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MINUTES - 05181993 - 1.42
THE BOAR® OR SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA Adopted this Order on May 18, 1993 by the following vote: AYES: Supervisors Powers, Smith, Bishop, McPeak, Torlakson NOES: None ABSENT: None ABSTAIN: None SUBJECT: Actuarial Report of the Employees' Retirement Association IT IS BY THE BOARD ORDERED that receipt of the Actuarial Report prepared for the Board of Retirement, Employees' Retirement Association of the County of Contra Costa by W. F. Corroon Corporation, 50 Fremont Street, 24th Floor, San Francisco 94105-2236, is ACKNOWLEDGED. 1 hereby certify that this Is a true and correct copy of an action taken ;on entered on the minutes of the eoar�+of Supe the date shown. ATTESTED: / 3__.. PHIL BATCH ELO Jerk of t1fe Boara of Supervisors and County Administrator &ut BY - =- -- — ---- ,Deputy cc: Retirement Administrator Auditor-Controller County Administrator L� SSOCIATION / 4/'RETIREMENT rA ES :EMPLOYE f C©NTRA �p�NTY•0 � ndu-n1 o �� a '' � . . ;`' � . i ;,. .,�� , ti• Add`t r j anuary x1, 1993 . A ctuarial R pert .4v C ' 1 v, �•t r5�.�. L v IL cl � 3`• - 1 -. � :-� �•` � � vim,,,` t ""� ,. � .5..� ".� _ �- ,w til, � }� �,J � � �, Y\, 4 '� - � ` `�•. >� x E �'. � fir,-� '�`�. 1' r'Y ^P. �+,�V �. '"$�C `S-•✓ � fi � r'`�. ,�l%.. r9 e .� `�V' ''F 1 1 t � A-� a + r'( ,1--a ° : � � �`t. d,i'. • R �'� 1" 1 f f \ Kj `t 1'p �` � ��� r � � �Y ��� R 1 �� 1 � �~ 'M •\�r �'� t � ":�`� �� , :� 1 r'. x , �' � �,-,. h �}{r, t t \ bra`• ?;�'E' �� r� � � i`� t ti \..� C-1 a- 141 IV 0I _ �, .,fin. � �,� ,y�• F,. f j+D -� '� S,.i � -fes., •�. `-� y � j i .,y�" �,� - / � A ��,• t ✓ �.. -fir, � '�\ t �/ ��, r � c) -.,� - �, � � 1 i .� �.("'_ �l -., �• �.. � t-. � i � v r ( e `A � ter%�5 `s,� .� "li .i k -n � �� � _.- e��a� �• ver �. � � T t ?° 1 G � � a v `n� —�` ��� ;� ���t� �� � ��i4 ' �l'� l ' L L -��,�./'�^ �o•" �� ��i cit - �.. i y l W F CORROON April 12, 1993 RECEIVED W F Corroon 50 Fremont Street APR Q 199 24th Floor y San Francisco, CA CLERK E 'AE:G OF SAFE"i eV Qow- CONTRA COSTA C o Zip Code: 94105-2236 Telephone 415-979-0600 Board of Retirement Fax 415-979-0177 Contra Costa County Employees' Retirement Association 1355 Willow Way, Suite 221 Concord, California 94520 Ladies and Gentlemen: As requested, we have completed the additional studies of the Retirement System as of January 1, 1993. This report contains results from our studies on: 1. Distribution of Undistributed Earnings or Contingency Reserves, 2. Supplemental Post-Retirement Benefits under Section 31681.8. The results presented herein are based upon the same data as was used in the January 1, 1993 valuation study. We wish to express our appreciation for the cooperation we have received throughout the study. Respectfully submitted, WF CORROON Krystyna Upstill, E.A., M.A.A.A. Senior Vic resident and Actuary Drew Ja F. .A., M.A.A.A. Executive Vice President and Actuary KHU/DJ:abd Enclosure ' Actuaries and Consultants W F Corroon Corporation- California, a Willis Corroon Group company COUNTY OF CONTRA COSTA Addendum to January 1, 1993 Actuarial Report TABLE OF CONTENTS DESCRIPTION PAGE Letter of Transmittal I. Results (i) Distribution of Undistributed Earnings or Contingency Reserve.....................................................................2 (ii) Supplemental Post-Retirement Benefits under Section 31681.8.........................................................................8 II. Appendix (ii) Summary of Assumptions and Funding Method.....................11 SECTION RESULTS 1 W DISTRIBUTION OF UNDISTRIBUTED EARNINGS OR CONTINGENCY RESERVE ' A policy was adopted by the Board of Retirement on September 11, 1990, to provide a method of distributing earnings in excess of the assumed interest rate, currently 8.25%. As of December 31, 1992, there was a balance in the Undistributed Earnings account of $9,204,583 and a balance in the Board designated Contingency Reserve of 1 $18,990,914, which represents approximately 0.97% and 2.00% of the total unaudited book value of assets ($949,545,674). Based on the distribution policy, the Undistributed Earnings and Contingency Reserve are available to provide: 1. funding for the Supplemental Cost of Living Benefits to retirees under Section 31681.8 for one year, 2. a one year reduction in employee contributions, and 3. a one year reduction in employer contributions. ' Supplemental Cost of Living Benefits(Section 31681.8) The 1990 the monthly supplemental cost of living benefit of $4.00 per year of service is increased each year as determined by the change in the Consumer Price Index (CPI) as shown below. Dollar Amount Calendar Year Change in CPI* per Year of Service 1990 6.04% $4.00 1991 3.48% $4.24 1992 3.22% $4.39 1993 $4.53 *December to December Index for All Urban Consumers (1982-84 base) for ' the San Francisco-Oakland-San Jose area. Based on the eligibility requirements of Section 31681.8, retirees on or before April 1, 1981 would continue to receive the supplement and the cost would be $1,550,721 using the CPI adjusted amount of $4.53 per year of service. COUNTY OF CONTRA COSTA 2 1 -ADDENDUM I. RESULTS One Year Reduction in Employee Contributions The current aggregate employee rates by plan before and after the 1992 transfers 1 based on the 8-1/4% interest rate and 6-1/4% salary scale assumptions are shown below: GENERAL SAFETY Tier 1 Tier 2 Current rate before 1992 transfer 5.72% 2.48% 6.94% ' Reduction for 1992 transfer 1.10 .51 1.29 Current rate after 1992 transfer 4.62% 1.97% 5.65% 1990 Target rate* 4.33% 1.84% 5.30% *Adjusted for the change in assumptions resulting from the 12/31/91 experience analysis. ' The Board needed $3,105,715 in 1992 to reduce the rates to their 1990 target. The funds were insufficient to meet this goal, but there were funds of $2,462,804 available to reduce the rates to the "current rate after 1992 transfer" as shown above. In order to maintain employee contribution rates at the 1990 target rate, a 1993 t transfer amounting to $3,269,626 would need to be made. This amount is assumed to be a nonrefundable transfer. The aggregate Study #2 employee contribution rates due to this transfer are shown below: ' GENERAL SAFETY Tier 1 Tier 2 Recalculated rate before 1993 transfer 5.73% 2.49% 6.97% Reduction for 1993 transfer 1.40 .65 1.67 Recalculated after 1993 transfer 4.33% 1.84% 5.30% One Year Reduction in Employer Contributions The current employer contribution rates by plan after 1992 transfers based on the 8-1/4% interest rate and 6-1/4% salary scale assumptions are as follows: GENERAL SAFETY ' Tier 1 Tier 2 Current rate before 1992 transfer 16.36% 13.23% 24.29% Reduction for 1992 transfer 1.52 1.48 2.11 Current rate after 1992 transfer 14.84% 11.75% 22.18% 1990 Target rate 14.44% 11.36% 21.63% The Board needed $6,418,720 in 1992 to meet the target. At that time, there was $5,090,058 available to reduce the rates to the "current rate after 1992 transfer" as COUNTY OF CONTRA COSTA 3 -ADDENDUM I. RESULTS ' shown above. In order to maintain employer contribution rates at the 1990 target levels a 1993 transfer of $8,468,988 is required. This would result in the following contribution rates: ' GENERAL SAFETY Tier 1 Tier 2 Recalculated rate before 1993 transfer 16.72% 13.68% 24.99% iReduction for 1993 transfer 2.28 2.32 3.36 Recalculated after 1993 transfer 14.44% 11.36% 21.63% ' Results of Policy Application lication ' The total amount needed to provide the one year reduction in employee and employer contributions and the $4.53 supplemental benefit to retirees is $13,289,385. The balance of the Undistributed Earnings of $9,204,583 is insufficient, but with the 1 additional Board Designated Contingency Reserve of $18,990,914 there are sufficient funds to fully reduce employer and employee contributions to their 1990 target levels and fund the supplemental benefit at the $4.53 level. A breakdown of the required amounts based on our understanding of the policy with the corresponding percentage of the total needed is shown below. Supplemental Benefit $ 1,550,721 11.669% ' Employer Transfer 8,468,988 63.727 Employee Transfer 3,269,676 24.604 Total $ 13,289,385 100.000% ' The distribution of the employee and employer transfers by plan based on this allocation is shown in Tables 1 and 2, following. COUNTY OF CONTRA COSTA 4 —ADDENDUM I. RESULTS Table 1 ' Employee Contribution Rates with Board of Retirement Transfer of$3,269,676 ' (as a percentage of payroll) Net COL Basic & COL with Board with County ' Basic without Basic with of &Board of employer employer COL without Retirement Retirement subvention subvention transfer transfer transfer ' General Tier 1 6.36% 3.18% 2.56% 1.15% 4.33% General Tier 2 2.68% 1.34% 1.15% .50% 1.84% Safety 7.72% 3.86% 3.11% 1.44% 5.30% TOTAL 5.13% 2.56% 2.09% .94% 3.51% Annual Amount General Tier 1 $ 6,214,000 $ 3,107,000 $ 2,492,000 $ 1,124,000 $ 4,231,000 General Tier 2 3,804,000 1,902,000 1,632,000 709,000 2,611,000 Safety 6,774,000 3,387,000 2,729,000 1,264,000 4,651,000 ' TOTAL $16,792,000 $ 8,396,000 $ 6,853,000 $ 3,097,000 $11,493,000 ' Based on total annual salaries of $97,709,000 for General Tier 1 members $141,919,000 for General Tier 2 members, and $87,759,000 for Safety members. 8-1/4% interest rate and 6-1/4% salary scale assumptions. ' COUNTY OF CONTRA COSTA 5 —ADDENDUM I. RESULTS Table 2 Employer Contribution Rates with Board of Retirement Transfer of$8A68.988 ' (as a percentage of payroll) Net COL Basic & COL with Board with County Basic without Basic with of &Board of employer employer COL without Retirement Retirement subvention subvention transfer transfer transfer ' General Tier 1 8.43% 11.12% 5.60% 3.32% 14.44% General Tier 2 7.58% 8.64% 5.04% 2.72% 11.36% Safety 15.74% 19.39% 5.60% 2.24% 21.63% TOTAL 10.02% 12.26% 5.36% 2.77% 15-03% ' Annual Amount General Tier 1 $ 8,237,000 $10,865,000 $ 5,472,000 $ 3,244,000 $ 14,109,000 ' General Tier 2 10,757,000 12,262,000 7,153,000 3,860,000 16,122,000 Safety 13,813,000 17,016,000 4,915,000 1,966,000 18,982,000 ' TOTAL $32,807,000 $40,143,000 $17,540,000 $ 9,070,000 $ 49,213,000 ' Based on total annual salaries of97 7 al Tier 1 members, $ 09,000 for Gener e e , $141,919,000 for General Tier 2 members, and $87,759,000 for Safety members. 8-1J4% interest rate and 6-1J4% salary scale assumptions. ' COUNTY OF CONTRA COSTA 6 —ADDENDUM 1. RESULTS Impact of$1,000,000 Transfers Each $1,000,000 transfer from the Unrestricted Reserve or the Contingency Reserve ' this year will have the effect of reducing the required contribution rate by 0.31% of total payroll for the employer and 0.35% for the members as a group, assuming that the members' transfer is made on a nonrefundable basis. Next year, the contribution rates will increase to the pre-transfer levels unless another similar transfer takes place. A breakdown by group is shown below for each $1,000,000 transfer on behalf of the employees' and employer's cost of living contributions. This breakdown is based on an allocation of the $1,000,000 in proportion to the required contributions. EMPLOYEES EMPLOYER Percent of Nonrefundable Percent of Transfer Payroll Transfer Amount Payroll Amount ' General Tier 1 -.37% $ 364,000 -.32% $ 312,000 General Tier 2 -.17 238,000 -.29 408,000 ' Safety -.45 398,000 -.32 280,000 TOTAL -.35% $ 1,000,000 -.31% $ 1,000,000 If these transfers are used to offset liabilities rather than to replace some of next year's contributions, then each $1,000,000 would reduce the required contribution rates by .02% of total payroll for the employer and by .03% for the employees as a group. These reductions would continue for the next 17-1/2 years for the employer and for about 15 years for the employees (their average working lifetimes). COUNTY OF CONTRA COSTA 7 -ADDENDUM I. RESULTS (H) SUPPLEMENTAL POST-RETIREMENT BENEFITS Over the past several years, supplemental cost of living benefits have been granted to retirees on a one year basis only. The supplemental benefit,has been adopted in ' accordance with Section 31874.3 from 1981 through 1983 and Section 31681.8 from 1984 through 1992. The following table shows a history of the Consumer Price Index (CPI), the aggregate ongoing cost of living adjustment granted to all retired members ' and the supplemental COL benefit expressed as a percentage of total retired payroll at the end of each corresponding year. Supplemental COL Aggregate Ongoing Adjustment as Percentage of Calendar Year CPI COL Adjustment Total Pension Roll ' 1981 12.8% 3.0% 6.5% 1982 7.5% 3.0% 6.5% 1983 .8% 3.0% 4.5% 1984 5.7% 2.8% 2.4%* 1985 4.2% 3.0% 4.5%* 1986 3.0% 3.0% 5.5%* 1987 3.4% 3.0% 5.5%* 1988 4.4% 3.0% 4.8%* 1989 3.9% 3.0% 2.7%* ' 1990 6.0% 3.0% 3.9%* 1991 3.5% 3.0% 3.7%* 1992 3.2% 3.0% 3.3%* 12-year average 4.9% 3.0% 4.5% ' Over the past nine years, the supplemental (Section 31681.8) COL benefit has been granted in the following form: ' Annual ELIGIBLE RETIREES AT Amount BEGINNING OF YEAR Percentage Retirement Granted Increase for Calendar Date of Per Year of Pension Annual Eligible ' Year Eligibility Service Number Roll Increase Retirees 1984 4/1/80 $ 15.00 2,021 $ 13,862,000 $ 487,000 3.5% 1985 4/1/81 $ 30.00 2,176 $ 15,633,000 $ 1,050,000 6.7% 1986 4/1/81 $ 42.00 2,130 $ 15,702,000 $ 1,453,000 9.3% 1987 4/1/81 $ 48.00 2,058 . $ 15,701,000 $ 1,605,000 10.2% 1988 4/1/81 $ 48.00 2,000 $ 15,762,000 $ 1,561,000 9.9% ' 1989 4/1/81 $ 30.00 1,982 $ 15,784,000 $ 960,000 6.0% 1990 4/1/81 $ 48.00 1,942 $ 15,998,000 $ 1,506,000 9.4% 1991 4/1/81 $ 50.88 1,913 $ 15,992,000 $ 1,565,000 9.8% 1992 4/1/81 $ 52.68 1,871 $ 16,114,000 $ 1,565,000 9.7% ' COUNTY OF CONTRA COSTA 8 -ADDENDUM I. RESULTS i Section 31681.8 ' As part of our study we were asked to estimate the supplemental cost of living benefit for 1992 upon adoption of Section 31681.8. In accordance with this Section, the additional benefit is payable to those retired members whose unused Consumer Price Index increase accumulations equal or exceed 25%, as established by Section 31870.1, and to beneficiaries of members who would have been eligible. The maximum monthly or quarterly benefits are equal to $15 for each year of full County service not to exceed 30 years. Most of the beneficiaries receive 60% of the benefit that would have been payable to the ' member. The table below illustrates the impact of providing an increase of $1 per month ($12 per year) for each year of service to members who retired before April 1, 1981, their ' beneficiaries, and beneficiaries of active members who died before April 1, 1981. This $1 per month supplemental benefit would be equivalent to an increase of 2.1% in the total basic and COL benefit of members eligible for this increase. The distribution of all retired members and beneficiaries on the pension roll by amount is shown, along with the total annual increase in benefits for all members falling in a particular category. 1993 ANNUAL INCREASE FOR $1 PER MONTH $0 $1 -$99 $100 -$199 $200-$299 $300-$359 $360 Total ' GENERAL Service 1,561 154 404 276 95 59 2,549 $ 0 $ 9,601 $ 58,970 $ 66,914 $ 30,348 $ 21,240 $ 187,073 ' Disability 163 30 35 30 17 35 310 $ 0 $ 1,992 $ 5,340 $ 7,176 $ 5,472 $ 12,600 $ 32,580 ' Beneficiaries 144 159 150 43 6 11 513 $ 0 $ 9,839 $ 21,789 $ 9,650 $ 1,908 $ 3,960 $ 47,146 Total 1,868 343 589 349 118 105 3,372 $ 0 $ 21,432 $ 86,099 $ 83,740 $ 37,728 $ 37,800 $ 266,799 SAFETY Service 204 3 8 65 28 10 318 $ 0 $ 108 $ 1,317 $ 16,920 $ 8,994 $ 3,600 $ 30,939 Disability 91 4 6 13 23 39 176 $ 0 $ 324 $ 957 $ 3,300 $ 7,380 $ 14,040 $ 26,001 Beneficiaries 31 9 34 18 9 14 115 $ 0 $ 596 $ 5,280 $ 4,535 $ 2,928 $ 5,245 $ 18,584 ' Total 326 16 48 96 60 63 609 $ 0 $ 1,028 $ 7,554 $ 24,755 $ 19,302 $ 22,885 $ 75,524 TOTAL 2,194 359 637 445 178 168 3,981 $ 0 $ 22,460 $ 93,653 $108,495 $ 57,030 $ 60,685 $ 342,323 ' COUNTY OF CONTRA COSTA 9 -ADDENDUM I. RESULTS 1 1 sEcIIoN APPENDIX (ii) SUMMARY OF ASSUMPTIONS AND FUNDING METHOD Current Assumptions ' Valuation Interest Rate 8-1/4% Post-Retirement Mortality (a) Service General Males 1983 Group Annuity Mortality Table — Male set ahead one year General Females 1983 Group Annuity Mortality Table — Female set ' ahead two years Safety 1983 Group Annuity Mortality Table — Male set ahead one year (b) Disability 1981 Disability Mortality Table (c) For Employee ' Contribution Purposes General 1983 Group Annuity Mortality Table — Male setback two years Safety 1983 Group Annuity Mortality Table — Male set ahead one year ' Pre-Retirement Mortality Based upon the Experience Analysis as of 12/31/91 Withdrawal Rates Based upon the Experience Analysis as of 12/31/91 Disability Rates Based upon the Experience Analysis as of 12/31/91 ' Service Retirement Rates Based upon the Experience Analysis as of 12/31/91 Salary Scales Total increases of 6-1/4% per year reflecting 5-1/4% for inflation and approximately 1% for merit and longevity Assets Actuarial Book Value ' Funding Method The System's liability is presently being funded on the Entry Age Normal method with a Supplemental Present Value. The amortization period for the Supplemental Present Value is 17-1/2 years from the valuation date of January 1, 1993. COUNTY OF CONTRA COSTA 11 -ADDENDUM II. APPENDIX ` EMPLOYEES', RETIREMENT ASSOCIATION OF` , THE CQUNTY.OF CONTRACOSTA ,ACTUARIAL REPORT_ - k Prepared for the Board. of'-Retirement as,of January 1, 1993 77 IA ' - 1, ' ,. / - - -•( " ,} J ., - _t•,l / r `y 1 . " I ' r ' � .. � _� �(. l r'_ Jh .. '� -. ,_, t 4 r� t � �-- t .'� � _ � � �. r s L � - _ G� - � , ._ � i I- � '� • .� �. - � r r . . i . r�. �`,� � � :� �„ .. � / �'} � . . , ��.� r < - � j �.: � � � .. ) a , / a t I \ r ~ l � r v t�' r .. `�` � \ r' •� F •'/ � ' .. r �i 'r .. � yam' �� ;, i i � ` . � yyr �. t .. � � �� fr � ._ �� ' '^� • • � �',. .t� � � . , �� .� _ � �� �'�' ,,' _ � � , ,-.`, _ - -� � - �1 W F CORROON April 12, 1993 APR 3 01993 W F Corroon CLLRKa FeD 50 Fremont Street C�NTRq CpF SRV/S 24th Floor STA CO. ORS San Francisco, CA Board of Retirement Zip Code. 94105-2236 Contra Costa County Employees' Telephone 415-979-0600 Retirement Association Fax 415-979-0177 1355 Willow Way, Suite 221 Concord, California 94520 Ladies and Gentlemen: Pursuant to our agreement, we have completed pleted an actuarial valuation of the County's Retirement System as of January 1, 1993, and are pleased to submit our �t report on the results of the survey. This report describes in detail the results arising from our study. We look forward to discussing this report with the Board and wish to express our appreciation for the cooperation extended to us during the course of this assignment. Respectfully submitted, WF CORROON Krystyn H. Upstill, E.A., M.A.A.A. Senior ce President and Actuary w Jame F.S.A., M.A.A.A. Execu ce President and Actuary KHU/DJ:abd Enclosure Actuaries and Consultants W F Corroon Corporation-California, a Willis Corroon Group company :rx .. .. .,..«--tv �� � �� .wy'.r h ,I I -� t �;� :� COUNTY OF CONTRA COSTA JANUARY 1, 1993 TABLE OF CONTENTS DESCRIPTION PAGE I. Report Preface (i) Introduction.......................................................................................2 (ii) Executive Summary.........................................................................3 (iii) Summary of Statistical Information............................................5 II. Actuarial Assumptions (i) Noneconomic Actuarial Assumptions.......................................7 (ii) Economic Actuarial Assumptions..............................................10 Ill. Valuation Results (i) Contribution Rates.........................................................................15 (ii) Funding Progress of the System..................................................21 (iii) Actuarial Balance Sheet................................................................23 N. Appendix (i) Major Provisions of the Pension Plan.......................................26 (ii) Summary of Assumptions and Funding Method..................29 (iii) Total Annual Salary and Active Membership Distribution.............................................................30 (iv) Summary of Monthly Allowances Being Paid........................33 (v) Total Annual Benefit and Retired Membership Distribution.............................................................34 (vi) Probabilities of Separation Prior to Retirement.......................37 (vii) Member Contribution Rates........................................................40 (viii) Accounting Balance Sheet............................................................42 (ix) Ratio of Current Compensation to Compensation Anticipated at Retirement Age....................................................43 (x) Life Expectancy after Service Retirement..................................44 (xi) Life Expectancy after Disability Retirement..............................45 rsEciorvl REPORT PREFACE 0) INTRODUCTION ' As requested, we performed an actuarial valuation of the County Retirement System as of January 1, 1993, using the latest statistical information available as to the active, inactive, and retired membership. The results presented herein are based upon the unaudited statistical and financial ' data as supplied to us by the Retirement Office and the benefits for General members under Sections 31676.11 and 31751, and for Safety members under Section 31664 of the County Employees Retirement Law of 1937. r f ' 2 COUNTY OF CONTRA COSTA � I. REPORT PREFACE 0D EXECUTIVE SUMMARY A brief summary of the results of our valuation is presented below. More comprehensive information on each topic is presented in the relevant section of the ' report. Section I- Report Preface A comparison between membership data as of January 1, 1992 and 1993 is presented in subsection (iii). In comparing the data, we found that the number of active members decreased by 2%, the total retired pension roll increased by 11% and the Actuarial Book Value of assets went up by 12%. ' Section 11-Actuarial Assumptions (i) NONECONOMIC ACTUARIAL ASSUMPTIONS The triennial experience study was conducted at the time of the January 1, 1992 valuation. At that time, data for the previous three years was analyzed regarding service retirement, deaths, disablements and terminations of employment and was compared to the incidence expected using the actuarial assumptions current at that time. Where the results differed materially, the actuarial assumptions were modified. These assumptions continue to be used until the next experience analysis due to be performed at the time of the January 1, 1995 actuarial study. ' (ii) ECONOMIC ACTUARIAL ASSUMPTIONS In order to insure that the same inflationary expectations are consistently included in all of the economic assumptions, we have utilized a component approach in deriving our economic assumptions. Specifically, we have assumed that the investment return earned over the long-term is made up of two components. • inflation, and • real rate of return. In addition, we have assumed that future salary increases will be made up of components for: • inflation, and • merit and longevity increases. In our report we are recommending that the current 5-1/4% inflation assumptions and the 3% future real rate of return continue to be used. In combination, these assumptions equate to an 8-1/4% long-term investment return assumption. 3 COUNTY OF CONTRA COSTA � I. REPORT PREFACE ' The same inflation assumption, 5-1/4%, is reflected in the recommended long-term salary increase assumption. ' Section 111- Valuation Results (i) CONTRIBUTION RATES ' The recalculated rates are higher for the Employer and for the employees. The Employer rate was primarily affected by higher than expected salary increases. These rates are discussed in more detain in 1 Section IIIM. (ii) FUNDING PROGRESS OF THE SYSTEM In order to judge the funding progress of the System, a comparison was made of the System's liabilities for benefits earned to date to the current value of assets. For this purpose, liabilities were calculated on a ' Plan Termination basis. These liabilities include all liabilities for current retired and inactive members, including future automatic cost- of-living increases. For current active members, the liability measured is the proportion of projected retirement benefits earned to date, where the proportion was measured based on service-to-date divided by service-earned-to-retirement. Furthermore, the plan termination basis ' assumes that the plan terminates as of January 1, 1993 and salaries are frozen at the current levels. ' The liabilities are higher due to higher than expected salary increases given to many of the active members which in turn leads to higher accrued benefits to be paid at retirement. The net assets at actuarial ' book value have also increased due to the realization under this asset method of unrealized gains. The resulting funding ratio has increased from 98% to 100% since the last valuation. (iii) ACTUARIAL BALANCE SHEET The actuarial balance sheet compares the present value of all future benefits anticipated to be paid for the current membership with the sources of funds to be used to provide these benefits. It illustrates that if recommended contribution levels made in the future under the current actuarial assumptions prove out over time, current assets plus future employer and member contributions will be adequate to cover all future benefit payments for the current membership. Section 1V-Appendix A summary of the major provisions of the System is included, as well as detailed ' information on the actuarial assumptions and demographic information. General and Safety member contribution rates by entry age are shown in subsection (vii), separately for Tier 1, Tier 2 and Safety. 4 COUNTY OF CONTRA COSTA � 1. REPORT PREFACE (iii) SUMMARY OF STATISTICAL INFORMATION ' Based upon the unaudited statistical and financial data received, we show a comparison of information used in the January 1, 1992 and January 1, 1993 actuarial valuations of your System. Percentage Increase (Decrease) January 1,1992 January 1,1993 During the Year 1 Active Members Tier 1 - General Number 2,327 2,210 (5)% Total annual payroll $ 96,543,000 $ 97,709,000 1% Average monthly salary $ 3,457 $ 3,684 7% Tier 2 - General Number 3,860 3,871 0% Total annual payroll $ 129,094,000 $ 141,919,000 10% Average monthly salary $ 2,787 $ 3,055 10% Safety ' Number 1,564 1,510 (3)% Total annual payroll $ 80,866,000 $ 87,759,000 9% Average monthly salary $ 4,309 $ 4,843 12% ' Total Number 7,751 7,591 (2)% Total annual payroll $ 306,503,000 $ 327,387,000 7% Average monthly salary $ 3,295 $ 3,594 9% Retired Members ' Number 3,876 3,981 3% Total annual pension roll (basic) $ 37,046,000 $ 41,210,000 11% Average monthly allowance (basic) $ 796 $ 863 8% Total annual pension roll (basic and COL) $ 46,937,000 $ 52,304,000 11% ' Average monthly allowance (basic and COL) $ 1,009 $ 1,095 9% Inactive Vested Members Number 490 546 11% Assets* rActuarial Book Value $ 926,448,000 $ 1,041,163,000 12% Book Value $ 853,878,000 $ 949,546,000 11% Market Value $ 1,001,259,000 $ 1,064,571,000 6% *Unaudited 5 COUNTY OF CONTRA COSTA � I. REPORT PREFACE SECTION II ACTUARIAL ASSUMPTIONS 1 1C)i NONECONOMIC ACTUARIAL ASSUMPTIONS ' Probabilities of Separation From Service Prior to Retirement ' At the time of the January 1, 1992 actuarial valuation, an analysis was made, based upon each member's sex and attained age as of the valuation date, to determine the probability of members leaving the System because of nonvested withdrawal, death, disability retirement, service retirement, and vested withdrawal. The probabilities developed at that time are again being used as the basis of determining costs in this study. The rates of separation from active service are listed in Section MO. However, it is difficult to obtain the meaning of the various changes in the probabilities of separation by examining each one of them separately. For example, if there is more turnover, there will be fewer retirements. Because of this interdependency, it is helpful to develop another table which takes this into account. Exhibit 1 on the following page shows for both General and Safety members the expected number of present active members who will eventually separate from the System for each of the various causes of termination, based on the current assumptions. In Exhibit 2, we have used these results to graphically display the probabilities of separation from the System. For purposes of the graph, we have combined the following: • service retirement and terminated vested into Service Retirement, • ordinary and duty disabilities into Disability, • ordinary death, duty death and death while eligible into Death, and • General Tier 1 and Tier 2 experience into General. Post-Retirement Mortality ' At the time of the January 1, 1992 actuarial study, the mortality after service and after disability retirement was also analyzed. The life expectancies based on tables adopted at that time and still in use are shown in Section IV(x) and IV(xi). Mortality Basis for Basic Employee Contribution Rates In accordance with the 1937 County Retirement Act, we have calculated contribution rates which are based upon a sex-independent basis under benefit Section 31676.11 and 31751 for General members, and Section 31664 for Safety ' members. The resulting mortality table is the 1983 Male Group Annuity Mortality Table set back two years for General members and set ahead one year for Safety members. These tables continue to represent the average mortality for each of the groups as a whole, and in our opinion area fair and adequate sex-independent mortality tables. 7 COUNTY OF CONTRA COSTA II. ACTUARIAL ASSUMPTIONS ' Exhibit 1 Expected Number to Eventually Separate for Indicated Cause (Based on Current Actuarial Assumptions) ' GENERAL MALE MEMBERS Number Death Present of Ordinary Ordinary While Duty Duty Terminated Age Actives Withdrawal Death Disability Service Eligible Death Disability Vested 20-24 18 15 0 0 2 0 0 0 1 25-29 112 78 1 1 19 1 0 2 10 30-34 224 123 3 4 60 2 0 6 26 35-39 291 112 5 7 117 3 1 11 35 40-44 370 93 7 10 201 5 0 17 37 45.49 372 58 8 11 251 5 0 17 22 1 50-54 253 24 5 7 196 3 0 10 8 55.59 190 11 3 5 160 2 0 6 3 60-64 87 2 1 2 78 1 0 2 1 ' 65&OVER 24 0 0 1 23 0 0 0 0 TOTAL 1,941 516 33 48 1,107 22 1 71 143 (26.6%) (1.7%) (2.5%) (56.9%) (1.1%) (0.1%) (3.7%) (7.4%) GENERAL FEMALE MEMBERS Number Death Present of Ordinary Ordinary While Duty Duty Terminated Age Actives Withdrawal Death Disability Service Eligible Death Disability Vested 20-24 48 40 0 1 4 0 0 0 3 25-29 266 197 2 4 41 1 0 2 19 30-34 496 313 6 10 117 3 1 5 41 35-39 634 310 9 20 228 5 1 9 52 40-44 787 269 14 31 389 8 1 14 61 4549 750 165 14 31 471 8 1 14 46 50-54 559 70 10 22 421 6 0 9 21 55-59 363 24 5 11 307 3 0 5 8 60-64 167 5 2 4 153 1 0 1 1 65&OVER 70 0 1 1 68 0 0 0 0 TOTAL 4,140 1,393 63 135 2,199 35 4 59 252 (33.6%) (1.5%) (3.3%) (53.2%) (0.8%) (0.1%) (1.4%) (6.1%) SAFETY MEMBERS Number Death Present of Ordinary Ordinary While Duty Duty Terminated Age Actives Withdrawal Death Disability Service Eligible Death Disability Vested 20-24 23 10 0 0 8 0 0 3 2 25-29 197 59 1 4 86 2 1 32 12 30-34 258 48 1 6 136 3 2 47 15 35-39 246 23 1 6 153 3 2 48 10 40-44 255 13 1 6 177 3 1 49 5 4549 284 6 1 6 218 3 1 47 2 50-54 163 1 0 2 138 2 0 20 0 55&OVER 84 0 0 1 78 0 0 5 0 TOTAL IX 160 5 31 994 16 7 251 46 (10.6%) (0.3%) (2.1%) (65.8%) (1.1%) (0.5%) (16.6%) (3.0%) 8 COUNTY OF CONTRA COSTA II. ACTUARIAL ASSUMPTIONS Exhibit 2 Expected Percentage to Eventually Separate for Indicated Cause (Based on Current Actuarial Assumptions) General Male Members 70.0% 64.3% 60.0% 50.0% 40.0% 30.0% 26.6% 20.0% 10.0%n 6.2% 2.9% 0.0% Withdrawal Service Retirement Disability Death 70.0% General Female Members 60.0% 59.3% 50.0%n 40.0% 33.6% 30.0% 20.0% 10.0% 4.7% 2.4% 0.0% Withdrawal Service Retirement Disability Death 70.0% 68.8% Safety Members 60.0% 50.0% 40.0% .- 30.0% 20.0% 18.7% 1 10.0% 0.6% 0.0% Withdrawal Service Retirement Disability Death 9 COUNTY OF CONTRA COSTA II. ACTUARIAL ASSUMPTIONS (H) ECONOMIC ACTUARIAL ASSUMPTIONS Interest Rate and Salary Scale Assumptions Adopted by the Board To assist in the selection of appropriate interest assumptions to use in this study, we had available financial information showing the Retirement Fund's investment earnings. The average rates of return on the Fund's investments since 1977 were as follows, based on the book value of assets: Calendar Year Average Rate of Return Calendar Year Average Rate of Return 1977 6.75% 1985 11.11% 1978 6.92% 1986 13.38% 1979 8.02% 1987 8.59% 1980 8.00% 1988 8.47% 1981 6.89% 1989 11.39% 1982 10.93% 1990 5.40% 1983 12.10% 1991 9.94% 1984 8.92% 1992 10.38%* 16-year average 9.20% *Unaudited. The average salary increases and the average annual Consumer Price Index (CPI) ' increases since 1977 were as follows: Average Average Average Average Annual Annual Annual Annual Salary CPI Salary CPI Calendar Year Increase Increase Calendar Year Increase Increase 1977 7.6%* 7.6% 1985 5.0% 4.2% 1978 8.4%* 9.3% 1986 7.0% 3.0% 1979 8.4%* 8.7% 1987 5.0% 3.4% 1980 7.8%* 15.2% 1988 5.4% 4.4% 1981 7.5% 12.8% 1989 6.5% 3.9% 1982 9.3% 7.5% 1990 6.7%** 6.0% 1983 2.2% 0.8% 1991 4.2% 3.5% 1984 8.0% 5.7% 1992 8.9% 3.2% 16-year average 6.7% 6.2% 1 *Estimated. **Restated November 22, 1991. 10 COUNTY OF CONTRA COSTA II. ACTUARIAL ASSUMPTIONS r As an illustration of the historical inflation rates exhibited by the U.S. economy, the table shown below provides the average compound rates of increase in the Consumer Price Index through 1992 over selected periods. HISTORIC CPI INCREASES Period Average Period Average Last 90 Years 3.3% Last 30 Years 5.3% Last 70 Years 3.2% Last 20 Years 6.3% Last 50 Years 4.4% Last 10 Years 3.8% The inflationary salary assumptions used by the 1937 Act Counties are shown below. CURRENT LONG-TERM INFLATIONARY ASSUMPTIONS USED BY 1937 ACT COUNTIES Retirement System Inflation Retirement System Inflation Alameda 5.50% Sacramento 5.00% Contra Costa 5.25% San Bernardino 5.00% Fresno 5.00% San Diego 5.00% Imperial 3.50% San Joaquin 5.50% Kern 4.00% San Mateo 5.00% Los Angeles 5.00% Santa Barbara 5.00% Marin 5.00% Sonoma 5.50% Mendocino 5.50% Stanislaus 5.50% Merced 5.50% Tulare 5.00% Orange 4.50% Ventura 5.25% Average 5.03% In the past eleven years, the interest and inflationary salary scale assumptions for your retirement plan were.as follows: INFLATIONARY SALARY ACTUARIAL INTEREST RATE SCALE ASSUMPTION GRADED VALUATION DATE ASSUMPTION From To January 1, 1982 8.00% 6.00% 5.25% January 1, 1983 8.00% 6.00% 5.25% January 1, 1984 8.50% 5.75%* January 1, 1985 8.50% 5.75% January 1, 1986 8.50% 5.75% January 1, 1987 8.25% 5.50% January 1, 1988 8.25% 5.50% January 1, 1989 8.25% 5.50% 1 January 1, 1990 8.25% 5.50% January 1, 1991 8.25% 5.50% January 1, 1992 8.25% 5.25% January 1, 1993 8.25% 5.25% Not graded since January 1, 1984. ' 11 COUNTY OF CONTRA COSTA � II. ACTUARIAL ASSUMPTIONS In addition to the inflation assumption, merit and longevity increases ranging from about 5% to 1/2% per year (depending on the member's classification and age) are included in our salary projections. The effect of the merit and longevity assumption is to add an increase of about 1% per year to the inflationary salary projections. Interest Rate and Salary Scale Assumptions Adopted by Board Calculations in this study have been based on the current economic assumptions adopted by the Board for the System's January 1, 1993 valuation: Interest Rate — 8-1/4% Salary Scale — 5-1/4% inflation rate plus merit/longevity increase, which averages to about 1% Actuarial Value of Assets The Retirement Board has adopted, effective December 31, 1985, the use of a modified book value of the Fund's assets for purposes of calculating the required contribution rates. Under this approach more recognition is given each year to total earnings of the Fund. The approach used by your System is to spread the unrealized gains and losses over five years. In other words, only 20% of unrealized gains and losses are to be recognized in any one year. Under the modified approach, the valuation assets, which we called the Actuarial Book Value, were arrived at as follows: 1. Unrealized Gains (Losses) Total Increase In Unrealized Number of Total Unrealized Gains Calendar Gains(Losses) Years (Losses)Recognized Year 100% 20% to 12/31/92 to 12/31/92 1988 $ 29,416,728 $ 5,883,345 5 $ 29,416,728 I 1989 $ 55,875,910 $ 11,175,182 4 $ 44,700,728 1990 $ 11,340,899 $ 2,268,180 3 $ 6,804,540 1991 $ 53,397,185 $ 10,679,437 2 $ 21,358,874 1992 $ (32,356,600) $ (6,471,320) 1 $ (6,471,320) 2. Total Gains (Losses) Recognized to December 311 1992 $ 95,809,550 3. Book Value as of December 31, 1992 (unaudited) — less payables $ 927,984,585 4. (2. + 3.) $ 1,023,794,135 r5. Corridor Limit: (Net assets (& market: $1,043,009,870) a. 80% of Market Value (less payables) $ 834,407,896 ' b. 120% of Market Value (less payables) $ 1,251,611,844 6. Item 4. After Corridor Applied $ 1,023,794,135 7. Actuarial Book Value Ratio (6./3.) 1.10324 *Total unrealized gains as of 12/31/88. 12 COUNTY OF CONTRA COSTA II. ACTUARIAL ASSUMPTIONS Each year for the next four years, an additional 20% of the 1992 increase in unrealized loss, or $6,471,320 will be subtracted from your Actuarial Book Value. An additional 1991 amount of $10,679,437 will continue to be added for the next three years, an additional 1990 amount of $2,268,180 will continue to be added for the next two years, and an additional 1989 amount of $11,175,182 will be added for one more year. In addition, future unrealized gains or losses will also be recognized in a similar manner under this method. The ratio arrived at in item 7 on the previous page, is only used to adjust the reserves used in determining the employer contribution rate. These reserves are the Member Deposits, County and District Advance, Retired, and Cost-of-Living Reserves. Total assets at Actuarial Book, with the ratio applied only to these reserves, are $1,041,163,407. These assets were derived as follows: 1. Member Deposit, County and District Advance, Retired, and Cost-of-Living Reserves $ 887,424,765 2. Actuarial Book Value Ratio 1.10324 3. Item 1. x Item 2. $ 979,042,498 4. Contingency, Board Designated, Unrestricted, and Other Reserves Excluded from Contribution Determination and Accounts Payable $ 62,120,909 5. Actuarial Value of Assets: (3. + 4.) $1,041,163,407 6. Accounts Payable $ 21,561,089 7. Net Actuarial Value of Assets for Funding Ratio: (5. - 6.) $1,019,602,318 13 COUNTY OF CONTRA COSTA II. ACTUARIAL ASSUMPTIONS III VALUATION RESULTS 1 1 W CONTRIBUTION RATES 1 A comparison of employer and employee total (basic and cost-of-living) contribution rates is shown below. The rates are based upon benefit Section 31676.11 1 for Tier 1 General members, Section 31751 for Tier 2 General members, and Section 31664 for Safety members. These rates also include 50% subvention by the employer of the members' basic contribution rates. The dollar amounts reflect the salaries at tthe valuation date. CONTRIBUTION RATES AND ANNUAL AMOUNTS EMPLOYER EMPLOYEE % of Payroll Annual Amount % of Payroll Annual Amount Current rates @ 8-1/4% interest and 6-1/4% salary scale 1. Before 1992 Transfers from Undistributed Earnings 17.13% $56,077,000 4.64% $ 15,198,000 2. After 1992 Transfers from Undistributed Earnings 15.47% $50,641,000 3.73% $ 12,205,000 Recalculated rates @ 8-1/4% ' interest and 6-1/4% salary scale before transfers 17.62% $57,683,000 4.66% $ 15,249,000 In comparing the current rates (before 1992 transfers) with the recalculated rates (Study #1), each based on the same economic assumptions, we note an increase in the employer and the member rates. The employer costs increased due to higher than expected salary increases (inlcuding 1992 retroactive increases). The increase in the actuarial book value of assets offset 1 some of these increases in employer rates. The employee contribution rates increased slightly due to a change in the demographics of.the active group. More detailed comparisons of the basic and cost of living current and recalculated contribution rates are shown in Tables A and B following this section. Table A shows a comparison of the average employee contribution rates; Table B shows a comparison of the employer contribution rates. It should be noted that, in each of these tables, the current rates are shown with and without the reductions due to the 1992 transfers from undistributed earnings. Member contributions are payable over the employee's future working lifetime. The employer rates reflect the Entry Age Normal Funding method. Under this method, ' part of the liability (normal cost) is being paid over the future working lifetimes of ' 15 COUNTY OF CONTRA COSTA III. VALUATION RESULTS 1 the members and part (the supplemental liability cost) is being amortized over 17-1/2 years from the valuation date. In addition to the contribution rates we have included in Section III(ii) the funding progress ratio on a Plan Termination basis. Recommendation We recommend that the Board adopt the recalculated contribution rates based on the current economic and noneconomic assumptions. Contra Costa County is in a sound funding position. This statement is made based on the funding progress ratio as calculated in Section III(ii) of this report and upon the anticipated adoption of the above recommendation. 1 ' 16 COUNTY OF CONTRA COSTA III. VALUATION RESULTS r Table A r Comparison of Employee Contribution Rates 8-1/4% Interest and 6-1/4% Salary Scale Assumptions CURRENT RATES (BEFORE 1992 TRANSFERS) GENERAL SAFETY Tier 1 Tier 2 r %of Annual %of Annual % of Annual Payroll Amount Payroll Amount Payroll Amount Basic without ' subvention 6.36% $ 6,214,000 2.68% $ 3,804,000 7.72% $ 6,774,000 Basic with subvention 3.18% $ 3,107,000 1.34% $ 1,902,000 3.86% $ 3,387,000 Cost of Living 2.54 2,481,000 1.14 1,618,000 3.08 2,703,000 Total with subvention 5.72% $ 5,588,000 2.48% $ 3,520,000 6.94% $ 6,090,000 Average rate for the total group with subvention = 4.64% Annual amount for the total group with subvention = $15,198,000 CURRENT RATES (AFTER 1992 TRANSFERS) GENERAL SAFETY ' Tier 1 Tier 2 % of Annual % of Annual % of Annual Payroll Amount Payroll Amount Payroll Amount ' Basic without subvention 6.36% $ 6,214,000 2.68% $ 3,804,000 7.72% $ 6,774,000 Basic with subvention 3.18% $ 3,107,000 1.34% $ 1,902,000 3.86% $ 3,387,000 Cost of Living 1.43 1,397,000 .63 894,000 1.73 1,518,000 Total with subvention 4.61% $ 4,504,000 1.97% $ 2,796,000 5.59% $ 4,905,000 Average rate for the total group with subvention = 3.73% Annual amount for the total group with subvention = $12,205,000 r Note: Contribution amounts are based on _total annual salaries of $97,709,000 for Tier 1 General members, $141,919,000 for Tier 2 General members, and $87,759,000 for Safety members. 17 COUNTY OF CONTRA COSTA III. VALUATION RESULTS 1 1 ' Table A Comparison of Employee Contribution Rates (Continued) RECALCULATED RATES (Rates Updated by 12/31/92 Study) GENERAL SAFETY Tier 1 Tier 2 %of Annual %of Annual % of Annual Payroll Amount Payroll Amount Payroll Amount Basic without subvention 6.36% $ 6,214,000 2.68% $ 3,804,000 7.72% $ 6,774,000 Basic with subvention 3.18% $ 3,107,000 1.34% $ 1,902,000 3.86% $ 3,387,000 Cost of Living 2.55 2,492,000 1.15 1,632,000 3.11 2,729,000 Total with subvention 5.73% $ 5,599,000 2.49% $ 3,534,000 6.97% $ 6,116,000 Average rate for the total group with subvention = 4.66% Annual amount for the total group with subvention = $15,249,000 Note: Contribution amounts are based on total annual salaries of $97,709,000 for Tier 1 General members, $141,919,000 for Tier 2 General members, and $87,759,000 for Safety members. r r r 1 r 1 r1$ COUNTY OF CONTRA COSTA III. VALUATION RESULTS r t ' Table B Comparison of Employer Contribution Rates 8-1/4% Interest and 6-1/4% Salary Scale Assumptions CURRENT RATES (BEFORE 1992 TRANSFERS) GENERAL SAFETY Tier 1 Tier 2 % of Annual %of Annual %of Annual Payroll Amount Payroll Amount Payroll Amount Basic without subvention 8.20% $ 8,013,000 7.25% $ 10,288,000 15.17% $ 13,313,000 Basic with subvention 10.89% $ 10,641,000 8.31% $ 11,793,000 18.82% $ 16,516,000 Cost of Living 5.47 5,345,000 4.92 6,982,000 5.47 4,800,000 Total with subvention 16.36% $ 15,986,000 13.23% $ 18,775,000 24.29% $ 21,316,000 Average rate for the total group with subvention = 17.13% Annual amount for the total group with subvention = $56,077,000 CURRENT RATES (AFTER 1992 TRANSFERS) GENERAL SAFETY Tier 1 Tier 2 % of Annual %of Annual %of Annual Payroll Amount Payroll Amount Payroll Amount Basic without subvention 8.20% $ 8,013,000 7.25% $ 10,288,000 15.17% $ 13,313,000 Basic with subvention 10.89% $ 10,641,000 8.31% $ 11,793,000 18.82% $ 16,516,000 Cost of Living 3.95 3,860,000 3.44 4,882,000 3.36 2,949,000 ' Total with subvention 14.84% $ 14,501,000 11.75% $ 16,675,000 22.18% $ 19,465,000 L Average rate for the total group with subvention = 15.47% Annual amount for the total group with subvention = $50,641,000 Note: Contribution amounts are based on total annual salaries of $97,709,000 for Tier 1 General members, $141,919,000 for Tier 2 General members, and $87,759,000 for Safety members. 19 COUNTY OF CONTRA COSTA � III. VALUATION RESULTS Table B Comparison of Employer Contribution Rates (Continued) RECALCULATED RATES (Rates Updated by 12/31/92 Study) GENERAL SAFETY Tier 1 Tier 2 %of Annual %of Annual % of Annual Payroll Amount Payroll Amount Payroll Amount Basic without subvention 8.43% $ 8,237,000 7.58% $ 10,757,000 15.74% $ 13,813,000 ' Basic with subvention 11.12% $ 10,865,000 8.64% $ 12,262,000 19.39% $ 17,016,000 Cost of Living 5.60 5,472,000 5.04 7,153,000 5.60 4,915,000 Total with subvention 16.72% $ 16,337,000 13.68% $ 19,415,000 24.99% $21,931,000 Average rate for the total group with subvention = 17.62% Annual amount for the total group with subvention = 57,683,000 Note: Contribution amounts are based on total annual salaries of $97,709,000 for Tier 1 General members, $141,919,000 for Tier 2 General members, and 1 $87,759,000 for Safety members. COUNTY OF CONTRA COSTA III. VALUATION RESULTS a (H) FUNDING PROGRESS OF THE SYSTEM L Funding Ratio - "Plan Termination"Assumption A comparison of the measurement of the funding progress of the System in -successive valuations is an important criteria for determining the soundness of a pension system. There are various methods of measuring the progress of the System's funding, but we believe the most useful measure is the ratio of the System's assets to its obligation for benefits earned to date. Unless benefit improvements are adopted, assumptions are strengthened, or actuarial losses are incurred, assets typically increase at a greater rate than the liabilities for benefits earned to date in an open system. This will have the effect of increasing the funding * progress ratio in future years. At the time of the last valuation, we computed the ratio of the assets of the System to the obligation for benefits earned to date based on a Plan Termination assumption. We believe that this measure can help the Board to monitor the progress of the funding status of the System. To this end, we include below the funding ratio based on the 8-1/4% interest rate.assumption. _ 8-1/4% INTEREST RATE 6-1/4% SALARY SCALE ASSUMPTION Previously 7 Calculated Recalculated 1. Present Value of Benefits* $ 915,020,000 $ 1,016,174,000 �; 2. Assets at Actuarial Book Value* $ 898,749,000 $ 1,019,602,000 I� 3. Funding Ratio on Actuarial Book Value 98% 100% 7" *Both the liabilities and assets exclude accounts payable. The present value figures include all liabilities of the System for basic and cost of living benefits granted to members and beneficiaries already on the pension roll. All basic and cost of living liabilities of active and vested inactive members are included �t for every year of service already earned at the valuation date and assume immediate 100% vesting. The recalculated liabilities are based on the salaries of the members as of December 31, 1992. In calculating the funding progress of the System, we have used all of the assets at actuarial book value excluding accounts payable and including all undistributed earnings. f` 21 COUNTY OF CONTRA COSTA III. VALUATION RESULTS _ Corrected 4/13/93 L 22 COUNTY OF CONTRA COSTA III. VALUATION RESULTS r►� _ ���� "� --�"'�/ � �„' •y, '� tri �l 1i 1.1 �.` ��� �'1 `1t l- �'+� I�� 1 �r ti 1,,,� 1 ,, �\ �.� ,, .. "1��_ �� �_� �� .. r�;`f `l�' (iii) ACTUARIAL BALANCE SHEET One of the purposes of an Actuarial Balance Sheet is to enable the employer, by reference to the periodic statements of this nature, to determine whether or not the contributions are adequate to provide the benefits without impairment to the Fund. The following is a descriptive listing of the items which make up the Actuarial Balance Sheet for the System. ' Item # 1. The actuarial value of assets in the Retirement Fund as of December 31, 1992, as described in Section II O. 2. The present value of contributions it is anticipated will be made by present members after January 1, 1993, until their separation from the System as active members. 3. The present value of future contributions that will be required of the Employer in order to fully provide the benefits anticipated on account of present active, inactive and retired members. 5. The actuarial present value of the allowances which are currently being paid to retired members and beneficiaries on account of service and disability retirements as well as survivor benefits. 6. The present value of retirement allowances for anticipated future service and disability retirements, including continuance to spouses, to active and inactive members. 7. The present value of death benefits payable on account of the death of currently active members. 8. The present value of termination benefits payable on account of the withdrawal (refund) of currently active members. 9. The reserve set up to provide for the payment of the post retirement death benefit. 10. The undistributed earnings held for future adverse experience, but sometimes used for other Retirement System purposes. Ila. The current liabilities include retirement allowances payable, accrued expenses, other amounts payable, and unearned employer contributions. 11b. The reserve to pay supplemental retiree benefits in accordance with Section 31681.8. 11c. The statutory reserve is the minimum amount equal to 1% of the total assets held for adverse experience. 11d. Reserves designated for other purposes as shown. The contingency reserve is an additional amount not to exceed to 2% of the total book value of assets held for adverse experience, if available. 23 ' COUNTY OF CONTRA COSTA 111. VALUATION RESULTS ACTUARIAL BALANCE SHEET* As of December 31, 1992 ASSETS Basic COL Total 1. Total actuarial value of assets $ 792,427,804 $ 248,735,603 $ 1,041,163,407 2. Present value of future contributions by members 79,454,067 64,937,995 144,392,062 3. Present value of future contributions by the Employer: a. Normal Cost 235,651,630 48,688,239 284,339,869 b. UAAL 228,444,514 176,768,343 405,212,857 4. Total actuarial assets $ 1,335,978,015 $ 539,130,180 $ 1,875,108,195 LIABILITIES Basic COL Total 5. Present value of retirement allowances payable to present retired members $ 380,614,119 $ 227,333,849 $ 607,947,968 6. Present value of retirement allowances to be granted: a. Service retirement 734,379,203 247,888,894 982,268,097 b. Disability retirement 121,984,937 47,665,439 169,650,376 7. Present value of death benefits to be granted: a. Lump sum and return of contributions 3,027,849 998,545 4,026,394 b. Death while eligible to retire 7,338,216 2,848,664 10,186,880 c. Duty death 2,855,164 1,173,682 4,028,846 8. Present value of members' contributions to be returned upon withdrawal before retirement 23,657,618 11,221,107 34,878,725 9. $1,000 post-retirement death benefit reserve 1,344,046 0 1,344,046 10. Unrestricted earnings 9,204,583 0 9,204,583 11. Miscellaneous liabilities and reserves a. Current liabilities" 21,561,089 0 21,561,089 b. Retiree supplemental benefit 894,466 0 894,466 C. Statutory reserve 9,495,457 0 9,495,457 d. Board designated reserves: i. Contingency reserve 18,990,914 0 18,990,914 ii. Relocation and Systems Enhancements 391,464 0 391,464 iii. Capital outlay reserve 72,108 0 72,108 e. Investment in fixed assets 166,782 0 166,782 12. Total actuarial liabilities $ 1,335,978,015 $ 539,130,180 $ 1,875,108,195 *Based on 8-1/4% interest and 6-1/4% salary scale assumptions. **Includes unearned employer contributions of$15,159,000. 24 COUNTY OF CONTRA COSTA III. VALUATION RESULTS 1 SECTIONV APPENDIX r r r i 0) MAJOR PROVISIONS OF THE PENSION PLAN A. GENERAL MEMBERS Tier 1 Plan (Section 31676.11) Tier 2 Plan (Section 31751) Coverage a. All General members hired before August 1, 1980 a. All General members hired on or after August 1, and electing not to transfer to Tier 2 Plan 1980 and all General members hired before August 1,1980 electing to transfer to the Tier 2 Plan Final Average Salary (FAS) a. One year final average salary a. Three year final average salary Service Retirement a. Requirement a. Requirement Age 50 and 10 years of service,or with 30 years of Age 50 and 10 years of service,or with 30 years of service regardless of age. service regardless of age. b. Benefit b. Benefit Retirement Retirement Age Benefit Formula Age Benefit Formula 50 (1.24%xFAS-1/3x1.24%x$350)xYrs. 50 (0.83%xFASxYrs.-0.57%xYrs*xPIA) 55 (1.67%xFAS-1/3x1.67%x$350)xYrs. 55 (1.13%xFASxYrs.-0.87%xYrs.xPIA) 60 (2.18%xFAS-1/3x2.18%x$350)xYrs. 60 (1.43%xFASxYrs.-1.37%xYrs.xPIA) 62 (2.35%xFAS-1/3x2.35%x$350)xYrs. 62 (1.55%xFASxYrs.-1.67%xYrs.xPIA) 65 (2.61%xFAS-1/3x2.61%x$350)xYrs. 65 (1.73%xFASxYrs.-1.67%xYrs.xPlA) Maximum Benefit:100% of FAS * Not greater than 30 years,where PIA is the Social Security Primary Insurance Amount. Disability Retirement a. Requirements a. Requirements (1) Service-connected: None (1) Service-connected: None (2) Non service-connected: five years of service (2) Nonservice-connected: ten years of service (3) Definition of disability is more strict than in Tier 1 Plan b. Benefit b. Benefit (1) Service-connected (1) Service-connected or nonservice-connected > is 40%FAS lus 10%FAS for each minor child (maximum of three). , (2) Nonservice-connected. 1-12%x FAS x years (2) Disability benefits are offset by other plans of of service. Future service years projected to the Count except Workers Compensation age 65.Generally leads to 113 FAS benefit. and Social Security. 26 COUNTY OF CONTRA COSTA IV. APPENDIX Tier 1 Plan (Section 31676.11) Tier 2 Plan (Section 31751) Death Before Retirement a. Before eligible to retire for disability(less than five a. Before eligible to retire(less than ten years). years). (1) One month's salary for each year of service (1) $2,000 lump sum benefit offset by any Social Security payment (2) Return of contributions (2) Return of contributions b. While eligible to retire(after five years).60% of b. While eligible to retire(ten years or service- Service or Disability Retirement Benefit. Generally connected death).60% of Service or Disability the benefit is 20%of FAS. Retirement Benefit (minimum benefit is 24% of FAS) lus for each minor child,20%of the allowance otherwise paid to the member. Minimum family benefit is 60% of the member's allowance. Maximum family benefit is 100%of the member's allowance. ' c. Line of duty death-1/2 FAS Death After Retirement a. After Service Retirement or Nonservice-Connected a. After Service or Disability Retirement Disability-60% of the allowance continued to the (1) 60%of allowance continued to spouse kus 20% spouse or to minor children of allowance to each minor child. Minimum b. After Service-Connected Disability-100% of the benefit is 60% of allowance. Maximum benefit allowance continued to the spouse or to minor is 100%of allowance. children (2) Lump sum payment of$3,000 less any Social c. Lump sum payment of$1,000 Security lump sum payment Withdrawal Benefits a. If less than five years of service,return of a. If less than five years of service,return of contributions contributions b. if greater than five years of service,right to have b. If greater than five years of service,right to have ' vested deferred retirement benefit vested deferred retirement benefit Cost of Living Benefit 3% maximum change per year 4% maximum change per year Employees'Contribution Rates a. Basic-to provide for 1/2 of the Section 31676.11 a. 40%of the full Section 31676.11 employee benefit at age 55 contribution rate b. COL-to pay for 1/2 of future COL costs b. COL-to pay for 1/2 of future COL costs Employer Contribution Rates Enough to make up for the balance of the basic and Enough to make up the balance of the basic and COL COL contributions needed contributions needed Transfers from the Tier 1 Plan to the Tier 2 Plan were made on an individual voluntary irrevocable basis.Credit is given under the Tier 2 Plan for future service only.The COL maximum is 4%only for the credit under the Tier 2 Plan. Transferred Tier 2 Plan members keep the five year requirement for nonservice-connected disability.Those who were members before April 1,1973 will be exempt from paying member contributions after 30 years of service. 27 COUNTY OF CONTRA COSTA IV. APPENDIX B. SAFETY MEMBERS Coverage Death Before Retirement a. All Safety members a. Before eligible to retire(less than five years) Final Average Salary (FAS) (1) One month's salary for each year of service a. One year final average salary (2) Return of contributions Service Retirement b. While eligible to retire(after five years).60% of 1 Service or Disability Retirement Benefit. Generally a. Requirement the benefit is 20%of FAS Age 50 and 10 years of service,or with 20 years of c. Line of duty death-1/2 FAS service regardless of age. b. Benefit Death After Retirement Retirement a. After Service Retirement or Nonservice- Age Benefit Formula Connected Disability-60% of the allowance 50 2.00%x FAS x Yrs. continued to the spouse or to minor children 55 2.62%x FAS x Yrs. b. After Service-Connected Disability-100%of the b0 allowance continued to the spouse or to minor 2.62%x FAS x Yrs. children Maximum Benefit: 100% of FAS c. Lump sum payment of$1,000 Disability Retirement Withdrawal Benefits a. Requirements a. If less than five years of service,return of (1) Service-connected: None compensation (2) Nonservice-connected: five years of service b. If greater than five years of service,right to have b. Benefit vested deferred retirement benefit (1) Service-connected. 50% FAS or Service Cost of Living Benefit Retirement benefit if greater 3%maximum change per year (2) Nonservice-connected.1.8% x FAS x years of Employees'Contribution Rates service. Future service years projected to age 55.Generally leads to 1/3 FAS benefit. a. Basic-to provide for 1/2 of the Section 31664 benefit at age 50 b. COL-to pay for 1/2 of future COL costs Employer Contribution Rate Enough to make for the balance and COL costs 28 ' COUNTY OF CONTRA COSTA IV. APPENDIX 00 SUMMARY OF ASSUMPTIONS AND FUNDING METHOD Current Assumptions Valuation Interest Rate 8-1/4% Post-Retirement Mortality (a) Service General Males 1983 Group Annuity Mortality Table — Male set ahead one year ' General Females 1983 Group Annuity Mortality Table — Female set ahead two years I' Safety 1983 Group Annuity Mortality Table — Male set ahead one year (b) Disability 1981 Disability Mortality Table (c) For Employee Contribution Purposes General 1983 Group Annuity Mortality Table — Male setback two years Safety 1983 Group Annuity Mortality Table — Male set ahead one year Pre-Retirement Mortality Based upon the Experience Analysis as of 12/31/91 Withdrawal Rates Based upon the Experience Analysis as of 12/31/91 Disability Rates Based upon the Experience Analysis as of 12/31/91 Service Retirement Rates Based upon the Experience Analysis as of 12/31/91 Salary Scales Total increases of 6-1/4% per year reflecting 5-1/4% for inflation and approximately 1% for merit and longevity Assets Actuarial Book Value as described in Section II(ii) Funding Method The System's liability is presently being funded on the Entry Age Normal method with a Supplemental Present Value. The amortization period for the Supplemental Present Value is 17-1/2 years from the valuation date. 29 COUNTY OF CONTRA COSTA IV. APPENDIX (iii) TOTAL ANNUAL SALARY AND MEMBERSHIP DISTRIBUTION OF ACTIVE GENERAL MEMBERS AS OF DECEMBER 31, 1992 MALES YEARS OF SERVICE PRESENT 30& AGE 0-4 5-9 10-14 15-19 20-24 25-29 OVER TOTAL BELOW 20 18 18 20-24 546,103 546,103 93 19 112 25-29 3,242,538 816,538 4,059,076 135 75 14 224 30-34 5,161,080 3,259,440 595,871 9,016,391 115 112 52 11 1 291 35-39 4,682,285 5,319,412 2,688,750 495,142 47,146 13,232,735 107 97 82 68 14 2 370 40-44 4,371,269 4,441,093 4,181,708 3,459,872 615,754 61,188 17,130,884 80 79 65 72 59 17 372 45-49 3,218,095 3,994,331 3,459,306 4,359,889 2,988,910 806,159 18,827,290 53 44 30 34 43 43. 6 253 50-54 2,441,497 2,175,675 1,541,174 1,979,487 2,708,921 2,352,255 361,342 13,560,351 31 28 21 33 29 23 25 190 55-59 1,319,005 1,245,970 998,961 1,976,533 1,558,071 1,359,424 1,350,508 9,808,472 10 18 15 11 15 5 13 87 60-64 380,199 915,571 670,782 671,765 753,948 250,413 749,149 4,391,827 65& 1 11 5 1 2 2 2 24 OVER 64,572 372,240 210,144 51,372 106,224 138,099 90,480 1,033,131 643 483 284 230 163 92 46 1,941 TOTAL 25,426,643 22,540,270 14,346,696 12,994,060 8,778,974 4,968,138 2,551,479 91,606,260 AVERAGE AGE 44.00 AVERAGE SERVICE 10.00 AVERAGE ENTRY AGE 34.00 30 COUNTY OF CONTRA COSTA IV. APPENDIX TOTAL ANNUAL SALARY AND MEMBERSHIP DISTRIBUTION OF ACTIVE GENERAL MEMBERS AS OF DECEMBER 31, 1992 FEMALES YEARS OF SERVICE PRESENT 30& AGE 0-4 5-9 10-14 15-19 20-24 25-29 OVER TOTAL BELOW 20 ' 44 4 48 20-24 1,047,362 119,712 1,167,074 202 63 1 266 25-29 6,122,651 1,872,060 33,612 8,028,323 277 157 60 2 496 30-34 8,899,814 6,008,690 2,012,720 65,851 16,987,075 275 177 111 68 3 634 35-39 9,222,182 6,938,380 4,492,166 2,297,231 103,974 23,053,933 266 197 141 113 70 787 40-44 8,789,925 7,666,413 5,569,350 4,348,845 2,402,760 28,777,293 217 202 124 92 90 24 1 750 45-49 7,121,294 7,585,517 4,839,345 3,552,724 3,706,268 983,066 37,650 27,825,864 148 128 101 91 58 23 10 559 1 50-54 4,954,759 4,436,030 3,934,869 3,685,555 2,390,777 983,753 437,463 20,823,206 71 66 72 65 63 23 3 363 55-59 1,826,038 2,300,276 2,558,340 2,525,225 2,551,587 1,010,613 143,316 12,915,395 28 30 35 35 27 8 4 167 60-64 903,910 1,031,240 1,175,176 1,490,001 1,107,922 310,984 148,338 6,167,571 65& 9 22 15 13 4 7 70 OVER 268,274 625,164 473,377 530,428 137,424 241,920 2,276,587 1,537 1,046 660 479 315 85 18 4,140 TOTAL 49,156,209 38,583,482 25,088,955 18,495,860 12,400,712 3,530,336 766,767 148,022,321 AVERAGE AGE 43.50 AVERAGE SERVICE 8.75 AVERAGE ENTRY AGE 34.75 31 COUNTY OF CONTRA COSTA IV. APPENDIX TOTAL ANNUAL SALARY AND MEMBERSHIP DISTRIBUTION OF ACTIVE SAFETY MEMBERS AS OF DECEMBER 31, 1992 MALES AND FEMALES YEARS OF SERVICE PRESENT 30& AGE 0-4 5-9 10-14 15-19 20-24 25-29 OVER TOTAL ' BELOW 20 22 1 23 20-24 1,041,251 44,340 1,085,591 138 59 197 25-29 6,747,533 3,290,722 10,038,255 86 145 27 258 30-34 4,233,165 8,355,447 1,641,460 14,230,072 33 74 114 25 246 35-39 1,705,277 4,148,588 6,989,271 1,594,635 14,437,771 18 35 71 109 22 255 40-44 928,683 2,021,739 4,175,376 6,738,452 1,368,791 15,233,041 13 25 35 81 114 16 284 45-49 601,816 1,348,144 1,930,535 5,018,836 7,293,722 1,017,991 17,211,044 3 8 13 20 56 52 11 163 ' 50-54 125,328 412,076 676,034 1,099,600 3,749,869 3,689,280 875,763 10,627,950 55& 3 4 6 5 22 31 13 84 OVER 142,020 172,707 219,167 257,282 1,368,710 1,898,727 836,471 4,8951084 316 351 266 240 214 99 24 1,510 TOTAL 15,525,073 19,793,763 15,631,843 14,708,805 13,781,092 6,605,998 1,712,234 87,758,808 AVERAGE AGE 40.25 AVERAGE SERVICE 12.25 AVERAGE ENTRY AGE 28.00 32 COUNTY OF CONTRA COSTA IV. APPENDIX Ov) SUMMARY OF MONTHLY ALLOWANCES �- AS OF DECEMBER 31, 1992 L r General Members Monthly Allowance Service Number Basic Cost of Living Total 1 Unmodified 2,354 $ 1,999,026 $ 486,233 $ 2,485,259 Option 1 121 79,777 17,922 97,699 Options 2 &3 74 54,906 10,047 64,953 Total 2,549 $ 2,133,709 $ 514,202 $ 2,647,911 Disability L Unmodified 294 $ 205,733 $ 64,004 $ 269,737 Option 1 15 8,487 3,039 11,526 Options 2 &3 1 479 29 508 Total 310 $ 214,699 $ 67,072 $ 281,771 Beneficiaries L Total 513 $ 194,836 $ 94,597 $ 289,433 Total* 3,372 $ 2,543,244 $ 675,871 $ 3,219,115 Safety Members L Monthly Allowance r Service Number Basic Cost of Living _ Total U Unmodified 309 $ 591,233 $ 140,476 $ 731,709 Option 1 7 10,734 2,917 13,651 Options 2 &3 2 1,716 385 2,101 U Total 318 $ 603,683 $ 143,778 $ 7 47,46 1 F--, Disability U Unmodified 169 $ 205,786 $ 62,944 $ 268,730 Option 1 7 7,882 1,750 9,632 Options 2 & 3 0 0 0 0 i_ Total 176 $ 213,668 $ 64,694 $ 278,362 Beneficiaries U Total 115 $ 73,586 $ 40,111 $ 113,697 r- Total 609 $ 890,937 $ 248,583 $ 1,139,520 33 U COUNTY OF CONTRA COSTA IV. APPENDIX U -- �.vvivrr-vr�.vrvn�n worry � IV-fHPPEIVUIX . i fE R, a., 0 b, .r' a l l �I �I cs l r� 1 ,tet O f } l 1 TOTAL ANNUAL BENEFIT AND MEMBERSHIP DISTRIBUTION OF RETIRED SAFETY MEMBERS AS OF DECEMBER 31, 1992 MALES AND FEMALES YEARS OF REMMIENT 1 PRESENT 30& AGE 0-4 5-9 10-14 15-19 20-24 25-29 OVER TOTAL BELOW 21 15 3 1 46 45 501,365 261,923 57,879 14,602 835,769 16 18 12 5 51 45-49 383,563 303,871 183,381 64,108 934,923 25 12 13 6 2 58 1 50-54 653,678 202,383 214,744 96,032 23,054 1,189,891 48 34 11 3 4 1 101 55-59 2,064,934 858,821 187,116 36,244 42,278 3,872 3,193,265 19 48 36 17 2 1 123 60-64 663,627 1,487,552 827,963 239,264 16,148 4,218 3,238,772 3 8 44 32 10 7 104 65-69 48,769 251,652 1,206,153 514,644 112,232 52,027 2,185,477 2 8 49 15 4 1 79 70-74 36,599 275,761 981,270 183,393 36,199 5,658 1,518,880 4 17 8 1 30 75-79 103,591 252,738 60,598 7,176 424,103 6 4 2 12 80-84 88,220 20,096 17,653 125,969 2 2 4 85-89 14,224 10,587 24,811 90& 1 1 OVER 2,454 2,454 138 137 127 117 56 26 8 609 TOTAL 4,315,936 3,402,801 2,952,997 2,049,755 718,063 187,016 47,746 13,674,314 AVERAGE AGE 60.50 AVERAGE YEARS RETIRED 11.25 AVERAGE RETIREMENT AGE 49.25 36 COUNTY OF CONTRA COSTA IV. APPENDIX (vi) PROBABILITIES OF SEPARATION PRIOR TO RETIREMENT (Based on Experience Analysis as of 12/31/91) GENERAL MALE MEMBERS Death Ordinary Ordinary While Duty Duty Tenninated Agt Withdrawal Death Disability Service Elieible Death Disability Vested 20 .1250 .0002 .0000 .0000 .0000 .0001 .0001 .0010 21 .1210 .0002 .0000 .0000 .0000 _ .0001 .0001 .0015 22 .1180 .0002 .0000 .0000 .0000 .0001 .0001 .0020 23 .1150 .0002 .0000 .0000 .0000 .0001 .0001 .0025 24 .1130 .0002 .0000 .0000 .0000 .0001 .0001 .0030 25 .1110 .0002 .0002 .0000 .0001 .0001 .0002 .0035 26 .0990 .0002 .0002 .0000 .0001 .0001 .0002 .0040 27 .0970 .0002 .0002 .0000 .0001 .0001 .0002 .0045 28 .0950 .0002 .0003 .0000 .0001 .0001 .0002 .0050 29 .0920 .0002 .0003 .0000 .0001 .0001 .0002 .0055 ' 30 .0890 .0003 .0004 .0000 .0002 .0001 .0003 .0060 31 .0850 .0003 .0004 .0000 .0002 .0001 .0003 .0065 32 .0810 .0003 .0004 .0000 .0002 .0001 .0004 .0070 33 .0770 .0003 .0004 .0000 .0002 .0001 .0005 .0075 34 .0720 .0004 .0004 .0000 .0002 .0001 .0006 .0080 35 .0660 .0004 .0005 .0000 .0002 .0001 .0007 .0085 36 .0600 .0004 .0005 .0000 .0002 .0001 .0008 .0090 ' 37 .0540 .0004 .0005 .0000 .0002 .0001 .0009 .0095 38 .0490 .0005 .0005 .0000 .0003 .0001 .0010 .0100 39 .0440 .0005 .0006 .0000 .0003 .0001 .0012 .0105 40 .0400 .0006 .0006 .0000 .0003 .0001 .0014 .0115 41 .0370 .0006 .0007 .0000 .0003 .0001 .0015 .0125 42 .0340 .0007 .0008 .0000 .0004 .0001 .0016 .0135 43 .0310 .0007 .0009 .0000 .0004 .0001 .0018 .0130 44 .0280 .0008 .0010 .0000 .0004 .0001 .0019 .0115 45 .0250 .0008 .0011 .0000 .0004 .0001 .0021 .0105 46 .0220 .0009 .0012 .0000 .0005 .0001 .0023 .0095 47 .0200 .0009 .0013 .0000 .0005 .0001 .0025 .0090 48 .0180 .0010 .0014 .0000 .0005 .0001 .0027 .0095 49 .0160 .0011 .0015 .0000 .0006 .0001 .0030 .0080 50 .0150 .0012 .0016 .0350 .0007 .0001 .0033 .0075 51 .0140 .0013 .0017 .0200 .0008 .0001 .0035 .0065 52 .0130 .0014 .0018 .0200 .0009 .0001 .0037 .0055 53 .0120 .0015 .0019 .0300 .0010 .0001 .0039 .0045 54 .0120 .0016 .0020 .0400 .0011 .0001 .0041 .0041 55 .0115 .0017 .0022 .0600 .0012 .0001 .0043 .0037 56 .0110 .0019 .0025 .0600 .0013 .0001 .0044 .0033 57 .0110 .0021 .0028 .0600 .0014 .0001 .0045 .0030 58 .0105 .0023 .0032 .0700 .0016 .0001 .0046 .0027 59 .0105 .0025 .0036 .0800 .0018 .0001 .0048 .0025 60 .0105 .0027 .0040 .1200 .0020 .0001 .0050 .0023 61 .0105 .0030 .0044 .1000 .0022 .0001 .0051 .0021 ' 62 .0100 .0033 .0048 .2700 .0024 .0001 .0053 .0019 63 .0100 .0037 .0052 .1600 .0026 .0001 .0054 .0017 64 .0100 .0041 .0056 .2000 .0028 .0001 .0056 .0015 65 .0000 .0045 .0060 .3500 .0030 .0001 .0058 .0000 66 .0000 .0050 .0065 .2500 .0032 .0001 .0059 .0000 67 .0000 .0056 .0070 .2500 .0034 .0001 .0061 .0000 68 .0000 .0063 .0075 .4000 .0036 .0001 .0063 .0000 ' 69 .0000 .0071 .0080 .5000 .0038 .0001 .0065 .0000 70 .0000 .0000 .0000 1.0000 .0000 .0000 .0000 .0000 37 ' COUNTY OF CONTRA COSTA IV. APPENDIX PROBABILITIES OF SEPARATION PRIOR TO RETIREMENT (Based on Experience Analysis as of 12/31/91) GENERAL FEMALE MEMBERS Death Ordinary Ordinary While Duty Duty Terminated Age Withdrawal Death ab ice Eligible Death Disability Vested 20 .1400 .0001 .0000 .0000 .0000 .0001 .0001 .0010 21 .1350 .0001 .0000 .0000 .0000 .0001 .0001 .0010 22 .1300 .0001 .0000 .0000 .0000 .0001 .0001 .0015 23 .1250 .0001 .0000 .0000 .0000 .0001 .0001 .0020 24 .1200 .0001 .0000 .0000 .0000 .0001 .0001 .0025 25 .1100 .0002 .0001 .0000 .0001 .0001 .0001 .0030 26 .1000 .0002 .0001 .0000 .0001 .0001 .0001 .0035 27 .0950 .0002 .0001 .0000 .0001 .0001 .0001 .0040 28 .0900 .0002 .0001 .0000 .0001 .0001 .0002 .0045 ' 29 .0850 .0002 .0001 .0000 .0001 .0001 .0002 .0050 30 .0830 .0003 .0002 .0000 .0002 .0001 .0002 .0055 31 .0800 .0003 .0002 .0000 .0002 .0001 .0002 .0060 32 .0780 .0003 .0002 .0000 .0002 .0001 .0002 .0065 33 .0760 .0003 .0002 .0000 .0002 .0001 .0002 .0070 34 .0740 .0004 .0002 .0000 .0002 .0001 .0002 .0075 35 .0710 .0004 .0003 .0000 .0002 .0001 .0003 .0070 36 .0680 .0004 .0003 .0000 .0002 .0001 .0003 .0065 37 .0650 .0004 .0004 .0000 .0002 .0001 .0003 .0060 38 .0600 .0004 .0004 .0000 .0002 .0001 .0003 .0057 39 .0550 .0005 .0005 .0000 .0003 .0001 .0003 .0055 40 .0500 .0005 .0006 .0000 .0003 .0001 .0003 .0055 41 .0460 .0005 .0008 .0000 .0003 .0001 .0004 .0055 42 .0430 .0005 .0010 .0000 .0003 .0001 .0005 .0060 43 .0400 .0006 .0012 .0000 .0004 .0001 .0006 .0065 44 .0370 .0006 .0014 .0000 .0004 .0001 .0007 .0070 45 .0350 .0007 .0017 .0000 .0004 .0001 .0008 .0075 46 .0330 .0008 .0019 .0000 .0004 .0001 .0009 .0078 47 .0310 .0009 .0021 .0000 .0005 .0001 .0010 .0080 48 .0290 .0010 .0023 .0000 .0005 .0001 .0011 .0075 49 .0270 .0011 .0025 .0000 .0006 .0001 .0012 .0070 50 .0250 .0012 .0027 .0250 .0006 .0001 .0013 .0065 51 .0230 .0013 .0029 .0200 .0007 .0001 .0014 .0060 52 .0200 .0014 .0031 .0200 .0007 .0001 .0015 .0055 53 .0170 .0015 .0033 .0200 .0008 .0001 .0016 .0050 54 .0150 .0016 .0035 .0350 .0009 .0001 .0017 .0045 ' 55 .0140 .0017 .0037 .0400 .0010 .0001 .0018 .0043 56 .0130 .0018 .0039 .0500 .0011 .0001 .0019 .0042 57 .0125 .0019 .0041 .0550 .0012 .0001 .0020 .0041 58 .0120 .0020 .0043 .0550 .0012 .0001 .0021 .0040 59 .0115 .0021 .0046 .0750 .0013 .0001 .0021 .0039 60 .0115 .0022 .0049 .1000 .0013 .0001 .0021 .0038 61 .0110 .0023 .0052 .0900 .0014 .0001 .0021 .0036 62 .0110 .0024 .0056 .2400 .0014 .0001 .0021 .0034 63 .0110 .0025 .0059 .1500 .0015 .0001 .0021 .0032 64 .0105 .0026 .0062 .2500 .0015 .0001 .0021 .0030 65 .0000 .0028 .0065 .3000 .0016 .0001 .0020 .0000 66 .0000 .0030 .0068 .3500 .0017 .0001 .0020 .0000 67 .0000 .0032 .0072 .3500 .0018 .0001 .0020 .0000 68 .0000 .0034 .0076 .3500 .0019 .0001 .0020 .0000 69 .0000 .0036 .0080 .5000 .0020 .0001 .0020 .0000 70 .0000 .0000 .0000 1.0000 .0000 .0000 .0000 .0000 COUNTY OF CONTRA COSTA IV. APPENDIX i PROBABILITIES OF SEPARATION PRIOR TO RETIREMENT ' (Based on Experience Analysis as of 12/31/91) SAFEN MEMBERS Death ' Ordinary Ordinary While Duty Duty Terminated Age Withdrawal Death Disabfliiy Service Eligible Death Disabifily Vested 20 .0590 .0001 .0000 .0000 .0000' .0001 .0006 .0009 21 .0560 .0001 .0000 .0000 .0000 .0001 .0007 .0013 22 .0530 .0001 .0000 .0000 .0000 .0001 .0008 .0017 23 .0500 .0001 .0000 .0000 .0000 .0001 .0009 .0021 24 .0470 .0001 .0000 .0000 .0000 .0001 .0010 .0025 25 .0440 .0001 .0002 .0000 .0001 .0001 .0012 .0029 26 .0410 .0001 .0002 .0000 .0001 .0001 .0014 .0031 27 .0385 .0001 .0002 .0000 .0001 .0001 .0016 .0033 28 .0360 .0001 .0003 .0000 .0001 .0001 .0018 .0035 29 .0340 .0001 .0003 .0000 .0001 .0001 .0020 .0037 1 30 .0320 .0001 .0004 .0000 .0002 .0002 .0024 .0039 31 .0300 .0001 .0004 .0000 .0002 .0002 .0027 .0041 32 .0280 .0001 .0004 .0000 .0002 .0002 .0030 .0043 33 .0260 .0001 .0005 .0000 .0002 .0002 .0033 .0045 34 .0230 .0001 .0005 .0000 .0002 .0002 .0036 .0047 35 .0190 .0002 .0006 .0000 .0003 .0002 .0039 .0050 ' 36 .0150 .0002 .0006 .0000 .0003 .0002 .0042 .0053 37 .0120 .0002 .0007 .0000 .0003 .0002 .0045 .0056 38 .0100 .6002 .0007 .0000 .0003 .0003 .0049 .0052 39 .0095 .0002 .0008 .0000 .0003 .0003 .0054 .0048 40 .0090 .0002 .0009 .0000 .0004 .0003 .0060 .0044 41 .0085 .0002 .0010 .0010 .0004 .0003 .0066 .0040 ' 42 .0080 .0003 .0011 .0010 .0004 .0003 .0073 .0037 43 .0075 .0003 .0012 .0010 .0005 .0004 .0080 .0034 44 .0070 .0003 .0013 .0010 .0005 .0004 .0090 .0031 ' . 45 .0065 .0003 .0014 .0050 .0006 .0004 .0103 .0028 46 .0060 .0003 .0015 .0050 .0007 .0004 .0117 .0024 47 .0050 .0003 .0016 .0050 .0008 .0004 .0132 .0020 48 .0040 .0004 .0017 .0060 .0009 .0005 .0148 .0015 49 .0030 .0004 .0018 .0070 .0010 .0005 .0164 .0010 50 .0020 .0004 .0020 .0700 .0012 .0005 .0181 .0005 51 .0020 .0004 .0022 .0700 .0013 .0005 .0191 .0005 52 .0020 .0005 .0024 .0700 .0015 .0005 .0218 .0005 ' 53 .0010 .0005 .0027 .0800 .0017 .0005 .0237 .0005 54 .0010 .0005 .0030 .1000 .0018 .0005 .0256 .0005 55 .0000 .0005 .0033 .3200 .0020 .0006 .0276 .0005 56 .0000 .0005 .0036 .2200 .0022 .0006 .0297 .0005 57 .0000 .0005 .0039 .2200 .0024 .0006 .0319 .0005 58 .0000 .0005 .0043 .2200 .0026 .0006 .0342 .0005 59 .0000 .0005 .0046 .2200 .0028 .0006 .0365 .0005 60 .0000 .0000 .0000 1.0000 .0000 .0000 .0000 .0000 39 COUNTY OF CONTRA COSTA IV. APPENDIX ' (vii) GENERAL MEMBERS' CONTRIBUTION RATES* Tier 1 - Sectiion 31676.11 Tier 2 - Section 31751 Basic C.O.L." Basic C.O.L." ' First Excess of First Excess of $350 of Monthly $350 of Monthly Total Total ENTRY Monthly Compensation Monthly Compensation Monthly Monthly ACE CompensationOver $350 Compensation Over $350 Compensation Compensation 20 4.31% 6.47% 1.73% 2.60% 2.45% 1.05% 21 4.32 6.48 1.74 2.61 2.45 1.05 22 4.33 6.50 1.74 2.61 2.46 1.06 ' 23 4.35 6.52 1.75 2.62 2.46 1.06 24 4.36 6.54 1.75 2.63 2.47 1.06 25 4.38 6.57 1.76 2.64 2.48 1.06 1 26 4.40 6.60 1.77 2.65 2.49 1.07 27 4.42 6.63 1.78 2.67 2.51 1.08 28 4.45 6.67 1.79 2.68 2.52 1.08 29 4.47 6.71 1.80 2.70 2.54 1.09 30 4.50 6.75 1.81 2.71 2.55 1.09 31 4.53 6.80 1.82 2.73 2.57 1.10 32 4.56 6.84 1.83 2.75 2.59 1.11 33 4.59 6.89 1.85 2.77 2.60 1.12 34 4.63 6.94 1.86 2.79 2.62 1.12 35 4.66 6.99 1.87 2.81 2.64 1.13 36 4.69 7.04 1.89 2.83 2.66 1.14 37 4.73 7.10 1.90 2.85 2.68 1.15 38 4.77 7.16 1.92 2.88 2.71 1.16 39 4.81 7.22 1.93 2.90 2.73 1.17 40 4.85 7.28 1.95 2.93 2.75 1.18 1 41 4.89 7.34 1.97 2.95 2.78 1.19 42 4.94 7.41 1.99 2.98 2.80 1 .20 43 4.99 7.48 2.01 3.01 2.83 1.21 44 5.03 7.55 2.02 3.04 2.85 1.22 45 5.08 7.62 2.04 3.06 2.88 1.24 46 5.13 7.69 2.06 3.09 2.91 1.25 1 47 5.18 7.77 2.08 3.12 2.94 1.26 48 5.23 7.84 2.10 3.15 2.97 1.27 49 5.28 7.92 2.12 3.18 3.00 1.29 50 5.34 8.01 2.15 3.22 3.03 1.30 51 5.39 8.09 2.17 3.25 3.06 1.31 52 5.45 8.18 2.19 3.29 3.09 1.33 53 5.51 8.27 2.22 3.33 3.12 1.34 54 & Over 5.57 8.36 2.24 3.36 3.16 1.36 *As a percentage of salary based upon 8.25% interest and 6.25% salary scale assumptions. **40.22% of basic rates for Tier 1 and 42.89% of basic rates for Tier 2. 40 COUNTY OF CONTRA COSTA IV. APPENDIX SAFETY MEMBERS' CONTRIBUTION RATES* ENTRY ACS Basic C.O.L.`* ' 20 7.59% 3.05% 21 7.61 3.06 ' 22 7.64 3.07 23 7.68 3.09 24 7.73 3.11 25 7.78 3.13 26 7.85 3.16 27 7.92 3.18 ' 28 7.99 3.21 29 8.08 3.25 30 8.17 3.29 ' 31 8.26 3.32 32 8.36 3.36 33 8.47 3.41 34 8.57 3.45 35 8.68 3.49 36 8.78 3.53 37 8.89 3.57 38 9.00 3.62 39 9.11 3.66 40 9.22 3.71 41 9.33 3.75 42 9.44 3.80 43 9.55 3.84 44 9.67 3.89 45 9.78 3.93 46 9.90 3.98 47 10.02 4.03 ' 48 10.13 4.07 49 & Over 10.25 4.12 *As a percentage of salary based upon 8.25%interest and 6.25% salary scale assumptions. **40.22% of basic rates. i 41 COUNTY OF CONTRA COSTA IV. APPENDIX (viii) ACCOUNTING BALANCE SHEET AS OF DECEMBER 31, 1992 ' (Unaudited) ASSETS Cash and prepaid expenses $ 54,956,858 Securities owned at Book Value (Market Value: $888,063,306) 762,543,575 First mortgage 122,032 Real Estate (Market Value: $85,231,767) 95,726,213 Short Term* 24,726,000 Accrued interest, dividends and rental receivables 6,641,044 Contract payments receivables 1,082,745 1 Forward currency contracts 1,138,869 Contributions receivable 2,457,093 Other receivables 47,580 Leasehold improvements, equipment and furniture less depreciation 103,665 ' TOTAL ASSETS $ 949,545,674 LIABILITIES Accounts payable* $ 21,561,089 Member deposits 133,077,370 Employers advance reserve 110,658,697 Retired members' reserve 418,229,503 Cost-of-living reserve 225,459,195 $1,000 post retirement death benefit reserve 1,344,046 Cost-of-living supplement 894,466 ' Restricted Statutory reserve $ 9,495,457 ' Board designated Contingency reserve 18,990,914 Relocation and system enhancement 391,464 Capital outlay reserve 72,108 Total Restricted $ 28,949,943 Investment in fixed assets 166,782 Unrestricted 9,204,583 TOTAL LIABILITIES $ 949,545,674 *Including prepayment of employer contributions of$15,159,000. 42 ' COUNTY OF CONTRA COSTA IV. APPENDIX Ox) RATIO OF CURRENT COMPENSATION TO COMPENSATION ANTICIPATED AT RETIREMENT AGE GENERAL MEMBERS SAFETY MEMBERS ' Age Study#1 Study#1 20 .037 .080 21 .041 .088 22 .045 .097 23 .050 .106 24 .054 .116 25 .059 .126 26 .064 .137 27 .069 .148 28 .075 .159 29 .081 .171 30 .087 .183 31 .093 .195 32 .100 .207 33 .107 .220 34 .115 .232 35 .123 .246 36 .132 .260 37 .141 .275 ' 38 .151 .291 39 .162 .308 40 .172 .326 41 .184 .344 42 .196 .364 43 .209 .385 44 .223 .407 45 .237 .431 46 .252 .456 47 .268 .482 48 .285 .510 49 .303 .539 50 .322 .570 51 .341 .603 52 .362 .638 53 .383 .675 54 .406 .714 55 .430 .755 56 .455 .799 57 .482 .846 58 .510 .894 59 .539 .945 60 .570 1.000 61 .603 62 .638 63 .674 64 .714 65 .755 66 .799 67 .845 ' 68 .894 69 .945 70 1.000 Study#1 = 8.25% interest with salary scale of merit and longevity plus 5.25% for inflation. 43 COUNTY OF CONTRA COSTA IV. APPENDIX W YEARS OF LIFE EXPECTANCY AFTER SERVICE RETIREMENT General General Age Male Female Safety Age Male Female Safety 50 28.30 33.03 28.30 80 7.21 9.09 7.21 51 27.42 32.10 27.42 81 6.91 8.57 6.91 52 26.55 31.16 26.55 82 6.43 8.06 6.43 53 25.68 30.23 25.68 83 6.07 7.58 6.07 54 24.82 29.31 24.82 84 5.73 7.11 5.73 55 23.97 28.39 23.97 . 85 5.41 6.66 5.41 56 23.13 27.48 23.13 86 5.10 6.23 5.10 57 22.29 26.57 22.29 87 4.82 5.81 4.82 ' 58 21.46 25.67 21.46 88 4.54 5.40 4.54 59 20.46 24.78 20.46 89 4.28 5.02 4.28 60 19.83 23.89 19.83 90 4.04 4.66 4.04 61 19.02 23.01 19.02 91 3.80 4.31 3.80 62 18.23 22.15 18.23 92 3.58 3.98 3.58 ' 63 17.45 21.28 17.45 93 3.37 3.67 3.37 64 16.69 20.43 16.69 94 3.16 3.37 3.16 ' 65 15.95 19.59 15.95 95 2.98 3.10 2.98 66 15.23 18.76 15.23 96 2.80 2.84 2.80 67 14.52 17.94 14.52 97 2.62 2.59 2.62 68 13.84 17.13 13.84 98 2.45 2.36 2.45 69 13.18 16.34 13.18 99 2.28 2.14 2.28 70 12.54 15.56 12.54 100 2.11 1.93 2.11 71 11.92 14.81 11.92 101 1.95 1.74 1.95 ' 72 11.31 14.08 11.31 102 1.78 1.55 1.78 73 10.72 13.37 10.72 103 1.61 1.37 1.61 74 10.15 12.69 10.15 104 1.43 1.19 1.43 75 9.60 12.03 9.60 105 1.26 1.03 1.26 76 9.08 11.39 9.08 106 1.09 0.87 1.09 77 8.57 10.78 8.57 107 0.92 0.71 0.92 78 8.10 10.20 8.10 108 0.74 0.50 0.74 79 7.64 9.63 7.64 109 0.50 --- 0.50 ' 1983 GA (x + 1, y + 2,x + 1) 44 COUNTY OF CONTRA COSTA IV. APPENDIX (A) YEARS OF LIFE EXPECTANCY AFTER DISABILITY RETIREMENT GENERAL MEMBERS Male & Male & Male & Age Female Age Female Age Female 20 38.73 50 21.08 80 7.00 21 37.98 51 20.59 81 6.63 ' 22 37.26 52 20.11 82 6.27 23 36.56 53 19.63 83 5.94 24 35.87 54 19.13 84 5.63 25 35.19 55 18.68 85 5.34 26 34.53 56 18.21 86 5.06 27 33.87 57 17.75 87 4.80 28 33.23 58 17.29 88 4.55 ' 29 32.60 59 16.83 89 4.31 30 31.98 60 16.37 90 4.09 31 31.37 61 15.91 91 3.87 32 30.76 62 15.45 92 3.66 33 30.17 63 14.99 93 3.46 ' 34 29.58 64 14.53 94 3.26 35 29.00 65 14.07 95 3.07 36 28.43 66 13.60 96 2.89 37 27.87 67 13.13 97 2.71 38 27.31 68 12.66 98 2.54 ' 39 26.76 69 12.18 99 2.37 40 26.21 70 11.70 100 2.20 41 25.67 71 11.21 101 2.04 42 25.14 72 10.72 102 1.88 43 24.61 73 10.22 103 1.72 ' 44 24.09 74 9.73 104 1.55 45 23.57 75 9.24 105 1.38 46 23.06 76 8.76 106 1.21 47 22.56 77 8.28 107 1.04 48 22.06 78 7.83 108 0.88 49 21.57 79 7.41 109 0.71 110 0.50 1981 Disability Table 45 COUNTY OF CONTRA COSTA IV. APPENDIX 1 YEARS OF LIFE EXPECTANCY AFTER DISABILITY RETIREMENT ' SAFETY MEMBERS Male & Male & Male & Age Female Age Female Age Female 20 49.29 50 23.59 80 7.00 ' 21 48.39 51 22.80 81 6.63 22 47.48 52 22.03 82 6.27 23 46.58 53 21.26 83 5.94 24 45.68 54 20.50 84 5.63 25 44.79 _ 55 19.77 85 5.34 26 43.89 56 19.06 86 5.06 27 43.01 57 18.40 87 4.80 28 42.12 58 17.78 88 4.55 ' 29 41.24 59 17.20 89 4.31 30 40.36 60 16.64 90 4.09 ' 31 39.48 61 16.11 91 3.87 32 38.61 62 15.59 92 3.66 33 37.74 63 15.08 93 3.46 34 36.88 64 14.58 94 3.26 35 36.02 65 14.09 95 3.07 36 35.16 66 13.61 96 2.89 37 34.31 67 13.13 97 2.71 38 33.45 68 12.66 98 2.54 ' 39 32.61 69 12.18 99 2.37 40 31.77 70 11.70 100 2.20 41 30.93 71 11.21 101 2.04 42 30.09 72 10.72 102 1.88 43 29.26 73 10.22 103 1.72 ' 44 28.43 74 9.73 104 1.55 45 27.61 75 9.24 105 1.38 ' 46 26.80 76 8.76 106 1.21 47 25.98 77 8.28 107 1.04 48 25.18 78 7.83 108 0.88 ' 49 24.38 79 7.41 109 0.71 110 0.50 ' 1981 Disability Table 46 COUNTY OF CONTRA COSTA IV. APPENDIX