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HomeMy WebLinkAboutMINUTES - 06242008 - D.4 } Contra TO: BOARD OF SUPERVISORS ,�^^ r``- ;• Costa 4 FROM: John Cullen, County Administrator � .,.,- ¢ -I'z County DATE: June 24, 2008 COU. SUBJECT: OPEB — Post Retirement Medical Benefits Trust Agreement California Employer's Retiree Benefit Trust Program ("CER137) SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: CONSIDER directing the County Administrator to begin the application process to prefund other post employment benefits through the California Employer's Retiree Benefit Trust Program ("CERBT") and CONSIDER authorizing the Chair, Board of Supervisors, to execute an agreement with CalPERS upon successful conclusion of application process. FISCAL IMPACT: The result of the recommendations herein, if implemented, will have a significant future impact on the County's overall fiscal stability and ability to deliver services. . BACKGROUND: On September 25, 2007 the Board of Supervisors approved the selection of an irrevocable trust structure (Internal Revenue Code Section 115) for OPEB funding for Contra Costa County and directed staff to return in January 2008 with the documents necessary to establish the trust. On January 15, 2008 the Board of Supervisors executed the Post Retirement Medical Benefit Trust Agreement and Post Retirement Medical Benefits Plan for the County of Contra Costa. The purpose of the Trust is to hold assets to pay post retirement health benefits and the purpose of the Plan is to provide post retirement health benefits for certain retired employees and their spouses and dependents. On May 6, 2008 the County adopted the FY 2008-09 Budget, which included a $20 million pre-funding appropriation to be deposited into an irrevocable OPEB trust. In the January 2008 report, staff explained that the California Employers' Retiree Benefit Trust Fund was the CalPERS equivalent to the County's trust fund and that technically, Contra Costa County was not eligible to put funds into the CERBT trust due to the methodology and assumptions used in the 2006 actuarial valuation. Additionally, at that time, there were several other reasons why a local independent trust was recommended as a better option for Contra Costa County. For example, once an entity joins the CalPERS trust, it is difficult to move to another trust should a better option emerge (for example, after 3 years of participation in the trust, CalPERS allows the transfer of money to another 115 trust but only if the CalPERS Board agrees.-that it is in fact exempt under IRS CONTINUED ON ATTACHMENT: X YES SIGNATURE: VECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE `APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON �o APPROVE AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON THE UNANIMOUS(ABSENT ) MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE ES: NOES: SHOWN. ABSENT: ABSTAIN: 1 ATTESTED . 0 CONTACT: Lisa Driscoll(335-1023) JOHN CULLEN,CLERK OF THE BO`ARV OF SUPERVIYORS AND CO NTY ADMINISTRATOR CC: All County Departments . BY ®( D TY CERBT June 24, 2008 Page 2 of 2 Code section 115); the Benefit Trust Fund will be controlled by the CalPERS Board which has only one member to represent local agencies; and CalPERS will not indemnify the County for CaIPERS' errors. Staff recommended the creation of a local 115 trust as an interim decision and tasked itself with keeping current on any other options that became available. Since that time several things have changed which make the CERBT trust much more attractive for Contra Costa County. The two most significant changes are that 1) the FY 2008-09 Budget includes fewer pre-funding appropriations than were originally anticipated; and 2) the administrative costs for the CERBT are much lower than expected. The projected annual administrative cost for FY 2007-08 was 50 basis points of assets with no transactions fees. Because the number of entities who have joined the CERBT and the amount of deposits have exceeded CalPERS' expectations, the actual cost is expected to be even less than 50 basis points. Currently the County does not have the internal expertise or certification to make the local trust investments. The original plan was to contract for these services, which staff is now confident cannot be done at equal or less expense than participating in the CalPERS trust. A number of items in the CERBT standard agreement (Attachment A) raise significant questions, and it would be desirable to get written clarification from CalPERS on several points: 1. The agreement requires (Item C, Section 2) the County to submit actuarial reports, which the CalPERS board may reject in its sole discretion. We will pursue CalPERS written confirmation that the County's 2008 actuarial valuation meets CalPERS requirements and that CalPERS does not plan any changes in the standards for valuations; 2. The agreement requires (Item C, Section 3) the County to notify the CalPERS board of the amount of its expected annual contributions. We will seek CalPERS written confirmation that the County's completion of the Certification of Funding Policy does not obligate the County to annually contribute to the CERBT the amount referenced in the Certification and request that the agreement with CalPERS state this explicitly; 3. The agreement provides (Item D, Section 5) that investment income shall be allocated among employers at least annually. We will seek CalPERS written confirmation that the allocation will be pro rata based on invested assets; 4. The agreement does not require (Item F, Section 5) that instructions for disbursement be made in writing. We will pursue a requirement in the agreement for written instruction; and 5. The agreement imposes (Item H, Section 5) strict requirements to transfer monies from the CERBT to another trust. We will seek CalPERS written confirmation that if the County spends down all of its trust assets, it will be deemed to have no assets remaining in its account for purposes of satisfying the termination conditions and also that such "spend down" may occur if CalPERS terminates the County's participation in the trust (Section H,(1) and (2). Conclusion Staff recommends that we begin the CERBT application process. With the Board's authorization, County staff will work with CalPERS staff to mitigate our legal concerns through written clarification from CaIPERS; and complete the agreement package, which consists of two signed copies of the participation agreement, a copy of our actuarial valuation report, a summary of the actuarial information, certification of the OPEB actuarial information, certification of our funding policy and GASB reporting compliance, and delegation of authority to request disbursement. Once the standard contract and certifications are approved and forwarded to CaIPERS, it takes approximately two weeks for CalPERS to review and accept the contract documents and actuarial report and an additional week before the County's initial contribution can be accepted. This timeline would allow ample opportunity to complete the process by October 1, 2008, the scheduled date of our first OPEB prefunding transfer. It is staff's intent to maintain the local 115 trust rather than dissolve it in order to allow for the most flexibility. Attachments: A— Standard Agreement; B — Investment Policy; C — CERBT Participating Agencies ADDENDUM TO DA .lune 24. 2008 On this day the Board of Supervisors considered directing the County Administrator to begin the application process to prefund Other Post Employment Benefits (OPEB) through the California Employer's Retiree Benefit Trust Program (CERBT) and considered authorizing the Chair, Board of Supervisors,to execute an agreement with CalPERS upon successful conclusion of application. process. John Cullen, County Administrator, introduced the item noting the Board of Supervisors approved an irrevocable trust structure for OPEB finding for the County. (Complete Board Order available in the Minutes File at the Clerk of the Board's Office). In conclusion, lie recommended the CERBT application process be started. He noted with the Board's authorization, County staff will work with CaIPERS staff to mitigate legal concerns through written clarification and complete the agreement, which would consist of two signed copies of the participation agreement, a copy the County's actuarial valuation report, summary of the actuarial information, certification of the OPEB information, certification of funding policy and GASB reporting compliance, and delegation of authority to request disbursement. In reference to page 2 of the Board Order, Supervisor Uilkenia requested the County Administrator's staff provide written clarification on items 1 through 5 and return to the Board with the recommendations for the Chair of the Board to execute an agreement with CaIPERS upon conclusion of the application process. Chair Glover asked the public opinion for their comments and the following person spoke: • Roland Katz, Business Agent, Local 1 asked if the drop in the assumption came without any draconian measures of slashing benefits, and said lie understood this item was a matter of collective bargaining. He requested the Board inform the Union regarding such matters well in advance. IIe asked for a thorough analysis and cautioned the Board this would come up at the bargaining table. In reference to the Task Force. Mr. Katz noted his disappointment in the Board's response today and said what Local 1 received from their staff suggests there is no belief in collective bargaining iii the county. Supervisor Gioia concurred with Mr. Katz and said there should be a better approach to select who would be on the committee and that nominating and having management pick is not the process the County should follow and requested further discussion ori this. He said other than having the process changed it would be in everyone's interest to move l:orward and have full and open discussion. Chair Glover said the Board would revisit this to make sure that this is something that works because the Board has committed to make sure there will be dialogue, and it was not presumed that a decision that comes from that would prohibit the bargaining that would take place. I ie stressed the importance of everyone sitting at the table to conic up with some solutions. Supervisor Bonilla concurred we are taking a first fool: at the process and said there will be opportunities to have a broader discussion, not narrowed down to the health plan issuebut as a whole organization over the issue of how to address OPEB. Supervisor Piepho referred to the nomination process in the invite letter: "ci cross section of represented employees, union representatives and retirees that i>>ould he selected to participate. " She said it is the Board's commitment in the process to have an open inclusive process. Addendum to D.4, June 24, 2008 Page 2 q f 2 Supervisor Uilkema added to the recommendation that the County Administrator should return to the Board with recommendations to subsequently consider authorizing the Chair of the .Board to sign the agreement with CalPERS upon successful resolution of the issues articulated in the Board Order. Mr. Cullen said if Mr. Katz and other Union leaders feel the nomination process is problematic to let him know the person they would like on the Committee. By a unanimous vote lvith all Supervisors present, the Board of Supervisors took the follolving action: DIRECTED the County Administrator to begin the application process to prefund OPEB benefits through the CERBT program and authorized the Chair.. Board of Supervisors to execute an agreement with CalPERS upon successful conclusion of application process; and DIRECTED the County Administrator to return to the Board with recommendations to consider authorizing the Chair of the Board to sign an agreement with CalPERS upon successful resolution of the issues written in the Board Order. # # # 2 A'ICTACHME\Tj A CALIFORNIA EMPLOYER'S RETIREE BENEFIT TRUST PROGRAM ("CERBT") AGREEMENT AND ELECTION OF (NAME OF EMPLOYER) TO PREFUND .OTHER POST EMPLOYMENT BENEFITS THROUGH CaIPERS WHEREAS (1) Government Code Section 22940 establishes in the State Treasury the Annuitants' Health Care Coverage Fund for the prefunding of health care coverage for annuitants (Prefunding Plan); and WHEREAS (2) The California Public Employees' Retirement System (CaIPERS) Board of Administration (Board) has sole and exclusive control and power over the administration and investment of the Prefunding Plan(sometimes also referred to as CERBT), the purposes of which include, but are not limited to (i) receiving contributions from participating employers and establishing separate Employer Prefunding Accounts in the Prefunding Plan for the performance of an essential governmental function (ii) investing contributed amounts and income thereon, if any, in order to receive yield on the funds and (iii) disbursing contributed amounts and income thereon, if any, to pay for costs of administration of the Prefunding Plan and to pay for health care costs or other post employment benefits in accordance with the terms of participating employers' plans; and WHEREAS (3) (NAME OF EMPLOYER) (Employer) desires to participate in the Prefunding Plan upon the terms and conditions set by the Board and as set forth herein; and WHEREAS (4) Employer may participate in the Prefunding Plan upon (i) approval by the Board and (ii) filing a duly adopted and executed Agreement and Election to Prefund Other Post Employment Benefits (Agreement) as provided in the terms and conditions of the Agreement; and WHEREAS (5) The Prefunding Plan is a trust fund that is intended to perform an essential governmental function within the meaning of Section 115 of the Internal Revenue Code as an agent multiple-employer plan as defined in Governmental Accounting Standards Board (GASB) Statement No. 43 consisting of an aggregation of single-employer plans, with pooled administrative and investment functions; Rev 04/25/2008 NOW, THEREFORE, BE IT RESOLVED THAT EMPLOYER HEREBY MAKES THE FOLLOWING REPRESENTATION AND WARRANTY AND THAT THE BOARD AND EMPLOYER AGREE TO THE FOLLOWING TERMS AND CONDITIONS: A. Representation and Warranty Employer represents and warrants that it is a political subdivision of the State of California or an entity whose income is excluded from gross income under Section 115 (1) of the Internal Revenue Code. B. Adoption and Approval of the Agreement; Effective Date; Amendment (1) Employer's governing body shall elect to participate in the Prefunding Plan by adopting this Agreement and filing with the CalPERS Board a true and correct original or certified copy of this Agreement as follows: Filing by mail, send to: CalPERS Constituent Relations Office CERBT (OPEB) P.O. Box 942709 Sacramento, CA 94229-2709 Filing in person, deliver to: CaIPERS Mailroom Attn: Employer Services Division 400 Q Street Sacramento, CA 95814 (2) Upon receipt of the executed Agreement, and after approval by the Board, the Board shall fix an effective date and shall promptly notify Employer of the effective date of the Agreement. (3) The terms of this Agreement may be amended only in writing upon the agreement of both CalPERS and Employer, except as otherwise provided herein. Any such amendment or modification to this Agreement shall be adopted and executed in the same manner as required for the Agreement. Upon receipt of the executed amendment or modification, the Board shall fix the effective date of the amendment or modification. (4) The Board shall institute such procedures and processes as it deems necessary to administer the Prefunding Plan, to carry out the purposes of this Agreement, and to maintain the tax exempt status of the Prefunding Plan. Employer agrees to follow such procedures and processes. Rev 04/25/2008 2 C. Actuarial Valuation and Employer Contributions (1) Employer shall provide to the Board an actuarial valuation report on the basis of the actuarial assumptions and methods prescribed by the Board. Such report shall be for the Board's use in financial reporting, shall be prepared at least as often as the minimum frequency required by GASB Statement No. 43, and shall be: (a) prepared and signed by a Fellow or Associate of the Society of Actuaries who is also a Member of the American Academy of Actuaries or a person with equivalent qualifications acceptable to the Board; (b) prepared in accordance with generally accepted actuarial practice and GASB Statement Nos. 43 and 45; and, (c) provided to the Board prior to the Board's acceptance of contributions for the valuation period or as otherwise required by the Board. (2) The Board may reject any actuarial valuation report submitted to it, but shall not unreasonably do so. In the event that the Board determines, in its sole discretion, that the actuarial valuation report is not suitable for use in the Board's financial statements or if Employer fails to provide a required actuarial valuation, the Board may obtain, at Employer's expense, an actuarial valuation that meets the Board's financial reporting needs. The Board may recover from Employer the cost of obtaining such actuarial valuation by billing and collecting from Employer or by deducting the amount from Employer's account in the Prefunding Plan. (3) Employer shall notify the Board of the amount and time of contributions which contributions shall be made in the manner established by the Board. (4) Employer contributions to the Prefunding Plan may be limited to the amount necessary to fully fund Employer's actuarial present value of total projected benefits, as supported by the actuarial valuation acceptable to the Board. As used throughout this document, the meaning of the term "actuarial present value of total projected.benefits" is as defined in GASB Statement No. 45. If Employer's contribution causes its assets in the Prefunding Plan to exceed the amount required to fully fund the actuarial present value of total projected benefits, the Board may refuse to accept the contribution. (5) The minimum Employer contribution will be at least $5000 or be equal to Employer's Annual Required Contribution, whichever is less, as that term is defined in GASB Statement No. 45. Contributions can be made at any time following the seventh day after the effective date of the Agreement provided that Employer has first complied with the requirements of Paragraph C. Rev 04/25/2008 3 D. Administration of Accounts, Investments, Allocation of Income (1) The Board has established the Prefunding Plan as an agent plan consisting of an aggregation of single-employer plans, with pooled administrative and investment functions, under the terms of which separate accounts will be maintained for each employer so that Employer's assets will provide benefits only under employer's plan. (2) All Employer contributions and assets attributable to Employer contributions shall be separately accounted for in the Prefunding Plan (Employer's Prefunding Account). (3) Employer's-Prefunding Account assets may be aggregated with prefunding account assets of other employers and may be co-invested by the Board in any asset classes appropriate for a Section 115 Trust. (4) The Board may deduct the costs of administration of the Prefunding Plan from the investment income or Employer's Prefunding Account in a manner determined by the Board. (5) Investment income shall be allocated among employers and posted to Employer's Prefunding Account as determined by the Board but no less frequently than annually. (6) If Employer's assets in the Prefunding Plan exceed the amount required to fully fund the actuarial present value of total projected benefits, the Board, in compliance with applicable accounting and legal requirements, may return such excess to Employer. E. Reports and Statements (1) Employer shall submit with each contribution a contribution report in the form and containing the information prescribed by the Board. (2) The Board shall prepare and provide a statement of Employer's Prefunding Account at least annually reflecting the balance in Employer's Prefunding Account, contributions made during the period and income allocated during the period, and such other information as the Board determines. F. Disbursements (1) Employer may receive disbursements not to exceed the annual premium and other costs of post employment healthcare benefits and other post employment benefits as defined in GASB 43. (2) Employer shall notify CalPERS in writing in the manner specified by CalPERS of the persons authorized to request disbursements from the Prefunding Plan on behalf of Employer. Rev 04/25/2008 4 (3) Employer's request for disbursement shall be in writing signed by Employer's authorized representative, in accordance with procedures established by the Board. The Board may require that Employer certify or otherwise establish that the monies will be used for the purposes of the Prefunding Plan. (4) Requests for disbursements that satisfy the requirements of paragraphs (2) and (3) that are received on or after the first of a month will be processed by the 15th of the following month. (For example, a disbursement request received on or between March 1 st and March 31 st will be processed by April 15th; and a disbursement request received on or between April 1 st and April 30th will be processed by May 15th.) (5) CalPERS shall not be liable for amounts disbursed in error if it has acted upon the instruction of an individual authorized by Employer to request disbursements. In the event of any other erroneous disbursement, the extent of CaIPERS' liability shall be the actual dollar amount of the disbursement, plus interest at the actual earnings rate but not less than zero. (6) No disbursement shall be made from the Prefunding Plan which exceeds the balance in Employer's Prefunding Account. G. Costs of Administration Employer shall pay its share of the costs of administration of the Prefunding Plan, as determined by the Board. H. Termination of Employer Participation in Prefunding Plan (1) The Board may terminate Employer's participation in the Prefunding Plan if: (a) Employer gives written notice to the Board of its election to terminate; (b) The Board finds that Employer fails to satisfy the terms and conditions of this Agreement or of the Board's rules or regulations. (2) If Employer's participation in the Prefunding Plan terminates for any of the foregoing reasons, all assets in Employer's Prefunding Account shall remain in the Prefunding Plan, except as otherwise provided below, and shall continue to be invested and accrue income as provided in Paragraph D. (3) After Employer's participation in the Prefunding Plan terminates, Employer may not make contributions to the Prefunding Plan. Rev 04/25/2008 5 (4) After Employer's participation in the Prefunding Plan terminates, disbursements from Employer's Prefunding Account may continue upon Employer's instruction or otherwise in accordance with the terms of this Agreement. (5) After thirty-six (36) months have elapsed from the effective date of this Agreement: (a) Employer may request a trustee to trustee transfer of the assets in Employer's Prefunding Account. Upon satisfactory showing to the Board that the transfer will satisfy applicable requirements of the Internal Revenue Code and the Board's fiduciary duties, then the Board shall effect the transfer within one hundred twenty (120) days. The amount to be transferred shall be the amount in the Employer's Prefunding Account as of the disbursement date and shall include investment earnings up to the investment earnings allocation date immediately preceding the disbursement date. In no event shall the investment earnings allocation date precede the transfer by more than 120 days. (b) Employer may request a disbursement of the assets in Employer's Prefunding Account. Upon satisfactory showing to the Board that all of Employer's obligations for payment of post employment health care benefits and other post employment benefits and reasonable administrative costs of the Board have been satisfied, then the Board shall effect the disbursement within one hundred twenty (120) days. The amount to be disbursed shall be the amount in the Employer's Prefunding Account as of the disbursement date and shall include investment earnings up to the investment earnings allocation date immediately preceding the disbursement date. In no event shall the investment earnings allocation date precede the disbursement by more than 120 days. (6) After Employer's participation in the Prefunding Plan terminates and at such time that no assets remain in Employer's Prefunding Account, this Agreement shall terminate. (7) If, for any reason, the Board terminates the Prefunding Plan, the assets in Employer's Prefunding Account shall be paid to Employer after retention of (i) amounts sufficient to pay post employment health care benefits and other post employment benefits to annuitants for current and future annuitants described by the employer's current substantive plan (as defined in GASB 43), and (ii) amounts sufficient to pay reasonable administrative costs of the Board. (8) If Employer ceases to exist but Employer's Prefunding Plan continues to exist and if no provision has been made by Employer for ongoing payments to pay post employment health care benefits and other post employment benefits to annuitants for current and future annuitants, the Board is authorized to and shall appoint a third party administrator to carry out Employer's Prefunding Plan. Any and all costs associated Rev 04/25/2008 6 I with such appointment shall be paid from the assets attributable to contributions by Employer. (9) If Employer should breach the representation and warranty set forth in Paragraph A., the Board shall take whatever action it deems necessary to preserve the tax-exempt status of the Prefunding Plan. I. General Provisions (1) Books and Records. Employer shall keep accurate books and records connected with the performance of this Agreement. Employer shall ensure that books and records of subcontractors, suppliers, and other providers shall also be accurately maintained. Such books and records shall be kept in a secure location at the Employer's office(s) and shall be available for inspection and copying by CalPERS and its representatives. (2) Audit. (a) During and for three years after the term of this Agreement, Employer shall permit the Bureau of State Audits, CaIPERS, and its authorized representatives, and such consultants and specialists as needed, at all reasonable times during normal business hours to inspect and copy, at the expense of CaIPERS, books and records of Employer relating to its performance of this Agreement. (b) Employer shall be subject to examination and audit by the Bureau of State Audits,'CalPERS, and its authorized representatives, and such consultants and specialists as needed, during the term of this Agreement and for three years after final payment under this Agreement. Any examination or audit shall be confined to those matters connected with the performance of this Agreement, including, but not limited to, the costs of administering this Agreement. Employer shall cooperate fully with the Bureau of State Audits, CaIPERS, and its authorized representatives, and such consultants and specialists as needed, in connection with any examination or audit. All adjustments, payments, and/or reimbursements determined to be necessary by any examination or audit shall be made promptly by the appropriate party. (3) Notice. (a) Any notice, approval, or other communication required or permitted under this Agreement will be given in the English language and will be deemed received as follows: Rev 04/25/2008 7 i 1 . Personal delivery. When personally delivered to the recipient. Notice is effective on delivery. 2. First Class Mail. When mailed first class to the last address of the recipient known to the party giving notice. Notice is effective three delivery days after deposit in a United States Postal Service office or mailbox. 3. Certified mail. When mailed certified mail, return receipt requested. Notice is effective on receipt, if delivery is confirmed by a return receipt. 4. Overnight Delivery. When delivered by an overnight delivery service, charges prepaid or charged to the sender's account, Notice is effective on delivery, if delivery is confirmed by the delivery service. 5. Telex or Facsimile Transmission. When sent by telex or fax to the last telex or fax number of the recipient known to the party giving notice. Notice is effective on receipt, provided that (i) a duplicate copy of the notice is promptly given by first-class or certified mail or by overnight delivery, or (ii) the receiving party delivers a written confirmation of receipt. Any notice given by telex or fax shall be deemed received on the next business day if it is received after 5:00 p.m. (recipient's time) or on a nonbusiness day. 6. E-mail transmission. When sent by e-mail using software that provides unmodifiable proof(i) that the message was sent, (ii) that the message was delivered to the recipient's information processing system, and (iii) of the time and date the message was delivered to the recipient along with a verifiable electronic record of the exact content of the message sent. Addresses for the purpose of giving notice are as shown in Paragraph B.(1) of this Agreement. (b) Any correctly addressed notice that is refused, unclaimed, or undeliverable because of an act or omission of the party to be notified shall be deemed effective as of the first date that said notice was refused, unclaimed, or deemed undeliverable by the postal authorities, messenger or overnight delivery service. (c) Any party may change its address, telex, fax number, or e-mail address by giving the other party notice of the change in any manner permitted by this Agreement. Rev 04/25/2008 8 (d) All notices, requests, demands, amendments, modifications or other communications under this Agreement shall be in writing. Notice shall be sufficient for all such purposes if personally delivered, sent by first class, registered or certified mail, return receipt requested, delivery by courier with receipt of delivery, facsimile transmission with written confirmation of receipt by recipient, or e-mail delivery with verifiable and unmodifiable proof of content and time and date of sending by sender and delivery to recipient. Notice is effective on confirmed receipt by recipient or 3 business days after sending, whichever is sooner. (4) Modification This Agreement may be supplemented, amended, or modified only by the mutual agreement of the parties. No supplement, amendment, or modification of this Agreement shall be binding unless it is in writing and signed by the party to be charged. (5) Survival All representations, warranties, and covenants contained in this Agreement, or in any instrument, certificate, exhibit, or other writing intended by the parties to be a part of their Agreement shall survive the termination of this Agreement until such time as all amounts in Employer's Prefunding Account have been disbursed. (6) Waiver No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this Agreement shall be effective unless it is in writing and signed by the.party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy shall be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, nor shall any waiver constitute a continuing waiver unless the writing so specifies. (7) Necessary Acts, Further Assurances The parties shall at their own cost and expense execute and deliver such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to evidence or carry out the intent and purposes of this Agreement. Rev 04/25/2008 9 A majority vote of Employer's Governing Body at a public meeting held on the day of the month of in the year authorized entering into this Agreement. Signature of the Presiding Officer: Printed Name of the Presiding Officer: Name of Governing Body:. Name of Employer: Date: BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM BY KENNETH W. MARZION ACTUARIAL AND EMPLOYER SERVICES BRANCH CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM To be completed by CalPERS The effective date of this Agreement is: Rev 04/25/2008 10 ATTACHMENT B CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM — - STATEMENT OF INVESTMENT POLICY FOR ANNUITANTS' HEALTHCARE COVERAGE FUND December 18, 2006 This Policy is effective immediately upon adoption. I. PURPOSE This document sets forth the investment policy ("the Policy") for the Annuitants' Healthcare Coverage Fund ("the Fund"). The design of this Policy ensures that investors, managers, consultants, or other participants selected by the California Public Employees' Retirement System ("the System") take prudent and careful action while managing the Fund. Additionally, use of this Policy provides assurance that there is sufficient flexibility in controlling investment risks and returns associated with this Fund. II. STRATEGIC OBJECTIVE Ensure that the Fund has liquidity adequate to meet its projected cash flow needs, while at the same time keeping its cash balances fully invested, so as to achieve the highest total rate of return possible, consistent with a prudent level of risk. The Fund shall be managed to accomplish the following: A. Provide sufficient liquidity to meet all cash needs; B. Enhance the Fund's total rate of return by ensuring that all cash balances are fully invested at all times until they are needed by the Fund; C. Maintain sufficient diversification to avoid large losses and preserve capital; and D. Consider solely the interest of the Fund's participants and their beneficiaries in accordance with California State Law. III. RESPONSIBILITIES AND DELEGATIONS A. The System's Investment Committee ("the Investment Committee") is responsible for approving and amending the Policy. The Investment Committee delegates the responsibility for administering the Fund to the Investment Staff through the Delegation of Authority (Delegation Nos. 89- 13 and 95-50). Copyright©2006 by CaIPERS. Reproduction of any part of this manual is permissible if reproduction contains notice of CalPERS'copyright as follows: "Copyright©2006 by CalPERS" ANNUITANTS'HEALTHCARE COVERAGE FUND Page 2 of 4 B. The System's Investment.Staff("the Staff') is responsible for: 1. Implementing and adhering to the Policy; 2. Reporting internally to senior management concerning the implementation of this Policy. This report shall be prepared at least monthly to include, but is not limited to,'the current market value and allocations by asset class compared to the asset allocation targets. C. The General Pension Consultant ("the Consultant") is responsible for monitoring, evaluating, and reporting to the Investment Committee, at. least quarterly, the Fund's performance relative to the benchmark and Policy guidelines. IV. PERFORMANCE OBJECTIVE The Fund, at a minimum, shall generate a long-term total return that meets or exceeds the Fund's actuarial interest rate assumption. V. INVESTMENT APPROACHES AND PARAMETERS A. Philosophy and Approach The Fund shall be managed in accordance with the CalPERS Statement of Investment Policy for Asset Allocation Strategy approved by the Investment Committee and in a manner consistent with each individual Board-Approved Policy governing each asset class. Such policies shall specify the method and parameters for implementation and provide for the ongoing monitoring of that asset class. B. Fund Structure/Parameters The System shall manage the Fund in accordance with the following strategic asset allocation. In order to increase the investment opportunities, the Fund shall hold an interest in pooled funds managed by the System. The System's Master Custodian shall employ a unitized fund structure to maintain separate and distinct historical records and to produce individual net asset values (NAV's) for each asset class in the Fund. Copyright©2006 by CalPERS. Reproduction of any part of this manual is permissible if reproduction contains notice of CalPERS'copyright as follows:"Copyright©2006 by CalPERS. ANNUITANTS'HEALTHCARE COVERAGE FUND Page 3 of 4 The Annuitants' Healthcare Coverage Fund Strategic Asset Allocation Asset Class Policy Allocation Policy Range U. S. Equity 35% 30% - 40% Int'I Equity 29% 24% - 34% REITs 10% 7% - 13% U. S. Fixed Income 20% 17% -23% High Yield 6% 3% - 9% Cash Equivalent 0% 0% Expected Return: 7.75% Expected Risk: 11.91% Return/Risk: 0.65 C. Restrictions, Prohibitions and Permissible Securities Restrictions, Prohibitions and Permissible Securities of the Fund are defined in the Board-Approved Policy governing each asset class, as follows: U. S. Equity: Pooled S&P 500 Equity Index Fund — Internally Managed Int'I Equity: Equity Index Funds— Internally Managed REITs: Enhanced CORE Index Public Real Estate Equity Securities — Internally Managed U. S. Fixed Income and High Yield: Dollar-Denominated Fixed Income Program Cash: Dollar-Denominated Short-Term Program — Internally Managed Copyright©2006 by CalPERS. Reproduction of any part of this manual is permissible if reproduction contains notice of CalPERS'copyright as follows:"Copyright©2006 by CalPERS. ANNUITANTS'HEALTHCARE COVERAGE FUND Page 4 of 4 VI. BENCHMARK The benchmark for each of the Fund's asset class investments is defined in the Board-Approved Policy governing each asset class. The benchmark for the Fund as a whole shall be a weighted asset class benchmark based on asset class.index returns weighted by asset class policy targets. VII. GENERAL Investors, managers, consultants, or other participants selected by the System shall make all calculations and computations on a market value basis, as recorded by the System's custodian. VIII. GLOSSARY OF TERMS Definitions of key words used in this policy are located in the Miscellaneous Investment Policies Glossary of Terms which is included in the System's Master Glossary of Terms. Annuitants' Healthcare Coverage Fund Approved by the Policy Subcommittee: December 15, 2006 Adopted by the Investment Committee: December 18, 2006 Copyright©2006 by Ca1PERS. Reproduction of any part of this manual is permissible if reproduction contains notice of Ca1PERS'copyright as follows:"Copyright©2006 by CalPERS.. m 0 0 N N 7 67 T T a) '0 J � m y (6 G ai 0 N - O G01 N G � ca G C (a NC G -0 to N Ur�' Gu GO N 0 co r o co Gca N-pu ° ° � (fl° y acr ,m -o G ax ° as °7 yE � ai � caucv a � kc) (1y v ° N cCa 0- c CO m0) °' �� � om @c > .6 E UJ 7 0 ° c — 0 -j 15 �o G m o m a CN Ecn G (n U N uj a1 C @ c4 N N O Q- U 'iA 0 O �Q N R c6 O O +� tll U t�U o x c N -o a� m o o in mu1u�1 0 ° o o rs xc c W o o �� m p`„ O G U G N c6 — o @ 'G N U N N cb (f) � ° r � o QWE ° �' x � � u O,o mm Q N No6 (1)r U a o N � O U 1S. OU .S3 >N � O C N (J1 G CG X (yl G U -O G ca G N c6 U U '% U o r Ns. _ �^ mm co 00) CG C) r o ° N G U x@ 9 o p a) @ p � o N o cox a s is °n p o m m c6 O o W -G a ° � -° G u� .- a� •0 7 NN co oca N Rfn 0 � Q 0) o, . w o a N V oco N d' Ch o 0 0 o N �• o o LL'1 1l) p'1, (•4 r En o 0 65 co co o N co CG o r N N CD N o o to 'LT c6 �' „�•, o N �V U Fr cam•) N ✓ Y .�- 6 O x srn G U m p N m ✓ w t6 U fi N L) w R'0 c ¢ W W A N r 0 4 co c ;° p ui oIr- r U co N OJ N Q N Nlf 1- m`ca `o Q 1 W � N U 7d � N Attachment C List of Agencies Participating in the CERBT Fund (As of May 14, 2008) 58 agencies have contracted with CalPERS to participate in the California Employers' Retiree Benefit Trust (CERBT) Fund. Alameda Corridor Transportation Authority County of Napa Alameda County Congestion Management Agency County of Nevada Alameda County Waste Management Authority County of Placer Aptos/La Selva Fire Protection District County of Riverside Bay Area Air Quality Management District County of San Mateo California Fairs Financing Authority Fresno Law Library City of Bellflower Grossmont Healthcare District City of Belmont Ironhouse Sanitary District City of Burbank Kern County Housing Authority City of Cerritos Los Angeles Community College District City of Corona Metropolitan Transportation Commission City of Dublin Midpeninsula Regional Open Space District City of EI Cajon Napa County Mosquito Abatement District City of Huntington Beach Northern California Power Agency City of Huntington Park Oro Loma Sanitary District City of Manhattan Beach Otay Water District City of Menlo Park Padre Dam Municipal Water District City of Milpitas Riverside County Transportation Commission City of Mission Viejo Riverside Transit Agency City of Palm Desert Sacramento City Housing Authority City of Palo Alto Sacramento County Office of Education City of Redondo Beach Sacramento Municipal Utilities District City of Ridgecrest Santa Ana Watershed Project Authority City of San Diego South Placer Municipal Utility District City of Seal Beach Southern California Association of Governments City of Temecula Stanislaus County Housing Authority City of Thousand Oaks Tamalpais Union High School District City of West Sacramento Town of Los Altos Hills Contra Costa Transportation Authority Truckee Donner Public Utilities District Board of Supervisor Presentation By Jerry Telles June 24, 2008 Supervisor Glover and Board Members: My name is Jerry Telles and I am the Chair of the Retiree Support Group of Contra Costa County. I am also the Retiree Trustee on the Contra Costa County Employees Retirement Association and the Secretary for AFSCME retiree local 142 and Chapter 57 of Northern California. First, do me a favor and write down the figure you feel a retiree lives on monthly. I will quote from the CAFRA, the Comprehensive Annual Financial Report written each year by the Contra Costa County Employees Retirement Association. In this report it gives the average salary for a retiree in the System. Now write down what you feel it is. Is it $2000, $4000, or$6000? The average salary is $2800.00 a month. That sounds like an O.K. income, but consider the expenses: Mortgage 1200 Taxes 100 Health Ins 225 Auto&Home Ins 150 Food 300 Gas 200 Telephone 50 Cable T.V. 60 Medication& Doc40 Total 2325 dollars This leaves 475 dollars for living expenses. Imagine what one car repair or one home repair or one family emergency can do to this budget. This estimate is without credit card debt. Now you're asking these people to pay more for health insurance. Right now it is an 80/20 split with the County paying 80% and retiree paying 20%. With the adoption of this plan in about eight years it will be 20% County and 80% Retiree. Do you think these retirees will be able to absorb an increase from 225 dollars a month for health care to 1000 dollars a month in eight years when they only have 475 dollars extra today? This decision will create a Retiree Welfare state for your Retired employees. Are you prepared for that or more correctly is the County prepared for that? A second issue is Surviving Spouse. Did you know that if I passed away today, my wife only gets 60% of my retirement, $1680? She would no longer have health care because the county does not have surviving spouse health care. I bring this to you because there are other ways to reduce the OPEB liability than what is being proposed by the County Administrator and Human Resource Director. We have suggested and continue to suggest the transferring of all county employees and retirees to Calpers Health which could save the county upwards of 17 nullion dollars a year. If you need a place to start transferring people to Calpers, start with the unrepresented. I am sure the unrepresented actives and retirees would like to pay less and receive increased benefits like Surviving Spouse Health care and portability with Kaiser. Thank you for time and considerations. RE, QUEST TO SPEAK FORM (3 Minute Limit) I wish to speak on Agenda Item #: — Complete this form and place it in the upright box near the Date: CQ �v1 w1S speaker's podium, and wait to be called by the Chair. My comments will be: General Personal information is optional. This speaker's card will be incorporated into the public record of this meeting. ❑ For Name (PR.IN,r): IAV 1 1�t'L ❑ Against To ensure your name is announced correctly,you may want to inchrde its phonetic spelling II ❑ I wish to speak on the subject of- Address: fAddress: 0 -17� City: % (VrIv C ' Phone: .l am speaking for: ❑ Myself _1 , ,� l It, Organization: I`�\ J.ccd / ❑ I do not want to speak but would like to leave comments for the Board to consider (Use the back of this,form)