City discloses costs for proposed early retirement incentive; no approval tonight

The City Council heard a public disclosure July 23 of anticipated costs for a proposed early retirement incentive program required under Government Code section 7507, but did not vote on the program. Under the proposal previewed by special counsel Isabelle Soffy of Best, Best & Krueger, eligible employees who meet CalPERS service-retirement criteria could receive a $25,000 lump-sum incentive. The program would be limited to 12 participants, for a maximum incentive payout of $300,000, with estimated employer payroll taxes of $22,950. Council members were told they must wait at least two weeks after the public disclosure before formally considering approval. The disclosure matters because Government Code section 7507 requires a public meeting to reveal the costs before the council may act. Soffy said eligibility would follow CalPERS rules: ‘‘service retire’’ eligibility (age 50 for classic members, age 52 for PEPRA members) and a minimum of five years of CalPERS service credit. The proposed election window staff described was Aug. 25 to Oct. 10, 2025, with a required retirement effective no later than Oct. 15, 2025. Soffy noted the $25,000 payment would be treated as wages for tax purposes and subject to customary withholding. Council members asked about the program’s fiscal justification and whether the city would be exposed to ‘‘gift of public funds’’ concerns. Soffy and staff explained that the program was expected to reduce future pension accruals and related costs, which they said would make the incentive permissible under the doctrine. She added the council could change parameters before final approval. On reemployment, the council discussed post-retirement work rules: CalPERS generally precludes retired annuitants from returning to work for the employer for 180 days; the administration said any additional contractual post-retirement restrictions would be reviewed with labor counsel and, if appropriate, included in the separation agreement. This item was informational only; no motion or approval was requested. Staff said formal consideration of the program and any changes to the parameters would occur at a later meeting, expected Aug. 13, 2025, followed by the enrollment window if the program is approved.