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Home My WebLink AboutMINUTES - 05152001 - C.64 TO: BOARD OF SUPERVISORS Contra FROM: JOHN SWEETEN, COUNTY ADMINISTRATOR Costa c .saJtzr;• i.s DATE: May 15, 2001 _ �° cos- - County T'4 COUP1� SUBJECT: PREPAYMENT AGREEMENT WITH COUNTY RETIREMENT BOARD SPECIFIC REQUEST(S)OR RECOMMENDATIONS)1£BACKGROUND AND JUSTIFICATION RECOMMENDATION: APPROVE the Agreement between the Contra Costa County Employee Retirement Board (CCCERA) and Contra Costa County regarding prepayment of annual contributions and DIRECT the County Administrator or his designee to execute the agreement. BACKGROUND: Pursuant to Government Code Section 31582, the County has the ability to repay its annual contributions to the County's Retirement Board; in exchange for making prepayment, the Retirement Board offers the County a discount on its annual contribution. For FY 2001-02, this factor will equal .955 of the actual contribution requirement. To calculate the discount.factor, the CCCERA proposes that the discount calculating method be based on the present value of an (ordinary) annuity instead of the lump sum method that was used in the past. This arrangement to prepay the County's annual contributions has proven financially advantageous to both parties over the past several years. FISCAL IMPACT: Changing the method of calculation to a present value approach will result in a smaller discount to the County. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BO N May 15, 2001 APPROVE AS RECOMMENDED XX OTHER 1 VOTE OF SUPERVISORS 1 HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN XX UNANIMOUS(ABSENT ----- ) AND ENTERED ON THE MINUTES OF-THE BOARD OF SUPERVISORS ON THE DATE AYES: NOES: SHOWN. /) ABSENT: ABSTAIN: ATTESTED May 15, 2001 JOHN SWEETEN,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR CC: Laura Lockwood,Capital Facilities&Debt Management Auditor-Controller B *EPUTY Contra Costa County Employees' Retirement Association 1355 Willow Way, Suite 221 Concord,CA 94520-5728 Tel: (925)646-5741 Fax: (925)646-5747 April 18, 2001 Laura Lockwood Director of Capital Facilities & Debt Mgmt Contra Costa County 651 Pine Street, 6th Floor Martinez, CA 94553 Dear Laura: We are providing written notice that the current Prepayment Agreement between CCCERA and Contra Costa County is being terminated effective June 30, 2001. Per the agreement, 60 day written notice is required by either party of its intent not to renew. Enclosed is a copy of the new agreement that has been adopted by the Retirement Board starting with the fiscal year July 1, 2000 and going forward. We have changed the method used to calculate the prepayment discount detailed under Section lb of the agreement. Instead of using the lump sum method, the more accurate method of calculating the present value (PV) of an (ordinary) annuity is used. For 2001-02, this corresponds to a discount factor of.955 by using an increased actuarial assumption rate of 8.5% per annum. Within 30 (lays, please either sign and return the new agreement or notify CCCERA in writing that you do not intend to participate in the Prepayment program for the next fiscal year. If you have any questions, please don't hesitate to call, e-mail or write. Sincerely, Rick Koehler Retirement Accounting Manager RkoehlerCa)ret.co.contra-costa.ca.us Encl. OAPrepaymentsTrepay tern letter 4-18-0 Ldoc AGREEMENT BETWEEN CONTRA COSTA COUNTY AND THE BOARD OF RETIREMENT REGARDING PREPAYMENT OF ANNUAL CONTRIBUTIONS Contra Costa County would like to prepay its annual contribution for fiscal year 2001-02 in one lump sum rather than on a monthly basis thoughout the year. Any such prepayment will be pursuant to Govt. Code Section 31582 of the County Employees Retirement Law of 1937 and its' amendments. The prepayment may or may not include the County's subvention of employee required- contributions. equiredcontributions. IT IS AGREED THAT: 1. With regard to any prepayment of Costs under Govt. Code Section 31582: a) Prepayment will be made on or before the last working day in July to be applied against that fiscal year's Costs. b) The prepayment amount will be computed using the most recently adopted contribution rates and an estimated County payroll discounted at the actuarially assumed interest rate (currently 8.5%), and will be calculated by computing the present value of an(ordinary) annuity. The discount factor will equal .955 for fiscal year 2001-02. Number of periods N= 12 Interest factor I=8.5%/12 Amount of payment PMT=Annual estimated contributions/12 C) This prepayment is intended to be the County's estimated full contribution for the fiscal year. 2. As soon as practical,but no later than 45 calendar days after the end of the fiscal year, a "true-up"will be done by the Retirement System(CCCERA). If the"true-up" cannot be completed within the 45 day period because the County has not provided a reconciled contribution report through the last payroll of the fiscal period by July 3 l't, an additional interest charge on underpayments shall be paid to CCCERA at the actuarial assumed interest rate. Interest will be computed from the first day of the new fiscal year to the date of receipt of the final reconciled contribution report plus one-day. If all the reconciled contribution reports are provided to CCCERA by the required due dates and CCCERA does not provide a "true-up"within 45 days, CCCERA will pay interest on overpayments at the actuarial assumed interest rate up to the date of the "true-up". Any difference between what the County prepaid, before applying the discount factor, and what the County should have paid once actual payroll amounts are known, will be handled as follows: a) If the prepayment, before applying the discount factor, is less than the actual amount that should have been paid,the County will be required to pay the difference within 30 days of notification. b) If the prepayment,before applying the discount factor, is greater than the actual amount that should have been paid,the difference will be applied as a credit against the next year's prepayment. (See reverse side) \\CCCR_FS\SYS\SHARED\Managers\Prepayment Agreements\County Prepayment Agreement\CCCprepayagreement agreement 01- 02(rev 4-10-01).doc 3. The County may choose to include as part of its prepayment amount, its subvention of ^ employee required contributions. However, if included,the County will continue to report individual employees' subvention amounts as part of each month's payroll report to the Retirement System just as though those contributions were being made during that payroll period. In this way, individual member accounts will not be at risk that incorrect employee contributions were made on their behalf. Another way of stating this is, the fact that a prepayment includes subvention contributions will be totally transparent to the Retirement System's membership sub-ledger system. 4. This agreement shall continue to automatically renew each fiscal year unless either party gives written notice to the other of its intent not to renew the Agreement at least sixty(60) days before its expiration. FOR THE BOARD OF SUPERVISORS: FOR THE BOARD OF RETIREMENT: Signature Signature Title Title Date Date I \\CCCR_FS\SYS\SHARED\Managcrs\Prepayment Agreements\County Prepayment Agreement\CCCprepayagreement agreement 01- 02(rev 4-10-01).doc