Superior Court Of California - Fresno County, California

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7772 N. Palm Ave.Fresno, CA 93711www.fcera.org(559) 457-0681 p.(559) 457-0318 f.DATE:September 5, 2018TO:Board of RetirementFROM:Donald C. Kendig, CPA, Retirement AdministratorStaff Contact: Doris L. Rentschler, CFP, Assistant Retirement AdministratorSUBJECT:Consideration of the proposed First Amendment to the Agreement betweenFCERA and Superior Court Fresno County Modifying the Court Annual LeavePlan – APPROVERecommended Action1. Approve the First Amendment to the Agreement between Fresno Superior Court andFCERA modifying the annual leave plan, creating a Time Off Bank and allowing up to notmore than one transfer into the bank per year.Alternative Action1. Approve the First Amendment to the Agreement between Fresno Superior Court andFCERA modifying the annual leave plan, creating a Time Off Bank allowing a one-timeoption to transfer into the bank.2. Take no action at this time and provide staff direction regarding the Board’s desiredcourse of action concerning the Court’s proposed amendments.Fiscal and Financial ImpactsThe proposed amendment to the agreement does not change the potential costs to the system.Tier 1 Court employees can already convert up to 1 year (2080 hrs.). The proposed amendmentdoes not change that and therefore has no financial impact to the system.Background and DiscussionThe Court wishes to modify their annual leave plan. The modifications would involve increasingthe number of leave hours a member may cash out at retirement/termination. The increase inthe number of hours cashed out has no impact on the retirement system. Cash out of annualleave at termination is not a pensionable event. The second part of the proposed modificationscreates a “Time Off Bank” (TOB). The TOB has no cash value at termination but member whoretires can convert up to 2080 leave hours (1 year of service) to retirement service credit. Theoption to convert to service credit is only available to Tier 1 members who already can convertannual leave to service credit at retirement. The current agreement with the Court and the2229414v1 / 19704.0001 Excellence Professionalism Teamwork Integrity Accountability “The County of Fresno is an Equal Employment Opportunity Employer.”Innovation

FCERA/Superior Court AmendmentPage 2clarification to that agreement, already provide Tier 1 members with the ability to convert up to2080 hours of annual leave to service credit at retirement. The conversion of annual leave toservice credit does not apply to any other membership class/tier. Therefore, this proposalcreates no new benefit and has no new or increased cost to the retirement plan.FCERA currently receives a file from the Court of each eligible member’s leave hours at the endof the fiscal year. FCERA provides this information to the actuary as part of the valuation dataand is already included in our projections. Since the valuation considers the impact of thepotential leave hours that could convert to service, and the maximum amount of service credit(1 year) is not changing, staff’s opinion is that the proposed modification does not constitute achange in benefits. Therefore, an actuarial study is not required.Lastly, the Board has a policy directing the actuary to review equity in employer contributionsduring the experience studies that are conducted every three years. Should a change such as thisor other actuarial experience change the recommended employer contributions rates, theActuary would bring it to the Board’s attention ensuring employer contribution rate equity.Please see the Courts Executive Summary, Proposed Amendment, and other reference materialfor more information.Attachments1. Executive Summary2. Proposed First Amendment (allows future transfers)3. Alternate First Amendment (allows a one-time transfer)4. FCERA – Superior Court Agreement5. FCERA – Superior Court Clarification of Agreement6. September 21, 2016 Employer Contribution Rate Equity Policy (for reference)2229414v1 / 19704.0001

Superior Court of CaliforniaCounty of FresnoAugust 23, 2018Board of Retirement,Fresno County Employees’ Retirement AssociationFCERA Office7772 N. Palm AvenueFresno, CA 93711Re: Proposed Addendum to AgreementDear Board of Retirement:The Court seeks to restructure its Annual Leave program. With the exception of the increase inthe number of hours eligible for cash out upon separation mentioned below, this restructuring willonly effect Court employees who are General Tier 1 FCERA members of which there are currently278.Part of the restructuring involves the creation of a Time Off Bank system similar to that created byFresno County in 2004. Like the County, the Court will have two separate leave banks, one witha cap and a cash value and the other with no cash value where the balance can be convertedto retirement service credit upon termination of employment. The restructuring will in no way alterthe number of hours that may be considered sick and may be used to extend service credit. The2080 cap previously agreed upon between the Court and FCERA will remain.The Court intends to implement the restructuring upon ratification of our new MOUs. The Court iscurrently in negotiations so the specific implementation date is not known at this time. The Courtwould like to conduct the initial conversion within 60 days of ratification. The Court would like tooffer future conversion opportunities of not more than one per year. Whether the Court allows aonetime conversion of hours or whether we allow potential future conversions; the restructuringwill not increase FCERA’s liability beyond the 2080 hours. At present each Tier 1 employee has theability to accrue up to 2080 hours that have no cash value but can be converted to retirementservice credit upon termination of employment. This cap will remain regardless of how manyconversion opportunities the Court allows.The restructuring will increase the number of hours eligible for cash out upon separation from 400to 600 for all Court employees. This increase does not have a direct impact on FCERA as theliability lies with the Court. It could potentially decrease FCERA’s liability as employees with lessthan 2680 total hours may opt to convert fewer hours to the Time Off Bank to ensure they have1130 O Street Fresno, California 93724

the maximum number of hours available to them for cash out.It is the Court’s position that the proposed restructuring as set out in the Addendum does notconstitute a benefit plan change that would require an actuarial study.It is the Court’sunderstanding that FCERA shares this position.Sincerely,Dawn AnninoManaging Research Attorney1130 O Street Fresno, California 93724

1FIRST ADDENDUM AMENDMENT TO AGREEMENT BETWEEN FCERA AND COURT2DATED 1/31/123THIS FIRST ADDENDUM AMENDMENT TO AGREEMENT BETWEEN FCERA AND4COURT DATED 1/32/12 (this “Amendment”) is made and entered into5this6COURT OF CALIFORNIA, COUNTY OF FRESNO, (hereinafter “COURTCourt”),7and FRESNO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION (hereinafter8“FCERA”).9R E C I T A L SThis ADDENDUM supplements and, when in conflict,supersedes the Agreement and previous writing as agreed to in11paragraphs 5 and 6 of the Agreement between FCERA and COURT.A.Formatted: Font: Not Boldday of September, 2018, by and between the SUPERIOR1012Formatted: Font: Not BoldWHEREAS, Court and FCERA entered into that certain13AGREEMENT DATED 1/31/12 (the “Agreement”) wherein Court and FCERA14set forth the terms and conditions under which, among various15other things, Court would report Court employee retirement16information to FCERA to allow for the proper of administration of17Court employees’ retirement accounts and FCERA would establish an18independent reporting system to receive and process Court employee19retirement information.Formatted: UnderlineFormatted: Centered, Indent: First line: 0"Formatted: UnderlineFormatted: UnderlineFormatted: UnderlineFormatted: UnderlineFormatted: UnderlineFormatted: Underline20B.WHEREAS, Court and FCERA clarified certain terms and21conditions of the Agreement by way of that certain WRITING AS22AGREED TO IN PARAGRAPHS 5 AND 6 OF THE AGREEMENT BETWEEN FCERA AND23COURT DATED 1/31/12 (the “Attachment to the Agreement”).24C.WHEREAS, Court and FCERA now desire to amend the25Agreement and the Attachment to the Agreement, subject to the26terms and conditions of this Amendment.27NOW THEREFORE, the parties agree as follows:28COUNTY OF FRESNOFresno, CA2229364v1 / 19704.0001Formatted: Underline

11.Definitions. Capitalized terms used but not defined in2this Amendment shall have the meaning given to them in the3Agreement and the Attachment to the Agreement.452.Formatted: UnderlineAmendment. The Agreement is hereby amended as follows:Formatted: Underline(a) “Annual Leave” Changed to “Personal Time Off”. AllFormatted: Indent: First line: 1"6references in the Agreement and Attachment to the Agreement to the7term “Annual Leave” are deleted and replaced with the term8“Personal Time Off” which is abbreviated as “PTO.”910(b) Amendment to Attachment to the Agreement, Page 1,11Lines 4-8. Page 1, Lines 4 through 8 of the Attachment to the12Agreement are deleted in their entirety and replaced with the13following:14All current Court employees are “General Tier 1”15FCERA Members or “General Tier 5” FCERA members. This16Addendum applies to current Certain Court employees hired on17or after 10/10/83 who are “General Tier 1” members of FCERA,18whose and their benefits and contributions are governed by19all laws applicable to “General Tier 1” members of FCERA and20the 2000 class action settlement agreement attached to the21Agreement as Exhibit A to the Agreement between FCERA and the22Court dated 1/31/2012 and to any future employee who is23deemed to qualify for reciprocity.Formatted: UnderlineFormatted: UnderlineFormatted: Font: ItalicFormatted: Indent: Left: 0.5", First line: 1"Formatted: Font: ItalicFormatted: Font: Italic, UnderlineFormatted: Font: Italic24252627(c)Amendment to Attachment to the Agreement Section7(b), Page 2, Lines 21-25. Section 7(b) of the Attachment to the28COUNTY OF FRESNOFresno, CA2229364v1 / 19704.0001Formatted: UnderlineFormatted: Underline

1Agreement, Page 2, Lines 21 through 25, are deleted in their2entirety and replaced with the following:3Currently Tier 1 Court employees hired on or after410/10/83 are eligible for pay-off of remaining Annual5PTOLeave6hours multiplied by the current hourly rate).7between 401 601 and 2480 2680 are considered sick leave and8may be used to extend service credit only. The Court is9restructuring its Annual Leave program.Excess hoursThe restructuringwill not modify the number of hours that may be used to11extend service credit.12Formatted: Indent: First line: 1"131.14the Agreement. The following shall be added as a new15subsection (c) to Section 7 of the Attachment to the16Agreement:(d)Addition of Section 7(c) to the Attachment to17The restructuring will have 5 components:192.Formatted: UnderlineFormatted: Font: Bold, UnderlineFormatted: UnderlineFormatted: No underlineAccrued time will be referred to as PersonalFormatted: Font: ItalicFormatted: Indent: Left: 0.5", First line: 1"Time Off (PTO) as opposed to accrued Annual Leave.213.All Court employees may accrue a maximum of22600 hours of PTO in their PTO Bank. In the event the PTO bank23Bank reaches accumulates 600 hours, the employee will stop24accruing PTO until such time as the PTO Bank is reduced so as25to accept new accrualsbelow 600 hours.2628Formatted: Indent: Left: 1", No bullets or numberingFormatted: Indent: First line: 1"1827Formatted: Indent: Left: 0.5", First line: 1"balance up to 400 600 hours at 100% (up to 400 6001020Formatted: Font: ItalicFormatted: Indent: Left: 0.5", First line: 1", No bullets ornumberingFormatted: Indent: First line: 1", No bullets or numbering4.(e)All Court employees hired on or after 10/10/83will be eligible for pay-off of their entire PTO bank balance atCOUNTY OF FRESNOFresno, CA2229364v1 / 19704.0001

1100% (up to 600 hours multiplied by the current hourly2rate).Addition of Section 7(d) to the Attachment to the Agreement.3The following shall be added as a new subsection (d) to Section 74of the Attachment to the Agreement:5General Tier I employees will have the option6of converting any accrued Annual LeavePTO hours to Time Off7Bank Hours (“TOB Hours”) and depositing them into a Time Off8Bank (a “TOB”). This option will be a one-time only9conversion and will be irrevocable upon execution.Hours will have no cash value, but may be used for vacation,11sick, or other leaves. Upon termination of Court employment,12up toa maximum of 2080 hours of TOB Hours are may be13considered sick leave and may be used to extend service14credit only.15any Annual Leave hours that remain will be designated as PTO16hours.17Bank.Formatted: Font: ItalicFormatted: Indent: Left: 0.5", First line: 1", No bullets ornumberingFormatted: Font: ItalicAfterPTO hours not deposited in the TOB willThese hours and will reside in the employee’s PTO.18Formatted: Indent: First line: 1", No bullets or numbering5.(f)Addition of Section 7(e) to the Attachment to20the Agreement. The following shall be added as a new subsection21(e) to Section 7 of the Attachment to the Agreement:22Formatted: Font: BoldTOB hours1019Formatted: Font: Bold6.If an employee does not opt to convert their Annual23LeavePTO hours and deposit them into the TOB, the Court will24automatically convert and deposit any Annual LeavePTO hours over25600 into the TOB.26PTO hours and will reside in the employee’s PTO Bank.2728COUNTY OF FRESNOFresno, CA2229364v1 / 19704.0001The 600 hours that remain will be designated asFormatted: Font: BoldFormatted: Font: BoldFormatted: Font: Italic

13.Effect of Amendment. Except as provided in this2Amendment, all of the terms and conditions of the Agreement and3Attachment to the Agreement shall remain in full force and effect.4In absolutely no circumstances shall the terms of this Amendment5be interpreted to increase the number of hours that may be used by6Court employees to extend service credit.74.Binding Effect. This Amendment shall bind and inure to8the benefit of all successors, assigns and heirs of the parties9and their officers and directors.105.Modification Must be in Writing. This Amendment may not11be amended or modified except by writing executed by duly12authorized representatives of the parties.136.Counterparts. This Amendment may be executed in14counterparts, each of which when so executed shall be deemed an15original, but all such counterparts together shall constitute but16one and the same instrument.177.Entire Agreement. By signing this document, each party18represents and agrees that: (i) this document represents the final19agreement between parties with respect to the subject matter20hereof; (ii) this document supersedes any commitment letter, term21sheet, exhibit, or other written outline of terms and conditions22relating to the subject matter hereof; (iii) there are no23unwritten oral agreements between the parties; and, (iv) this24document may not be contradicted by evidence of any prior,25contemporaneous, or subsequent oral agreements or understandings26of the parties.27288.Court and FCERA hereby agree that the Court mayimplement the above described restructuring.COUNTY OF FRESNOFresno, CA2229364v1 / 19704.0001Court and FCERAFormatted: UnderlineFormatted: UnderlineFormatted: UnderlineFormatted: UnderlineFormatted: UnderlineFormatted: Bullets and Numbering

1hereby agree that the restructuring does not constitute a benefit2plan change that would require an actuarial study.345IN WITNESS WHEREOF, the parties hereto have executed thisADDENDUM as of the day and year first hereinabove written.678COURT:Superior Court of California,County of FresnoFCERA:Board of Retirement,Fresno County Employees’Retirement AssociationBySheran L. MortonCourt Executive OfficerByNathan MagsigBoard Chair910111213141516171819202122232425262728COUNTY OF FRESNOFresno, CA2229364v1 / 19704.0001

1FIRST ADDENDUM AMENDMENT TO AGREEMENT BETWEEN FCERA AND COURT2DATED 1/31/123THIS FIRST AMENDMENT TO AGREEMENT BETWEEN FCERA AND COURT4DATED 1/32/12 (this “Amendment”)THIS ADDENDUM is made and entered5into this6SUPERIOR COURT OF CALIFORNIA, COUNTY OF FRESNO, (hereinafter7“COURTCourt”), and FRESNO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION8(hereinafter “FCERA”).9day of September, 2018, by and between theThis ADDENDUM supplements and, when in conflict, supersedes the10Agreement and previous writing as agreed to in paragraphs 5 and 611of the Agreement between FCERA and COURT.R E C I T A L S12A.WHEREAS, Court and FCERA entered into that certain13AGREEMENT DATED 1/31/12 (the “Agreement”) wherein Court and FCERA14set forth the terms and conditions under which, among various15other things, Court would report Court employee retirement16information to FCERA to allow for the proper of administration of17Court employees’ retirement accounts and FCERA would establish an18independent reporting system to receive and process Court employee19retirement information.20B.WHEREAS, Court and FCERA clarified certain terms and21conditions of the Agreement by way of that certain WRITING AS22AGREED TO IN PARAGRAPHS 5 AND 6 OF THE AGREEMENT BETWEEN FCERA AND23COURT DATED 1/31/12 (the “Attachment to the Agreement”).24C.WHEREAS, Court is restructuring its Annual Leave25program. The restructuring will not modify the number of hours26that may be used by Court employees to extend service credit.2728COUNTY OF FRESNOFresno, CA2229402v1 / 19704.0001Formatted: Font: Not BoldFormatted: Centered, Indent: First line: 0"

1D.WHEREAS, Court and FCERA now desire to amend the2Agreement and the Attachment to the Agreement, subject to the3terms and conditions of this Amendment.4NOW THEREFORE, the parties agree as follows:51.Definitions. Capitalized terms used but not defined in6this Amendment shall have the meaning given to them in the7Agreement and the Attachment to the Agreement.892.Amendment. The Agreement is hereby amended as follows:(a) “Annual Leave” Changed to “Personal Time Off”. All10references in the Agreement and Attachment to the Agreement to the11term “Annual Leave” are deleted and replaced with the term12“Personal Time Off” which is abbreviated as “PTO.”1314(b) Amendment to Attachment to the Agreement, Page 1,15Lines 4-8. Page 1, Lines 4 through 8 of the Attachment to the16Agreement are deleted in their entirety and replaced with the17following:Formatted: Indent: First line: 1"1819All current Court employees are “General Tier 1”20FCERA Members or “General Tier 5” FCERA members. Certain This21Addendum applies to current Court employees hired on or after2210/10/83 who are “General Tier 1” members of FCERA, whose and23their benefits and contributions are governed by all laws24applicable to “General Tier 1” members of FCERA and the 200025class action settlement agreement attached to the Agreement26as Exhibit A to the Agreement between FCERA and the Court27dated 1/31/2012 and to any future employee who is deemed to28qualify for reciprocity.COUNTY OF FRESNOFresno, CA2229402v1 / 19704.0001Formatted: Indent: Left: 0.5", First line: 1"Formatted: Underline

12Formatted: Indent: First line: 1"(c)Amendment to Attachment to the Agreement Section37(b), Page 2, Lines 21-25. Section 7(b) of the Attachment to the4Agreement, Page 2, Lines 21 through 25, are deleted in their5entirety and replaced with the following:6Currently Tier 1 Court employees hired on or after710/10/83 are eligible for pay-off of remaining Annual8LeavePTO balance up to 400 600 hours at 100% (up to 400 6009hours multiplied by the current hourly rate).between 401 601 and 2480 2680 are considered sick leave and11may be used to extend service credit only.The Court is restructuring its Annual Leave13program.14hours that may be used to extend service credit.The restructuring will not modify the number of151.16the Agreement. The following shall be added as a new17subsection (c) to Section

1130 O Street Fresno, California 93724 Superior Court of California County of Fresno August 23, 2018 Board of Retirement, Fresno County Employees’ Retirement Association FCERA Office 7772 N. Palm Avenue Fresno, CA 93711 Re: Proposed Addendum to Agreement Dear Board of Retirement: The Court seeks to restructure its Annual Leave program.

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