12. Resolution 5328 - Montana Public Employees Retirement System Policyof Kalispell
Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax (406)758-7758
TO: Mayor Pamela B. Kennedy and the
Kalispell City Council
FROM: Rich Hickel, Adjutant City Attorney
Terry Mitton, Human Resources Director
SUBJECT: Revised City Policy on Optional MPERS Membership
MEETING DATE: November 17, 2008
BACKGROUND: Membership in Montana Public Employees Retirement
System (MPERS) is mandatory for employees who work more than 960
hours annually in covered public employment. MPERS requires
members to contribute 6.9% of their gross pay into their state
retirement account and the employing agency must match this
contribution. For employees who work less than 960 hours in a
calendar year, membership in MPERS is optional. M.C.A. §19-3-
412(1)(b). This same statute provides that a member who "declined
optional membership but later becomes a member may purchase service
credit for the period of time beginning with the date of employment
in which membership was declined to the commencement of
membership." M.C.A. §19-3--412(6). It further provides that the
purchase "must comply with M.C.A. §19-3-505."
M.C.A. §19-3-505(2)(c) states that the employer may not
discriminate among employees who request retroactive purchase of
all or a portion of the service credit which accrued while
participation was optional. It has been the past city practice to
pay non -mandatory contributions for its employees. Under section
505, once the city has established a policy regarding retroactive
purchase, it is bound by that policy with respect to all current
employees. For future employees, this policy may be revised.
The Montana Public Employees Retirement Administration (MPERA)
has provided the attached "Employer Payment Policy" which describes
alternatives available to the city for non -mandatory contributions.
Basically, it allows the city to either keep or change its current
policy regarding city payments for past non -mandatory service
credit. As was stated, this policy change may be implemented only
with regard to FUTURE employees. All current employees are
"grandfathered" in under the current practice. A change in current
practice will be recognized and accepted by MPERA.
RECOMMENDATION: City Administration recommends approval of this
revision to the City payment policy with respect to optional MPERS
membership for future employees.
FISCAL EFFECTS: From a budget perspective, changing the current
policy to prospectively provide that the city will not pay the
employer's contributions due on previous service should result in a
long-term reduction in possible expenditures. The actual budgetary
impact of maintaining the current practice is not quantifiable
since by definition, non --mandatory participation is optional on the
part of the employee. Some may elect to participate, but many
others may not. Under the new policy, should a future employee
elect to purchase service credit for time employed with the city
while MPERA membership was optional, the City would not be required
to pay its matching contribution.
Respectfully submitted,
Rich Hickel, Ad City_Attorney
Myr Webb, City Manager
Terry Mi ton, HR Director
RESOLUTION NO.5328
A RESOLUTION TO REVISE THE POLICY OF THE CITY OF KALISPELL REGARDING
THE OPTIONAL MONTANA PUBLIC EMPLOYEES RETIREMENT SYSTEM (MPERS)
ELECTIONS.
WHEREAS, pursuant to Section 19-3-412 MCA, certain defined employees of the City of Kalispell
are not required, but may elect, to belong to and contribute to the Montana Public
Employees Retirement System (MPERS) which also calls for a matching contribution
from the employer (the City of Kalispell); and
WHEREAS, state law at Section 19-3-412(5) MCA further provides the election to those certain
defined employees who declined optional membership but who later become a member to
purchase service credit for the period of time beginning with the date of employment in
which membership was declined to the commencement of membership; and
WHEREAS, although the circumstances have been rare, it has been the past city practice to pay such
non -mandatory city matching contributions for those employees who make this election
of a retroactive purchase of all or a portion of the service credit accrued while the
participation was optional; and
WHEREAS, the Kalispell City Council finds that it is in the best interests of the City to make it a
policy to decline to make the matching contributions for those employees hired in the
future who elect to make a retroactive purchase of all or a portion of the service credit
accrued while their participation was optional for the reason that the existing practice of
agreeing to contribute the matching funds creates an indefinite unfunded liability for the
City that it is not able to accurately or reasonably anticipate.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL
AS FOLLOWS:
SECTION I. The City Manager is authorized to communicate with the Montana Public
Employees Retirement Administration and complete such documentation as may
be necessary to express the policy of the City of Kalispell that it declines to make
the matching contributions for those employees hired in the future who elect to
make a retroactive purchase of all or a portion of the service credit accrued while
their participation was optional.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE
CITY OF KALISPELL, THIS 17TH DAY OF NOVEMBER, 2008.
Pamela B. Kennedy
Mayor
ATTEST:
Theresa White
City Clerk