AgdaPkt 2017-01-09 Closed and Joint

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6.1.E. - Page 2 benefit formula, classic employees hired on or after October 24, 2012 the 2% @ 60 formula, and the PEPRA 2.5% @ 67 benefit formula for new members hired on or after January 1, 2013. - Safety employees hired before October 24, 2011 the 3% @ 50 benefit formula, classic employees hired on or after October 24, 2012 the 3% @ 55 formula, and the PEPRA 2.7% @ 57 benefit formula for new members hired on or after January 1, 2013 In April 2013, the CalPERS Board approved funding policy changes, including new amortization and smoothing methods. These changes will result in higher City contribution rates phased -in over five years; the phase-in began in fiscal year 2015/16. These changes are expected to result in greater contribution rate volatility in most years but smaller fluctuations in years with extreme market events. CalPERS completed a new experience study in February 2014 and adopted demographic assumption changes for June 30, 2014 valuations which will further increase employer contribution rates. These increases will be phased -in over a five-year period starting with 2016/17. The CalPERS Board also adopted a risk mitigation strategy in November 2015. This new strategy will result in gradually higher employer contribution rates over the next 20 years or so. In December 2016, the CalPERS Board approved a further reduction in the discount rate from 7.5 to 7.0 which will be implemented over the next three years, starting in 2018/19. ANALYSIS With respect to the OPEB work (Exhibit A), the Consultant will prepare the GASB 75 accounting information for the fiscal years ending June 30, 2018 and June 30, 2019 based on the June 30, 2017 actuarial valuation. Consultant will provide the actuarial certification, funding policy certification, and Excel valuation information spreadsheet required by CalPERS for agencies funding with CERBT along with a certified final valuation results discussion outline. With respect to the CalPERS contribution rate analysis (Exhibit B), the City is seeking a professional expert analysis of the financial impact of upcoming CalPERS changes. The CalPERS June 30, 2014 actuarial valuation report released in December 2015 provided estimated contribution projections through 2021/22 including the impact of funding policy changes and assumption changes. Further analysis by Bartel Associates, as provided for by the recommended agreement, will provide City contribution rate projections and sensitivity analysis for all of these CalPERS changes, including the impact of additional pension tiers, enabling the City to better understand the cost increases and their volatility. In addition, the analysis will provide options and strategies to reduce the City's unfunded pension liabilities. Staff recommends engagement of John Bartel to complete the required analyses. John Bartel has over 30 years of employee benefits experience. He is a leading actuarial