HomeMy WebLinkAboutMINUTES - 04221986 - 2.5 TO•i BOARD OF SUPERVISORS
FROM Phil Batchelor, County Administrator C tra
by C. A. Hammond, Chief Assistant Costa
DATE: April 16, 1986 o �/
SUBJECT: Supplemental Retiree Allowance Permitted by Government Code '"� �'J
Section 31681. 8
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS
1 . Ratify inclusion of a study of implementing Government Code
Section 31681. 8 as a component of the overall actuarial
review made as of January 1, 1986.
2. Withhold action on the recommendation of the Retirement
Board approving a special .one year supplemental allowance of
$3 . 50 per month per year of service, for those who meet the
criteria specified in Section 31681. 8, until a recommenda-
tion is made with respect to transfers on behalf of
employers and employees.
3 . Direct the County Administrator to file a statement with
respect to additional transfers from Undistributed
Retirement System Earnings for consideration of the
Retirement Board on May 5, 1986 .
BACKGROUND
The Retirement Administrator has advised your Board that the
system' s actuary (the firm of Coates, Herfurth & England, Inc. )
was asked to study the cost of implementing Section 31681. 8 of
the Government Code in conjunction with its overall actuarial
review of the system as of January 1, 1986. This section permits
a special retirement increase for those who retired prior to
April 1, 1981, of an amount not to exceed $15. 00 per month times
the member' s years of service (not to exceed 30 years) if the
retiree allowances have lost at least 25% to the Consumer Price
Index since the time of retirement. A special supplement of
$2. 50 per month was authorized pursuant to this section for the
past year payable from Undistributed Retirement Earnings
( "Retirement Surplus" ) .
On April 8, 1986 a representative of the system' s actuary
appeared before the Retirement Board and summarized findings and
conclusions from the actuarial review dated January 1, 1986 .
After the actuary' s presentation, the Retirement Board took
several actions including ( 1) acceptance of the actuarial report
( 2) authorization for a transfer of $1,453 ,494 from Undistrib ed
CONTINUED ON ATTACHMENT: I YES SIGNATURE: 114
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON April 22, 1986 APPROVED AS RECOMMENDED X OTHER
VOTE OF SUPERVISORS
1 HEREBY CERTIFY THAT THIS IS A TRUE
X UNANIMOUS (ABSENT III AND CORRECT COPY OF AN ACTION TAKEN
AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN.
ATTESTED
PHIL BATCHELOR, CLERK OF THE BOARD OF
SUPERVISORS AND COUNTY ADMINISTRATOR
BY �.
M382/7-83 ���/ ,DEPUTY
Earnings to fund an increased special allowance of $3 .50 per
month for qualifying retirees pursuant to Government Code Section
31681. 8, and ( 3 ) fixing a special meeting on May 5, 1986 to
consider additional transfers from Surplus into the
Cost-of-Living Reserve against contributions due from employers
and employees.
From a technical legal point of view, the required actuarial
study pursuant to Section 31681. 8 requires Board of Supervisors
authorization as well as Retirement Board approval. Concurrence
with obtaining this information, which has already been compiled,
is recommended.
The report of the actuary indicates that the system has
$21,136, 000 in Undistributed Earnings ( "Retirement Surplus" ) as
of January 1, 1986. The 1937 Act Retirement Law requires that 1%
of the system' s assets of $474,895,000 be held as a Contingency
Reserve, but remaining Undistributed Earnings are subject to
transfer. The action of the Retirement Board, if also authorized
by your Board, encumbers $1, 453,949 of this amount leaving
roughly $14,000,000 subject to consideration for additional
transfers. The Retirement Board has set a special meeting on the
afternoon of May 5, 1986 to consider further transfers and the
implications of such transfers on overall system funding.
During each of the last several years, earnings of the retirement
system have exceeded the interest assumption allowing for
transfers to both employer and employee accounts to offset
otherwise required costs of the system. Our initial budget
projections for the 1986-1987 fiscal year assume that such a
transfer will again be made to offset otherwise required employer
(county and special districts) contributions. The county has a
very real interest therefore in transfer of such funds and
submittal of a position paper expressing the county' s position as
invited in letter of the Retirement Administrator dated
April 9, 1986 is advisable. A facet of such position is that
transfers should be in proportion to contributions to the system
which are in the ratio of at least two to one for employers as
compared to employees. Because of the financial significance of
these transactions .for both the county and district budgets, and
employees, deferment of action on authorizing distribution of a
portion of the Undistributed Earnings is advisable until the
total transfer plan has been decided upon.
Orig: County Administrator
cc: Retirement Board
Retirement Administrator
County Counsel
Personnel Director
Auditor-Controller