The City's method of payment of salary and the provision of fringe benefits to all employees of the City who are members of the Public Employees Retirement System (PERS) and the Police and Firemen's Disability and Pension Fund (PFDPF), are hereby modified as set forth below, in order to provide for a salary reduction pickup of employee contributions to the PERS and PFDPF, in accordance with Section 414(h)(2) of the Internal Revenue Code of 1986, as amended (hereinafter referred to as "the Code") and the rulings thereunder.
(a) The total annual salary and salary per pay period for each employee shall be the salary otherwise payable under the applicable contract of such employee and applicable City policies. Such total annual salary and salary per pay period of each employee shall be payable by the City in two parts: deferred salary and cash salary. An employee's deferred salary shall be equal to that percentage of said employee's total annual salary or salary per pay period which is required, from time to time, by the PERS or PFDPF on behalf of said employee as a pick-up and in lieu of the PERS or PFDPF employee contribution otherwise payable by said employee. An employee's cash salary shall be equal to said employee's total annual salary or salary per pay period less the amount of the pick-up for said employee, and shall be payable, subject to all applicable payroll deductions, to said employee. The City shall compute and remit its employer contributions to the PERS or PFDPF based upon each employee's total annual salary or salary per pay period, including the aforesaid pick-up. The City's total combined expenditures for its employees' total salaries otherwise payable under such employees' contracts and applicable City policies (including pickup amounts), and its employer contributions to the PERS or PFDPF, shall not be greater than the amounts the City would have paid for those items had this provision not been in effect.
(b) The pick-up shall be included in each employee's total annual salary for the purpose of computing daily rate of pay, for determining paid salary adjustments to be made due to absence or for any similar purpose.
(c) The pick-up by the City of each employee's contribution to the PERS or PFDPF shall be mandatory for each such employee. No such employee shall have the option of choosing to receive the contributed amounts directly instead of having them paid by the City to the PERS or PFDPF.
(d) The City specifically acknowledges that the contributions, although designated as employee contributions for purposes of the PERS or PFDPF, are to be paid by the City in lieu of contributions by its employees.
(e) The City shall pay to the PERS or PFDPF the contributions designated as employee contributions from the same source of funds as is used in paying the salaries of the employees.
(f) The City shall fulfill its income tax reporting and withholding responsibilities for each employee in such manner as is required by applicable Federal, State and local laws and regulations as they may exist at the time of such reporting and withholding, it being the City's understanding that Federal and State income tax laws and regulations presently require the City to report, as an employee's gross income, his or her total annual salary less the amount of the pick-up; that applicable portions of the Federal Social Security taxes continue to apply to picked-up amounts; and that municipal income tax laws may require the City to report, as an employee's gross income, his or her total annual salary, including the amount of the pick up.
(g) The Treasurer of the City is hereby authorized, empowered and directed to implement all procedures necessary in the administration of the pay of all employees affected by this section to effect the salary reduction pickup, as of the effective date of this section, of all of the statutorily required contributions to the PERS or PFDPF so as to enable employees to obtain the resulting Federal and State tax deferments and other attendant benefits.
(h) The Treasurer of the City is hereby authorized, empowered and directed to obtain the approval of the PERS and PFDPF regarding the City's implementation of the salary reduction pick-up plan and to implement all administrative procedures required by the PERS and PFDPF.
(i) The Law Director is hereby authorized, empowered and directed to seek the approval of the Internal Revenue Service with respect to the City's adoption of this salary reduction pick-up plan.
(j) The salary reduction pick-up plan as set forth in this section may be amended from time to time to satisfy any additional requirements which may arise as a result of any future amendments to Section 414(h)(2) of the Code or any future rulings thereunder.
(k) The portion of each employee's mandatory contributions to be picked up by the City, via salary reduction, pursuant to this section, may be changed from time to time by legislation adopted by Council.
(l) The effective date of the pick-up plan set forth in this section shall be January 1, 1994, or such later time as the necessary approvals are obtained.
(Ord. 1993-64. Passed 12-15-93.)