HomeMy WebLinkAboutCC Resolution 13556 (Pension Funding Policy)RESOLUTION NO 13556
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SAN RAFAEL ADOPTING A PENSION FUNDING POLICY
WHEREAS, the City of San Rafael is committed to adopting best fiscal practices, in
order to fully use the knowledge, resources and experience available throughout the industry;
and
WHEREAS, Public agencies that offer defined benefit pensions to their employees
should fund the cost of those benefits in an equitable and sustainable manner; and
WHEREAS, the City desires to demonstrate accountability and transparency by
communicating all of the information necessary for assessing the City's progress toward
meeting its pension funding objectives.
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of San Rafael
does hereby approve and adopt the following Pension Fundinq Policy:
Purpose: The purpose of this policy is to provide reasonable assurance that the costs of the
City's defined benefit pensions will be funded in an equitable and sustainable manner. It codifies
the City's commitment to fund these benefits based on regular actuarial valuations, and to
measure and report them in accordance with generally accepted accounting principles (GAAP).
Adhering to a funding policy that embodies these funding and accounting principles is a prudent
governance practice, and helps achieve intergenerational equity among those who financially
support the plan. It also ensures that resources are available to fulfill the City's contractual
promises to its employees, and minimizes the chance that funding of these benefits will interfere
with the City's ability to provide essential services to the public.
In order to achieve the purpose of thisop licy, the City will take the followina actions:
1. The City will use the actuarially determined contribution (ADC) provided by MCERA to serve
as the basis for its pension contributions.
2. The City supports an ADC that is calculated in a manner that fully funds the long-term costs
of promised pension benefits, while balancing the goals of
a) keeping contributions relatively stable; and
b) equitably allocating the costs over the employees' period of active service.
3. The City supports a policy of funding the full amount of the ADC each year and making the
full contribution as determined by MCERA. In the event the City is unable to fund the full amount
of the ADC in a given year with current resources (i.e., without borrowing or using reserves), the
Finance Director and City Manager will identify a reasonable period to return to full funding.
4. The City will demonstrate accountability and transparency by communicating all of the
information necessary for assessing the City's progress toward meeting its pension funding
objectives. This will be achieved, in part, by ensuring full and accurate implementation of GASB
Statement No. 68 beginning with fiscal year 2014-2015.
5. As part of the annual budget adoption process, the Finance Director and City Manager will
report to the City Council on the following:
a) most recent actuarially determined pension contribution (ADC)
b) relationship between ADC and budgeted pension contribution
c) projected ADC for next three years
d) impact of funding full ADC over the three-year planning horizon
e) any other significant issues associated with funding the defined benefit pension in a
stable and equitable manner as described in #2 above.
6.) Staff will monitor changes to and expansions of pension funding best practices, as well as
any additional guidance provided by the Government Finance Officer's Association that relate to
the funding of defined benefit pensions. Staff will return to City Council with modifications to this
policy as needed.
I, ESTHER C. BEIRNE, Clerk of the City of San Rafael, hereby certify that the foregoing
resolution was duly and regularly introduced and adopted at a regular meeting of the Council of
said City on Monday, the 17th of June 2013, by the following vote, to wit:
AYES: COUNCILMEMBERS: Colin, Connolly, Heller, McCullough & Mayor Phillips
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
ESTHER C. BEIRNE, City Clerk
CALIFORNIA EMPLOYERS' RETIREE BENEFIT TRUST PROGRAM ("CERBT")
AGREEMENT AND ELECTION
OF
CITY OF SAN RAFAEL
(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) _ CITY 4.)F SAP! RAFAEL _
(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
essent al go,,ernp"niental function within the mean ng of Section 115 of the InteMnal
Revenue Code as an agent multiple employer plan as defined in Governmental
Accaunhng Standards Board (SASB) Statement N:) -3 cor-srsting of an aggregation of
single -employer plans ,v th pooled ad min stratK!,e an i n iestment functions
A
Exhibit A
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 CaIPERS Board a true and correct original
or certified copy of this Agreement as follows
Filing by mail, send to- CalPERS
Affiliate Program Services Division
CERBT (OPEB)
P O Box 1494
Sacramento„ CA 95812-1494
Filing in person, deliver to.
CalPERS Mailroom
Affiliate Program Services Division
CERBT (OPEB)
400 Q Street
Sacramento CA 95811
(2) Upon receipt of the executed Agreement, and after approval by the Board the
Board shall fix an effect!ve 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 other wise 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 re,;&pt 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
admin ri�stethe Prefurding Plan to carry out the purposes of this Agreement and to
nary `a n Che �:ax exempt status of the Prefundri- Plan Ery pl )yar agrees to f-)llojv such
prJcej a es ar"d processes
C Other Post Employment Benefits (OPEB) Cost Reports and Employer Contributions
(1) Employer shall provide to the Board an OPER cost 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, and shall be prepared at least as often as the
minimum frequency required by GASB 43, This OPEB cost report may be prepared as
an actuarial valuation report or, if the employer is qualified under GASB 45 and 57, may
be prepared as an Alternative Measurement Method (AMM) report
(a) Unless qualified under GASB 45 and 57 to provide an AMM report,
Employer shall provide to the Board an actuarial valuation report. Such
report shall be for the Board's use in financial reporting, and shall be
prepared at least as often as the minimum frequency required by GASB
43 and 57, and shall be:
1) 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;
2) prepared in accordance with generally accepted actuarial practice and
GASB 43, 45 and 57, and
3) provided to the Board prior to the Board's acceptance of contributions
for the valuation period or as otherwise required by the Board.
(b) If qualified under GASB 45 and 57, Employer may provide to the Board an
AMM report. 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 43 and 57, and shall be
1) affirmed by Employers external auditor or by a Fellow or Associate
of the Society of Actuaries wvho is also a Member of the American
Academy of Actuaries or a person with equivalent quallfit-ations
acceptable to the Board to be consistent with the AMM process
described in GASB 45
2) prepared in accordance with GASB 43 45 and 57 and
3.I provided to the Board pti , t i i'lr BUard s acceptance Of
�ontributlons for the valuation period or as otherwise required by
the Board
2, Tne Board may repect any OPEB cost rep,:»` s1.101"utted to It but shall not
_I-- r�asenably d-) so Ir the e sent that the Board deterrn nes In Its so,e disci-etion that
the CPES Jos` rep)rl s nY r_ table for _ise i'o tl,.Ne Brard's f'n_inc al sfa`emenrs o ,f
F,7-pl,�/e F: I` P • C -, � / .jm -� 9' reri ''DPEB cc- sF reC DO t! r- B,Dar-I niay ob'-3.1 aP
Employer's expense, an OPEB cost report that meets the Board's financial reporting
needs. The Board may recover from Employer the cost of obtaining such OPEB cost
report 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 OPEB cost report 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) No contributions are required If an employer elects to contribute then the
contribution amount should not be less than $5000 or the employer's annual required
contribution (ARC), whichever amount is lower 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
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 (Employers Prefunding Account).
( 3) Employer's Prefunding Account assets may be aggregated with pi efunding 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) In iestment income shall be allocated among empluyers and posted to Employer s
Prefunding A.--c-Dunt as deter ni-ed by the Board b it no less rregLie nVy than an 1.oaIIJ
,6) If Employers assets In the Prefunding Plan exceed the ar count rerlwred to I'Liky fend
the actuar,al present 4ue of total projected benefits the Board In compliance av th
appI,cable l` ng a -id leggf reci(ji-ements n"lay return s, i:h exce3s to Employer
El
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 CaIPERS in writing in the manner specified by CaIPERS of the
persons authorized to request disbursements from the Prefunding Plan on behalf of
Employer.
(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)
will be processed monthly
(5) CalPERS shall not be liable for amounts disbursed in error if it has acted upon the
written 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 act,ial dollar amount of the disbursement plus interest at the actbal earnings rate
bi it not less than zero
(o) No disbursement shall be made from the Prefunding Plan which exceeds the
balance in Employer's Prefunding Account
G Costs of Adrn nistration
Employer shall pay its sha e of the costs of adm,n straticn of tree Pref_ind ng Plan as
lege m n2d by the Board
H -e _ � o ; je- Pa �:ipat , u w Pre` ind net P a
I rrn r'ate2 7c �r�
I) The 8 D3,1 e,,3, --Ip- F -7,o' -,.8=r : p,:qrt - qq -y,'1 in Prefi nr i -g 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.
(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
or at such earlier date as may be approved by the Board in its sole discretion:
(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
c 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 dosbursement %,v thin one hundred twenty ( 120) days The
amount to be disbursed shall be the amount in the Employers Prefunding
.A:count as of the disburse-nent date and shall include inlestment
earnings up to the investment ea+n ngs allocation date rm nedrately
d:;,rere ing t�e 'J�sbursement JaLe In to e lent Shall the in lestment
earn ngs a!I; 7at P sn dat= p-e,-ed,:_the lisbt_,rseme-It by mere than 120
_lays
IIS u'i i;_ 1, �I' ;> -2 '�
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(7) If, for any reason, the Board terminates the Prefunding Plan, the assets in
Employers 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
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 CalPERS books and records of Employer relating to its
performance of this Agreement
(b) Employer shall be subject to eYamrnation and audit by the Bu, eau o` &'.ite
4ud4s CalPERS and its authorized representatives and such
-onsultants and specialists as reeled during tre term of this Agreemew
and For three yea -s after final payment under th s Agreement Any
exan-enation o a,_idit shall be a- Dnf ned to thus,: matters connected Ali"11 the
perfo,mance of th s Agreement vlick_iding but not lim ted to the costs of
adY-Titnister ng this 4g eerpient Ennpl,:yer shall. !-:,operate fully with the
of Sate AL„J'ts Ca,PERS art its avtr —,zed representatojes and
r✓r rte, lta�,is errs per_ aO,sts 3_ Nee le,i ir, re:tior, ,v fH 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:
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.
4r 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
prov des 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 Jate the message was delivered to
the recipient along with a verfiab"e electronic record of the exact
-ontent of the wes5agp se ii
'a J'1 "eSS;s ff:)r the pls"PoSe of giving nof, ce a''e ss shy,,/n in Paragraph B ( 1 � of this
c —1 e- -1)e-L
(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.
(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
(o) Vvaivei
No waver of a breach, failure of any condition or any right or remedy contained in or
granted by the provisions of this Agreement shall be effectrie unless It Is in writing and
sign -3d by the party wai,iing the breach fa lure right or remedy No waiver of any
breach failure ,right or remedy shall be deerred a warier of any other breach failure
ilgi'6i C_lY L '.7 sly—!iai i c o^alt a� + ,- .�' c�s} ute a contlruir�g
.-„ �iTi v ��/i �r�,iirr �,��, i,i, i y ..a� I t
wal°.e ml=ss the writing so specifies
(7) Necessary Acts, Further Assurances
The parties shall at their own coats 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.
A majority of the Employer's Governing Body at a public meeting held on the 17th
day of the month of June in the year 2013 , authorized entering
into this Agreement.
Signature of the Presiding Officer:
Printed Name of the Presiding Officer: Ga
Name of Governing Body
Name of Employer:
Date- June 18, 2013
O. Phillips
City Council of the City of San Rafael
Citv of San Rafael
BOARD OF ADMINISTRATION
CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM
BY
PA^If`.' A `IDERSON
AFFILIAI !.: PROGRAM SERVICES DIVISION
CALIFORNIA PUBLIC EiMPLOYEES RETIREMENT SYSTEM
► To be completed by CaiPERS
i
The effective date f'h,s Ag-eement is _ ^_
PARTICIPATION AGREEMENT
REGARDING CITY OF SAN RAFAEL RETIREE MEDICAL TRUST 401(h) ACCOUNT
This Participation Agreement regarding the City of San Rafael Retiree Medical Trust
401(h) Account ("Agreement") is entered by and between the City of San Rafael, a political
subdivision of the State of California ("CITY") and the Marin County Employees' Retirement
Association ("MCERA" and "retirement system"), a public employees retirement system
organized and existing pursuant to the County Employees Retirement Law of 1937, as amended,
California Government Code Sections 31450 et seq. ("CERL"). CITY and MCERA are
sometimes referred to herein individually as the "Party" or collectively as the "Parties."
RECITALS
WHEREAS, MCERA provides and administers a multiple employer defined benefit
pension plan for the active and retired employees of CITY, pursuant to CERL and other
applicable law;
WHEREAS, CITY presently maintains a Retiree Medical Plan ("Retiree Medical Plan")
on behalf of its retired employees and their spouses and dependents. The Retiree Medical Plan
assists career employees in maintaining health insurance coverage following their retirement
from service;
WHEREAS, CITY provides for the funding of its Retiree Medical Plan through, among
other things, a trust vehicle maintained by MCERA that is subject to favorable treatment under
the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, in accordance with MCERA Resolution Nos. 2007-08-01 and 92/93-1,
adopted under CERL by the MCERA Board of Retirement and affirmed by the Board of
Supervisors of the County of Marin, and in accordance with the Code, MCERA makes available
to participating employers a Code Section 401(h) account (the "401(h) Account") to provide a
funding mechanism for the retiree health benefits that are established by such employers solely
for their former employees who retire under MCERA and their eligible spouses and dependents;
WHEREAS, MCERA has provided such a 401(h) Account in the form of a separate sub -
account for CITY in connection with its retiree medical benefits ("CITY's 401(h) Account");
WHEREAS, CITY wishes to (1) establish its own retiree health trust under Section 115
of the Code ("CITY's 115 retiree health trust"); (2) make the CITY responsible for paying all
retiree health benefits that its retirees are eligible for, effective on a mutually agreed upon date,
but no later than July 1, 2013; (3) relieve MCERA from any future obligations or liabilities to
pay retiree health benefits, effective on a mutually agreed upon date, but no later than July 1,
2013; (4) direct MCERA to pay any remaining funds in the CITY's 401(h) account to the
CITY's 115 retiree health trust, effective on a mutually agreed upon date, but no later than July
1, 2013 (collectively, "CITY Directives").
WHEREAS, MCERA has sought and obtained approval from the Internal Revenue
Service that permits it to comply with the CITY Directives under the Code; thus CITY may now
Exhibit B
terminate the CITY's 401(h) Account in accordance with Government Code section 31694.1,
subsection (g).
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties hereto agree as follows:
AGREEMENT
1. Recitals. The foregoing recitals are true and correct and incorporated herein by
this reference.
2. Trust Account in MCERA. MCERA created on the books of the retirement
system CITY's 401(h) Account, pursuant to Article 8.6 of CERL and Section 401(h) of the
Code, for the exclusive purpose of funding the retiree health benefits provided by the CITY.
MCERA has accounted for the assets and liabilities of the CITY's 401(h) Account separate and
apart from the assets and liabilities of the retirement system, except for investment purposes as
expressly provided for in this Agreement and as authorized by the Code. Assets in the CITY's
401(h) Account are not used for retirement, disability or death benefits or services related to the
provision of those benefits, or for payments to any retired CITY employees and their spouses and
dependents.
3. Benefits of the Retiree Medical Plan. CITY has been solely responsible for all of
the following:
A. the level and amount of benefits available to participants;
B. the eligibility and participation of retirees, spouses and dependents;
C. the health plans to be offered to participants;
D. contributions to the 401(h) Account; and
E. the level of funding of the 401(h) Account to provide benefits under the
Retiree Medical Plan.
4. Fundina of the 401(h) Account. CITY has been solely responsible for
contributing funds to the CITY's 401(h) Account.
5. Investment of Assets of the 401(h) Account.
A. MCERA invests the assets in the CITY's 401(h) Account together with
the assets held in the retirement system to pay retirement, disability and death benefits, subject to
the same policies and guidelines applicable to such other assets and subject to the requirements
of the Code. MCERA accounts for investment gains and losses attributable to the 401(h)
Account and reasonably allocates such gains and losses and expenses of investment and
administration to CITY's 401(h) Account. Notwithstanding the foregoing, MCERA has no
obligation to identify specific investments held by the 401(h) Account or to unitize any of the
investment of assets of the 401(h) Account.
B. CITY acknowledges and agrees that MCERA's investment of assets of the
401(h) Account is and has been subject to all applicable investment policies and guidelines
established for the investment of the assets held in the retirement system to pay retirement,
disability and death benefits; and that such policies and guidelines are suitable and appropriate
for the investment of assets in the 401(h) Account.
6. Expenses of Investment and Administration: Reporting. MCERA charges CITY's
401(h) Account with all expenses of investment and administration reasonably attributable to the
401(h) Account. MCERA regularly reports to CITY the nature and amount of such charges.
CITY may directly reimburse MCERA for these expenses; MCERA may also debit the 401(h)
Account for quarterly estimated charges in advance and reconcile such charges quarterly in
arrears.
7. Interest Crediting. MCERA recognizes investment gains and losses in the CITY's
401(h) Account as they are incurred. The "adjusted beginning balance" is determined by
subtracting any outflows during the month from, and adding any inflows during the month to, the
monthly balance, prorated on the date made or received. The "time weighted rate of return" is
determined by MCERA in a manner consistent with industry standards. MCERA notifies CITY
within thirty (30) calendar days after the end of each quarter, or as soon as practicable thereafter,
as to the amount of interest so credited (or losses so debited) to the 401(h) Account.
No assets or earnings held by MCERA for retirement, disability or death benefits are
used to credit interest to or pay expenses of the 401(h) Account, and no assets or earnings held
under the 401(h) Account are used to credit interest to or pay expenses of any assets held by
MCERA to pay retirement, disability or death benefits.
8. Accounting and Auditing. MCERA accounts for the assets in the 401(h) Account
on its books and records and makes such accounting available for CITY's inspection upon
reasonable request during normal business hours. As of the end of MCERA's fiscal year,
currently each June 30, MCERA provides CITY with an annual audited financial statement
documenting the assets and liabilities and income and expenses of the 401(h) Account. All costs
incurred in providing the accounting and audited financial statements are charged to the 401(h)
Account as an administrative expense or may be paid to MCERA separately by CITY.
9. Termination of 401(h) Account. This Agreement and the 401(h) Account may be
terminated in accordance with the provisions of this Paragraph.
A. As permitted by California Government Code section 31694. 1, subsection
(g), CITY intends to terminate participation in the 401(h) Account and will direct MCERA to
transfer the funds held therein to a successor trustee that it will name.
B. CITY intends, no later than July 1, 2013 (1) to establish its CITY's 115
retiree health trust; (2) to make the CITY responsible for paying all retiree health benefits for
which its retirees are eligible; (3) to relieve MCERA from any future obligations or liabilities to
pay retiree health benefits; and (4) to direct MCERA to pay any remaining funds in the CITY's
401(h) account to the CITY's 115 retiree health trust.
10. Further Actions. Each Party shall take all actions and do all things, and execute,
with acknowledgement or affidavit if required, any and all documents and writings, that
reasonably may be necessary or proper to achieve the purposes and objectives of this Agreement
and the CITY's 401(h) Account.
11. Governing Law. This Agreement and its enforcement shall be governed by both
the laws of the State of California and the Code. To the extent the provisions of the Code are in
conflict with the California law when interpreting this Agreement, this Agreement shall be
interpreted in a manner that preserves the "tax -qualified" status of the 401(h) Account as
determined by MCERA.
12. Operative and Effective Dates. This Agreement shall become operative on the
full execution of this Agreement by authorized signatories of both Parties.
Dated:
92013 Dated:
CITY OF SAN RAFAEL, a political
subdivision of the state of California
By, m._._. _ .... _.. .........
Print Name
, 2013
MARIN COUNTY EMPLOYEES'
RETIREMENT ASSOCIATION, a public
retirement system
By_". _...._
Print Name
Its Its
4
EXHIBIT C
CITY OF SAN RAFAEL
Pension and OPEB
Benefit Change Estimates
Doug Pryor, Vice President
Bartel Associates, LLC
May 24, 2013
Content
Topic
Benefits
Projections
FDRAFT
Page
1
7
BENEFITS
Pension
1 New members on or after I/1/13.
2 Annual compensation limited to $136,440 in 2013; indexed with CPI in future years.
B/j)
May 24, 2013 1
BENEFITS
Pension
Miscellaneous Benefit Factors
3.0%
2.5%
511 aro
1.0% . . . .......
11 11 12 11 14 11 11 17 11 19 60 61 62 61 64 61 66 67 61 69 10
2%W!55 2.70,oii55 — PEPRA 2'o a 62
. . ........ ......................
4
May 24, 2013 2
Hire Date
Formula I
COLA
FAP
Miscellaneous
Tier 1
<7/1/11
.7%55
3%
1 year
Tier 2
7/1/11 - 1/1/13
2.0%A55
2%
3 year
Tier 3
> 1/1/13'
2.0%(i7z,)62
2%
3 year with cap2
Safety
Tier 1
<7/1 /11
3.0%P,55
3%
1 year
Tier 2
7/1/11 - 1/1/13
3.0%(&,55
2%
3 year
Tier 3
> 1/1/13'
2.7%P,57
2%
3 year with cap 2
1 New members on or after I/1/13.
2 Annual compensation limited to $136,440 in 2013; indexed with CPI in future years.
B/j)
May 24, 2013 1
BENEFITS
Pension
Miscellaneous Benefit Factors
3.0%
2.5%
511 aro
1.0% . . . .......
11 11 12 11 14 11 11 17 11 19 60 61 62 61 64 61 66 67 61 69 10
2%W!55 2.70,oii55 — PEPRA 2'o a 62
. . ........ ......................
4
May 24, 2013 2
2.5%
2.0%
1 ,5'0
11 12 11 51 19 60
3%M55 P E P R A 2.7°/ 57
Bil May 24.2013
Elected Officials,
Unrepresented Mid
Management &
Management
Tier 1
Tier 2
All Other Groups
Tier 1
Tier 2
(B�
May 24, 2013
BENEFITS
OPEB
Hire Date
Formula
<1/1/09 Full premium/cape
> 1 /1/09 PEMIICA Minimum ($115/month in 2013 )
<1/1/10 Capp
> 1/1/10 PEMHCA Minimum ($115/month in 2013)
5
BENEFITS
OPEB
Bargaining Unit
Monthly Cap
Min Date3
SEW Child Care Unit
$543
1/1/10
Unrepresented Mid -Management Employees
Retired < 12/l/01: $442
Retired > 12/1/01: Full prem
1/1/09
H i red > 4/1/07: $600
San Rafael Fire Chief Officer's Association
$557
1/1/10 �I
San Rafael Firefighters' Association, I.A.FF., Local
$557
1/1/10
1775
San Rafael Police Association
$386
1/1/10
San Rafael Police Mid -Management Association
$566
1/1/10 d
SEW 1021
$752
1/1/10
Public Employees Bargaining Unit (PEU) Local 1
$659
1/1/10
Unrepresented Management Employees and Council
Hired <4/1/07: Full prem
City Clerk and Elected Part -Time City Attorney
Hired > 4/1/07: $600
1/1/09
Western Council of Engineers (WCE)
$752
1/1/10
Employees hired on or after date receive only PEM FICA minimum ($115 in 2013).
May 24, 2013 6 �4,
PROJECTIONS
I
Data
■ MCERA Information
• June 30, 2003 actuarial valuation report
• June 30, 2006 actuarial valuation report
• June 30, 2011 actuarial valuation report
Misc. Safety Total
➢ Active Members 240 124 364 I
➢ Active Payroll $17,555 $14,408 $31,963
(in $000s)
• EFI PEPRA Cost Analysis (dated 12/11/12)
• Tier 2 Normal Cost summary
■ OPEB Information
• June 30, 2011 GASB 45 OPEB actuarial valuation
OPEB Savings
■ Measured by benefits paid to retirees
■ 2012 Council resolution freezing caps
(previously assumed annual 3.25% CPI increase)
■ 2009 and 2010 Tier 2 PEMHCA minimum benefit implemented
■ Benefits paid to retirees not affected by 401(h) investments
/L May 24. 2013 8
PROJECTIONS
Pension Savings
N Measured by City Normal Cost to MCERA
III Include net remaining savings/cost from benefit enhancements:
0 2003 valuation Miscellaneous benefit increase 2%@58.5 to 2.7%@55
(5% City payment towards employee contribution eliminated)
9 2003 valuation Police benefit increase 2%@50 to 3%@55
(7% City payment towards employee contribution eliminated)
* 2006 valuation Fire benefit increase 2%@50 to 3%@55
(7% City payment towards employee contribution eliminated)
111 7/1 /11 Tier 2 plan change
III I/ 1/ 13 PEPRA benefit change
111 2018 increase employee contributions
• Assumes City imposes cost sharing for current members in 2018.
• Optional under PEPRA
• Approximately 0.8% for Miscellaneous, and 3% for Safety
B/,I' May 24, 2013 9 q'nx00
PROJECTIONS
Methods
N Assumptions from 6/30/11 actuarial valuations:
* 3.25% annual payroll growth
* Payroll in 2011 MCERA report assumed for 2013/14
III Not included in calculations:
• Savings/cost before 2013/14 not included
• Impact of later retirement under PEPRA not included in OPEB savings projections
B/1' May 24, 2013 to
PROJECTIONS
Pension
Benefit Enhancement Cost Impact Summary
Total
Normal
UAAL
24.7%
Cost
Amortizations
Total
■ Miscellaneous 3.0%
7.2%
10.2%
■ Safety
12.0%
32.1%
• Police 2.5%6
8.2%
10.7%
•Fire 2.5%
8.4%
10.9%
l.stimates derived from 6.130iO3 (Miscellaneous and Police) and 6/30/06 (Fire) actuarial valuation reports.
s Lstimated using 6/30/06 (Fire) actuarial valuation impact.
Primarily due to 16 to 17 year rolling amortisation method, payroll changes, and investment return, estimated 2013/14
payments are 6.7%, 8.1%, and 8.54/. for Miscellaneous, Police and Fire, respectively.
May 24, 2013 11
PROJECTIONS
• Miscellaneous
• Hired < 7/1/11
• Hired 7/1/11-12/31/1
• Hired > 1/1/13$
• Safety
• Hired < 7/1/11
• Hired 7/1/11-12/31/1
• hired > 1/1/13
Pension
2
2
Normal Cost Summary
City Employee
Total
13.7%
11.0%
24.7%
10.9%
7.1 %'
18.0%
8.4%
8.3%
16.7%
20.1%
12.0%
32.1%
19.3%
10.8%'
30.1%
12.4%
12.5%
24.9%
Estimated based on member rate for a%crage entry age.
" Normal Cost rates apply to PEPRA limited pa).
Estimated based on member rate for average entry age.
B�� May 24. 2013
ON
PROJECTIONS 1
l �
Pension
Miscellaneous Savings
(in 000's)
$5000 __..... _ ............._.._,.... .........................
$4,000
$3,000
$2,000
$1,000
$0
($1,000)
13/14 18/19 23/24 28/29 33/34 38/39
2003-2007 Net Benefit EnhancementoCity T2 Implemented 2011
CMPEPRA Formula Change oPEPRA Impose TI Cost Sharing
Total Net Savings
13
PROJECTIONS
Pension
Safety Savings
(in 000'x)
43/44
$5,000 –... ..._
$4,000
$3,000 _ ..... _._... w
$2,000 ._......
...
$1,000. _
$0
($1,000) ......
13/14 18/19 23/24 28x29 3334 3W39 43!44
EM 2003-2007 Net Benefit Enhancement F --'City T2 Implemented 2011
MISPEPRA Formula Change =PEPRA Impose'ri Cost Sharing
—,rotal Net Savings
May 24, 2013
14
PROJECTIONS
Pension
Total Savings
(in 000's)
$10,000 -.
$8.000 _..
$6,000
$4.000 - -
$2.000
$0
($2,000) .....m._.... __........._.. _. ,.._m..__
13/14 18,119 23/24 28/29 33/34 38/39 43/44
® 2003-2007 Net Benefit Enhancement r --'City T2 Implemented 2011
MIPEPRA Formula Change oPEPRA Impose T1 Cost Sharing
Total Net Savings
Bi 1 May 24, 2013 15 '
PROJECTIONS
OPEB
Total Savings
(in 000's)
$7.000
$6.000
u
$5.000
it ..,...,.,,..
$4.000
$3.000
� I -
$2,000
$1.000
$U
13,14 1& 19 23 24 28'29 3134 38/39 43(44
❑ Cap Free/e _711 MHCA Minimum T2
B/ L Ma) 24.2013 16
PROJECTIONS
Pension and OPEB
30 -year Total Savings
(in 000'5)
ff I PROJECTIONS
Savings/(Cosh
■ Pension
• 2003-2007 benefit enhancements
$ (101,600)
• Eliminate 5%/7% City contribution on member rate
93,500
• 7/1/11 Tier 2 plan change10
21,700
• 1/1/13 PEPRA benefit change
60,300
• 2018 increased employee contributions
6,,80Q
• Total
80,700
■ OPEB
18,700
• 2012 Council Resolution #13344 freezing caps
41,900
• 2009 and 2010 Tier 2 PEMHCA minimum benefit
9,300
• Total
51,200
■ Total
131,900
10 For employees hired on or after 7/1/1 I, Final Average Pay changed from I year to 3 year average, COLA changed from 3%
to 2% and Miscellaneous benefit formula changed dreams : 311,�55 to 2,•0%6155,
Y1 May 24, 2013 1a
xu.•:,�
ff I PROJECTIONS
Pension and OPEB
30 -year Total Savings
Illustrative Present Value
(in 000's)
Discount Rate
4%
_..................
5%
_................
■ Pension $ 31,100
.. . __.
$24,500
■ OPEB 22,600
18,700
■ Total 53,700
43,200
tip..
I May 24, 2013 18 1,410-1
PROJECTIONS
I
Pension and OPEB
Total Savings Comparison (30 -year)
(in 000's)
Total Projected
City Payments
Savings
Before After
Reforms Reforms
Dollar
■ Pension $ 586,000'' $ 505,000
$ 81,000
■ OPEB 151,000 100,000
51,000
■ Total 737,000 605,000
132,000
Pstimated based on MCRA 30 year contribution projections.
Assumes H1.1 projections do not include impact of Tier 2.
L May 24. 2013 19
Percent
14%
34%
18% 1