San Jose Municipal Code Part 7 City Contributions

Except as otherwise provided by other provisions of this Chapter 3.28, the city must make, after July 1, 1975, monthly (or biweekly if members contribute biweekly) current service contributions to this system. The current service contributions required of the city for each such period shall be a percentage of compensation earned, or of "compensation earnable" when so required by other provisions of this Chapter 3.28, by members in such period. Said percentage shall consist of the sum of two rates, the first being the one which is hereinafter referred to as "city's regular current service rate of contribution," and the second being the one which is hereinafter referred to as "city's current service deficiency rate of contribution."

(Prior code § 2904.1300.)

A. Except as provided in Section 3.28.200, the City's regular current service rate of contribution shall be such that the amount of contributions paid by the City under such rate for each month (or two (2) weeks, if members contribute biweekly) of current service for which the rate is imposed, as compared to the amount of normal contributions required of members for each such period of current service, shall be in the ratio of eight for the City to three for members (8:3).

B. For Tier 2 members, except as provided in Section 3.28.200.B, the City's regular current rate of contribution shall be such that the amount of contributions paid by the City under such rate for each month (or two (2) weeks, if members contribute biweekly) of current service for which the rate is imposed, as compared to the amount of normal contributions required of members for each such period of current service, shall be in the ratio of one for the City to one for the members (1:1).

C. There shall be no offset to normal cost contribution rates in the event Plan funding exceeds one hundred percent (100%). Both the City and employees shall always make the full annual required Plan contributions as calculated by the Retirement Board actuaries which will be in compliance with applicable laws and will ensure the qualified status under the Internal Revenue Code.

(Prior code § 2904.1301; Ords. 29120, 29904, 30017.)

A. Until amended, revised or changed by the retirement board in accordance with other provisions of this Chapter 3.28, the city's regular current service rate of contribution, on and after July 1, 1975, shall be twelve and seventy-seven hundredths percent of earned compensation, or of "compensation earnable" when so required by other provisions of this Chapter 3.28.

B. Notwithstanding any other provisions of this Chapter 3.28, the city's normal rate of contribution for tier 2 members on or after September 30, 2012, shall be that percentage of earned compensation, or of "compensation earnable," as defined for tier 2 member in Section 3.28.030.06, determined to be required in order to make the city's normal contributions half of the cost to provide pensions, allowances and other benefits which are or will become payable to tier 2 members on or after September 30, 2012, including any amount designed to recover from the city and the members the difference between the amount of normal contributions theretofore actually required to be paid by members and the city and any greater amount which, because of amendments hereafter made to this system or as a result of experience under this system, said members and the city should have theretofore been required to pay in order to make the city's normal contributions half of the abovementioned pensions, allowances and other benefits which are or will become payable to such tier 2 members on or after September 30, 2012.

C. The initial rate established by this section is based on interest and mortality tables and other actuarial data in possession of the city on the date of enactment of the applicable tier and is subject to change from time to time by the retirement board pursuant to other provisions of this Chapter 3.28.

(Prior code § 2904.1303; Ord. 29120.)

A. The City's current service deficiency rate of contribution shall be such as may hereafter be necessary to make up, over a period of thirty (30) years, any existing deficiency in the amounts of current service contributions theretofore contributed by members and by the City for the payment of the cost of all allowances and other benefits which are or will become payable to members on account of current service rendered before the effective date of the latest deficiency rate, such deficiency being that resulting from amendments hereafter made to this System or as a result of experience under this System. Until the amount accumulated in the retirement fund from contributions of members and the City on account of current service equals the present value of all amounts thereafter payable from the retirement fund on account of current service, the City shall make monthly (or biweekly, if members contribute biweekly) contributions, to make up any deficiency, at the current service deficiency rate established by the Retirement Board. Such rate shall be established and from time to time changed by the Retirement Board, whenever necessary, to accomplish the above-specified objective.

B. Notwithstanding the foregoing, with respect to Tier 2 members, the City and the Tier 2 members shall share equally in a current service deficiency rate of contribution that shall be such amount as may hereafter be necessary to make up, over the period currently used for amortizing deficiency rates, any existing deficiency under this Retirement System in the amounts of current service contributions theretofore contributed by members and by the City for the payment of the cost of all allowances and other benefits which are or will become payable to Tier 2 members on account of current service rendered before the effective date of the latest deficiency rate, such deficiency being that resulting from amendments hereafter made to this System or as a result of experience under this System. Until the amount accumulated in the retirement fund from contributions of members and the City on account of current service equals the present value of all amounts thereafter payable from the retirement fund on account of current service, the City and Tier 2 members shall make monthly (or biweekly, if members contribute biweekly) contributions, to make up any deficiency, at the current service deficiency rate established by the Retirement Board. Such rate shall be established and from time to time changed by the Retirement Board, whenever necessary, to accomplish the above-specified objective of sharing equally among the City and the Tier 2 members in such costs. Notwithstanding the foregoing, the following shall apply to the manner of sharing contributions between the City and members who became Tier 2 members prior to June 16, 2017 but on and after June 16, 2017 are no longer considered Tier 2 members as defined under Section 3.28.030.28 but remain members of the Plan and those members who are Tier 2 members effective on and after June 16, 2017:

1. The costs, including any unfunded actuarial accrued liability, associated with implementing changes to benefits for Tier 2 employees effective as of June 16, 2017 for members who were Tier 2 members prior to June 16, 2017, including the cost associated with returning prior members of this Plan who had become Tier 2 members back to the benefit provisions applicable to non-Tier 2 members, will be amortized as a separate liability over twenty (20) 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 the former Tier 2 members who will return to non-Tier 2 status and equally among those Tier 2 members whose Tier 2 benefits will be increased as of June 16, 2017. Such increased rates shall not be subject to the incremental increases in amounts associated with unfunded actuarial accrued liability described in Section 3.28.860.C.2.

2. Other than as provided in Section 3.28.860.C.1., 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 member in such year.

C. Except as provided in subsection 3.28.860.C., in determining the amount of contributions to be made to the Plan as provided in this Section 3.28.880, any excess of assets over the actuarial accrued liability shall not be used to reduce the contributions to the Plan.

(Prior code § 2904.1302; Ords. 29120, 29904.)

Except as may be otherwise provided elsewhere in this Chapter 3.28, the city must make monthly (or biweekly, if members contribute biweekly) prior service contributions to this system. The prior service contribution for each such period shall be a percentage of compensation earned, or of "compensation earnable" when so required by other provisions of this Chapter 3.28, in such period. Said percentage is hereinafter referred to as "city's prior service rate of contribution."

(Prior code § 2904.1304.)

The city's prior service rate of contribution shall be such that, based on interest and mortality tables and other relevant actuarial data, the sum of the total amount of city's prior service contributions which will be required of the city under the provisions of this Chapter 3.28, plus the total amount of prior service contributions which will be required of members under the provisions of this chapter, plus the total amount of all prior service contributions made by the city pursuant to the provisions of the Chapter 3.24 retirement system, will be sufficient to pay, when due, all pensions, allowances and other benefits which are or will become payable under this system on account of prior service rendered prior to July 1, 1975.

(Prior code § 2904.1305.)

A. Until amended, revised or changed by the retirement board in accordance with other provisions of this Chapter 3.28, the city's prior service rate of contribution, on and after July 1, 1975, shall be three and sixty-nine hundredths percent of earned compensation, or of "compensation earnable" when so required by other provisions of this chapter; or as applicable to tier 2 members, the percentage required to provide half of the cost of any prior service.

B. The initial rate established by this section is based on interest and mortality tables and other relevant actuarial data in the possession of the city on the date of enactment of this section and is subject to change from time to time by the retirement board pursuant to other provisions of this chapter.

(Prior code § 2904.1306; Ord. 29120.)

If a member who becomes such after July 1, 1975, becomes entitled to receive credit, pursuant to Section 3.28.650, for service formerly credited to him under a city police and fire department retirement plan specified in said Section 3.28.650, the city shall contribute to the retirement fund an amount equal to the sum of:

A. An amount which, when added to the amount of accumulated contributions of the member which are transferred from the police and fire department plan into the retirement system pursuant to said Section 3.28.650, will equal the amount of contributions which said member would have been required to pay under the Chapter 3.24 retirement system for service rendered prior to July 1, 1975, and under this system for service rendered on or after July 1, 1975, had he been a member of said systems from the date he became a member of the police and fire department retirement plan to the date he becomes a member of this system;

B. An amount which, when added to the amount of city contributions which are transferred from the police and fire department retirement plan into this system pursuant to said Section 3.28.650, will be equal to the contributions which the city would have been required to pay under the Chapter 3.24 retirement system for service rendered prior to July 1, 1975, and under this system for service rendered on or after July 1, 1975, had he been a member of said systems, in lieu of being a member of the police and fire department plan, from the date he became a member of the police and fire department retirement plan to the date he becomes a member of this system.

C. To the extent this section is applicable to tier 2 members, all provisions relating to the equal sharing of costs under this retirement system shall be applicable in determining any city and tier 2 member contributions required.

(Prior code § 2904.1307; Ord. 29120.)

A. The city shall bear and pay for all additional costs incurred by this retirement system because of the benefits provided by the provisions of Section 3.28.1110.A.3. or Section 3.28.1570.C. to any city officers or employees which would not have been provided absent the adoption of said sections.

B. The city shall bear and pay for all additional costs incurred by this retirement system because of the medical insurance benefits provided to any person described in Subsections B. or C. of Section 3.28.1950 which would not have been provided absent the adoption of said sections.

C. The city shall bear and pay for the period of time and under the terms and conditions set forth by the city council, an amount equal to the additional costs incurred by this retirement system for that portion of the unfunded liability as determined by the actuary for the retirement system that the city and new employees hired on or after September 27, 2013, would have otherwise paid as contributions had those employees been eligible for the retiree healthcare defined benefits provided under Part 16. Nothing herein shall be construed to mean that any contributions paid by the city are to be treated as city contributions for any purpose other than the sole and limited purpose specified herein. Subject to applicable laws relating to meet and confer requirements, the city shall retain the authority periodically to increase, reduce or eliminate the contribution paid by the city as authorized by this section.

(Ords. 22314, 23485, 24347, 29283, 29283.)

If the federated city service of a member is discontinued by reason of resignation or discharge, or by reason of layoff or leave of absence deemed by the board to have resulted in permanent discontinuance (and in the latter case, as of the date of determination by the board that the discontinuance is permanent), or if the disability retirement of a member is followed by cessation of the disability and by cancellation of the disability allowance but such member does not return to federated city service, and such member withdraws all or part of his accumulated normal contributions and interest thereon, and/or all or part of his prior service contributions and interest thereon, then in such event the city shall not receive a refund of its contributions made for such member nor receive a credit for such contributions against other contributions required to be made by the city.

(Prior code § 2904.1308; Ord. 20276.)

A. Such monthly or biweekly contributions as are required of the city by the provisions of this Part 7 shall be paid by the city within ten (10) days from and after the end of the month or two-week period for which they are made.

B. In lieu of making the monthly or biweekly contributions specified in this Part 7 for the pay periods commencing with the third pay period in fiscal year 2008-09, the city shall have the option to make, on or before August 1, 2008, an advance lump sum payment of the city's contributions to the medical benefits account and the retirement fund. The amount of such advance lump sum payment for fiscal year 2008-09 shall be as determined by the board to be actuarially equivalent to the monthly or biweekly payments that would otherwise have been the city's required contributions to the medical benefits account and the retirement fund for the pay periods commencing with the third pay period in fiscal year 2008-09.

C. Commencing with fiscal year 2009-10, the city shall have an annual option to select the periodic basis on which city contributions to the medical benefits account and to the retirement fund for that fiscal year will be paid; provided that such payment schedule shall be no less frequent than quarterly. Except as may otherwise be agreed to by the board, the notice of intent to exercise the option, including the periodic basis selected and the payment date(s) (the "notice of intent"), shall be provided by the city manager to the board on or before April 30th of the fiscal year prior to the fiscal year in which city may wish to exercise the option. The amount of the periodic payment(s) contained in city's notice of intent shall be as determined by the board to be actuarially equivalent to the monthly or biweekly payment that would otherwise have been required.

D. In the event that written notice of intent to exercise the option to select an alternative periodic payment schedule, has not been given by the city manager to the board on or before April 30th, or such other date as may be approved by the board, of each fiscal year, or if subsequent to the giving of such notice and prior to the commencement of the fiscal year, city elects not to exercise the option to select an alternative periodic payment schedule, city's payment of the city's contributions to the medical benefits account and to the retirement fund shall be made monthly or biweekly as otherwise specified in this Part 7.

E. Such alternative periodic payments as are made by the city pursuant to the provisions of this Part 7 shall be paid by the city within ten (10) days of the payment date(s) specified in city's notice of intent.

F. No later than the end of the second pay period in the fiscal year immediately following a fiscal year in which city has made a lump sum payment as specified in paragraph B. and C., city shall provide to the board a statement showing the actual amount of the city's payroll for members of the system for the prior fiscal year. The board shall then determine whether the lump sum advance payment(s) and the payment(s) that would otherwise have been required in the absence of the lump sum advance payment(s) are actuarially equivalent. The city shall pay any underpayment by the earlier of ten (10) days following receipt of the board's notice of determination or city's next contribution due date. The city shall receive credit for any overpayment in the form of an offset against the next payment(s) due by the city.

G. In the event that a city elected lump sum payment is made later than the payment date specified in the city's notice of intent, city's contribution to the medical benefits account and to the retirement fund will be recalculated by the board's actuary, at the city's expense, to reflect the timing difference. The city will pay the difference within ten (10) days of the date that the board's notice of the amount due is received.

H. Any late payment to be made later than ten (10) days after the payment date specified in the city's notice of intent is subject to approval by the board.

(Prior code § 2904.1310; Ord. 28332.)

A. All administrative costs of this system, as determined and approved by the board, including staff salaries and indirect labor costs, shall be borne by and paid from the retirement fund. The payment of costs of staff salaries and indirect labor from the retirement fund shall be subject to such limitations on said costs as may be agreed upon by the city and the employee organizations representing members of this system and set forth in the appropriate memoranda of agreement. Costs for staff salaries and indirect labor in excess of said limitations, if any, shall be paid by the city.

B. All administrative costs related to tier 2 of the system, as determined and approved by the board, shall be reflected in contribution rates as shared equally by the tier 2 members and the city.

(Prior code § 2904.1309; Ords. 20066, 20848, 21165, 21242, 22263, 23433, 29120.)

Notwithstanding any other provision of this Part 7, the city shall be entitled to an offset of a percentage, as is determined appropriate by the actuary for the federated city employees retirement system, of the additional employee retirement contributions that are made under Section 3.28.755 against the retirement contributions that the city would otherwise be required to make under this Part 7.

(Ord. 28752.)

Except as provided in Section 3.28.860.C, the City shall make annual contributions to the Plan. The annual contribution shall equal the City's portion of the full normal cost for such year plus the City's portion of the unfunded actuarial accrued liability rate for the year (which shall be the full amount with respect to members who are not Tier 2 members and one-half (½) of the unfunded actuarial accrued liability rate related to Tier 2 members) as determined by the Board. The amount of the City's annual contribution shall in no event be less than the City's full portion of the annual normal cost as described in this Section 3.38.960 and determined by the Board and the Plan's actuary.

(Ord. 29904.)