TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Diego Chavez, Administrative Services Director
PREPARED BY: Michelle Tamez, Human Resources Analyst
SUBJECT:
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Amendment to CalPERS Contracts to include Public Employees’ Pension Reform Act (PEPRA) Language for the City of Murrieta and the Murrieta Fire District
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ABSTRACT
The proposed action would initiate the process of amending the City and Murrieta Fire District contracts with the California Public Employees’ Retirement System (CalPERS) to include Public Employees’ Pension Reform Act (PEPRA) language. The amendment ensures the CalPERS contracts reflect current statutory requirements related to pension benefits, retirement contributions, and compensation limitations applicable to public employees who are CalPERS members. The amendment is administrative in nature and intended to ensure consistency with applicable state law.
RECOMMENDATION
recommendation
Adopt Resolution No. 26-4937 entitled: A Resolution of Intention of the City Council of the City of Murrieta, California, to Approve An Amendment to Contract Between the Board of Administration of the California Public Employees’ Retirement System and the City Council of City of Murrieta;
Introduce and conduct the first reading of Ordinance No. 633-26 entitled: An Ordinance of the City Council of the City of Murrieta, California, Approving an Amendment to the Contract Between the City Council of the City of Murrieta and the Board of Administration of the California Public Employees’ Retirement System to Include Public Employees’ Pension Reform Act (PEPRA) Language;
Acting as Board of Directors for the Murrieta Fire Protection District, take the following actions:
Adopt Resolution No. MFD 26-227 entitled: A Resolution of Intention of the Board of Directors of the Murrieta Fire District to Approve An Amendment to Contract Between the Board of Administration Of The California Public Employees’ Retirement System and the Board of Directors of the Murrieta Fire District; and
Introduce and conduct the first reading of Ordinance No. 634-26 entitled: An Ordinance of the City Council of the City of Murrieta, California, Acting as the Murrieta Fire District Approving an Amendment to the Contract Between the Board of Directors of the Murrieta Fire District and the Board of Administration of the California Public Employees’ Retirement System to Include Public Employees’ Pension Reform Act (PEPRA) Language.
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PRIOR ACTION/VOTE
None.
STRATEGIC ALIGNMENT
This item aligns with the City Council goal of: maintaining a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency relating to an administrative priority. Amending the City’s contract with the California Public Employees’ Retirement System to incorporate Public Employees’ Pension Reform Act language ensures legal compliance, strengthening internal controls, and standardizing pension administration. Incorporating PEPRA provisions helps manage long-term pension liabilities, improves financial predictability, and reduces risk.
DISCUSSION
The Public Employees’ Pension Reform Act (PEPRA), which became effective in 2013, established pension reform measures for public employers participating in CalPERS to address unfunded public pension liabilities across the state. PEPRA implemented several provisions affecting retirement benefits, including a new pension formula for “new members” (2% at 62 for miscellaneous members and 2.7% at 57 for safety members), employee contribution requirements, and compensation limits used to calculate retirement benefits. As defined by PEPRA, “new members” include: i) those who are new hires who have joined CalPERS for the first time on or after January 1, 2013, and who have no prior membership in another California public retirement system and ii) those who joined CalPERS prior to January 1, 2013, but after this date are hired by a different CalPERS employer following a break in service of more than six months.
At the time of PEPRA’s implementation, no formal contract amendment was required for CalPERS contracting agencies because PEPRA’s requirements apply as a matter of State law. Since PEPRA was enacted, the City has implemented PEPRA requirements through its payroll and retirement reporting processes.
Recently, CalPERS has been reaching out to contracting agencies and requesting that they formally update their agreements to reflect PEPRA compliance. More detail on CalPERS’ reasoning for requesting contract updates is available here:
<https://www.calpers.ca.gov/employers/contracts/pension-contract-amendments-agency-updates>, under “Amend Your Contract to Include PEPRA Provisions”.
CalPERS is requesting that all agencies execute these formal amendments within the next year. The first step in this process is for the City Council to adopt Resolutions of Intent and conduct a first reading of the Ordinances amending the CalPERS contracts for the City (Attachments 1 and 2) and the Murrieta Fire District (Attachments 3 and 4). The Ordinances will return for second reading and adoption on July 7, 2026.
Incorporating PEPRA language into the CalPERS contracts will clarify that the contract is subject to state pension reform laws and ensures alignment with current statutory requirements. The proposed amendments do not change employee retirement benefits, City or employee CalPERS contribution rates, or pensionable compensation limits, as these will continue to be administered in accordance with applicable provisions of PEPRA and CalPERS regulations.
PUBLIC NOTICING
The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item).
CEQA AND REGULATORY OVERVIEW
This action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly.
FISCAL IMPACT
There is no direct fiscal impact associated with the proposed amendments. The amendments simply clarify that the CalPERS contracts are subject to applicable provisions of PEPRA and CalPERS regulations. Retirement benefits and contributions will continue to be administered in accordance with state law and existing City policies.
ATTACHMENTS
ATT 1 - Resolution No. 26-4937
ATT 2 - Ordinance No. 633-26
ATT 3 - Resolution No. MFD 26-227
ATT 4 - Ordinance No. 634-26