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Home My WebLink About98.ONLINE 07-26-2017 Board Meeting Item 17 Attachment C - OCERS Published Meeting Minutes and Agenda Report.pdf ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM MEMORANDUM DATE: March 11, 2005 TO: Members, Board of Retirement FROM: James Buck, Assistant CEO, External Operations SUBJECT: Orange County Fire Authority and Orange County Sanitation District General Member Contribution Rates for Fiscal Year 2005/2006 Recommendation: Adopt the new employer contribution rates commensurate with the enhanced retirement benefit formulas as follows: Agency Current Rate New Rate a) Orange County Fire Authority 12.12% 15.74% b) Orange County Sanitation District 12,12% 14.81% 1 These contribution rates are calculated by The Segal Company based upon information prepared by the data supplied by the Towers Perrin cost study. The attached is the documentation from Segal. Submitted by: James Buck Keith Bozan Assistant CEO, External Operations Chief Executi a fficer Attachments: Orange County Fire Authority General Member Contribution Rates Orange County Sanitation District General Member Contribution Rates FED-11-2005 16:25 FROM The Segal Company TO 9817145586236 P.02 �- SEGAL THE SEGAL COMPANY 12o Montgomery Sneet Suite 500 San Francisco,CA 04104430E T 415 293 9200 F415,263.6290 www.segalco.cOm February 11,2005 Mr Keith Bovarth Chief Executive Officer Orange County Employees Retirement System 2223 Wellington Avenue Santa Ana,CA 92701 Re: Orange County Fire Authority General Member Contribution Rates for Fiscal Year 2005/2006 Dear Keith: Pursuant to your request, and based on information prepared by Towers Perrin, we have calculated the Orange County Fire Authority General employer contribution rates to reflect the 2.7% at 55 benefit formula improvement effective July 2004. We understand that the Fire Authority completed their MOUs after the last valuation as of December 31, 2003. Therefore, the rates for fiscal year 2005/2006 will for the first time reflect the enhanced formula. The Fire Authority's percent of payroll contribution rates before and after the benefit improvement are as follows: 1. Fire Authority General employer rate before improvement calculated in the 12.12% December 31, 2003 valuation by Towers Perrin 2. Additional contribution rate* to reflect 2.7% at 55 benefit improvement calculated 3.62% in benefit improvement study by Towers Perrin using December 31, 2002 membership data 3. Fire Authority General employer rate after improvement 15.74% • Out of the total increase, 3.419E is the increase in the UAAL rate and 0.21% is the increase in the Normal Cost rate. The following points should be considered by the Retirement System before the rate in item 3. is adopted by the Retirement Board: 1. The Fire Authority General employer rate in item I was calculated by the System's prior actuary, Towers Perrin, in their latest actuarial valuation as of December 31, 2003. That rate was adopted by the Board for the 2004/2005 fiscal year. acne *.eompemn,on end MR Cvmuleing n,—,A .01ION Gn,OAC° OIEVC4ND 0911ER neRTFORD HQQ$7QN IFS NNp ERP WIMNr POIl. NEW ORIFRNS WW YORK Pw,PU..WXIe pN05N1A S.N LR.NCISCO $EnYae 10RONT0 WISNINGiON.DC Ltd COOLWIONs PXaiLP°AX aAACIIINA GCNEJn NnMPV aC. IONRNNLABVae LONDON MLLEOVRNE MEEICU CRY .SIC pWa FEB-11-2005 16:25 FROM The Segal Company TO 9817145586236 P.03 Mr.Keith Bomrth Orange County Employees Retirement System Orange County Fire Authority General Member Contribution Rates for Final Year 2005/2006 February 11, 2005 Page 2 Segal has not adjusted the rate calculated by the System's prior actuary for deviations due to; (a)the difference between the Segal's and the prior actuary's valuation software and methods, and (b)the difference between projected and actual actuarial experience during calendar year 2004. For example,the employer rate may increase(or decrease) if the System's valuation assets earn less(or more)than the assumed return of 7.50%during 2004. 2. In determining the contribution rate increase under item 2-, we have relied on the results from the benefit improvement study performed by the System's prior actuary using membership data from the December 31, 2002 valuation. We have not verified or made any adjustments to those results. In particular,we have not adjusted those results to reflect differences that may arise from changes in membership demographics after the December 31, 2002 valuation. We understand the results in that study were approved by the Board. 3, The System should be aware that the rate after the benefit improvement in item 3.does not include any: (a) "reverse employee pickup", (b) funding of the RMSR account or(c) any other funding of retiree health benefits. 4. December 31, 2004 is the date of the System's next triennial experience study. We expect the contribution rate in item 3. to change in the December 31, 2004 valuation as we reflect any differences in valuation software, actuarial experience during 2004 and new actuarial assumptions from the triennial experience study. 5. With this update, the System will change from its practice of relying on results from a valuation performed six months before to 18 months before the beginning of the fiscal year. It is our understanding that the System is permitted to set the employer's contribution rate based on a valuation that was performed as of a date not more than 24 months before the beginning of the employer's fiscal year. However, as this has not been the past practice at the System, the System may want to consult with its auditor and possibly its legal counsel- The rates in this report are based on the December 31,2003 valuation. Other Considerations The System should also be aware that under the System's funding methodology(i.e., the Projected Unit Credit Method),unless we have younger employees entering the plan each year to maintain the average attained age for the active workforce at the level for 2003,the dollar Normal Cost of the active members calculated in the December 31, 2003 valuation is expected to increase in each future valuation as a function of survivorship and interest. However, that increase will be offset somewhat by the 4.0% annual inflation assumption when the Normal Cost is expressed as a percent of payroll. In addition,the System currently expresses the contributions to the Unfunded Actuarial Accrued Liability(UAAL)as a FEB-11-2005 16:26 FROM The Segal Company TO ge17145586236 P.04 Mr.Keith 13ozarth Orange County Employees Retirement System Orange County Fire Authority General Member Contribution Rates for Fiscal Year 2005/2006 February 11, 2005 Page 3 level dollar amount and it is anticipated that the contributions to the UAAL will decrease in each future valuation when the UAAL wntribution is expressed as a percent of payroll- We have not made any adjustments in determining the rate provided in item 3 for these or other timing effects. Please let us know if you have any questions. Sincerely, Andy Yeung,ASA,MAAA Associate Actuary AYY/jc 183'+9WOSi9aA01 FEB-11-2005 16:26 FROM The Segal Company TO 9t317145596236 P.05 -SEGAL THE SEGAL COMPANY 120 Montgomery Street Suite 500 San Francisco, CA 94104-4306 T415,263.6200 F415.253.e290 wwwsegalog.com February 11,2005 Mr.Keith Bozarth Chief Executive Officer Orange County Employees Retirement System 2223 Wellington Avenue Santa Ana,CA 92701 Re: Orange County Sanitation District General Member Contribution Rates for Fiscal Year 20052006 Dear Keith: Pursuant to your request, and based on information prepared by Towers Perrin, we have calculated the Orange County Sanitation District General employer contribution rates to reflect the 2.5% at 55 benefit formula improvement effective July 2005. The Sanitation District's percent of payroll contribution rates before and after the benefit improvement are as follows: 1. Sanitation District General employer rate before improvement calculated in the 12,12% December 31, 2003 valuation by Towers Perrin 2. Additional contribution rate' to reflect 2.5% at 55 benefit improvement calculated 2,69% in benefit improvement study by Towers Perrin using December 31, 2002 membership data 3. Sanitation District General employer rate after improvement 14.31% Out of the total increase,3.09% is the increase in the UAAL rate and 0.40% is the decrease in the Normal Cost rate. The following points should be considered by the Retirement System before the rate in item 3. is adopted by the Retirement Board: 1. The Sanitation District General employer rate in item 1 was calculated by the System's prior actuary, Towers Perrin, in their latest actuarial valuation as of December 31, 2003. That rate was adopted by the Board for the 2004/2005 fiscal year. BeNfle&CVm°entnla End HA COOSUITing WLANTA 6nsmN CHICAGO CLEVELOND OENWA HMrraao NOUSTON WE ANGELER -TIN CA OLIS x rw 0AJEANS Naw vno[ n,lumr LIn I.,Q Nir aAl rnANCAr CO aa0l. roFnuro wMxlNoro N,NC '45 Mu11 n81iEnel Gf4UP EI PCIWIiee and COTEuNan,a nwl5iFe0AN OAPCELONA 00NEv ...,JOG IGNANNa Sets N(i LCNUUN N�LtlOVINE wevlcn era e9Eo rants FEB-11-2005 16:26 FROM The Segel Company TO 9817145586236 P.06 Mr.Keith Borarth Orange County Employees Retirement System Orange County Sanitation District General Member Contribution Rates for Fiscal Year 2005/2006 February 11, 2005 Page 2 Segal has not adjusted the rate calculated by the System's prior actuary for deviations due to: (a)the difference between the Segal's and the prior actuary's valuation software and methods, and (b) the difference between projected and actual actuarial experience during calendar year 2004. For example, the employer rate may increase(or decrease) if the System's valuation assets cam less (or more)than the assumed return of 7.50%during 2004. 2. In determining the contribution rate increase under item 2., we have relied on the results from the benefit improvement study performed by the System's prior actuary using membership data from the December 31, 2002 valuation. We have not verified or made any adjustments to those results. In particular, we have not adjusted those results to reflect differences that may arise from changes in membership demographics after the December 31, 2002 valuation. We understand the results in that study were approved by the Board. 3. The System should be aware that the rate after the benefit improvement in item 3, does not include any: (a) 'reverse employee pickup", (b) funding of the RMBR account or (c) any other funding of retiree health benefits. 4. December 31, 2004 is the date of the System's next triennial experience study. We expect the contribution rate in item 3. to change in the December 31, 2004 valuation as we reflect any differences in valuation software, actuarial experience during 2004 and new actuarial assumptions from the triennial experience study. 5. With this update, the System will change from its practice of relying on results from a valuation performed six months before to 18 months before the beginning of the fiscal year. It is our understanding that the System is permitted to set the employer's contribution rate based on a valuation that was performed as of a data not more than 24 months before the beginning of the employer's fiscal year. However, as this has not been the past practice at the System, the System may want to consult with its auditor and possibly its legal counsel. The rates in this report are based on the December 31,2003 valuation. Other Considerations The System should also be aware that under the System's funding methodology (i.e., the Projected Unit Credit Method), unless we have younger employees entering the plan each year to maintain the average attained age for the active workforce at the level for 2003, the dollar Normal Cost of the active members calculated in the December 31, 2003 valuation is expected to increase in each future valuation as a function of survivorship and interest. However, that increase will be offset somewhat by the 4.0%annual inflation assumption when the Normal Cost is expressed as a percent of payroll. In addition,the System currently expresses the contributions to the Unfunded Actuarial Accrued Liability (UAAL) as a level FEB-11-2005 16I27 FROM The Segal Company TO 98171455B6236 P.O? Mr.Keith Botarth Orange County Employees Retirement System Orange County Sanitation District General Member Contribution Rates for Fiscal Year 2005/2006 February 11, 2005 Page 3 dollar amount and it is anticipated that the contributions to the UAAL will decrease in each future valuation when the UAAL contribution is expressed as a percent of payroll. We have not made any adjustments in determining the rate provided in item 3 for these or other timing effects. Pleaso let us know if you have any questions. Sincerely, (� Andy Young, 0 Associate Actuary AYY/Je 191791/05794.001 �efl June 20,200ty"21fl1f1 f5Y§tefn Board Regullarar BoBoard Meeting—Minutes Page 14 The Chair announced that the Closed Session Item would be heard during lunch in the Executive Conference Room. The Board broke for lunch at 12:55 p.m. CLOSED SESSION AGENDA S-E-1 CONFERENCE WITH LEGAL COUNSEL -ANTICIPATED LITIGATION Discussion of whether to initiate litigation pursuant to subdivision (c) of Section 54956.9 (One potential case) No reportable action taken. * * * * END CLOSED SESSION AGENDA* The Board reconvened at 1:55 p.m. 1.5 EARLY PAYMENT OF EMPLOYER CONTRIBUTIONS Mr. Bozarth reviewed this item and reported it was limited to cash payments. Mr. Moorlach wanted to know what the incentive was for early payments. Mr. Bozarth responded that OCERS can invest the fund early and it also allows for cash planning. Following discussion, a motion was made by Mr. Lightvoet, seconded by Mr. Moorlach to approve an early payment policy with respect to employer contributions as described, with the specific provision that a discount be provided only for cash payments, not for transfers from the Investment Account. The motion carried unanimously. 1-6 DRAFT STRATEGIC PLANNING AGENDA Mr. Bozarth reviewed the Draft Strategic Planning Agenda. Mr. Eley would like for the Investment section to provide an overview of things such as leverage and risk issues in the portfolio, etc. Ms. Silber would like a written legislative report. 1.7 REPLACEMENT BENEFIT PLANS UNDER IRC §415 Ms. Wyne reviewed the agreements regarding Replacement Benefit Plans under IRC §415. f.board/agenda/06-20-05 Board Minutes Orange County Employees Retirement System June 20,2005 Regular Board Meeting—Minutes Page 15 Ms. Silbar reviewed the agreements and sees two different agreements. Since these are not benefits OCERS will be responsible for, the agreements are not clear as to who will be making the determination. Ms. Silber would like to discuss some drafting changes with Ms. Wyne. Following discussion, a motion was made by Ms. Silbar, seconded by Mr. Lightvicet to authorize the CEO to enter into agreements with the County and 'San tationOls'frict for OCERS to administer the 415 plans for each entity subject to some modifications to th_e agreements.aggrrre".e�mmeentts. The motion carried unanimously. 1 8 PETITION FOR REASSIGNMENT OF REFEREE - DISABILITY RETIREMENT APPLICATION OF DORIS KIRKLEY Ms. Parker reviewed the petition for reassignment of Referee. Following discussion, a motion was made by Ms. Silbar, seconded by Mr. Eley to allow reassignment of referee for the disability retirement application of Doris Kirkley. The motion carried unanimously. * *** ** ** END OF INDIVIDUAL ITEMS AGENDA PUBLIC COMMENTS: None BOARD MEMBERS COMMENTS: Mr. Royalty complimented staff on how well they handled the difficult issues that came before the Board this morning. Mr. Moorlach questioned whether Mr. Bozarth responded concerning Mr. Beckett's memo, as it stated in the minutes from the Board meeting on May 16, 2005. Mr. Bozarth responded that he had not done that yet. Mr. Mcorlach also questioned whether the Audit Committee Meeting on July 8, 2005 would be at 8:30 a.m. or 1:30 p.m. The Chair responded that had not been discussed, but assumed it would be at 8:30 a.m. Ms. Neebe announced that she would be retiring from the County of Orange after 35 years of service as of August 5, 2005. CHIEF EXECUTIVE OFFICER/STAFF COMMENTS: Mr. Bozarth thanked the Board for getting through today's agenda. COUNSEL COMMENTS: f:boardlagends/06-20-05 Board Minutes