To: Board of Supervisors
From: Mendocino County Employees Retirement Association
Meeting Date: December 14, 2021
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Department Contact: |
Doris Rentschler |
Phone: |
707-463-4329 |
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Department Contact: |
Judy Zeller |
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707-463-4328 |
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Item Type: Regular Agenda |
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Time Allocated for Item: 10 Minutes |
Agenda Title:
title
Discussion and Possible Action Including Adoption of a Resolution Making Government Code Section 31641.56 Applicable from January 1, 2002 through December 31, 2009 and Government Code Section 31648.3 Applicable from January 1, 2005 through March 31, 2011 to Conform Mendocino County Employees Retirement Association (MCERA) Plan Documents to Plan Operations During Those Periods of Time, and Thereby, Subject to Internal Revenue Service Approval, Authorize Formally and Ratify Purchases of Service Credits Pursuant to Those Sections Previously Permitted by MCERA
(Sponsor: Mendocino County Employees Retirement Association)
End
Recommended Action/Motion:
recommendation
Adopt a resolution making Government Code section 31641.56 applicable from January 1, 2002 through December 31, 2009 and Government Code section 31648.3 applicable from January 1, 2005 through March 31, 2011 to conform Mendocino County Employees Retirement Association (MCERA) plan documents to plan operations during those periods of time, and thereby, subject to Internal Revenue Service approval, authorize formally and ratify purchases of service credits pursuant to those sections previously permitted by MCERA; and authorize Chair to sign same.
End
Previous Board/Board Committee Actions:
None.
Summary of Request:
Mendocino County Employees Retirement Association (MCERA) is recommending, subject to Internal Revenue Service (IRS) approval as described below, that the Board of Supervisors adopt Government Code section 31641.56 for the period January 1, 2002 through December 31, 2009 and section 31648.3 for the period January 1, 2005 to March 31, 2011 to conform the plan to past practice and permit only the service purchase agreements already fulfilled during those time periods.
There is no additional cost to the County associated with conforming MCERA’s plan document to past practice. As described in the accompanying Actuarial Study, the County’s retirement contribution rates have been calculated with the inclusion of the service credit already purchased under these sections for the impacted members.
Government Code section 31641.56 allows a MCERA member to purchase credit for prior County service in deferred status if adopted by the Board of Supervisors. MCERA has not been able to locate evidence that this section has been previously adopted by the Board of Supervisors, but between 2002 and 2009 MCERA permitted members returning to active status to purchase the service credit for time those members worked while in deferred status.
Government Code section 31648.3 allows an MCERA member to purchase service credit for the period of time that the member was on layoff if adopted by the Board of Supervisors. MCERA also has not been able to locate evidence that this section has been previously adopted by the Board of Supervisors, but between 2005 and March 2011 MCERA permitted members returning to active status to purchase service credit for the time the member was on layoff.
The correction of these service credit purchases is currently included within the Voluntary Compliance Plan that the IRS issued to MCERA, in connection with MCERA’s Historical Benefit Review Project. Numerous MCERA members impacted by the correction have requested, however, that MCERA approach the County more formally that it has it its prior research efforts to determine whether the County would be willing to conform the MCERA Plan Document to MCERA’s past practice with respect to these two topics, and only with respect to the limited period of time during which such purchases were permitted.
The cost of this practice is already included in the retirement contribution rates calculated as to the County, because the purchased service has been included in total service for actuarial valuation purposes. Therefore, there is no additional cost to the County by adoption of the resolution conforming the plan to past practice. In addition, the impacted members already paid for the referenced service credit, and those funds would need to be returned to such members, with interest, if the plan is not conformed to MCERA’s prior practice as described above.
Adoption of the resolution making Government Code sections 31641.56 and 31648.3 applicable will amend MCERA’s plan document, subject to the condition subsequent of IRS approval, so as to formally authorize, and thus ratify, the past practice and will only apply to those service purchase contracts already completed during the periods referenced; ongoing application of those sections is not being requested or considered.
It is at discretion of the IRS to accept conformance of the plan as an acceptable correction method for prior operation of the plan. If the IRS does not accept the action to conform the plan as an appropriate correction, in order to preserve MCERA's tax-qualified status, MCERA will be required to remove the purchased service credits and refund the contributions members paid with interest.
Alternative Action/Motion:
Do not to adopt the resolution presented which would result in the refunding of sixty-seven (67) member purchases with interest, and the recalculation of retired member benefits due to the reduction in service credit.
Does This Item Support the General Plan? No
Supervisorial District: All
vote requirement: Majority
Supplemental Information Available Online At: N/A
Fiscal Details:
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source of funding: N/A |
budgeted in current f/y: N/A |
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current f/y cost: None |
if no, please describe: |
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annual recurring cost: None |
revenue agreement: N/A |
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budget clarification: N/A |
Agreement/Resolution/Ordinance Approved by County Counsel: Yes
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CEO Liaison: Executive Office |
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CEO Review: Yes |
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CEO Comments:
FOR COB USE ONLY
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Executed By: Atlas Pearson, Deputy Clerk II |
Final Status:Adopted |
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Date: December 14, 2021 |
Executed Item Type: Resolution Number: 21-196 |
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