HomeMy WebLinkAboutOrdinance 25225-12-2021 ORDINANCE NO. 25225-12-2021
AN ORDINANCE REVISING ARTICLE I OF CHAPTER 2.5
"EMPLOYEES' RETIREMENT FUND," OF THE CODE OF THE CITY
OF FORT WORTH (2015), AS AMENDED, TO ADDRESS COUNCIL
AIDE POSITIONS BECOMING MEMBERS OF THE RETIREMENT
PLAN AND TO PROVIDE A ONE-TIME, IRREVOCABLE ELECTION
ALLOWING THOSE CURRENTLY SERVING NOT TO BECOME
MEMBERS OF THE PLAN SO LONG AS CERTAIN IDENTIFIED
CONDITIONS ARE MET; PROVIDING THAT THIS ORDINANCE IS
CUMULATIVE; PROVIDING A SEVERABILITY CLAUSE; AND
PROVIDING AN EFFECTIVE DATE.
WHEREAS, Article 6243i of the Texas Revised Civil Statutes ("Article 6243i") applies to
the Employees' Retirement Fund of the City of Fort Worth ("the Fund"); and
WHEREAS, Section 1.02 of Article 6243i defines "Participating member" of the Fund as
an individual "who makes contributions to the public retirement system as an employee of a
municipality to which [Article 6243i] applies," with such contributions being made on a pre-tax
basis; and
WHEREAS, Section 2.01(a) of Article 6243i provides that a person "becomes a
participating member . . . on the date of the person's employment" unless "otherwise provided by
administrative rule, municipal ordinance, or this section"; and
WHEREAS, Section 2.01(b) of Article 6243i identifies classes of individuals who are not
eligible to be participating members; and
WHEREAS, because participating members can receive retirement benefits via the Fund,
the City does not participate in the Social Security program under the Federal Insurance
Contributions Act ("FICA"), does not withhold Social Security contributions from individuals'
paychecks, and does not make employer contributions for Social Security benefits; and
WHEREAS, the individuals who assist members of the City Council as council aides or
district directors historically worked on a less than full time basis; were traditionally hired,
disciplined, and fired directly by the Councilmember; and have not been regular City employees or
participating members of the Fund; and
WHEREAS, council aides/district directors are not rendered ineligible to be participating
members under Section 2.01(b) of Article 6243i; and
WHEREAS, council aides/district directors and those individuals who are ineligible under
Section 2.01 have been required to participate in the City's FICA-alternative plan, which involves
Ordinance No.25225-12-2021
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withholding, on a pre-tax basis, a percent of the compensation of each individual not participating
in the Fund and placing that amount in a fund from which the individual will receive payment in
retirement; and
WHEREAS, in recent years the role of council aide/district director has evolved, with
many individuals serving on a full-time basis; and
WHEREAS,the Fort Worth City Council wishes to revise the City's retirement ordinance so
that council aides/district directors who are hired in the future automatically become participating
members of the Fund on beginning their employment with the City and so that those currently serving
as council aides/district directors can join the Fund; and
WHEREAS, some individuals currently serving in the aide/director role have expressed
concerns with being required to join the Fund; and
WHEREAS,the Fort Worth City Council wishes to allow individuals serving in the role of
council aide/district director at the time the change goes into effect a one-time option of becoming
participating members of the Fund or of remaining outside the Fund; and
WHEREAS, to comply with the regulations and guidance of the Internal Revenue Service
("IRS"), elections between alternative pre-tax retirement contributions must result in the same
amount being withheld from the individual's paycheck regardless of which option is selected; and
WHEREAS, to comply with IRS requirements, the FICA-alternative contributions for
council aides/district directors are being adjusted to align with participating members'
contributions to the Fund and going forward the FICA-alternative contributions will track Fund
contributions as they go up and down under the terms of automatic risk sharing adjustments and
any contribution-rate changes the City Council might approve in the future; and
WHEREAS, per Section 2-27 of the City Code, council aides/district directors serve
within a division of the City Manager's Office; and
WHEREAS, any council aide/district director who elects to become a participating
member of the Fund would, under Section 2.5-5(b)(3) of the City Code, be a member of group C
and entitled to cast votes for and be nominated and/or elected to Place 3 of the board of trustees of
the Fund; and
WHEREAS, any council aide/district director who elects not to become a participating
member of the Fund would be required to continue participation in the City's FICA-alternative
plan and to make contributions to that plan mirroring the contribution that would be made to the
Fund.
Ordinance No.25225-12-2021
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NOW THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF FORT WORTH, TEXAS:
SECTION 1.
That Section 2.5-2, "Membership in the Fund," of the Code of the City of Fort Worth is hereby
amended to revise paragraph (a) to add a new sentence addressing individuals serving in a class of
positions being converted from non-employee to employee status to allow such individuals to
make an election on whether to become members of the Fund, with such section 2.5-2(a) to read as
follows:
(a) Membership in the fund shall be based on the requirements set forth in Tex. Revised
Civil Statutes Article 6243i, § 2.01,provided however, that membership in the fund shall be a
condition of employment for all employees who are eligible to be members unless otherwise
provided in subsection (a-1).
(a-1)
(a) An individual who is eligible to be a member may elect not to become a member of the
fund only if all of the following conditions are met.
The individual has, for at least one full pay period prior to making the election,
been servingin in a position that is part of a class of position that is not eligible to be a
member of the Fund but that is participating in the City's social security alternative
plan, also known as the FICA alternative plan.
The class of position described in paragraph (1) is being eliminated and replaced
with a class of position that will be eligible to be a member of the Fund.
The contribution rate under the FICA alternative plan for the class of position
being eliminated and the contribution rate under the Fund for the replacement class of
position are the same at the time of the election and will continue to be the same
thereafter.
An individual who elects not to become a participating member of the Fund shall
be required to continue participating in and making_contributions to the FICA-
alternative plan.
Ordinance No.25225-12-2021
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An election is offered and may be made no more than once.
The election is required to be and actually is made prior to first date for which a
contribution under the Fund is scheduled to be made for the replacement class of
position.
The election is irrevocable.
(b An individual who fails to make an election or whose attempt to elect does not fully
comply with all conditions listed in subsection (a) shall become a member of the Fund
effective as of the first date for which a contribution under the Fund is made for the
replacement class of position.
SECTION 2.
That this ordinance shall be cumulative of all provisions of ordinances of the Code of the City
of Fort Worth, Texas (2015), as amended, except where the provisions of this ordinance are in direct
conflict with the provisions of such ordinances and such Code, in which event conflicting provisions
of such ordinances and such Code are here by repealed.
SECTION 3.
That it is hereby declared to be the intention of the City Council that the phrases, clauses,
sentences,paragraphs and sections of this ordinance are severable,and, if any phrase,clause, sentence,
paragraph or section of this ordinance shall be declared unconstitutional by the valid judgment or
decree of any court of competent jurisdiction, such unconstitutionality shall render the entire section
invalid and section will revert back to the section in effect prior to the passage of this ordinance.
Otherwise, such unconstitutionality shall not affect any of the remaining phrases, clauses, sentences,
paragraphs and sections of this ordinance, since the same would have been enacted by the City
Council without the incorporation in this ordinance of any such unconstitutional phrase, clause,
sentence,paragraph or section.
SECTION 4.
That the City Council finds that all acts, conditions and things required by provisions of
the Constitution of Texas and Charter and Ordinances of the City of Fort Worth precedent to and
in the adoption of this Ordinance have been done, have happened and have been performed in
proper and lawful time.
Ordinance No.25225-12-2021
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SECTION 5.
That this ordinance shall take effect on January 1, 2022 and shall apply to all service
rendered to the City on or after that date.
APPROVED AS TO FORM AND LEGALITY: ATTEST:
`7ir 2/IrX,
Jannett,S Goodall(Jan 21,202213:07 CST)
Sr. Assistant City Attorney Jannette S. Goodall
City Secretary
ADOPTED: December 14,2021 F R T
EFFECTIVE: January 1, 2022 r
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Ordinance No.25225-12-2021
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City of Fort Worth, Texas
Mayor and Council Communication
DATE: 12/14/21 M&C FILE NUMBER: M&C 21-0964
LOG NAME: 14COUNCILAIDETRANSITION
SUBJECT
(ALL)Adopt Attached Ordinances Regarding the Transition of Council Aide/District Director Positions to Pensionable Employment Positions by
Amending Chapter 2.5"Retirement"and Section 2-180,"Coverage of the System,"of the City Code and by Reallocating Appropriations in the
General Fund Up to$167,000.00 for City Retirement Fund Contribution Costs
RECOMMENDATION:
It is recommended that the City Council:
1.Adopt the attached ordinance revising the"Retirement"chapter of the City Code by amending section 2.5-2 to address council aide positions
becoming members of the retirement plan and to provide a one-time, irrevocable election allowing those currently serving in such positions to
remain in their current position and status, ineligible for the retirement plan;
2. Adopt the attached ordinance amending Section 2-180 of the Human Resources Article of Chapter 2 of the City Code to provide that City
Council Aides/District Directors do not have rights to administrative appeal from adverse employment actions and to make non-substantive
changes to enhance clarity;and
3.Adopt the attached ordinance reallocating appropriations in the General Fund for the purpose of funding costs of city contributions for the City
Council Aides/District Directors who become participating members of the Retirement Fund by decreasing the General Operating and
Maintenance category of Non-Departmental up to$167,000.00 and increasing the Salaries and Benefits category in City Manager's Office by the
same amount,with the amount of appropriation subject to the final figures calculated after all individuals have made their elections.
DISCUSSION:
The purpose of this Mayor and Council Communication (M&C)is to take actions associated with the position of Council Aide/District Director
being reconstituted as a pension-eligible regular full-time employment position.
Historically, individuals serving in the position of City Council Aide/District Director have been hired,disciplined, and fired directly by the
Councilmember and have not been considered regular full-time employees and as a result have not been eligible to participate in the Employees
Retirement Fund(the Fund). The aides/directors have instead participated in the City of Fort Worth's(City)FICA-alternative program,which
consists of employee contributions to a third-party administrator into a 401(a)plan,from which participants will receive payment in retirement.
Because all regular full-time employees are members of the Fund,the City has not been a general participant in Social Security since 1945.
The City Council recently requested that the City Manager evaluate the transition of the aide/director position to a pension-eligible position with the
accompanying benefits afforded to regular,full-time general City employees. Some individuals,particularly those who have been serving in the
aide/director position for a number of years, have expressed concerns with being required to join the Fund at a late date and wish to instead
continue participating in the City's 401(a)FICA-Alternative Plan.
All currently serving aides/directors will be given a one-time option to transition to a regular,full-time general employee as described in more detail
below.Those that opt not to transition to regular,full-time employment will remain in their current position and status,ineligible to participate in the
Fund.All future aides/directors will be hired into regular,full-time positions eligible for and required to participate in the Fund.
Adoption of the first attached ordinance would revise the Retirement Fund Chapter of the City Code by amending section 2.5-2. The ordinance
would provide a one-time,irrevocable election that allows an individual currently serving in a non-pension-eligible position that is being eliminated
and replaced with a regular,full-time, pension eligible position to not become a member of the Fund so long as certain identified criteria are all
met.
Two of the key requirements are that the pre-tax employee contributions under either option(pension or FICA alternative)are the same and that an
election must be made before the first date for which contributions under the Fund are scheduled to be made. These requirements are needed to
comply with IRS(Internal Revenue Service)regulations and guidance regarding pre-tax retirement contributions.
As currently proposed,the new aide/director pension-eligible position would"come online"on January 1,2022,which is the beginning of pay
period 2 for calendar year 2022,and Fund contributions will be made for all service rendered to the City on or after that date. Each individual must
make his or her election no later than December 30,2021,which is the last City business day before the date on which the change in status will
otherwise take effect.
The election is irrevocable,and any individual who opts not to become a regular,full-time employee would be required to continue participating in
the FICA-alternative program with contributions at the same rate as those made to the Fund. Any individual who fails to make an election or
whose attempted election does not fully comply with the criteria will automatically become a member of the Fund as of January 1,2022. The City's
Human Resources Department has had on-going discussions with the affected individuals and will continue to assist them with information to
make an informed decision.
In accordance with state law,any individual who begins working as an aide/director on or after January 1,2022,will automatically become a
participating member of the Fund on the date of the person's employment with the City.
Note—Individuals who become participating members of the Fund will pay an employee contribution for compensation attributable to service on or
after January 1,2022. The City intends to"pick up"the contribution amount and treat it as an employer contribution payable on a pre-tax basis,
reducing participants'taxable income. Complying with tax law restrictions requires that the election not to participate in the Fund be made in
advance and precludes an election being made after the"pick up"of these contributions begins on January 1,2022. Because the City is closed
on December 31,2021,in observance of the New Year's Day holiday,elections must be made by 5:OOpm on December 30,2021.
Because of the unique nature a Council Aide/District Director serves as an assistant and envoy for his or her employing Councilmember,they
would continue to be hired,disciplined,and fired at the discretion of their individual Councilmember as has historically been the case. To
memorialize this understanding, it is recommended the City Council adopt the second attached ordinance,which amends section 2-180 of the
Human Resources article of the City Code to provide that City Council Aides/District Directors do not have rights to administrative appeal from
adverse employment actions. In reviewing Section 2-180 to make this clarification,the City Attorney's Office noted that this provision would benefit
from non-substantive restructuring to enhance clarity and recommends making revisions as noted in the attached.
When this change goes into effect on January 1,2022,the approved position(AP)count reflected in the adopted budget will be increased by nine.
The per-employee cost is higher for someone who is participating in the Fund than for an individual in the FICA-Altemative Program.The third
attached ordinance would reallocate receipts and appropriations in the General Fund by reducing Non-Departmental by$167,000.00 and
increasing City Manager's Office by that same amount. This amount represents the maximum additional cost that would occur if all nine existing
aides become participating members in the Fund. Because it is anticipated that some individuals may opt to remain outside the Fund,the actual
amount that is needed may be lower.Therefore,the attached appropriation ordinance includes language that would reduce the appropriation
amount to the actual cost,which will be calculated after all of the impacted individuals have made their election.
A Form 1295 is not required because:This M&C does not request approval of a contract with a business entity.
A Form 1295 is not required because:This M&C does not request approval of a contract with a business entity.
FISCAL INFORMATION/CERTIFICATION:
The Director of Finance certifies that funds are currently available in the General Operating and Maintenance category within the General Fund and
upon approval of the above recommendations and adoption of the attached appropriation ordinance,funds will be available in the Salary&
Benefits category within the General Fund. Prior to an expenditure being incurred,the City Manager Department has the responsibility of verifying
the availability of funds.
Submitted for City Manager's Office by: Jay Chapa 5804
Originating Business Unit Head: Dianna Giordano 7783
Nathan Gregory 7847
Additional Information Contact:
Expedited