In 1987, the cities of Costa Mesa and Newport Beach entered into a Joint Powers Exercise Agreement (“Agreement”), into which Garden Grove later entered in 1991, to create the Joint Powers Employee Benefit Authority (“Authority”).  The Authority established the Joint Powers Employee Benefit Authority Medical Premium Retirement Benefit Plan (“Plan”) to provide a deferred compensation plan for City employees to cover health premiums in retirement.  In 2006, Garden Grove elected to cease future contributions to the Plan, and in 2008, began mandatory disbursements of Section 409A funds. 

Recently, the Member Agencies discussed the option of terminating the Agreement. Section 17 of the original Plan Agreement stipulates that the governing bodies of three quarters or more of the Members must adopt a resolution of termination within any 120 days in order to terminate the Agreement and dissolve the Authority.

The Member Agencies agreed to begin the process of terminating the Agreement since participant activities for the Plan have decreased over the years.  The cities of Newport Beach and Costa Mesa have ceased administering the program as all assets have been disbursed.  For Garden Grove, the number of participants has decreased significantly over the years as most of the funds have been disbursed to the respective participants.  With little participant activity, maintenance of the program is not an efficient use of staff time and City resources. 

Upon approval of the resolution by the governing bodies of all three Member Agencies, the remaining funds will be distributed back to the participants.  The Agreement will terminate at the end of the 2020-21 Fiscal Year and exist only for the purposes of disposing of all assets and closing out all affairs of the Authority.  The City of Newport Beach adopted the resolution to terminate the Agreement on November 24, 2020, and the City of Costa Mesa will decide upon the resolution at their City Council meeting on December 15, 2020.  All governing boards of the Member Agencies must adopt a resolution to terminate in order to formally and completely dissolve the program and terminate the Agreement. 

There is no financial impact to the City.  The funds in this Trust will be distributed back to the participants.

It is recommended that the City Council:

• Adopt the attached Resolution to dissolve the Joint Powers Employee Benefit Authority and terminate the Joint Exercise of Powers Agreement.