San Jose Municipal Code Part 1 General Provisions and Definitions

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. This plan shall be known as the "1975 Federated City Employees Retirement Plan," and includes all provisions of this Chapter 3.28.

B. Notwithstanding any provision of the code to the contrary, the elements of the retirement plan as set out in Chapters 3.16, 3.20, 3.24 and 3.28 are components of a single retirement system known as the Federated City Employees Retirement Plan.

C. Contributions made by the city and the members of the plan to the retirement fund described in Part 3 of this chapter shall be made for the purpose of distributing to such members or their beneficiaries the corpus and income of the fund in accordance with the terms of this plan.

D. The Federated City Employees 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.

E. Effective September 30, 2012, the Federated City Employees Retirement Plan has been amended to provide for different retirement benefits for individuals hired or rehired by the city on and after that date. Members subject to these new benefit provisions are referred to in this chapter as Tier 2 members.

F. Under the City Council's authority pursuant to Article XV, Section 1500 of the City Charter, the provisions of Article XV-A of the City Charter are hereby implemented into the San José Municipal Code. To the extent there is any conflict between Article XV-A of the City of San José's Charter and the provisions of the Federated City Employees' Retirement System, Article XV-A will supersede any conflicting provision in the Federated City Employees' Retirement System, except as provided in Section 3.28.350.B.

(Prior code § 2904.1000; Ords. 27838, 28885, 29120, 29174.)

The effective date of this Chapter 3.28 and of this retirement plan is and shall be the first day of July, 1975, and unless otherwise indicated, the words "effective date of this chapter" or "effective date of this system," as used in this chapter, shall be deemed to mean and refer to said first day of July, 1975.

(Prior code § 2904.1029; Ord. 29120.)

Unless the context otherwise requires, the definitions and general provisions set forth in this part govern the construction of this Chapter 3.28.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Actuarial equivalent" means a benefit of equal value when computed upon the basis of the mortality tables adopted and the regular interest rate fixed by the board.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"City" means the City of San José, a municipal corporation of the State of California.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Benefit" means any retirement or survivorship allowance, or the refund of any accumulated contributions, or any money or right to which any person or estate may become entitled under the provisions of this system.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Chapter 3.24 retirement system," "Chapter 3.24 system" and "Chapter 3.24 plan" each mean the San José Federated City Employees Retirement System set forth in Chapter 3.24 of Title 3 of the San José Municipal Code.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

A. "Compensation" means the remuneration paid in cash out of funds controlled by the City, plus the monetary value, as determined by the Board, for time during which the member is excused from work because of holidays, sick leave, vacation, or compensating time off.

B. "Compensation" shall include holiday in lieu pay.

C. "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.

D. "Compensation" shall not include the provision by the City of any medical or hospital service or care plan for its employees, any contribution by the City to meet the premium or charge for such plan, or any payment into any fund to provide any death, retirement or survivorship benefits for employees or their survivors, or to provide any health or welfare benefits for employees, value of living quarters, board, lodging, fuel, laundry, and other advantages provided by the City in payment for the member's services, or any payment by the City of the employee portion of any taxes imposed by federal law, or any payment made by the City to the federal or state government for any social security system or program. Compensation also shall not include any payments based on overtime pay; travel, uniform or expense allowances; insurance, medical, surgical or hospital benefits; workers' compensation benefits; retirement, death or survivorship benefits; per diem payments; or any other fringe benefits.

E. Notwithstanding any other provisions of Chapter 3.28, "Compensation" shall not include any non-pensionable compensation increase, which represents a wage increase, that is effective on or after July 1, 2018. 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 §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 26918, 29904, 30101.)

A. "Compensation earnable" by a member employed on a full-time basis means the average monthly (or biweekly, if compensation is paid on a biweekly basis by the city) compensation of a member, as determined by the board upon the basis of the average time put in by members in the same group or class of employment and at the same rate of pay.

B. "Compensation earnable" by a tier 2 member employed on a full-time basis means the average monthly (or biweekly, if compensation is paid on a biweekly basis by the city) base pay actually paid to such member and shall not include premium pay or any other additional compensation.

C. "Compensation earnable" by a member employed to render part-time service means the monthly (or biweekly, if compensation is paid biweekly) compensation actually paid to such member for such part-time service.

D. "Compensation earnable" by a tier 2 member employed to render part-time service means the monthly (or biweekly, if compensation is paid biweekly) base pay actually paid to such member for such part-time service and shall not include premium pay or any other additional compensation.

E. The computation for time during which a member is absent shall be based on the compensation earnable by the member at the beginning of the absence, and the computation for time prior to entering federated city service shall be based on the compensation earnable by the member in the position first held by him or her in such service.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 29120.)

"Continued service," as applied to prior service, means all prior service, regardless of interruptions; but, as to current service, it means employment in federated city service uninterrupted by a continuous absence of more than three years. The period for which a member receives credit for service under Section 3.28.630 while absent on military service shall be excluded in calculating such continuous absence.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Current service" means all city service rendered by a member on or after July 1, 1975, for which the member is entitled to credit under the provisions of this system.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Employee" means any person in the employ of the city, or who holds a city office, whose compensation, or at least that portion of that compensation which is provided by the city, is paid out of funds directly controlled by the city. The word "employee" shall be deemed to include the word "officer."

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Federated city service" means the service described and defined as such in Part 5 of this chapter.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

A. For a member who separated from City service prior to July 1, 2001, "final compensation" means the highest average annual compensation earnable by the member during any period of three (3) consecutive years of Federated City Service, including time prior to entering Federated City Service at the compensation earnable by the member in the position first held by him or her in such service as may be necessary to complete three (3) consecutive years.

B. For a member, other than a Tier 2 member, who separated from City service on or after July 1, 2001, "final compensation" means the highest average annual compensation earnable by the member during any period of twelve (12) consecutive months of Federated City Service, including time prior to entering Federated City Service at the compensation earnable by the member in the position first held by him or her in such service as may be necessary to complete twelve (12) consecutive months; provided, however, that such final compensation shall not exceed one hundred eight percent (108%) of the second-highest average annual compensation earnable by the member during any twelve (12) consecutive months, excluding all of the months used to determine the highest average annual compensation earnable; and provided further if the member has been subject to a mandatory reduction in paid working time, the calculation for compensation earnable shall include the compensation that would have been earnable had the member not been subject to a mandatory reduction in paid working time.

C. For Tier 2 members, "final compensation" means the average annual compensation earnable as defined for Tier 2 members in Section 3.28.030.06, by the member during the highest three (3) consecutive years of Federated City Service. "Final compensation" will consist only of base pay, excluding premium pay and any other additional compensation.

D. For the purposes of this Chapter, periods of service separated by breaks in service may be aggregated to constitute a period of three (3) consecutive years or twelve (12) consecutive months, as applicable, if the periods of service are consecutive except for such breaks. If a break in service did not exceed six (6) months in duration, time included in the break and compensation earnable during such time shall be included in computation of final compensation. If a break in service exceeded six (6) months in duration, the first six (6) months thereof and the compensation earnable during those six (6) months shall be included in computation of final compensation, but time included in the break which is in excess of six (6) months, and the compensation earnable during such excess time shall be excluded in computation of final compensation.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 26828, 28603, 29120, 29904.)

On and after July 1, 1975, the "fiscal year," for purposes of this chapter, is any year commencing on July 1st and ending on June 30th next following.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Funds directly controlled by the city" include funds deposited in and disbursed from the city treasury in payment of compensation regardless of their source.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Holiday in lieu pay" means remuneration paid by the city to a member, as a percentage of the member's compensation, in lieu of holiday benefits provided to other city employees.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Member" means a person who becomes a member of this system pursuant to the provisions of Part 4 of this chapter whose membership shall not have been terminated pursuant to provisions of this chapter. No other persons are members.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Member's accumulated contributions" means the sum of a member's accumulated normal contributions and the member's accumulated prior service contributions, made by the member and standing to the credit of the member's individual account.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Member's accumulated normal contributions" means the sum of all normal contributions made by a member and standing to the credit of the member's individual account, plus regular interest thereon.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Member's accumulated prior service contributions" means the sum of all prior service contributions made by a member and standing to the credit of the member's individual account, plus regular interest thereon.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Member's prior service contributions" means contributions made by a member on account of city service rendered prior to July 1, 1975.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Normal contributions" means contributions made by a member on account of current service at the normal rates of contribution fixed by the board.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Part-time service" means any service rendered by an employee of the city on a part-time basis. It also means and includes any service which is paid for on a part-time per diem, per hour or any basis other than annual, monthly or biweekly basis. "Part-time-employee" means any person employed by the city to render part-time service for the city.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Plan year" means July 1 to June 30.

(Ord. 28885.)

"Prior service" means all city service rendered by a member prior to July 1, 1975, for which the member is entitled to credit under the provisions of this system.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 28885.)

"Regular interest" means interest at the annual rate fixed by the board, compounded annually, plus such additional interest as the board may credit from year to year.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 28885.)

"Retirement board" or "board" means the board of administration referred to and specified in Section 3.28.100 of this chapter.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 28885.)

"Retirement fund" or "fund" means the retirement fund specified in Section 3.28.300 of this chapter.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 28885.)

"Retirement system," "Retirement plan," "this system" or "this plan" means the 1975 federated city employees' retirement plan created by the provisions of this Chapter 3.28.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 28885, 29120.)

A. "Tier 2 member" means any person who is hired, rehired or reinstated by the City on or after September 30, 2012 except for any person who is eligible and elects to participate in a defined contribution plan established under the San José Municipal Code.

B. Notwithstanding subsection 3.28.030.28.A., the following persons who do not elect to participate in a defined contribution plan established under the San José Municipal Code 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 September 30, 2012:

1. Any person who was a member of this Plan prior to September 30, 2012, and terminated employment with the City and did not take a return of contributions, and returned to employment with the City in a position covered by this Plan on or after September 30, 2012; or

2. Any person accepting employment on or after September 30, 2012 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 21, 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 a new member as defined by Government Code Section 7522.04(f) as may be amended, or are rehired or reinstated City employees without a work history prior to September 30, 2012; or

3. Any person who, prior to August 4, 2013, was a Police member of the Police and Fire Department Retirement Plan established under Chapter 3.24 or the 1961 Police and Fire Department Retirement Plan established under Chapter 3.36, and terminated employment with the City without a return of his or her contributions, and later returned to employment with the City in a position covered by this Plan on or after August 4, 2013; or

4. Any person who, prior to January 2, 2015, was a Fire Department member of the Police and Fire Department Retirement Plan established under Chapter 3.24 or the 1961 Police and Fire Department Retirement Plan established under Chapter 3.36, and terminated employment with the City without a return of his or her contributions, and later returned to employment with the City in a position covered by this Plan on or after January 2, 2015.

(Ords. 29120, 29174, 29904, 30145.)

"Independent medical panel" means the independent medical review panel or disability review panel appointed by the Retirement Board as specified in Section 3.28.150 of this Chapter.

(Ord. 29904.)

"Mandatory reduction in paid working time" shall mean any time period during which a member's paid working time is mandatorily reduced, as calculated on an annual basis, to less than two thousand eighty hours, but not less than one thousand seven hundred thirty nine hours, pursuant to an agreement with a recognized employee organization that represents the member.

(Ord. 28603.)

"New Employee" means, except as may be provided in Part 16 or Part 17 of this Plan, any employee initially hired on or after September 30, 2012.

(Ord. 29904.)

Whenever the context so requires, the masculine gender includes the feminine and the feminine includes the masculine.

(Prior code § 2904.1028.)

When the compensation of a member is a factor in any computation to be made under this chapter, there shall be excluded from such computation any compensation based on overtime put in by a member. For purposes of this chapter, overtime is the aggregate service performed by an employee in excess of the hours of work considered normal for employees on a full-time basis, and for which monetary compensation is paid.

(Prior code § 2904.1011.)

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 person as said address is shown on the records of the retirement board. A member may at any time file with said board a change of address.

(Prior code § 2904.1026.)

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, to the extent then funded, shall be nonforfeitable.

B. Upon the 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.

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

(Ords. 27838, 29174.)