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HomeMy WebLinkAboutRESOLUTIONS - 01011999 - 1999-348 BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, STATE OF CALIFORNIA IN THE MATTER OF: Making Government Cade Section 31789.5 ) applicable in Contra Costa County ) RESOLUTION NO. 99/348 regarding a burial allowance for retirees ) WHEREAS, the Retirement Board is currently authorized to provide a burial allowance of$1,000 to the named beneficiary of any retiree upon the death of the retiree, and W' IEREAS, the burial allowance has not been increased in the past fourteen years, and WHEREAS, in 1997, the Legislature passed and the Governor signed AB 407 (Chapter 439, Statutes of 1997) which, by adding Section 31759.5 to the Government Code, authorized 1937 Act counties to increase the burial allowance to $5,000, subject to the approval of the Board of Supervisors and subject to a finding by the Board of Retirement that the benefit may be financed from surplus earnings of the retirement fund, and WHEREAS,the Board of Retirement has determined that it can fund the benefit from the surplus earnings of the retirement fund and has voted to transfer the necessary funds into the Death Benefit Reserve to fully fund the $5,000 burial allowance for all retirees, and WHEREAS, the Board of Supervisors believes that it is appropriate to consent to m-3king Government Code Section 31739.5 applicable in Contra Costa County; NOW, THEREFORE, BE IT BY THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA RESOLVED that the Board hereby makes California Government Code Section 31789.5 applicable in Contra Costa County as to all retired members who die on or after July 20, 1999. PASSED by unanimous vote of the Board Members present on this twentieth day of July, 1999. 1 hereby certify that this is a true and correct copy of an order entered on the minutes of said Board of Supervisors on the date aforesaid. Witness my hand and the Seal of the Board of Supervisors affixed on this twentieth day of July 1999. PHIL BATCHELOR, clerk of the Board of Supervisors and County Administrator By: PepeClerk EMtz 5 ,, n Date: July 8, 1999 To: Board of Supervisors From: Pat Wiegert, Administrator' s) Subject: Increase in the Retirement System Lump Sum Death Benefit . . On behalf of the Board of Retirement, I request that the Board of Supervisors adopt the permissive provisions of Gov. Code Sec.31789.5 as created by Ch 439, Statutes of 1997. At present,when one of our retirees dies,we pay a$1,000 burial allowance to the named beneficiary. Section 31789.5,which became effective January 1, 1997, allows the retirement system to increase the death benefit amount to $5,000. It becomes operative only if the Board of Supervisors adapts the provision by a majority vote. As of this date, three other'37 Act counties have adopted this amount. Section 31789.5 also provides that the cost of this benefit may be paid from excess surplus earnings of the retirement system the same as the current$1,000 benefit is funded. Our actuary has determined that the total cost of this benefit is$8,968,000 for all retirees. A copy of the actuary's cost determination is attached to this memo. The Board of Retirement has already transferred$880,852 of this year's excess surplus earnings to fully fund the death benefit at its current level. The Board has voted to transfer an additional $8,968,000 to pay the entire cost of a$5,000 death benefit as a result of the fund's performance over the past several years. To assist your Board in its deliberations,I offer the following information: + The lump sum death benefit was intended to pay for the retiree's funeral expenses. • For years,the death benefit was$750. • In 1985 the benefit was increased to $1,000, a special reserve account was established to pay this benefit, and excess surplus earnings were used to fully fund the benefit(no County cost) Funeral expenses in California increased at an average annual rate of 9%between 1980 and 1994.** • At that rate, and assuming$1,000 would have adequately defrayed funeral expenses in 1985,you'd need$3,640 to accomplish the same in 1999, and this doesn't include burial plot and related expenses. " ,�' 'Sy of Funeral Ces�d CQnwm Prektolm.in the m of Cal®fomiI March, 1994,the most current survey available to me. CONTRA COSTA COUNTY EMPL0YEE5 RET2REMENr 4t r 2355 Willow Way,Sake 222,ConcordASSOC1AT10NS,CA 94370-5728 n Telephone: {975}646-3741,Fara (925}646-3747 WILLIAMM. . MERCER tUr0 October 12, 1998 Ms. Patricia Wiegert, CEBS Retirement Administrator Contra Costa County Employees` Retirement Association 1355 Willow Way, Shite 221 Concord, CA 94520 Re: Increase Lump Sum Death Benefit(Revised) Dear Pat: We have revised our lump sum death benefit reserve study dated August 25, ,1998. The revision is necessary because: 1. In our original study, we assumed a $3,000 death benefit will be paid to Tier 2 members from the current Death Benefit Reserve, However, from the discussion at the September Administrative Committee meeting, we understand that only $1,000 will be paid out to Tier 2 members from the Death Benefit Reserve. In other words, members in all tiers will receive $1,000 from the Death Benefit Reserve. 2. The Retirement Association has actually been paying the full $3,000 Tier 2 death benefit from the Death Benefit Reserve. As a result, we understand that a total of $24,000 has been overpaid from the Death Benefit Reserve. We assume in this calculation that the Retirement Board will make a correction by transferring $24,000 from the Employer Advance Reserve to the Death Benefit Reserve. Current Program New Prom $1,000 Death Benefit $5,000 Death Benefit Present value of Future Benefits for: Retired members $1,461,000 $7,305,000 Current inactive vested members $70,000 $351,000 Current active members ZIL4� ��� T $2,242,000 $11,210,000 Death Benefit Reserve Cas of $1,337,148 $1,337,148 12/31/97) Before Correction Death Benefit Reserve Cas of $1,361,148 $1,361,148 12/31/97) After Correction Errcess/(DeflciencY)as of 12/31/97 William M.Mercer,Incorporated Phone 415 743 8700 California Insurance License 0610400 3 Embarcadero Center,Suite 1500 Fax 415 743 8960 Box 7448/94120 San Francisco,CA 94111-4015 W!L A, M&a Ms. Patricia Wiegert, CEBS October 12, 1998 Page 2 . There has been no change to the cost estimate of increasing the current benefit, only to the level of the current Death Benefit Reserve and its associated liability. The followings are points of note: 1. The above liability calculation was based on membership statistics as of December 31, 1997 and, because all members will get the same death benefit, the liability will not be impacted by the transfer of Tier 2 members to Tier 3. 2. We do not have any documentation which would allow us to determine how the current Death Benefit Reserve was established and to explain why the current reserve is deficient. Please t tis know if you have any questions. Since 1 , Drew James F.S.A. DJ/AY:lf r,\YtubiclyreutK„a1cNeM\�etYrrxr1991m Idtl9 a • a 317893. Death of person rocelving retireaaent allowaace;death boa- e&to •operattlas said application of section (a) Upon the death of any person titer retirement and while receiving a t ally from this rfaem,or any superseded syr there shall be Paid to his or bar estate or to the beneficiary as he or she shall nominate by wnritten designation duly executed and fled with the board, an amount dew- mined by the board of supervisors in be provided from contributions of die counn. or district. The board of saperviom shall, by reachdim adopted by majority vote, Fisc and determine an amount that shall not exceed five dousand dollars($3,000). (b) This section applies to every number who dies after this section be- comes operative whether he or she has retired before or after the operative date or effective date of this section. (c) The sheath benefit provided by this section shall be paid is lieu of a payment under Section 31784 or 31799.1. (d) This section shall not be operative in any county until such time as the board of aupenirore shall, by noolution adopted by m*ority vote, make the , provisions of this section applicable in the county. (Added by Ststs. 1997,Ch.439(A.8.407)�Sec. 1.) 131789.5. Death of person while receiving retirement allowance; egrecntlon and applicatio n (a) Upon the death of any p mart after retirement and while receiving a retirement allowance fitan this system,or any superseded system,them shall be paid to his or her estate, or to the beneficiary as he or she shall nominate by written designation duly executed and filed with the board, an amount deter- mined by the board of supervisors. The board of sepwAson shall,by rood a= tion adopted by m4ority vote,fix and determine as amount that shall not exceed five thousand dollars($3,1100). (b) .This sect= applies to every member who dies attar this section be- comes operative whether he or she hiss retired before or after the operative date or effective date of this section. (c) The death benefit provided by this section shall be paid in lieu of a Payment under Section 31729 or 31789.1 and may be paid in part,from contribu. does of the county or district in accordance with Section 31789.and its prat,Som euplus atrnings of the retirement system in accordance with Section 31789.1. (d)-,Fins sacdoa shall not be operative in any county until such Umme its the be"of superb on shall.by raalatiioan adopted by a majority rote.make this sectim applicable in the county and until such time as the board of t,by tosalutaaa adopted by a MaJority vote.detrxmunes that its portion of hitt benefits may be financed from surplus earmap of tit:redrement fused. (e) Upon adoption by any county providing benefits pursuant to this sec- tion,of Article 3.3(Commencing with Section 31310),only that portion of those benefits that is paid fit m surplus arraings described in Section 31392.2 shall be paid,instead,from the Supplemental Rgaree Benefits Roem established pursu- ant to Section 31310.8.