Loading...
HomeMy WebLinkAboutMINUTES - 12032013 - D.1RECOMMENDATION(S): ACCEPT that this Board Order serves as written acknowledgment by the County Administrator (chief executive officer) that he understands the current and future cost of Retirement benefit changes for unrepresented employees, elected officials, and those non-sworn employees represented by the Contra Costa County Deputy Sheriffs' Association, as determined by the County's actuary in the November 5 and November 6, 2013 Actuarial Reports (Attached). FISCAL IMPACT: As shown in the valuations, the result of the retirement changes described herein for unrepresented employees and elected officials will save 1.3% of annual pensionable pay with the first hire in year one and 1.6% for non-sworn DSA employees. Future valuation results will change with demographic and cost updates. These projections do accurately measure the direction of the plan change costs. Over time, as more employees are hired into the new PEPRA tier at a 2% COLA, the savings will become more significant. It should be noted that the figures presented in this report represent the savings associated only with the negotiation of a 2% COLA. The actual savings from both the new State law and the negotiated change beginning January 1 is the savings between the new PEPRA tier with a 2% COLA and Tier III with a 3% COLA. When considering the difference between these tiers the total savings is closer to 5.0%. APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 12/03/2013 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Candace Andersen, District II Supervisor Mary N. Piepho, District III Supervisor Karen Mitchoff, District IV Supervisor Federal D. Glover, District V Supervisor Contact: Lisa Driscoll, County Finance Director, 335-1023 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: December 3, 2013 David Twa, County Administrator and Clerk of the Board of Supervisors By: June McHuen, Deputy cc: Robert Campbell, Auditor-Controller, Christine Penkala, County Benefits Manager, Ted Cwiek, Human Resources Director, Marilyn Leedom, Chief Executive Officer/CCCERA D.1 To:Board of Supervisors From:David Twa, County Administrator Date:December 3, 2013 Contra Costa County Subject:Government Code 7507 - Chief Executive Acknowledgement of Future Costs of Benefits - Unrepresented Employees, Elected Officials, and DSA-Non-Sworn BACKGROUND: At its meeting on November 12, the Board of Supervisors accepted an actuarial valuation of future annual costs of negotiated and proposed changes to Other Post Employment Benefits, as provided by Buck Consultants in letters dated November 5 and November 6, 2013. The Board of Supervisors was informed that Government Code, Section 7507 requires with regard to local legislative boards, that the future costs of changes in retirement benefits or other post employment benefits as determined by the actuary, shall be made public at a public meeting at least two weeks prior to the adoption of any changes in public retirement plan benefits or other post employment benefits. The November 5th and 6th, 2013 reports from Buck Consultants fulfilled that requirement. Government Code, Section 7507 also requires that if the future costs (or savings) of the changes exceed one-half of 1 percent of the future annual costs of the existing benefits for the body, an actuary shall be present to provide information as needed at the public meeting at which the adoption of a benefit change shall be considered. An actuary will be present at the meeting of December 3, 2013. And finally, Section 7507 requires that upon the adoption of any benefit change to which the section applies, the person with responsibilities of a chief executive officer in an entity providing the benefit, however that person is denominated, shall acknowledge in writing that he or she understands the current and future cost of the benefit as determined by the actuary. As the County Administrator (chief executive officer) and by approving this Board Order, I acknowledge in writing that I understand the current and future cost of the benefit changes presented to you today, as determined by the actuary and contained in the November 5th and 6th, 2013 letters from Buck Consultants. (County's actuary). CONSEQUENCE OF NEGATIVE ACTION: Delayed implementation of the COLA reduction, resulting in loss of savings. CHILDREN'S IMPACT STATEMENT: None. ATTACHMENTS 7507 Report dated November 5, 2013 7507 Report dated November 6, 2013 3200 N. Central Ave., Suite 2200 • Phoenix, AZ 85012-2425 602.864.3500 • 602.864.3535 fax November 5, 2013 Ms. Lisa Driscoll Finance Director Contra Costa County 651 Pine Street, 10th floor Martinez, CA 94553 Re: Complying with California Government Code Section 7507 Regarding Changes to Pension Benefits as of January 1, 2014 Dear Ms. Driscoll: We have been asked to estimate the effect on the County’s current and future unfunded actuarial accrued liabilities and Annual Required Contributions resulting from a new tier of benefits in the structure of Assembly Bill 340 (AB340) with a 2.00% Cost of Living Adjustment (COLA). January 1, 2014 was used as the effective date for the proposed change for the Unrepresented Employees and Elected Officials. We are comparing this benefit structure to the AB340 structure with a 3.00% COLA. Because this change affects only future employees, it will have no effect on the unfunded actuarial accrued liabilities of Contra Costa County Employees’ Retirement Association (CCCERA) as of January 1, 2014. We show the cost impacts on the enclosed charts per one hire per year for each bargaining unit (A8, AS, B8, BD, C8, D8, and FX). The costs shown are combined employee and employer normal costs. By going from a 3.00% COLA to a 2.00% COLA, the County will realize a savings. The savings are equal to the excess of the normal cost for an AB340 structure with a 3.00% COLA over the normal cost of an AB340 structure with a 2.00% COLA. We have expressed the savings in annual dollar amounts and as percentages of covered payroll for fiscal years 2014, 2015, and 2016. These results are merely illustrative and the actual impact will depend upon the actual demographic characteristics of the employees as well as the pattern of future hiring. Ms. Lisa Driscoll November 5, 2013 Page 2 Future actuarial measurements may differ significantly from the current measurement presented in this report due to such factors as: plan experience different from that anticipated by the economic and demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements; and changes in plan provisions or applicable law. Due to the limited scope of this report, an analysis of the potential range of such future measurements has not been performed. The methods and assumptions used are the same as those used in the December 31, 2012, actuarial valuation of CCCERA. Information on our new entrant profile is given in Note 2 of the enclosed projections. The report was prepared under the supervision of Charlie Chittenden, an Enrolled Actuary, a Fellow of the Society of Actuaries, and a Member of the American Academy of Actuaries, who met the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained in this report. This report has been prepared in accordance with all Applicable Actuarial Standards of Practice. I am available to answer any questions on the material contained in the report, or to provide explanations or further details as may be appropriate. Sincerely, Charles E. Chittenden, FSA, EA, MAAA Joseph Son, FSA, EA, MAAA Principal and Consulting Actuary Senior Consultant, Retirement Actuary Enc. Ms. Lisa Driscoll November 5, 2013 Page 3 Unrepresented Employees and Elected Officials – Total Plan Year 2014 2015 2016 Valuation Pay $640,100 $1,304,100 $1,992,900 Annual Cost AB340 with 3.00% COLA i) $$85,600 $173,800 $264,500 ii) % of Pay 13.4%13.3%13.3% AB340 with 2.00% COLA i) $$77,500 $157,300 $239,500 ii) % of Pay 12.1%12.1%12.0% Saving/(Cost) i) $$8,100 $16,500 $25,000 ii) % of Pay 1.3%1.2%1.3% $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 2014 2015 2016 Saving/(Cost)AB340 with 3.00% COLA AB340 with 2.00% COLA Contra Cost County -AB340 with 3.00 COLA vs. AB340 with 2.00 COLA Annual Cost by Plan Year ($) 0.0% 5.0% 10.0% 15.0% 2014 2015 2016 Saving/(Cost)AB340 with 3.00% COLA AB340 with 2.00% COLA Annual Cost by Plan Year (% of Pay) Ms. Lisa Driscoll November 5, 2013 Page 4 Unrepresented Employees and Elected Officials – A8, AS, B8, and BD Plan Year 2014 2015 2016 Valuation Pay $470,200 $957,800 $1,463,400 Annual Cost AB340 with 3.00% COLA i) $$58,900 $119,400 $181,700 ii) % of Pay 12.5%12.5%12.4% AB340 with 2.00% COLA i) $$53,300 $108,100 $164,500 ii) % of Pay 11.3%11.3%11.2% Saving/(Cost) i) $$5,600 $11,300 $17,200 ii) % of Pay 1.2%1.2%1.2% $0 $50,000 $100,000 $150,000 $200,000 2014 2015 2016 Saving/(Cost)AB340 with 3.00% COLA AB340 with 2.00% COLA Contra Cost County -AB340 with 3.00 COLA vs. AB340 with 2.00 COLA Annual Cost by Plan Year ($) 0.0% 5.0% 10.0% 15.0% 2014 2015 2016 Saving/(Cost)AB340 with 3.00% COLA AB340 with 2.00% COLA Annual Cost by Plan Year (% of Pay) Ms. Lisa Driscoll November 5, 2013 Page 5 Unrepresented Employees and Elected Officials – C8, D8, and FX Notes: 1. The methods and assumptions used to determine the savings were the same as those used for the December 31, 2012, valuation. 2. The county is assumed to hire one active from each bargaining group (A8, AS, B8, BD, C8, D8, and FX), at January 1 of each projection year. The assumed annual pensionable pays and age at entry are summarized in the table below: A8 AS B8 BD C8 D8 FX 2014 $170.2K $100.6K $96.9K $155.3K $60.9K $37.3K $90.7K 2015 $176.2K $104.1K $100.3K $160.7K $63.0K $38.6K $93.9K 2016 $182.4K $107.7K $103.8K $166.3K $65.2K $40.0K $97.2K Age 46 47 37 48 38 52 27 3. The Social Security Wage Base is $115,500 for 2014 and it is expected to grow 2.00% per year. 4. In the AB340 benefit structure, the multiplier is 2% at 62. The multiplier increases by 0.1% for ages above 62 to a maximum of 2.5% at 67. It decreases by 0.1% for ages below 62 to a minimum of 1.0% at 52. Plan Year 2014 2015 2016 Valuation Pay $169,900 $346,300 $529,500 Annual Cost AB340 with 3.00% COLA i) $$26,700 $54,300 $82,800 ii) % of Pay 15.7%15.7%15.6% AB340 with 2.00% COLA i) $$24,200 $49,200 $75,000 ii) % of Pay 14.2%14.2%14.2% Saving/(Cost) i) $$2,500 $5,100 $7,800 ii) % of Pay 1.5%1.5%1.4% $0 $20,000 $40,000 $60,000 $80,000 $100,000 2014 2015 2016 Saving/(Cost)AB340 with 3.00% COLA AB340 with 2.00% COLA Contra Cost County -AB340 with 3.00 COLA vs. AB340 with 2.00 COLA Annual Cost by Plan Year ($) 0.0% 5.0% 10.0% 15.0% 20.0% 2014 2015 2016 Saving/(Cost)AB340 with 3.00% COLA AB340 with 2.00% COLA Annual Cost by Plan Year (% of Pay) 3200 N. Central Ave., Suite 2200 • Phoenix, AZ 85012-2425 602.864.3500 • 602.864.3535 fax November 6, 2013 Ms. Lisa Driscoll Finance Director Contra Costa County 651 Pine Street, 10th floor Martinez, CA 94553 Re: Complying with California Government Code Section 7507 Regarding Changes to Pension Benefits as of January 1, 2014 Dear Ms. Driscoll: We have been asked to estimate the effect on the County’s current and future unfunded actuarial accrued liabilities and Annual Required Contributions resulting from a new tier of benefits in the structure of Assembly Bill 340 (AB340) with a 2.00% Cost of Living Adjustment (COLA). January 1, 2014 was used as the effective date for the proposed change for the Non-Sworn Deputy Sheriffs (VN). We are comparing this benefit structure to the AB340 structure with a 3.00% COLA. Because this change affects only future employees, it will have no effect on the unfunded actuarial accrued liabilities of Contra Costa County Employees’ Retirement Association (CCCERA) as of January 1, 2014. We show the cost impacts on the enclosed charts per member hired per year. The costs shown are combined employee and employer normal costs. By going from a 3.00% COLA to a 2.00% COLA, the County will realize a savings. The savings are equal to the excess of the normal cost for an AB340 structure with a 3.00% COLA over the normal cost of an AB340 structure with a 2.00% COLA. We have expressed the savings in annual dollar amounts and as percentages of covered payroll for fiscal years 2014, 2015, and 2016. These results are merely illustrative and the actual impact will depend upon the actual demographic characteristics of the employees as well as the pattern of future hiring. Ms. Lisa Driscoll November 6, 2013 Page 2 Future actuarial measurements may differ significantly from the current measurement presented in this report due to such factors as: plan experience different from that anticipated by the economic and demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements; and changes in plan provisions or applicable law. Due to the limited scope of this report, an analysis of the potential range of such future measurements has not been performed. The methods and assumptions used are the same as those used in the December 31, 2012, actuarial valuation of CCCERA. Information on our new entrant profile is given in Note 2 of the enclosed projections. The report was prepared under the supervision of Charlie Chittenden, an Enrolled Actuary, a Fellow of the Society of Actuaries, and a Member of the American Academy of Actuaries, who met the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained in this report. This report has been prepared in accordance with all Applicable Actuarial Standards of Practice. I am available to answer any questions on the material contained in the report, or to provide explanations or further details as may be appropriate. Sincerely, Charles E. Chittenden , FSA, EA, MAAA Joseph Son, FSA, EA, MAAA Principal and Consulting Actuary Senior Consultant, Retirement Actuary Enc. Ms. Lisa Driscoll November 6, 2013 Page 3 Notes: 1. The methods and assumptions used to determine the savings were the same as those used for the December 31, 2012, valuation. 2. The county is assumed to hire one active at January 1 of each projection year. The annual pensionable pays at entry are assumed to be $55,900, $57,900, and $59,900 for the 2014, 2015, and 2016 hires, respectively. The age at entry for new hires is assumed to be 26. 3. The Social Security Wage Base is $115,500 for 2014 and it is expected to grow 2.00% per year. 4. In the AB340 benefit structure, the multiplier is 2% at 62. The multiplier increases by 0.1% for ages above 62 to a maximum of 2.5% at 67. It decreases by 0.1% for ages below 62 to a minimum of 1.0% at 52. Plan Year 2014 2015 2016 Valuation Pay $50,300 $102,600 $156,900 Annual Cost AB340 with 3.00% COLA i) $$7,900 $16,000 $24,400 ii) % of Pay 15.7%15.6%15.6% AB340 with 2.00% COLA i) $$7,100 $14,500 $22,100 ii) % of Pay 14.1%14.1%14.1% Saving/(Cost) i) $$800 $1,500 $2,300 ii) % of Pay 1.6%1.5%1.5% $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 2014 2015 2016 Saving/(Cost)AB340 with 3.00% COLA AB340 with 2.00% COLA Contra Cost County -AB340 with 3.00 COLA vs. AB340 with 2.00 COLA Annual Cost by Plan Year ($) 0.0% 5.0% 10.0% 15.0% 20.0% 2014 2015 2016 Saving/(Cost)AB340 with 3.00% COLA AB340 with 2.00% COLA Annual Cost by Plan Year (% of Pay)