HomeMy WebLinkAboutOCSD 19-20RESOLUTION NO. OCSD 19-20
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT AUTHORIZING THE EXECUTION OF
THE MEMORANDUM OF UNDERSTANDING WITH THE ORANGE
COUNTY EMPLOYEES RETIREMENT SYSTEM ESTABLISHING THE
TERMS TO RECOGNIZE AND APPLY THE ORANGE COUNTY
SANITATION DISTRICT'S SATISFACTION OF ITS UNFUNDED
ACCRUED ACTUARIAL LIABILITY AND DEFERRED UNFUNDED
ACCRUED ACTUARIAL LIABILITY
WHEREAS, as a participating employer in the Orange County Employees
Retirement System ("OCERS"), the Orange County Sanitation District ("Sanitation
District") contributes to OCERS on an annual basis such contributions as OCERS
determines are due and payable to OCERS from the Sanitation District, as an employer,
to help fund the retirement and other benefits due to Sanitation District employees and
their beneficiaries; and
WHEREAS, the Sanitation District's annual contributions as determined by
OCERS are currently calculated as a percentage of pensionable payroll that includes both
a normal contribution rate ("Normal Cost") and a rate that reflects the amortization of an
unfunded accrued actuarial liability ("UAAL") attributable to the Sanitation District,
pursuant to Government Code sections 31453 and 31453.5; and
WHEREAS, as of September 4, 2019, the total UAAL attributable to the Sanitation
District was $8, 116,226; and
WHEREAS, as of December 31, 2018, an additional UAAL attributable to the
Sanitation District on the books of OCERS totaled $30,232,235 ("Deferred UAAL"), which
amount has been deferred and is projected to be due and payable by the Sanitation
District in amortizing installments commencing July 1, 2021; and
WHEREAS, the amortizing installments of Sanitation District's Deferred UAAL in
any future year may be more or less than the total UAAL attributable to the Sanitation
District in such future year ("Actual UAAL"); and
WHEREAS, as of November 1, 2019, the Sanitation District has contributed
$38,000,000 to OCERS in satisfaction of its UAAL and Deferred UAAL; and
WHEREAS, the Sanitation District and OCERS wish to enter into a Memorandum
of Understanding ("MOU") to set forth the terms and conditions under which OCERS shall
recognize and apply the Sanitation District's Contribution.
OCSD 19-20-1
NOW, THEREFORE, the Board of Directors of Orange County Sanitation District,
DOES HEREBY RESOLVE , DETERMINE, AND ORDER:
Section 1: The above recitals are true and correct and are incorporated herein by
reference.
Section 2 : That the Board Chairman is hereby authorized and directed to execute
the Memorandum of Understanding as attached hereto as Exhibit "A ".
Section 3 : The Clerk of the Board shall certify to the adoption of this Resolution .
PASSED AND ADOPTED at a regular meeting of the Board of Directors held
December 18 , 2019 .
David Joh
Board Ch · an
Orange County Sanitation District
ATTEST:
.A.PPRGV ED AS TO FORM:
OCSD 19-20-2
STATE OF CALIFORNIA )
) SS
COUNTY OF ORANGE )
I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District,
do hereby certify that the foregoing Resolution No. OCSD 19-20 was passed and adopted
at a regular meeting of said Board on the 18th day of December 2019, by the following
vote, to wit:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
Brad Avery, Doug Chaffee, Robert Collacott, James Ferryman,
Cecilia Iglesias, Steve Jones, Lucille Kring, Sandra Massa-Lavitt,
Mark Murphy, Richard Murphy, Andrew Nguyen, Glenn Parker, Erik
Peterson, Tim Shaw, David Shawver, Christina Shea, Jesus Silva ,
Fred Smith, Chad Wanke, Mariellen Yarc, Marshall Goodman
(Alternate), Patrick Harper (Alternate) and Chuck Puckett (Alternate)
None
Phil Hawkins and John Withers
None
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of
Orange County Sanitation District this 18th day of December 2019.
Board of Directors
Orange County Sanitation District
OCSD 19-2 0-3
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("MOU") is entered into effective the 21st day of
October, 2019, by and between the Orange County Employees Retirement System
("OCERS") and the Orange County Sanitation District ("District"), by and through the
parties' respective governing bodies.
WHEREAS, OCERS is a multiple employer trust fund that provides retirement, disability
and other benefits to the active, deferred and retired employees of the County of Orange,
District and other participating employers, and their beneficiaries; and
WHEREAS, the Board of Retirement of OCERS has the sole, exclusive and plenary
constitutional and statutory authority to administer the retirement system and invest the
funds of the system for the benefit of its members and their beneficiaries; and
WHEREAS, as a participating employer in OCERS, District contributes to OCERS on an
annual basis such contributions as OCERS determines are due and payable to OCERS
from District, as an employer, to help fund the benefits referred to above; and
WHEREAS, District's annual contributions as determined by OCERS currently are
calculated as a percentage of pensionable payroll that includes both a normal contribution
rate ("Normal Cost") and a rate that reflects the amortization of an unfunded accrued
actuarial liability attributable to District, pursuant to Government Code sections 31453 and
31453.5; and
WHEREAS, as of September 4, 2019, the total unfunded accrued actuarial liability
attributable to the District ("UAAL") was $8, 116,226; and
WHEREAS, as of December 31, 2018, an additional unfunded accrued actuarial liability
attributable to District on the books of OCERS totaled $30,232,235 ("Deferred UAAL"),
which amount has been deferred and is projected to be due and payable by the District
in amortizing installments commencing July 2021; and
WHEREAS, the amortizing installments of District's Deferred UAAL in any future year
may be more or less than the total unfunded accrued actuarial liability attributable to the
District in such future year ("Actual UAAL"); and
WHEREAS, on or about September 4, 2019, the District contributed $8, 116,226 to
OCERS in full satisfaction of its UAAL and accrued interest on the UAAL through the
payment date ("UAAL Contribution") that is due and payable by District to OCERS as part
of its total contribution for the period July 1, 2020 through and including June 30, 2021;
and
WHEREAS, on or about November 1, 2019, the District plans to contribute $29,883,774
towards the District's Deferred UAAL ("Deferred UAAL Contribution"); and
WHEREAS, on or about November 1, 2016, OCERS established a reserve account on
its books and records (the "District Reserve Account") for the purpose of recording and
accounting for Deferred UAAL contributions; and
WHEREAS, as of December 31, 2018, the balance in the District Reserve Account was
$0;and
WHEREAS, District and OCERS wish to enter into this MOU to set forth the terms and
conditions under which OCERS shall recognize and apply District's UAAL Contribution
and Deferred UAAL Contribution; and
WHEREAS, each of the governing bodies of OCERS and District has approved and
accepted the terms and conditions of this MOU and has authorized its executive officer
to execute this MOU on its behalf.
NOW THEREFORE OCERS and District agree as follows:
1 . Crediting of UAAL Contribution. OCERS agrees to credit the UAAL Contribution
toward District's UAAL as of December 31, 2018 plus accrued interest through the
payment date. No portion of the UAAL Contribution shall be credited toward the Normal
Cost portion of District's employer contribution for such period. OCERS shall further
recognize the above credits in all financial statements and other reports prepared in
accordance with generally accepted accounting principles and as required by the
Government Accounting Standards Board. Upon being credited, these amounts shall be
considered as "valuation assets" to be counted against the liabilities of District in
calculating its share of future unfunded accrued actuarial liabilities.
2. Crediting of Deferred UAAL Contribution.
A. OCERS shall credit the Deferred UAAL Contribution to the District Reserve
Account.
B. Commencing as of December 31, 2019 and annually thereafter until there
is no remaining balance of funds in the District Reserve Account, OCERS shall
transfer from the District Reserve Account into an account on OCERS' books and
records that is ·used to record and account for cumulative employer contributions
to OCERS for future retirement benefits of active and deferred members the
amount necessary to satisfy the Actual UAAL attributed to District, as determined
by OCERS pursuant to Government Code sections 31453 and 31453.5. The
purpose of this transfer is to ensure that District's future annual employer
contribution obligation to OCERS shall consist of either the Normal Cost portion
only, or the Normal Cost and amortizing installments of only such amount of future
Actual UAAL that exceeds the amount of funds remaining in the District Reserve
Account.
C. None of the moneys in the District Reserve Account shall be considered
"valuation assets" on OCERS' books and records, and shall not be counted in
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calculating District's share of future Actual UAAL, but shall be held and transferred
only as described in this Paragraph 2.8.
D. OCERS shall not credit any amount of the District Reserve Account to
District's Normal Cost portion of its annual employer contribution at any time.
District shall remain responsible for making its full Normal Cost contributions to
OCERS as determined by OCERS from time to time.
3. Commingling of Funds. Upon crediting by OCERS, all amounts of the UAAL
Contribution and the Deferred UML Contribution shall be commingled with all otherfunds
and assets of the OCERS trust fund, to be administered, invested and disbursed within
the sole, exclusive and plenary authority of the OCERS Board of Retirement, as provided
by law. None of the UML Contribution or the Deferred UAAL Contribution shall remain
property of District, nor shall any such funds be disbursed to or on behalf of District for
any purpose other than the payment of benefits to OCERS' members and administrative
and investment expenses of the retirement system.
4. Crediting of Interest. OCERS shall credit (or debit) interest to the District Reserve
Account at the actual annual rate of return (or loss) experienced by the entire OCERS
trust fund on a calendar year basis. Interest crediting (or debiting) for the calendar year
shall occur on or before March 31 of each subsequent year, on the balance in the District
Reserve Account as of December 31 of the immediately preceding year.
5. OCERS' Sole Right to Determine Contributions and Appropriations.
Notwithstanding any provision in this MOU to the contrary, the parties acknowledge and
agree that OCERS has the sole, exclusive and plenary authority to determine employer
and employee contribution rates and appropriation amounts; that OCERS may change,
amend or otherwise alter its practices and policies regarding the setting of contribution
rates and amounts of appropriations to be made by its participating employers, including
but not limited to District; and that District is obligated to make the contributions and
appropriations required by OCERS, all as provided by law.
6. Additional Provisions.
A. This MOU shall be governed by and interpreted under the laws of the State
of California applicable to contracts made and to be performed entirely within the
State.
B. This MOU sets forth the entire agreement between OCERS and District with
regard to the subject matter herein, and fully supersedes any and all prior
agreements and understandings between them pertaining to the subject matter of
this MOU. The parties agree that no change to or modification of this MOU shall
be valid or binding unless it is in writing and signed by an authorized signatory for
each of the parties.
C. The language of all parts in this MOU shall be construed as a whole,
according to its fair meaning, and not strictly for or against either party. Should
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any provision in this MOU be declared or determined to be illegal or invalid, the
validity of the remaining parts, terms, or provisions shall not be affected and the
illegal or invalid part, term, or provision shall be deemed not to be part of this MOU,
and all remaining provisions shall remain valid and enforceable. The parties further
agree that in the event any provision of this MOU is held to be illegal or
unenforceable, each will fully cooperate with the other to effectuate its purpose to
conform the provision(s) to law.
D. This MOU is deemed to have been drafted jointly by the parties. Any
uncertainty or ambiguity shall not be construed for or against any party, since both
parties have participated in the negotiations and drafting of this MOU.
E. This MOU may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the
same instrument. Furthermore, signatures delivered via electronic transmission
shall have the same force, validity and effect as the originals thereof.
F. Should any dispute arise between the parties as to their respective rights
and obligations under this MOU, the parties will mak·e a good faith effort to resolve
their differences informally and without resort to legal process. Should any such
dispute remain unresolved after 90 days after one party notifies the other party in
writing of the dispute (unless shortened or extended by mutual agreement of the
parties), either party may commence legal action as provided by law to resolve the
matter. In any such legal action, the prevailing party shall be entitled to an award
of its reasonable attorneys fees and costs of suit.
7. Term. This agreement shall terminate and be of no further force or effect at such
time as there is no remaining balance in the District Reserve Account.
WITNESS THE EXECUTION HEREOF on the day and year first hereinabove written.
ORANGE COUNTY SANITATION
DISTRICT
Authorized Signatory
ORANGE COUNTY EMPLOYEES'
RETIREMENT SYSTEM
Title:
Dated: __ D_c.....~-\-J_l-._v-_L_Z_._,,_1 ~z._~o_{ ...... lt---
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