manner specified by this section.

(Prior code § 2903.81; Ords. 27768, 29266, 29879.)

Except as may otherwise be provided in this chapter, each person who, prior to the effective date of this chapter, was transferred from a permanent appointment in any position or class of positions in the police department or fire department to one (1) of the following positions or classes of positions in the department of communications: superintendent of communications, chief radio-telephone operator and radio-telephone technician, and who in addition is on the effective date of this chapter a member of the police and fire department retirement plan as described in Chapter 3.32 of this

Code, shall have the option, if he or she holds any such position in the department of communications on the effective date of this chapter, and not otherwise, of becoming subject to the provisions of this Chapter 3.36. Each of said persons, in order to exercise said option, shall file with the secretary of the retirement board a written statement, on a form to be furnished to him or her, upon request, by said board, declaring that he or she elects to be subject to the provisions of this chapter. Said statement shall be filed on or before, and no later than, the ninetieth (90th) day immediately following the effective date of this section, excepting, however, that any such person who on the effective date of this section is on temporary leave because of active service in the Armed Forces of the United States may file said statement electing to be subject to the provisions of this chapter with the secretary on or before, and no later than, the ninetieth (90th) day immediately following the date of expiration of his or her leave or his or her return to duty, whichever is earlier. Upon filing said written statement with the secretary in the manner and within the time specified in this section, such person shall be deemed to be subject to the provisions of this chapter as of the effective date of this section. Each person so electing to become subject to this chapter shall cease being subject to the provisions of Chapter 3.32, as of the effective date of the election made pursuant to this section. No such person shall become subject to the provisions of this chapter unless he or she exercises this option in the time and manner specified in this section.

(Prior code § 2903.82; Ord. 27768.)

A member who is retired for disability after the effective date of this chapter pursuant to the provisions of this chapter and who, in addition, after receiving such disability retirement, is appointed to a full-time position in the city service, appointment to which would not otherwise entitle

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him or her to the benefits of this chapter, in which new position monthly compensation is paid, shall, if and while said disability continues during the period of such new service, be a member of the retirement plan, and shall be subject to the provisions of this chapter.

(Prior code § 2903.83; Ords. 27768, 29266, 29879.)

All persons who, on the effective date of this chapter, are members of the police and fire department retirement plan described in Chapter 3.32 and do not exercise in the manner and within the time hereinabove specified their option of becoming subject to the provisions of this chapter, or who are not hereinabove given any such option or who are otherwise excluded from membership in the retirement plan as described in this chapter, are not and shall not be deemed to be subject to the provisions of this chapter and shall not be entitled to any benefits paid pursuant to this chapter. All such persons, however, shall remain members of the police and fire department retirement plan as described in Chapter 3.32 of this Code, subject to the provisions of said chapter and applicable provisions of the charter of the city, and the benefits being paid on the effective date hereof to or on account of any persons pursuant to Chapter 3.32 shall be continued at their existing rates in accordance with the provisions of said Chapter 3.32, and shall be paid from the retirement fund maintained in accordance with this chapter. Notwithstanding anything in this Code or in any ordinance to the contrary, no persons appointed to any position or class of positions on or after the effective date of this chapter shall become subject to Chapter 3.32 or be entitled to any benefits payable pursuant to Chapter 3.32. (Prior code § 2903.84; Ord. 27768.)

Part 3

RETIREMENT BOARD AND OTHER OFFICERS

Sections:

• 3.36.310 Retirement board - Powers and duties.

• 3.36.320 Retirement board - Additional powers and duties.

• 3.36.325 Retirement board - Personnel matters.

• 3.36.330 Retirement board - Meetings - Quorum - Voting.

• 3.36.340 Retirement board - Secretary - Retirement and benefits administrator duties.

• 3.36.350 Rules and regulations - Scope.

• 3.36.360 Duties of other city officers.

• 3.36.370 Determination of employee eligibility and determination and modification of benefits.

• 3.36.380 Medical service and advice.

• 3.36.385 Authority to secure other contractual services.

• 3.36.400 Actuarial evaluation and investigation - Interest rates.

• 3.36.410 Mortality, service and other tables - Revision of rates of contribution.

• 3.36.420 Determination of age, service or compensation where records are inadequate.

• 3.36.430 Accounts and recordkeeping. 3.36.440 Annual report.

• 3.36.450 Hearings - Authorized when.

• 3.36.460 Power to administer oaths and issue subpoenas.

• 3.36.470 Hearings - Rules and procedures.

• 3.36.480 Direct transfers of eligible rollover distributions.

• 3.36.485 Review of proposed amendments.

• 3.36.490 Direct trustee-to-trustee transfers.

The retirement system established pursuant to the provisions of this Chapter 3.36 and the retire-

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ment fund provided for in this Chapter 3.36 shall be managed, administered and controlled by that certain board of administration entitled "board of administration for police and fire department retirement plan" which has been established pursuant to the provisions of Chapter 2.08, Part 12 of the San José Municipal Code. (Prior code § 2903.100.)

The retirement board shall have all the powers and duties given to it in this Chapter 3.36, including but not limited to, the powers and duties specified in this Part 3. Notwithstanding anything in this part to the contrary, the retirement board shall not engage in a transaction prohibited by Section 503(b) of the Internal Revenue Code. (Prior code § 2903.101; Ord. 28886.)

The retirement board shall have any and all other powers imposed upon or granted to it by the provisions of Article XV of the Charter of the city, or by any other provisions of this Chapter 3.36. (Prior code § 2903.113.)

The city manager shall seek the advice and consent of the retirement board on the appointment, evaluation, discipline or termination of the director of retirement services, and the hiring, evaluation, discipline or termination of the assistant director of retirement services, or their equivalent positions. Notwithstanding the foregoing, the city manager may appoint, hire, evaluate, discipline or terminate the director of retirement services or the assistant director of retirement services with or without the advice or consent of the retirement board. Nothing in this chapter shall limit any authority of the city manager under the San José City Charter, San José Municipal Code, and any applicable city policies. (Ord. 29139.)

The retirement board shall hold regular meetings monthly at a time and place to be determined by the board. Special meetings may be held at any time and place upon the call of its president or of a quorum of the members of the board. Until at least seven seats on the board are filled for the first time after adoption of the ordinance increasing the board to nine members, four members of the board shall be necessary to constitute a quorum for the board to take action, although a lesser number may adjourn from time to time. Once seven seats on the board have been filled for the first time after adoption of the ordinance increasing the board to nine members, a majority of the total number of member seats, filled or vacant, shall be necessary to constitute a quorum, although a lesser number may adjourn from time to time. The board shall act by resolution, order or motion. All meetings shall be open and public.

(Prior code § 2903.114; Ord. 28787.)

The director of retirement services shall be the secretary of the retirement board. The director shall keep a record of all proceedings of the board in the same manner as is required for the keeping of records of all proceedings of the city council. (Prior code § 2903.115; Ords. 21624, 26034.)

Subject to the provisions of this Chapter 3.36 and to all applicable provisions of the Charter of the city, the board may make and enforce reasonable rules and regulations for the administration, management and control of the provisions of this chapter and of the retirement system and fund provided for herein; and each member of this system, each person retired thereunder and each person or estate entitled to or receiving any benefits

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under the provisions of this chapter is and shall be subject to the provisions of this chapter and to said rules and regulations. (Prior code § 2903.102.)

The city treasurer and the city auditor shall perform such duties with respect to this retirement system and the retirement fund as the board of administration may from time to time direct, and all such other duties as may be required of such officers by other provisions of this chapter or by the Charter of the city. No additional compensation shall be received by any of said officers for said services.

(Prior code § 2903.116.)

The board, subject to the provisions of this Chapter 3.36, shall determine who are employees of the city eligible for membership in this retirement system. Except as provided in Section 3.36.380 regarding decisions of the independent medical panel (or where the independent medical panel's determination is appealed, the administrative law judge), the board is the sole judge of the conditions under which persons may be admitted to and receive or continue to receive benefits under this system, and shall determine, modify or terminate benefits for service or disability, or any other benefits provided for in this chapter.

(Prior code § 2903.103; Ord. 29879.)

• A. The Board may enter into contractual arrangements for such medical services and advice, and may secure and pay reasonable compensation for independent medical examiners, as the Board deems necessary to effectuate the terms of this Chapter. Such contracts for medical services shall be entered into in the name of the Board of Administration for the Police and Fire Department Retirement Plan. The

cost of obtaining such medical services and advice, and any cost for appeals therefrom to an administrative law judge shall be administrative expenses of the Plan.

• B. Effective as of March 31, 2017 with respect to applications for disability benefits under the Plan, the Board shall appoint an independent medical panel of three (3) medical experts to evaluate and approve or deny, by a majority vote, all disability applications. The Board shall establish processes and procedures by which the independent medical panel shall carry out and document its responsibilities. Once the independent medical panel is formed, responsibility for reviewing disability applications and making disability determinations will solely be the responsibility of the independent medical panel, or if the decision of the independent medical panel is appealed, an administrative law judge. The independent medical panel may, upon its own initiative or upon request, reassess the status of a disability retirement recipient to confirm whether the recipient's disability continues. The individuals who may be appointed to such panel by the Board shall be determined as follows:

  1. Individuals shall be recruited to serve on the independent medical panel by the Board using the City's established request for proposal process.

  2. Each individual selected to serve on the independent medical panel shall be approved by a vote of no less than six (6) of the nine (9) members of the Board and shall serve for a four (4)-year term.

  3. Individuals serving on the independent medical panel shall have experience in varying fields of medicine and shall meet the following minimum qualifications:

     • a. Ten (10) years of practice after completion of residency; and

     • b. Practicing or retired Board Certified physician; and

     • c. Except for prior service on the independent medical panel established

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• under this 3.36.380, is not providing or has not provided medical services to the City or retirement boards; and

• d. No prior experience as a Qualified Medical Evaluator.

(Prior code § 2903.104; Ords. 25084, 29879, 30007.)

• A. In addition to the authority to enter into contractual arrangements for medical services as provided in Section 3.36.380 and the authority to enter into contractual arrangements for investment related services as provided in Part 4 of this chapter, the board is authorized to select, enter into contractual arrangements with, and pay reasonable compensation to persons to perform the following services for the board:

  1. Actuarial services.

  2. Auditing services.

  3. Investment manager search services.

  4. Investment performance evaluation services.

  5. Proxy voting services.

  6. Other consultant services which the board deems necessary to carry out its duties and responsibilities under this retirement plan.

• B. The contracts described in subsection A. shall be entered into in the name of the board of administration for the police and fire department retirement plan.

• (Ords. 24723, 25084.)

The board shall keep in convenient form such data as is necessary for actuarial evaluation of this system. As of April 1, 1962, and thereafter at the end of periods not to exceed five years, the retirement board shall cause to be made an actuarial investigation into the mortality, disability, service

and compensation experience of members and persons receiving benefits and an actuarial evaluation of the assets and liabilities of this system. (Prior code § 2903.105.)

• A. Upon the basis of any or all of such investigations, evaluations and determinations, the Board shall adopt such mortality, service and other tables as may be necessary, and shall fix and from time to time change the rates of monthly contribution required of members and of the City as may be necessary to make this System at all times actuarially sound in a manner consistent with Article XVI, Section 17 of the California Constitution (the "1992 California Pension Protection Act") and to provide the benefits provided for in this Retirement Plan; provided that, as may be otherwise provided elsewhere in this Chapter, the proportionate share of contributions on behalf of the City and members who are not Tier 2 members shall at all times be in the ratio of three to eight (3:8) except as provided in 3.36.410 A. For Tier 2 members, except as provided in Section 3.36.410 B., the proportionate share of contributions on behalf of the City and Tier 2 members shall at all times be in the ratio of one for the City to one for the Tier 2 members (1:1) (sharing equally), including any unfunded actuarially accrued liability.

  1. Notwithstanding the foregoing, the following shall apply to the manner of determining and making additional contributions attributable to the cost associated with reclassifying members of this Plan who, prior to August 4, 2013 for Police and prior to January 1, 2015 for Fire, were non-Tier 2 members of this Plan and then became Tier 2 members prior to June 18, 2017 but on and after June 18, 2017 remain in the Plan but are no longer considered Tier 2 members as defined under Section 3.36.020.15 ("Reclassified

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Tier 1 Members"). The additional contributions described in this Section 3.36.410 A.1. are attributable to the entire cost associated with treating Tier 2 service earned by a Reclassified Tier 1 Member as Tier 1 service, including any increase in the unfunded actuarial accrued liability, of the benefits. The entire cost associated with treating former Tier 2 service as Tier 1 service, including the increased unfunded actuarial accrued liability will be referred to as the "Total UAL Increase." The Total UAL Increase shall be determined for each affected member individually by the Board's actuary as of as based upon that member's age, years of service, salary, length of Tier 2 service and other relevant actuarial factors. As a result, the amortization schedule for each Reclassified Tier 1 Member may vary. Notwithstanding the cost sharing ratio for Tier 21 members described in the first paragraph of this Section 3.36.410 A. above, the Total UAL Increase shall be shared in a ratio of one for the City and one for the affected member (1:1) and will be reflected as soon as practicable as an increase in the contribution rates for such Reclassified Tier 1 Members. As a condition of receiving his or her full Tier 1 benefit, Reclassified Tier 1 Member must:

embers described in the first paragraph of this Section 3.36.410 A. above, the Total UAL Increase shall be shared in a ratio of one for the City and one for the affected member (1:1) and will be reflected as soon as practicable as an increase in the contribution rates for such Reclassified Tier 1 Members. As a condition of receiving his or her full Tier 1 benefit, Reclassified Tier 1 Member must:

• i. pay his or her Total UAL Increase plus accrued interest on the Reclassified Tier 1 Member's Total UAL Increase at the Plan's assumed rate of return from the date the Total UAL Increase is calculated until September 3, 2020 (the "Reclassified Tier 1 Member Obligation"). Effective the first full pay period following the effective date of Ordinance No. [xxxxx] amending Chapter 3.36.410 A(1)(i) of the 1961 Police and Fire Department Retirement

Plan in the San José Municipal Code, the City will pay a one-time amount equivalent to the expected future interest accrual on the Tier 1 Reclassified Member Obligation calculated as to the anticipated date to be repaid. In no event shall the City's payment cover interest accrued on the Reclassified Tier 1 Member Obligation prior to the first full pay period following the effective date of the ordinance amendment adding this provision and all interest accrued on the Reclassified Tier 1 Member Obligation prior to such date remains the obligation of the Reclassified Tier 1 Member whether or not previously paid by the Reclassified Tier 1 Member; and; and

• ii. in addition to making the required Tier 1 Member contributions, be individually responsible for his or her Reclassified Tier 1 Member Obligation and commence paying his or her Reclassified Tier 1 Member Obligation as soon as practicable after the board determines the amount of such obligation; and

• iii. a legally binding agreement with the City setting forth the terms and conditions of his or her Reclassified Tier 1 Member status under the Plan and payment of his or her Reclassified Tier 1 Member Obligation; and

• iv. fully satisfy any outstanding balance of his or her Reclassified Tier 1 Member Obligation on or before the later of sixty (60) calendar days following the date of the Reclassified Tier 1 Member's separation from City service or receipt of the final remaining balance calculation of such member's Reclassified Tier 1 Member Obligation from the Board. If the entire balance of the

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Reclassified Tier 1 Member Obligation is not satisfied by such date, benefits for such Reclassified Tier 1 Member shall be determined in accordance with Section 3.36.720 E.

2. The City shall pay its share of the Total UAL Increase through the Plan's amortization of the Plan's UAL as determined by the Board upon the recommendation of its actuary. The City's obligation includes any actuarial gains and losses associated with the Total UAL Increase, including interest from time to time at the Plan's assumed rate or return.

3. Notwithstanding the foregoing, the following shall apply to the manner of determining contributions on behalf of the City and members who accept employment in the Police Department or Fire Department of the City on or after January 1, 2013 who is otherwise eligible for this Plan and who was an active member in another California public retirement system, with which this Plan has reciprocity under Part 16, and who has a break in service of less than six (6) months from that covered employment and employment with the City, other than those who meet the definition of new members as defined by Government Code Section 7522.04(f) as may be amended, but on and after March 31, 2017 remain in the Plan but are no longer considered Tier 2 members under the definition of Tier 2 member under Section 3.36.020.15. Any and all costs, including but not limited to any unfunded actuarial accrued liability, directly or indirectly associated with benefit changes adopted on March 31, 2017 for such members and any and all amounts associated with moving such members from Tier 2 status to non-Tier 2 status, will be amortized as a separate liability over sixteen (16) years or other period determined by the Board. Fur-

ther, notwithstanding the cost sharing ratio for non-Tier 2 members described in the first paragraph of Section 3.36.410 A. above, any and all costs described in this subsection 3.36.410 A.3. shall at all times be shared in the ratio of one for the City and one for the non-Tier 2 members who became a member as a result of Part 16 of Chapter 3.36 of the San José Municipal Code and is not a Tier 2 Member as defined under Section 3.36.020.15 members (1:1) and will be reflected as soon as practicable in the contribution rates for such members.

4. Members of this Plan who, prior to September 30, 2012 were Tier 1 members of the Plan established under Chapter 3.28 of the San José Municipal Code and became Tier 2 members of this Plan prior to March 31, 2017 and remained in this Plan after March 31, 2017 but are no longer considered Tier 2 members as defined under Section 3.36.020.15 shall also be considered "Reclassified Tier 1 Members." The reclassification of their Tier 2 service to Tier 1 service and the corresponding benefits of such reclassification for these Reclassified Tier 1 Members shall be subject to the same terms and conditions as the Reclassified Tier 1 Members identified in Section 3.36.410 A.1., including but not limited to those described in Section 3.36.410 A.1. and Section 3.36.720.

• B. Notwithstanding Section 3.36.410 A., the following shall apply to the manner of determining contributions on behalf of the City and members who are Tier 2 members on or after March 31, 2017:

  1. The costs, including any unfunded actuarial accrued liability, associated with the Tier 2 benefit changes adopted on March 31, 2017 for members who were Tier 2 members prior to March 31, 2017 will be amortized as a separate liability over six-

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teen (16) years or other period determined by the Board and will be reflected as soon as practicable in contribution rates to be shared equally among the City and all Tier 2 members and such increased rates shall not be subject to the incremental increases in amounts associated with unfunded actuarial accrued liability described in Section 3.36.410 B.2.

2. Other than provided in Section 3.36.410 A., in determining member contribution rates, to the extent an unfunded actuarial accrued liability is determined to exist with respect to the Plan, Tier 2 members will contribute toward the amount of such amortized unfunded actuarial accrued liability by increasing the Tier 2 member contribution rate by one-third of one percent (0.33%) of compensation each year until such time as the cost of the unfunded actuarial accrued liability is being shared equally by the Tier 2 members and the City. Until such time as the Tier 2 members and the City are sharing such cost equally, the City will include in its contribution rate the amount of the amortized unfunded actuarial accrued liability that would otherwise have been paid by the Tier 2 members in such year.

(Prior code § 2903.106; Ords. 29198, 29266, 29879, 30007, 30145, 30183, 30441.)

Whenever it is impractical for the retirement board to determine from the records of the city, and from other evidence before it, the length of service, the compensation or the age of any member of this retirement system, then in such event the board may estimate for the purposes hereof such length of service, compensation or age. Each employee shall file with the board such information respecting his age, length of service or compensation as the board may require.

(Prior code § 2903.107.)

The retirement board shall keep any and all records and accounts reasonably necessary for the management, administration or control of this retirement system, including, but not limited to:

• A. Records of all contributions made by any and all members of the system or made by the city;

• B. Records of all moneys in the retirement fund and of the investment and disposition of such moneys; and

• C. The names of all persons receiving benefits under the retirement system, the nature of such benefits and the amounts paid to each therefor.

(Prior code § 2903.108; Ord. 25992.)

• A. Within ninety days after the end of each fiscal year, or if later, within thirty days after submission to the city council of an audited annual fiscal report of the retirement system's funds, the board shall submit to the city council and city manager an annual report for such preceding fiscal year. The report shall contain a statement of the board's work for such period, and shall show all receipts and disbursements and the balance remaining in the retirement fund after such payments. The report may contain recommendations for or against changes in the retirement system.

• B. A copy of such annual report shall also be sent to the headquarters of the police department and to each city firehouse within the city.

• (Prior code § 2903.110; Ords. 18767, 25992.)

The board may in its discretion hold hearings for the purpose of determining any question presented to it involving any right, benefit or obligation of a person under this chapter, provided that any such person aggrieved by such determination may, if the board has not held a hearing with regard to such determination, petition the board in writing for a hearing. Such request for a hearing must be

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filed within thirty days from and after the determination of the board. The board shall within thirty days from and after such request hold a hearing, after which hearing the board may affirm, reverse or modify its prior determination. Notwithstanding the foregoing, any decisions regarding a determination related to a member's disability shall be subject to review only in accordance with the process described in Section 3.36.960. (Prior code § 2903.112; Ord. 29879.)

The retirement board shall have the power to administer or require oaths and affirmations, to issue subpoenas to compel the attendance of witnesses, or to compel by subpoena the production of books, papers and documents and to take and hear testimony concerning any matter or thing pending before the board. If any person so subpoenaed neglects or refuses to appear or to produce any book, paper or document as required by said subpoena, or shall refuse to testify before the board or answer any questions which a majority of such board shall decide to be proper and pertinent, the board shall have the power to initiate proceedings in the proper courts to have such person be declared guilty of contempt. The chief of police shall, upon request of the board, have such subpoenas served by a police officer or officers. (Prior code § 2903.111.)

Whenever the board in its discretion holds any hearing or hearings on any matter, or is required by any of the provisions of this chapter to hold any hearing or hearings shall be conducted in accordance with rules or regulations adopted by the board. The rules of evidence generally applicable in the courts shall not be binding upon the board; hearsay and any and all other evidence which the board deems relevant and proper may be admitted and considered. No person shall have any right to demand or require that any or all evidence be sworn, although the board may permit or require all or any

evidence to be sworn if it so desires. No person shall have any right to subpoena, nor to require the board to subpoena, any witness or witnesses nor any evidence, although the board may subpoena witnesses or evidence if it so desires. No person shall have any right to cross-examine any witness or witnesses, although the board may permit, in its discretion, such cross-examination as it deems necessary or advisable. Any and all rights or privileges granted to any and all persons by the provisions of this chapter are and shall be subject to the provisions and limitations of this Section. (Prior code § 2903.117.)

• A. If, under the provisions of this chapter, a person becomes entitled to a distribution which is an eligible rollover distribution, the person may elect to have the distribution or any portion thereof paid directly to an eligible retirement plan specified by the person.

• B. The election made pursuant to this section shall be in accordance with the terms and conditions established by the board.

• C. Upon the exercise of the election by a person pursuant to this section, the distribution from the retirement fund of the amount designated by the person, once distributable under the provisions of this chapter, shall be made in the form of a direct transfer to the eligible retirement plan so specified.

• D. For the purposes of this section, "eligible rollover distribution" means a distribution from the retirement fund which constitutes an eligible rollover distribution within the meaning of Section 401(a)(31)(C) of the Internal Revenue Code, consisting of any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or the life expectancy) of the distributee or the joint lives (or

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• joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Internal Revenue Code; the portion of any distribution that is not includible in gross income; and any other distribution which the Internal Revenue Service does not consider eligible for rollover treatment, such as certain corrective distributions necessary to comply with the provisions of Section 415 of the Internal Revenue Code or any distribution that is reasonably expected to total less than two hundred dollars during the year. Effective January 1, 2002, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includible in gross income. However, such portion may be transferred only: (i) to an individual retirement account or annuity described in Section 408(a) or (b) of the Internal Revenue Code or to a qualified defined contribution plan described in Section 401(a) of the Internal Revenue Code; (ii) on or after January 1, 2007, to a qualified defined benefit plan described in Section 401(a) of the Internal Revenue Code or to an annuity contract described in Section 403(b) of the Internal Revenue Code, that agrees to separately account for amounts so transferred (and earnings thereon), including separately accounting for the portion of the distribution that is includible in gross income and the portion of the distribution that is not so includible; or (iii) on or after January 1, 2008, to a Roth IRA described in Section 408A of the Internal Revenue Code. Effective January 1, 2002, the definition of eligible rollover distribution also includes a distribution to a surviving spouse or to a spouse or former spouse who is an alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Internal Revenue Code. For purposes of this Section 3.36.480, "spouse" has the meaning set forth in federal law.

• E. For purposes of this section, "eligible retirement plan" means a plan which constitutes an eligible retirement plan within the meaning of Section 401(a)(31)(D) of the Internal Revenue Code, consisting of one or more of the following:

  1. An individual retirement account described in Section 408(a) of the Internal Revenue Code;

  2. An individual retirement annuity described in Section 408(b) of the Internal Revenue Code;

  3. An annuity plan described in Section 403(a) of the Internal Revenue Code;

  4. A qualified trust described in Section 401(a) of the Internal Revenue Code;

  5. Effective January 1, 2002, an annuity contract described in Section 403(b) of the Internal Revenue Code;

  6. Effective January 1, 2002, a plan eligible under Section 457(b) of the Internal Revenue Code that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or a political subdivision of a state that agrees to separately account for amounts transferred into that plan from the retirement plan; or

7. Effective January 1, 2008, a Roth IRA described in Section 408A of the Internal Revenue Code.

• F. For purposes of this section, "distributee" means an employee or former employee. It also includes the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Internal Revenue Code. Effective July 1, 2010, a distributee further includes a nonspouse beneficiary who is a designated beneficiary as defined by Section 401(a)(9)(E) of the Internal Revenue Code. However, a nonspouse beneficiary may only make a direct rollover to an individual retirement account or

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individual retirement annuity established for the purpose of receiving the distribution, and the account or annuity shall be treated as an "inherited" individual retirement account or annuity.

(Ords. 24814, 28886.)

• A. Except as provided in subsection B., prior to the adoption of any ordinance amending the police and fire department retirement plan, a copy of the proposed ordinance shall be provided to the board for the board's review and recommendation.

  1. The board may, but is not required to, submit a report or recommendation on the proposed amendment to the city council.

  2. If the board declines or fails to submit a report or recommendation on a proposed amendment within sixty days of receipt of the proposed ordinance by the secretary to the board, the city council may proceed to adopt or not adopt the ordinance without first receiving a report or recommendation from the board.

  3. Nothing in paragraph 2. shall be deemed to preclude the board from thereafter submitting a report or recommendation to the city council.

• B. In any case where the city council finds that there is a need to adopt an ordinance amending the system within a time period which would not allow for a sixty-day review period, the council may act on the ordinance without first submitting it to the board, and the following procedures shall apply:

  1. At the time the council passes the ordinance for publication of title or, in the case of an urgency ordinance, at the time the council adopts the ordinance, the council shall refer the ordinance to the board for study and consideration.

  2. Following its study, the board may submit to the council a recommendation that the council take one or more of the following actions:

     • a. Repeal the ordinance.

     • b. Readopt the provisions of the ordinance with such amendments, additions or changes, if any, as the board may wish to recommend.

     • c. Make such other changes or provisions as the board may recommend.

  3. Upon receipt of the board's recommendation, the council may implement or disapprove the recommendation.

• (Ords. 24922, 24979.)

• A. If a member of this plan becomes eligible to purchase permissive service credit in this plan and elects to make such purchase through a lump sum deposit, the plan will accept a direct trustee-to-trustee transfer of funds from an eligible deferred compensation plan as defined in Section 457(b) of the Internal Revenue Code if such transfer is:

  1. For the purchase of permissive service credit as defined in Section 415(n)(3)(A) of the Internal Revenue Code; or

  2. A redeposit of withdrawn contributions pursuant to Section 3.36.710.

• B. If required by the provisions of the Internal Revenue Code or the regulations promulgated under the Internal Revenue Code, the plan will account separately for funds received through a direct trustee-to-trustee transfer from an eligible deferred compensation plan.

• (Ord. 26829.)

Part 4

RETIREMENT FUND

Sections:

• 3.36.520 Custodian.

• 3.36.530 Investment of funds - Delegation of authority.

• 3.36.540 Investment of funds - Conditions and limitations.

• 3.36.545 Investment - Security loan agreements - Conditions.

• 3.36.550 Investments - Real estate.

• 3.36.560 Unclaimed or canceled checks.

• 3.36.570 Investment counseling - Restrictions.

• 3.36.575 Separate medical benefits account.

• 3.36.576 Contributions to fund retiree healthcare benefits.

• 3.36.580 Guaranteed Purchasing Power Provision.

In order to continue in force and make effectual pensions and retirements already existing or that may be granted in the future in favor of members of the retirement plan heretofore established pursuant to the provisions of Chapter 3.32, and in order to carry out the provisions of this chapter, the retirement fund heretofore created and existing pursuant to Chapter 3.32, and pursuant to Section 78a of the City Charter, is hereby continued, and is hereby made a combined or common fund for the police and fire department retirement plan established by this Chapter 3.36 and by Chapter 3.32, with the elements of the plan in each chapter being a component of a single retirement plan. All contributions, income and other moneys which are required, pursuant to the provisions of this chapter, to be paid to this retirement plan or into the retirement fund, shall be paid into and held in said fund; and all benefits or allowances payable to any member or beneficiary under this retirement plan shall

be paid from said fund. Said combined or common fund shall be known as the "police and fire department retirement fund."

(Prior code § 2903.125; Ords. 25084; 27768.)

The retirement board shall have the exclusive control of the administration and investment of the retirement fund.

(Prior code § 2903.126; Ord. 25084.)

• A. Except as provided in subsection B., the city director of finance is and shall be the custodian of the retirement fund, subject to the exclusive control of the board as to the administration and investment of the same.

• B. The board may enter into contractual arrangements with California banks or with national banking associations to provide master custody services with respect to the assets of the retirement fund. Such contracts shall be entered into in the name of the board of administration for the police and fire department retirement plan.

• C. All payments from the fund shall be made by the city director of finance upon demands made by the retirement board.

• D. All amounts received by the board or by the system under the provisions of this chapter shall be deposited with the custodian bank or the city director of finance to the credit of the retirement fund, including but not limited to any and all contributions, any and all interest earned on bank deposits, and any and all other income of this system or of the fund.

• (Prior code § 2903.127; Ord. 25084.)

• A. Without limiting the authority of the board itself to invest and reinvest the moneys of the retirement fund as provided in Section 3.36.540, the board may adopt an investment resolution

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or resolutions containing detailed investment guidelines, consistent with Section 3.36.540. While the resolution or resolutions are in effect, investments consistent with such guidelines may be made by an officer of the board, an officer or employee of the city, or a qualified investment advisor who has entered into a contractual arrangement pursuant to Section 3.36.560, provided that such officer, employee or advisor has been delegated such authority by the board and such officer, employee or advisor has been designated by name in the investment resolution or resolutions. Any transactions made pursuant to the foregoing provisions of this section shall be reported to the board on a monthly basis.

B. Without limiting the authority of the board itself to invest and reinvest the moneys in the retirement fund as provided in Section 3.36.540 or to delegate authority for investment and reinvestment as provided in subsection A. of this section, the board may, by resolution, designate a person by name to make shortterm investments and reinvestments of moneys in the retirement fund and to purchase, sell, or exchange such short-term investments and reinvestments of moneys in the retirement fund and to purchase, sell, or exchange such short-term investments. For purposes of this subsection, "short-term investments" shall consist of the following:

1. Repurchase agreements and reverse repurchase agreements;

2. Short-term investment fund;

3. Investments which are in commercial paper, United States Treasury bills, bankers' acceptances, negotiable certificates of deposit, or similar evidences of indebtedness; and

   • a. Which are of no more than one year in duration; and

   • b. Which are liquid in nature; and

   • c. Which are not investments in bonds or preferred or common stock.

The person to be so designated by the board shall be either a member of the board, a qualified investment advisor who has entered into a contractual arrangement pursuant to Section 3.36.560, or an officer or employee of the city. The person so designated shall serve in said capacity at the pleasure of the board and shall report monthly to the board on such short-term investments.

Moneys to be invested pursuant to this Subsection B. shall be only those moneys not then required for investments made pursuant to Section 3.36.540 and Subsection A. of this section.

(Prior code § 2903.129; Ords. 20115, 21076, 21305, 23560, 25084.)

The board shall invest and reinvest the moneys in the retirement fund in accordance with the following standards:

• A. The assets of the retirement plan are trust funds and shall be held for the exclusive purposes of providing benefits to members of the plan and their beneficiaries and defraying reasonable expenses of administering the plan. The assets of the retirement plan must not revert, and no contributions shall be permitted to be returned to the employers, except as permitted by Revenue Ruling 91-4.

• B. The board shall discharge its duties with respect to the plan solely in the interest of, and for the exclusive purposes of providing benefits to, members of the plan and their beneficiaries, maintaining the actuarial soundness of the plan in a manner consistent with Article XVI, Section 17 of the California Constitution (the "1992 California Pension Protection Act"), and defraying reasonable expenses of administering the plan. The board's

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duty to the members and their beneficiaries shall take precedence over any other duty.

• C. The board shall discharge its duties with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of like character and with like aims.

• D. The board shall diversify the investments of the plan so as to minimize the risk of loss and to maximize the rate of return, unless under the circumstances, it is clearly prudent not to do so.

• E. The retirement plan may participate under Section 401(a)(24) of the Internal Revenue Code in a qualified group trust that meets the requirements of Section 401(a) of the Internal Revenue Code in accordance with Revenue Ruling 81-100, as amended by Revenue Ruling 2004-67.

• (Prior code § 2903.128; Ords. 19989, 21145, 21607, 22509, 23560, 25084, 28886, 29198.)

• A. The retirement board may enter into contractual arrangements with broker-dealers and with California or national banks for such brokersdealers or banks to provide security lending services pursuant to security loan agreements. Such contracts shall be entered into in the name of the board of administration for the police and fire department retirement plan.

• B. For the purposes of this section, "security loan agreement" and "marketable securities" shall be defined as follows:

  1. "Security loan agreement" means a written contract whereby a legal owner, the lender, agrees to lend specific marketable corporate or government securities for a period not to exceed one year. The lender retains the right to collect from the borrower all dividends, interest, premiums,

rights, and any other distributions to which the lender would otherwise have been entitled. The lender waives the right to vote the securities during the term of the loan. The lender may terminate the contract upon not more than five business days' notice as agreed and the borrower may terminate the contract upon not less than two business days' notice as agreed. The borrower shall provide collateral to the lender in the form of cash, bonds or other interest-bearing notes and obligations of the United States or irrevocable letters of credit from California or national banks approved by the board. Such collateral shall be in an amount equal to at least one hundred two percent of the market value of the loan securities as agreed. The lender shall monitor the market value of the loaned securities daily. The loan agreement shall provide for payment of additional collateral on a daily basis, or at such times as the value of the loaned securities increases, to agreedupon ratios. In no event shall the amount of the collateral be less than the market value of the loaned securities.

2. "Marketable securities" means securities that are freely traded on recognized exchanges or market places.

• C. Any contractual arrangements entered into pursuant to this section shall require all of the following:

  1. Maintenance of detailed records of all security loans.

  2. Development of controls and reports to monitor the conduct of the transactions.

  3. Publication of the net results of the security loan transactions separate from the results of other investment activities.

• (Ords. 21864, 25084.)

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• A. The board may:

  1. Acquire, hold for investment or sell commercial, industrial and residential real estate, and real estate related debt instruments in the following forms:

     • a. In its own name;

     • b. In common ownership with the Federated City Employees Retirement System;

     • c. Through a title holding corporation or trust satisfying the requirements of Internal Revenue Code Section 501(c)(25);

     • d. Through a title holding corporation satisfying the requirements of Internal Revenue Code Section 501(c)(2); or

     • e. Through a Limited Liability Company;

  2. Lease real property owned by the board for any lawful purpose and for terms which may extend beyond the duration of this retirement plan;

  3. Create restrictions and easements affecting the real property owned by the board; and

  4. Exercise all other rights, privileges and powers which an owner of real property would have, unless otherwise prohibited by the terms of this retirement plan or by other applicable law.

• B. The board shall take title as follows:

  1. Title to all commercial, industrial and residential real estate and all real estate related debt instruments acquired by the board on behalf of this retirement plan shall be taken and held in one of the following forms:

     • a. Directly by the board of administration in the name of board of administration as trustee for the police and fire department retirement fund;

     • b. Through a title holding corporation or trust satisfying the requirements of Internal Revenue Code Section 501(c)(25);

     • c. Through a title holding corporation satisfying the requirements of Internal Revenue Code Section 501(c)(2); or

     • d. Through a Limited Liability Company.

  2. Title to all commercial, industrial and residential real estate and all real estate related debt instruments acquired by the board on behalf of this retirement plan to be held in common ownership with the Federated City Employees Retirement System shall be taken and held in the following name: board of administration as trustee for the Federated City Employees Retirement Fund, as to an undivided fifty percent interest, and the board of administration, as trustee for the police and fire department retirement fund, as to an undivided fifty percent interest, together as tenants in common.

• C. For the purposes of this Section 3.36.550, a title holding corporation or trust satisfying the requirements of Internal Revenue Code Section 501(c)(25), a title holding corporation satisfying the requirements of Internal Revenue Code Section 501(c)(2), or a Limited Liability Company may be such a corporation, trust or company established by the board.

• (Prior code § 2903.130; Ords. 25084, 25951, 27595, 28088.)

Notwithstanding any provisions in this Code to the contrary, whenever any check drawn against the retirement fund in payment of accumulated contributions or any benefits remains unclaimed or the claimant cannot be found, the proceeds of such check shall be redeposited in the retirement fund and held for the claimant without any further accumulation of interest, and such redeposit shall not

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operate to reinstate the membership of the claimant in this system. If such proceeds, whether heretofore or hereafter redeposited, are not claimed within four years after the date of redeposit, they shall revert to and become a part of the accumulated contributions of the city, held in the retirement fund to meet the liabilities of the city to the retirement system. The board may at any time, after revision of said proceeds to the city, and upon receipt of proper information satisfactory to it, return such proceeds so held for the city, to the credit of the claimant, to be administered in the manner provided under this system. (Prior code § 2903.130; Ord. 25084.)

• A. The board may enter into contractual arrangements with any person or persons or association or associations, who meet the requirements of subsection B. or C., to provide counsel to the board with respect to the board's policies of investing and reinvesting of moneys in the retirement fund. Such contracts shall be entered into in the name of the board of administration for the police and fire department retirement plan.

• B. Any person or association who provides services to the board with regard to financial securities:

  1. Shall be a person or association whose principal business consists of investment counseling services; and

  2. Shall be registered as an investment adviser under such laws as may require such registration.

• C. With respect to real estate advisors, the board shall enter into contractual arrangements only with persons or associations whose principal officers are engaged in the business of advising and evaluating commercial, industrial or residential real estate investments, mortgage banking, or property management, and which are licensed as real estate brokers by the State of California.

(Ords. 21607, 25084, 25553.)

• A. There is hereby established as of July 1, 1995, the medical benefits account as a separate account within the retirement fund. The medical benefits account shall be maintained in compliance with Internal Revenue Code Section 401(h) and the regulations promulgated thereunder. Monies in the medical benefits account may be commingled with other monies in the retirement fund solely for the purposes of investment.

• B. All contributions made to the retirement fund to provide for the payment of benefits for sickness, accident, hospitalization, dental or medical expenses of persons receiving monthly allowances under the provisions of Part 14 and Part 15 of this plan, and all earnings and interest attributable to such contributions to the retirement fund, shall be placed in the medical benefits account. All contributions to the medical benefits account shall be reasonable and ascertainable. At the time the city makes a contribution to the medical benefits account, the city shall designate in writing that such contribution is solely for the medical benefits account.

• C. Contributions to provide for the payment of benefits for sickness, accident, hospitalization, dental or medical expenses of persons receiving monthly allowances under the provisions of Part 14 and Part 15 of this plan, and earnings and interest attributable to such contributions may be made to the medical benefits account or to the trusts established by Chapters 3.54 and 3.56.

• D. Contribution rates to fund the benefits for sickness, accident, hospitalization, dental or medical expenses for those members eligible for benefits under Part 14 and 15 of this plan shall be established by the board as determined by the board's actuary and shall be borne by the city and the eligible members of the plan as follows:

  1. Contributions for dental benefits shall be made by the city and the members in the ratio of three-to-one (3:1).

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2. Contributions for other benefits provided through the medical benefits account shall be made by the city and the members in the ratio of one-to-one (1:1).

• E. Except as otherwise provided in this Section 3.36.575, all funds in the medical benefits account shall be used only for the payment of benefits and expenses allowed under Internal Revenue Code Section 401(h) and the regulations promulgated thereunder. The medical benefits account shall be used to provide medical and dental benefits in accordance with Parts 14 and 15 of this chapter. Prior to the satisfaction of all liabilities under this plan to provide such benefits, no funds in the medical benefits account shall be used for, or diverted to, any other purpose.

er Internal Revenue Code Section 401(h) and the regulations promulgated thereunder. The medical benefits account shall be used to provide medical and dental benefits in accordance with Parts 14 and 15 of this chapter. Prior to the satisfaction of all liabilities under this plan to provide such benefits, no funds in the medical benefits account shall be used for, or diverted to, any other purpose.

• F. All benefits provided through the medical benefits account, plus any life insurance protection provided under the plan, shall be subordinate to the retirement and survivors' benefits provided by the plan. Accordingly, at all times after the date on which the medical benefits account is established, the aggregate of the city's contributions to the medical benefits account shall not exceed twenty-five percent of its total aggregate contributions to the plan (other than contributions to fund prior service). For the purpose of this limitation, city contributions include any contributions which are "picked-up" pursuant to Internal Revenue Code Section 414(h).

• G. Upon the satisfaction of all liabilities under this plan to provide the benefits described in this section, any amount remaining in the medical benefits account shall be paid to the city.

• H. In the event that a member's interest in the medical benefits account is forfeited prior to the termination of the plan, an amount equal to the forfeiture shall be applied as soon as practicable to reduce the city contributions, if any, to the medical benefits account.

• I. City and member contributions to the medical benefits account shall be made on the same periodic basis as city and member contribu-

tions are made to the retirement fund. City contributions and member contributions to the medical benefits account may be paid on different payment schedules, as may be determined by the board.

(Ords. 27768, 28332, 28886, 29065, 29879.)

• A. Members who would otherwise be eligible for coverage under Parts 14 and 15 of this plan shall be provided a one-time irrevocable election to instead be covered under Chapter 3.57, in accordance with the process described in Chapter 3.57. Coverage under Chapter 3.57 shall not become effective until IRS approval to transfer member contributions previously contributed under Part 14 and Part 15 to the funding vehicle established under Chapter 3.57 is obtained. On a date determined by the City after coverage under Chapter 3.57 becomes effective, such member's Chapter 3.57 account shall receive a credit for all prior contributions made by the member under Parts 14 and 15 of this plan and such member's contribution rate shall be determined under Chapter 3.57.

• B. Effective on the date determined by the city once the VEBA is established, contributions to fund the healthcare benefits for qualified members and qualified survivors who are eligible for benefits to be provided under the terms of Parts 14 and 15 of this plan who do not make the one-time irrevocable election described in Subsection 3.36.576.C will be eight percent of compensation as defined under Section 3.36.020.3 for members and such percentage of covered compensation for city contributions as determined by the actuary to be necessary to fund the amount of the annual required contribution each year; provided, however, that if the city's portion of the required contribution is determined to be eleven percent of covered compensation or greater for a year, the city may in its discretion choose to only contribute a maximum of eleven percent of covered compensation for such year.

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• C. The city manager shall have the discretion to terminate the existing tier 2 retiree medical benefits plan. In that event, tier 2 members shall not be provided benefits or make contributions under Parts 14 and 15 of this plan.

• D. Effective on the date determined by the city once the VEBA is established, tier 2 members shall be subject to the provisions of Chapter 3.57 of this plan with respect to healthcare benefits and tier 2 members shall contribute the amount specified under Chapter 3.57 and shall not be provided benefits under or make contributions under Parts 14 and 15 of this plan.

(Ords. 29879, 30044.)

Effective January 1, 2018, and each January 1 thereafter, the annual retirement benefit of each member who is not a Tier 2 member will be reviewed by the Board to determine if the member's retirement allowance (including any cost of living adjustments) is equal to at least seventy-five percent (75%) of the purchasing power of the member's retirement allowance calculated as of the member's retirement date, adjusted for inflation by reference to the most current consumer price index for all urban consumers (CPI-U), San Francisco-OaklandSan José metropolitan area. If the value of the member's retirement allowance falls below seventyfive percent (75%) of purchasing power, the member shall receive an annual lump sum payment of the difference between the member's current retirement allowance and the amount required to achieve seventy-five percent (75%) purchasing power as a separate line item on the pension check as of February 1, 2018, and each February 1 thereafter. (Ords. 29879, 30007.)

Part 5

SERVICE

Sections:

• 3.36.610 Service defined.

• 3.36.615 Purchase of service credit for federated city service.

• 3.36.620 Military leave of absence.

• 3.36.625 Compliance with USERRA and the HEART Act.

• 3.36.630 Credit for holidays, sick leave, vacation, or leave of absence.

• 3.36.640 Suspensions.

• 3.36.650 Exclusions - Part-time service.

• 3.36.660 Exclusions - Service performed on nonmonthly basis.

• 3.36.670 Exclusions - Absence without compensation.

• 3.36.680 Exclusions - Time on retirement.

• 3.36.690 Credit in two retirement systems.

• 3.36.700 Maximum annual credit.

• 3.36.710 Reentry into police or fire department after withdrawal or repayment of contributions - Option for prior service credit.

• 3.36.715 Special window period for repurchase of prior service credit.

• 3.36.717 Service credit for time on unpaid leave of absence.

• 3.36.720 Satisfaction of liability for reclassification as tier 1.

Unless the context otherwise requires, the definitions set forth in this Part 5 govern the construction of Chapter 3.36.

(Prior code § 2903.150.)

Except as may be otherwise expressly provided elsewhere in this chapter, "service" means and includes the following service of a member of this retirement system and none other:

• A. Service as officer or employee of police or fire department, rendered by member

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after becoming and while a member of this system. Service rendered by a member of this retirement system, where such service was rendered as an officer or employee of the police department or fire department of the city, for monthly compensation, and only while such officer or employee is receiving such compensation for such service from the city.

• B. Service as officer or employee of police or fire department, rendered prior to effective date of this system by a person who becomes a member pursuant to provisions of Sections 3.36.180, 3.36.210 or 3.36.260. Service rendered prior to the effective date of this retirement system by any person who becomes a member of this retirement system pursuant to the provisions of Sections 3.36.180, 3.36.210 or 3.36.260 where such service was rendered as an officer or employee of the police department or fire department of the city for monthly compensation, if and to the extent such person received credit for such service pursuant to the provisions of the police and fire department retirement plan established by Chapter 3.32 of this Code.

• C. Service as officer or employee of police or fire department rendered prior to the effective date of membership in this system by a person who becomes a member pursuant to the provisions of Sections 3.36.240 or 3.36.250. Service rendered prior to the effective date of his or her membership in this retirement system by any person who becomes a member of this retirement system pursuant to the provisions of Sections 3.36.240 or 3.36.250, where such service was rendered as an officer or employee of the police department or fire department of the city, for monthly compensation, if and to the extent that such person received credit for such service pursuant to

the provisions of the police and fire department retirement plan established by Chapter 3.32, if the following condition is satisfied:

1. On or before the ninetieth day immediately following the day he or she becomes a member of this retirement system, the member has filed with the retirement board a written election to have such service so credited to him or her and to pay into the retirement fund, at times and in the manner fixed by the board, the amount necessary to make the accumulated contributions standing to the credit of the member's individual account equal to the amount they would be had he or she been a member of or on active duty with the police department or fire department in the position or class of position in the police department or fire department to which he or she shall have been appointed, during the time between the effective date of this chapter and the date he or she became a member of this system.

• D. Certain service for which certain persons were previously entitled to credit under certain other city retirement plans.

1. Service rendered prior to the effective date of membership in this retirement system, by a person who becomes a member of this retirement system pursuant to the provisions of Sections 3.36.170 or 3.36.200, if all of the following conditions are satisfied:

   • a. Such service consisted of service rendered by said person to the city as an officer or employee of the city, in a position or positions not included in this system, without any break,

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gap or cessation in the rendering of such service from the time such service was rendered to the time the person rendering such service became a member of this system pursuant to Sections 3.36.170 or 3.36.200; and

• b. Such service was rendered for monthly compensation and only while the person was receiving such monthly compensation for such service; and

• c. The person was entitled to credit for such service, immediately prior to the time he or she became a member of this system, under and pursuant to the provisions of the San José Federated City Employees' Retirement System established by the provisions of Chapter 3.24 or Chapter 3.28 of this Code or the provisions of the police and fire department retirement plan established by Chapter 3.32 of this Code; and

• d. Except as provided in paragraph 2., paragraph 3., or paragraph 4. below, the member files with the retirement board, on or before the ninetieth day immediately following the day he or she becomes a member of this system, a written notice of election re: federated city service to have such service credited to him or her; and

• e. The member pays into the retirement fund, at the time or times and in the manner specified by the retirement board, an amount of money sufficient to make the accumulated contributions standing to the

credit of the member's individual account in this system equal to the amount such contributions would be if he or she had been a member of or on active duty with the police department or fire department in the position or class of position in the police department or fire department to which he or she was appointed and because of which appointment he or she became a member of this system pursuant to Sections 3.36.170 or 3.36.200, during the time he or she was rendering the previous service for which he or she seeks to get credit, and if the contributions payable by him or her to this system under such circumstances had been deducted from his or her compensation and paid into the retirement fund during all of such time; and

• f. The member ceases to be a member of, or have any membership rights under, any other retirement plan or system of the city, other than Social Security or the city's deferred compensation plan.

2. A person who became a member of this retirement system pursuant to Sections 3.36.170 or 3.36.200 prior to September 1, 1995, and who failed to elect to have the previous service in the federated city employees retirement system credited under this retirement system within the time specified in D.1.d. above, may elect to have the previous service credited under this retirement system if:

• a. The person satisfies the requirements of D.1.a., b., c., e., and f. above; and

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• b. The person files with the retirement board a written election for such service credit on or before August 15, 1996.

3. On or after July 1, 2006, a person who became a member of this retirement system pursuant to Section 3.36.170, and who does not meet the requirements of D.1. above, may elect to have the previous service credited under this retirement system if:

   • a. The person satisfies the requirements of D.1.a., b., c., and f. above; and

   • b. Prior to the person's retirement the person files with the retirement board a written election for such service credit; and

   • c. Prior to the person's retirement, the person pays into the retirement fund at such times and in such manner as specified by the retirement board:

i. An amount of money sufficient to make the accumulated contributions standing to the credit of the member's individual account in this system equal to the amount the accumulated contributions would be if he or she had been a member of this plan employed in the police department during the time he or she was rendering the prior city service for which he or she seeks service credit and if the contributions payable to this retirement system had been deducted from his or her compensation and paid

into the retirement fund during all of such time; plus

ii. An amount equal to the interest that would have been earned on the accumulated contributions, at the actual rate earned by the retirement plan, as of the date the member files the election for service credit had the contributions been deducted and paid into the retirement fund; plus

iii. Interest on the unpaid balance of all such moneys, at the actuarially assumed interest rate in effect on the date the member files the election, from the date the member files the election to redeposit to the date all such moneys are fully paid into the retirement fund.

4. On or after March 31, 2017, a person who became a member of this retirement system pursuant to Section 3.36.200 as applicable, and who does not meet the requirements of D.1. above, may elect to have the previous service credited under this retirement system if:

   • a. The person satisfies the requirements of D.1.a., b., c., and f. above; and

   • b. Prior to the person's retirement the person files with the retirement board a written election for such service credit; and

   • c. Prior to the person's retirement, the person pays into the

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retirement fund at such times and in such manner as specified by the retirement board:

• i. An amount of money sufficient to make the accumulated contributions standing to the credit of the member's individual account in this system equal to the amount the accumulated contributions would be if he or she had been a member of this plan employed in the fire department during the time he or she was rendering the prior city service for which he or she seeks service credit and if the contributions payable to this retirement system had been deducted from his or her compensation and paid into the retirement fund during all of such time; plus

• ii. An amount equal to the interest that would have been earned on the accumulated contributions, at the actual rate earned by the retirement plan, as of the date the member files the election for service credit had the contributions been deducted and paid into the retirement fund; plus

• iii. Interest on the unpaid balance of all such moneys, at the actuarially assumed interest rate in effect on the date the member files the election,

from the date the member files the election to redeposit to the date all such moneys are fully paid into the retirement fund.

• E. Service in department of communications. Service rendered prior to or during membership in this retirement system by a person who becomes a member of this system pursuant to the provisions of Section 3.36.260, where such service was or is rendered as an officer or employee of the department of communications, for monthly compensation and only while the holder of such position is receiving such compensation for such service from the city.

• F. Military leave of absence. Subject to the provisions of Sections 3.36.620 and 3.36.625, time on leave of absence from city employment, while engaged in the performance of military or naval duty for the United States of America in time of war that constitutes qualified military service as defined under Internal Revenue Code Section 414(u)(5).

  • Anything herein to the contrary notwithstanding, no person shall be entitled to or be given credit for any such time served prior to the effective date of this chapter if he or she shall have heretofore been given reasonable time to claim credit for such service and pay contributions therefor and has failed within such reasonable time to claim the same or pay contributions therefor.

• G. Leave of absence from position in police or fire department to perform other city services. Should a member, during membership in this retirement system and while holding any position in the police department or fire department for active service in which monthly compensation is paid,

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• receive, after the effective date of this chapter, a temporary leave of absence from active duty in such position in order to perform any other service for the city as an officer or employee of the city, for monthly compensation, time served with the city in such other service during said temporary leave of absence shall be considered as time served in the position from which he or she is on temporary leave of absence; provided that the member contributes while on such leave of absence, to the retirement fund for such time the same as if he or she were on active duty in his or her position in the police department or fire department.

• H. Leave of absence of member from position in communications department to perform other city service. Should any member, during membership in this retirement system and while holding a position in the department of communications for active service in which monthly compensation is paid, receive, after the effective date of this chapter, a temporary leave of absence from active duty in such position in order to perform any other service for the city as an officer or employee of the city, for monthly compensation, time served with the city in such other service during said temporary leave of absence shall be considered as time served in the position from which he or she is on temporary leave of absence; provided that the member contributes, while on such leave of absence, to the retirement fund for such time the same as if he or she were on active duty in his or her position in the department of communications.

• I. City service, after disability retirement, other than in position in police or fire department included within membership of this plan. A member who is retired for disability after the effective date of this

chapter, pursuant to the provisions of this chapter, and who after receiving such disability retirement is appointed to a full-time position in the city service, appointment to which would not otherwise entitle him or her to membership in this retirement system, in which a monthly compensation is paid, shall receive credit for such service which is so rendered during such disability, and shall make contributions into the retirement fund at the same rates established for other members.

• J. Eligible prior military service. Eligible prior military service purchased by a member in accordance with Part 18 of this chapter.

• K. Service for time on unpaid leave. Time on unpaid leave of absence purchased by a member in accordance with Section 3.36.717 of this chapter.

• Notwithstanding the foregoing, members who make service credit purchases under this Section 3.36.610, except service credit purchases related to military leaves of absence in accordance with Section 3.36.620, shall be responsible for paying the entire cost of such service credit purchases. In this case, the entire cost is an actuarially determined amount that includes any amounts that would otherwise result in an actuarial loss to the city.

• (Prior code § 2903.151; Ords. 23491, 25061, 26005, 26464, 28030, 29266, 29332, 29879.)

• A. Subject to the limitations set forth in this section, a person may purchase service credit in this plan for service described in Subsection D. of Section 3.36.610, that was previously credited under the federated city employees' retirement system.

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• B. In the event there is any dispute regarding a member's eligibility to purchase such service credit, the amount of eligible service credit, the contributions and interest to be paid for the purchase of service credit, or the amount of service to be credited to a member, the board shall determine the issue based on the relevant information presented to the board.

• C. In order to purchase such service credit, the member must file a written notice of election re: federated city service in accordance with Subsection D.1.d. of Section 3.36.610.

• D. Subject to any limits on annual contributions imposed by Section 415 of the Internal Revenue Code of 1986, as amended, a member who elects to purchase credit for prior federated city service may pay the contributions:

  1. In one lump sum within sixty days from and after the date the member files the written notice of election re: federated city service to purchase such service credit; or

  2. For elections made on or before January 31, 2011, in monthly or biweekly installments by pre- or post-tax payroll deductions, paid over a period of time not to exceed eight years; or

  3. For elections made on after February 1, 2011, in monthly or biweekly installments by post-tax payroll deductions, paid over a period of time not to exceed eight years; or

  4. In a combination of a lump sum and installments.

• E. Any member electing to pay contributions in installments or to make the lump sum payment by pre-tax payroll deduction, on or before January 31, 2011, shall execute a binding irrevocable payroll authorization form authorizing the payment of the required contributions by payroll deduction. The payroll authorization form shall be filed with the director of finance. Such election executed on or before January 31, 2011 for payroll deductions shall be irrevocable. During the time the irrevocable

election is in effect, no direct payments from the member to the retirement fund for the purchase of such service credit shall be made by the member or accepted by this plan.

• F. Any member electing to pay contributions in installments or to make the lump sum payment by payroll deduction on or after February 1, 2011 shall execute a payroll authorization form authorizing the payment of the required contributions by post-tax payroll deduction. The payroll authorization form shall be filed with the director of finance. Such election executed on or after February 1, 2011 shall be revocable. During the time the revocable election is in effect, the member may make additional direct payments to the retirement fund for the purchase of such service credit.

• G. All contributions under Subsections D.2. and E. shall be treated as pre-tax salary reductions pursuant to Internal Revenue Code Section 414(h)(2).

• H. If a member elects to purchase credit for prior federated city service and make the contributions specified in Subsection D. of Section 3.36.610, and subsequently does pay all such moneys as provided in this section, such member shall be credited under this plan for the prior federated city service.

• I. If a member elects to purchase credit for prior federated city service and make the contributions specified in Subsection D. of Section 3.36.610, but fails to complete the redeposit, then:

  1. If the failure to complete the redeposit is because of death of the member, while a member of this plan but prior to retirement, the member shall be credited with the amount of service which is determined by the board to be attributable to the amount of accumulated contributions paid as of the date of the member's death.

  2. If the failure to complete the redeposit is for any reason other than the death of the member prior to retirement, any con-

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tributions made pursuant to the election shall be credited to the member's accumulated normal contributions account but the member shall receive no credit for any prior federated city service.

(Ords. 26005, 28886, 29266, 29879.)

• A. Anything elsewhere in this Part 5 to the contrary notwithstanding, and subject to the provisions of Section 3.36.625, if in time of war or national emergency as proclaimed by the President or Congress, or when any of the armed forces of the United States are serving outside of the United States or their territories, pursuant to order or request of the United Nations, or while any national conscription act is in effect, a member of this retirement system leaves or has left his or her city office or position prior to the end of the war or the termination of the national emergency, or during the effective period of such order or request of the United Nations, or prior to the expiration of the national conscription act, to join the armed forces of the United States and does or did without unreasonable and unnecessary delay join the armed forces or, being a member of any reserve force or corps of any of the armed forces of the United States or of the militia of the State of California, is or was ordered to duty therewith by competent military authority and served or serves in compliance with such orders, then in that event, subject to the conditions and limitations hereinafter set forth, the term "service," as used in this Chapter 3.36, means and includes the period of time from the date he or she leaves or has left his or her city office or position for said purpose to the date he or she returns to and reenters upon the office or position theretofore left by him or her or any other city office or position, the holding of which entitles a city employee to become a member of this retirement system; provided and upon conditions set forth herein.

  1. Upon his return to and reentry upon the abovementioned city office or position,

or within ninety days from and after the effective date of this section, if said person returned and reentered prior to the effective date of this section, the city shall contribute to the retirement fund through December 21, 2013 an amount of money equal to the amount of all contributions which city and said person would have had to pay into said fund if said person had not been so absent. For the sole purpose of calculating said amount of money, the amount of monthly compensation which said person would have received from the city during said period of absence if he had not been absent as aforesaid shall be deemed to be the monthly compensation which said person was earning immediately prior to the commencement of his absence plus any increase in compensation which said person was earning immediately prior to the commencement of his absence plus any increase in compensation which he would have received during said time for such work under any applicable ordinances or resolutions. The city's contribution requirement for the amount of all contributions which city and said person would have had to pay into said fund if said person had not been so absent pursuant to this Subsection A. shall end on December 21, 2013.

ement of his absence plus any increase in compensation which he would have received during said time for such work under any applicable ordinances or resolutions. The city's contribution requirement for the amount of all contributions which city and said person would have had to pay into said fund if said person had not been so absent pursuant to this Subsection A. shall end on December 21, 2013.

2. No moneys contributed or paid by city pursuant to this Subsection A. shall be deemed to be contributions or accumulated contributions of said person, and in no event shall said employee ever be entitled to all or any part of them upon withdrawing his accumulated contributions.

3. A person who leaves or has left, in the abovementioned times and circumstances as provided in Subsection A., his city office or position for the above-mentioned purpose shall be deemed, for the

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purpose of this retirement system, to be on military leave of absence without compensation during the above-specified period of time, during which he is absent, which is to be included, as above prescribed, in the definition of such person's "service"; and such person's membership in this system, during such period of time, shall be deemed suspended as provided in Part 11 of this chapter, it being the intention that, anything hereinabove to the contrary notwithstanding, the suspension and other provisions of Part 11 shall still apply in the above situation.

4. Any abovementioned person in this Subsection A. who shall have made any contributions to the retirement system for any abovementioned periods of absence occurring in or after December 8, 1941 through December 21, 2013, shall be reimbursed from the retirement fund the amount of contributions so made by him for such periods of absence.

• B. Military service because of which member must make member contributions.

  1. Subject to the provisions of Section 3.36.625, effective December 22, 2013, a member on leave of absence with compensation to engage in qualified military service as defined under Internal Revenue Code section 414(u)(5) shall contribute to the system before retirement, at times and in the manner prescribed by the retirement board, amounts equal to the contributions which would have been payable by said member to the system on the basis of his or her compensation earnable at the commencement of the leave of absence if he or she had remained in city service. Because said member is required to contribute, "service" as used in this Chapter 3.36 shall be deemed to include such qualified military service and the member shall receive credit for the qual-

ified military service in the same manner as if he or she had not been absent but were still in city service.

2. Because the member is required to contribute as aforesaid, the city shall also contribute during the period the member is a member of this system and on leave of absence with compensation to engage in qualified military service.

3. For the purposes of this Subsection B., "leave of absence with compensation to engage in qualified military service" shall include any leave of absence to engage in qualified military service, during which the member receives compensation from the city pursuant to an action of the city council approving special or supplemental pay or benefits for persons on leave for military duty. A "leave of absence with compensation to engage in qualified military service" shall only include compensation paid from the city and shall not include compensation paid to member by the state or federal government.

• C. Military service because of which member may make member contributions.

  1. Subject to the provisions of Section 3.36.625, effective December 22, 2013, a member on leave of absence without compensation to engage in qualified military service as defined under Internal Revenue Code section 414(u)(5) may receive credit for all or any part of such service if the member contributes to the system, either during his or her absence on qualified military service or upon his or her return to city service, at times and in the manner prescribed by the retirement board, amounts equal to the contributions which would have been payable by said member to the system on the basis of his or her compensation earnable at the commencement of the leave of absence if he or she had remained in city service, provided, however, that payment of such

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member contributions is completed before retirement and during a period beginning with the date of the member's reemployment and whose duration is three times the period of such member's qualified military service, but not greater than five years, or such period as may be permitted under Internal Revenue Code Section 414(u). To the extent said member does so contribute, "service" as used in this Chapter 3.36 shall be deemed to include such qualified military service and the member shall receive credit for the qualified military service in the same manner as if he or she had not been absent but were still in city service. To the extent said member does not contribute as aforesaid, such qualified military service shall be credited to said member as "service" only for the purpose of determining said member's eligibility for benefits under this system and such qualified military service shall not be credited for the purpose of determining the amount of such benefits.

2. To the extent the member elects to contribute as aforesaid and does so contribute, the city shall also contribute because of such qualified military service to the same extent as it would have contributed if the member had not been on a leave of absence without compensation to engage in qualified military service.

3. For the purposes of Subsection C., "leave of absence without compensation to engage in qualified military service" means any leave of absence to engage in qualified military service where the member receives no compensation from the city.

• D. The provisions of this section shall apply to tier 2 members.

(Prior code § 2903.151a; Ords. 29266, 29332.)

• A. Effective December 12, 1994, notwithstanding any other provision of the retirement sys-

tem law, contributions, benefits and service credit with respect to qualified military service are governed by Section 414(u) of the Internal Revenue Code and the Uniformed Services Employment and Reemployment Rights Act of 1994.

• B. Effective with respect to deaths occurring on or after January 1, 2007, while a member is performing qualified military service (as defined in 38 U.S.C. 43), to the extent required by Section 401(a)(37) of the Internal Revenue Code, survivors of a member in the retirement plan, are entitled to any additional benefits that the retirement plan would provide if the member had resumed employment and then died (as a non-service connected death) that are contingent on the member's death while employed. In any event, a deceased member's period of qualified military service must be counted for vesting purposes, but such period of service shall not be counted for benefit accrual purposes.

• C. Beginning January 1, 2009, to the extent required Section 414(u)(12) of the Internal Revenue Code, an individual receiving a differential wage payment (as defined under Section 3401(h)(2) of the Internal Revenue Code) from an employer shall be treated as employed by that employer, and the differential wage payment shall be treated as compensation for purposes of applying the limits on annual additions under Section 415(c) of the Internal Revenue Code. This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner.

• (Ord. 28886.)

Except as otherwise provided in this chapter, in computing the service with which a member is entitled to be credited under this chapter, time during which the member is excused from working because of holidays, sick leave or disability leave during which be receives compensation under Sec-

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tion 3.12.010, vacation or leave of absence during which he continues to receive full monthly compensation, shall be included; provided, however, that the time during which a person is retired for service or disability shall not constitute service as said term is used in this chapter, and no person shall be entitled to credit with service for or during such time.

(Prior code § 2903.152.)

Time, occurring after the effective date of this chapter, during which a member is temporarily suspended from city service for misconduct, incompetency or failure to perform his duties under or observe the rules and regulations of the department or office in which he is employed, shall be credited to such member as service, provided and upon condition that such member, or his surviving spouse. child or children or estate, shall contribute and pay into the retirement fund, for such time, on or before the sixtieth day from and after the date he returns to duty, or the date he resigns or is discharged or dies if he does not return to duty, any and all contributions which he would have been required to pay into or contribute to the said fund during such time if he were not suspended but was still actively employed for full compensation in the position from which he was temporarily suspended, together with an additional amount equal to what the city would have contributed for and during such time, because of his service during such time, if he had not been suspended. If such member shall return to duty, the abovementioned contributions shall be deducted, with or without his consent, from his salary. In no event shall a member be credited with more than thirty days' service for any one suspension, nor more than forty-five days' service for all suspensions in any one year. Tier 2 members shall not be eligible to make the service credit purchases described in this section.

(Prior code § 2903.156; Ord. 29266.)

The word "service," as used in the chapter, does not and shall not be deemed to include any

service rendered on a part-time basis. An employee is serving on a part-time basis when he engages in his duties for less time than is required of employees serving on a full-time basis, even though he is subject to call at any or all times. (Prior code § 2903.153.)

The word "service," as used in this chapter, does not and shall not he deemed to include any service rendered or paid for on a per diem, per hour or any other basis other than a monthly basis, even though the person rendering such service may be subject to call at any or all times. (Prior code § 2903.154.)

Except as otherwise provided in Section 3.36.640, and except for disability leave of absences for which compensation is paid under Section 3.12.010, time during which a member is absent from city service without full monthly compensation, including, but not by way of limitation, leaves of absence without full monthly compensation and layoffs, shall not be allowed or credited to a member in computing service.

(Prior code § 2903.155.)

Except as may be otherwise expressly provided elsewhere in this chapter, time during which a person is on retirement for service or for disability shall not be allowed or credited to a member in computing service.

(Prior code § 2903.157.)

The word "service," as used in this chapter shall not include any service for which a member receives any credit under any other retirement system or plan supported wholly or in part by any funds of the City of San José. (Prior code § 2903.158.)

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Credit for more than twelve months of service shall not be allowed for service rendered in any calendar or fiscal year. (Prior code § 2903.159.)

• A. Except as provided in this Section 3.36.710 and in Sections 3.36.715 and 3.36.3030, no person who, for any reason whatsoever, has withdrawn or has been paid, or withdraws or is paid, his or her accumulated contributions in the retirement fund pursuant to the provisions of this chapter or of Chapter 3.32 of this Code, and who subsequently is reemployed in the police department or fire department of the city and becomes a member of this plan, shall be entitled to or be given credit for any service rendered by him or her prior to such reemployment, to which credit he or she might otherwise be entitled under the provisions of this chapter.

• B. Upon any person becoming a member of this plan because of reemployment in the police department or fire department of the city, the retirement board shall cause written notice to be personally delivered or mailed to such member, informing such member of his or her rights under this section. If such notice is personally delivered, the person delivering such notice shall forthwith file with the secretary of the retirement board a declaration attesting to the time and place of such delivery. If mailed, such notice shall be sent by certified mail, return receipt requested, to such member at the latest address as shown in the records of the human resources department of the city.

• C. Except as provided in Subsection I. below, if the member wishes to have such prior service credited to him or her, the member shall file a written notice of election to redeposit with the secretary to the retirement board within ninety

days from and after the date that written notice of rights under this section is personally delivered or deposited in the mail to the member, and no later. If the member does not file the notice of election to redeposit within such time, the member shall be deemed to have elected not to have such prior service credited to him or her.

• D. The member shall not be entitled to prior service credit unless the member redeposits and pays into the retirement fund:

  1. All of the accumulated contributions previously withdrawn by or returned to said member; plus

  2. Interest on the accumulated contributions at the rate of two percent per year from the date said contributions were withdrawn by or paid to said member to the date the member repays such contributions to the retirement fund.

• E. Subject to any limits on annual contributions imposed by Section 415 of the Internal Revenue Code, any member who elects to have prior service credited to him or her shall redeposit and pay into the retirement fund the moneys specified in Subsection D. or Subsection I.:

  1. In one lump sum within sixty days from and after the date the member files with the secretary of the retirement board the notice of election to redeposit; or

  2. For elections made on or before January 31, 2011, in monthly or biweekly installments, paid pre-tax over a period of time not to exceed eight years; or

3. For elections made on or after February 1, 2011, in monthly or biweekly installments, paid post-tax over a period of time not to exceed eight years; or

   4. A combination of a lump sum and installments.

• F. Any member electing to pay the contributions in installments or to make the lump sum payment by pre-tax payroll deduction on or before January 31, 2011 shall execute a binding

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irrevocable payroll authorization form authorizing the payment of the required contributions by payroll deduction. The payroll authorization form shall be filed with the director of finance.

The election to redeposit accumulated contributions in the retirement fund and the authorization to redeposit by payroll deductions shall be irrevocable. During the time the irrevocable election is in effect, no direct payments from the member to the retirement fund shall be made by the member or accepted by this plan.

• G. Any member electing to pay contributions in installments or to make the lump sum payment by payroll deduction on or after February 1, 2011 shall execute a payroll authorization form authorizing the payment of the required contributions by post-tax payroll deduction. The payroll authorization form shall be filed with the director of finance. Such election executed on or after February 1, 2011 shall be revocable. During the time the revocable election is in effect, the member may make additional direct payments to the retirement fund for the purchase of such service credit.

• H. All contributions under Subsections E.2. and F. shall be treated as pre-tax salary reductions pursuant to Internal Revenue Code Section 414(h)(2).

• I. On or after July 1, 2006, for a member who is employed in the police department, and on or after March 31, 2017 for a member who is employed in the fire department, wishes to have such prior service credited to him or her, and the member does not otherwise qualify under this Section 3.36.710, the member shall file a written notice of election to redeposit with the secretary to the retirement board and, prior to his or her retirement, shall redeposit and pay into the retirement fund:

  1. All of the accumulated contributions previously withdrawn by or returned to said member; plus

  2. An amount equal to the interest that would have been earned on the accumulated contributions, at the actual rate earned by the retirement plan, as of the date the member files the election to redeposit if the contributions had not been withdrawn by or returned to the member; plus

  3. Interest on the unpaid balance of all such moneys, at the actuarially assumed interest rate in effect on the date the member files the election, from the date the member files the election to redeposit to the date all such moneys are fully paid into the retirement fund.

• J. If a member elects to redeposit and pay the moneys specified in Subsection D. or Subsection I. above, and subsequently does redeposit all such moneys as provided in this section, such member shall be credited under this plan for all the service for which he or she lost credit upon the withdrawal or return of the accumulated contributions.

• K. If a member elects to redeposit and pay the moneys specified in Subsection D. or Subsection I. above, but fails to complete the redeposit, then:

  1. If the failure to complete the redeposit is because of death of the member, while a member of this plan but prior to retirement, the member shall be credited with the amount of service which is determined by the board to be attributable to the amount of accumulated contributions redeposited as of the date of the member's death.

  2. If the failure to complete the redeposit is for any reason other than the death of the member prior to retirement, any amounts redeposited pursuant to the election provided by this section shall be credited to the member's accumulated normal contributions account but the member shall receive no credit for any service lost because of the previous withdrawal or return of contributions.

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• L. Members who make a redeposit under this Section 3.36.710 shall be responsible for paying the entire cost of such service credit purchase. In this case, the entire cost is an actuarially determined amount that includes any amounts that would otherwise result in actuarial loss to the city.

(Prior code § 2903.160; Ords. 22017, 26005, 28030, 28886, 29266, 29879.)

• A. Notwithstanding the provisions of Subsections B. and C. of Section 3.36.710, any member who withdrew or was paid his or her accumulated contributions and was subsequently reemployed in the police department or fire department of this city and who failed to elect to have prior service credited to him or her, may make such election by filing with the secretary of the retirement board on or before August 30, 1985, and no later, a written statement declaring such election and by redepositing and repaying all accumulated contributions previously withdrawn by or paid to said member, together with interest thereon as provided in Subsection D. of Section 3.36.710, within the time and in the manner provided by the retirement board.

• B. If such member does not file such statement on or before August 30, 1985, or does not redeposit and repay said moneys within the time and in the manner provided by the retirement board, said member shall be deemed to have elected not to have prior service credited to him or her.

• C. To be eligible for the election provided in this Section 3.36.715, such member must be a member of this retirement plan on the date he or she files said written statement with the secretary of the retirement board. No prior service shall be credited to any person who, on the date said written statement is filed with the secretary, is not or was not a member of this

retirement plan because of retirement or because of termination or suspension of membership under the provisions of this Code. (Ords. 26005, 29266, 29879.)

• A. Subject to the conditions, limitations and requirements of this Section 3.36.717, on or after July 1, 2006, a member of this plan who is employed in the police department may purchase service credit in this plan for eligible time on unpaid leave of absence as provided in this Section 3.36.717.

• B. Subject to the conditions, limitations and requirements of this Section 3.36.717, on and after March 31, 2017, a member of this plan who is employed in the fire department may purchase service credit in this plan for eligible time on unpaid leave of absence as provided in this Section 3.36.717.

• C. For the purpose of this section, "eligible time on unpaid leave of absence" means time for which the member was on leave of absence from his or her employment in the police department, or, on or after March 31, 2017, the fire department, and for which the member received no compensation from the city, but does not include:

  1. Any time prior to the date the person first became a member of this plan;

  2. Time in military service that would otherwise be eligible for service credit under any other provision of this plan;

  3. Time for which the member receives any service credit in a reciprocal system (as described in Part 16 of this chapter); or

  4. Any time for which the person was absent from service because of suspension or other disciplinary action.

• D. In the event there is any dispute regarding a member's eligibility to purchase service credit for eligible time on unpaid leave of absence, the contributions required, or the amount of

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service to be credited to a member, the board shall determine the issue based on the relevant information presented to the board.

• E. If a member wishes to purchase service credit for time on unpaid leave of absence, the member shall file a written notice of election to purchase such service credit with the secretary to the retirement board and shall submit to the secretary an amount of money determined by the secretary to be the cost of the actuarial services necessary to determine the cost of the additional benefits to be purchased. In addition, prior to his or her retirement, the member shall pay into the retirement fund the full cost of any and all additional benefits that accrue to the member and the member's survivors as a result of the purchase of service credit for time on unpaid leave of absence, as follows:

  1. The cost of the additional benefits shall be actuarially determined as the difference between (a) the value of the benefits calculated including service credit for the time on unpaid leave of absence and (b) the value of the benefits calculated without service credit for the time on unpaid leave of absence.

  2. The cost of the additional benefits shall be determined using the most current interest rate and life expectancy tables used to value benefits in the most recent actuarial valuation.

  3. The cost of the additional benefits shall include any cost-of-living-adjustments provided under Chapter 3.44.

4. If the member elects the installment payment option described below, member shall also pay interest on the outstanding balance at the actuarially assumed interest earnings rate.

• F. Subject to any limits on annual contributions imposed by Section 415 of the Internal Revenue Code, any member who elects to purchase

service credit for unpaid leave of absence shall pay into the retirement fund the moneys specified in Subsection E:

1. In one lump sum within sixty days from and after the date the member files with the secretary of the retirement board the election to purchase service credit; or

2. On or before January 31, 2011, in monthly or biweekly installments, paid pre-tax over a period of time not to exceed eight years; or

3. On or after February 1, 2011, in monthly or biweekly installments, paid post-tax over a period of time not to exceed eight years; or

4. A combination of a lump sum and installments.

• G. Any member electing to pay the contributions required by this Section 3.36.717 in installments or to make the lump sum payment by pre-tax payroll deduction on or before January 31, 2011 shall execute a binding irrevocable payroll authorization form authorizing the payment of the required contributions by payroll deduction. The payroll authorization form shall be filed with the director of finance. The election to purchase service credit for time on unpaid leave of absence and the authorization to redeposit by payroll deductions shall be irrevocable. During the time the irrevocable election is in effect, no direct payments from the member to the retirement fund shall be made by the member or accepted by this plan.

• H. Any member electing to pay contributions in installments or to make the lump sum payment by payroll deduction on or after February 1, 2011 shall execute a payroll authorization form authorizing the payment of the required contributions by post-tax payroll deduction. The payroll authorization form shall be filed with the director of finance. Such election executed on or after February 1, 2011 shall be revocable. During the time the revoca-

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ble election is in effect, the member may make additional direct payments to the retirement fund for the purchase of such service credit.

• I. All contributions under Subsections F.2. and G. shall be treated as pre-tax salary reductions pursuant to Internal Revenue Code Section 414(h)(2).

• J. If a member elects to purchase service credit for unpaid leave of absence and pay the moneys specified in Subsection E. above, and subsequently does pay all such moneys as provided in this section, such member shall receive service credit under this plan for the time on unpaid leave of absence.

• K. If a member elects to purchase service credit for time on unpaid leave of absence and pay the moneys specified in Subsection E., but fails to complete the payment because of a separation from city service whether by reason of retirement or death or otherwise, then the member shall be credited with the amount of service that is determined by the board to be attributable to the amount of money paid as of the date of the member's separation from city service.

• L. Under no circumstances shall the service credit for time on unpaid leave of absence be included in the determination of service credit for qualification for medical benefits provided under Part 14 of this chapter or for the qualification for dental benefits provided under Part 15 of this chapter.

(Ords. 28030, 28886, 29266, 29879.)

• A. A Reclassified Tier 1 Member under Section 3.36.410.A.1 who separates from City service prior to paying the full amount of his or her Reclassified Tier 1 Member Obligation, as described in Section 3.36.410.A.1, is liable for and shall be required to pay any remaining balance within sixty (60) calendar days following the later of the date of his or her separation from City service or receipt of the final

remaining balance calculation of such member's Reclassified Tier 1 Member Obligation from the Board. Notwithstanding the preceding sentence, any Reclassified Tier 1 Member who does not satisfy his or her Reclassified Tier 1 Member Obligation shall only be entitled to the reduced plan benefit described in Subsection 3.36.720.E.

• B. The outstanding balance owing and payable by the Reclassified Tier 1 Member shall be determined by the Board's actuary. In the event there is any dispute regarding the payment obligation of such Reclassified Tier 1 Member or any other issue related to the liability associated with the reclassification of his or her Tier 2 service to Tier 1 service, the Board shall determine the issue based on the relevant information presented to the Board. Any decision made by the Board shall be final and binding.

• C. Subject to any limits on annual contributions imposed by Section 415 of the Internal Revenue Code of 1986, as amended, the Reclassified Tier 1 Member must satisfy the outstanding balance of his or her Reclassified Tier 1 Member Obligation under Section 3.36.410.A.1, as determined by the Board's actuary, through either a transfer or rollover from the employee's Internal Revenue Code Section 457(b) deferred compensation plan account or through a lump-sum after-tax payment.

• D. In order for a Reclassified Tier 1 Member to satisfy his or her outstanding Reclassified Tier 1 Member Obligation, the member must make the payment in the time and manner established by the Board; provided however, the entire outstanding liability must be paid on or before sixty (60) calendar days following the later of his or her date of separation from City service or receipt of the final remaining balance calculation of such member's Reclassified Tier 1 Member Obligation from the Board. Notwithstanding the preceding sentence, any Reclassified Tier 1 Member who does not sat-

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isfy his or her Reclassified Tier 1 Member Obligation shall only be entitled to the reduced plan benefit described in Subsection 3.36.720.E

• E. If a Reclassified Tier 1 Member fails to satisfy his or her Reclassified Tier 1 Member Obligation within sixty (60) calendar days from the later of his or her date of separation from City service or receipt of the final remaining balance calculation of such member's Reclassified Tier 1 Member Obligation from the Board, the Reclassified Tier 1 Member shall only receive a portion of the Tier 1 benefit provided under this Plan that is the actuarial equivalent (as determined in the sole discretion of the Boards in consultation with their actuaries) of the amount such Reclassified Tier 1 Member paid for under the applicable provisions of this Plan.

• (Ord. 30145, 30183.)