HomeMy WebLinkAboutPrepayment of Pers Employer Contributions - FY 2006/2007 Council/Agency Meeting Held: 6
HB - 10: 08
IF
Deferred/Continued to:
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1 A proved ❑ Conditionally Ap roved ❑ Denied Ci lerk' igna ' CF3
Council Meeting Date: 6/19/2006 Department ID Number: FN 06-003
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITYQOUNCIL MEMBERS
SUBMITTED BY: PE LOPE ULBRETH-GRAFT, PA, CITY ADMINISTRAT R
PREPARED BY: DANIEL T. VILLELLA, CPA, FINANCE DIRECTOR f�
SUBJECT: PREPAYMENT OF PERS EMPLOYER CONTRIBUTIONS
Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue:
The Public Employees Retirement System (PERS) is offering a 3.66% discount to agencies
that pay 100% of the employer's contribution for the 2006-2007 PERS fiscal year. The
estimated savings for 2006-2007 if the City participates in this program is $180,078.
Funding Source:
Cash is available within the various funds that usually have PERS obligations. Any amounts
paid prior to the obligation date for these benefits in the fiscal year 2006-2007 are considered
prepayments of expenses and can be refunded if necessary.
Recommended Action: Motion to:
Authorize Daniel T. Villella, CPA, Finance Director to approve the Public Employees
Retirement System LUMP SUM PAYMENT REQUEST for fiscal year 2006-2007 authorizing
the lump sum prepayment of PERS Retirement Employer's Contribution in the amount of
$8,300,730 for Safety employees and $3,008,132 for Miscellaneous employees to be paid by
July 15, 2006.
Alternative Action(s):
Make the traditional twenty-six biweekly payments throughout the twelve months.
REQUEST FOR ACTION
MEETING DATE: 6/19/2006 DEPARTMENT ID NUMBER:FN 06-003
Analysis:
The City has been advised that again PERS is offering a 3.66% discount to agencies paying
100% of the employer's share for the 2006-2007 fiscal year by July 15, 2006. Based on this
information, the City requested the PERS Actuarial & Employer Services Division to calculate
the lump sum payment for the Safety employees (Attachment 1) and the Miscellaneous
employees (Attachment 2).
This information is based on the most recent annual valuation and assumes payment made
between July 1 and July 15, 2006. The amount of pre-payment required is approximately
3.66% less than the total of the twenty- six biweekly payments. This reduced amount was
calculated by PERS discounting future payments by their expected rate of return of 7.75%.
Safety Miscellaneous Total
Normal - Over 26 Pay Periods $ 8,616,382 $ 3,122,522 $ 11,738,904
Prepay Entire Amount by July 15, 2006 8,300,730 3,008,132 11,308,862
Gross Savings 315,652 114,390 430,042
Interest Loss -Assuming Earnings Rate of 4.25% (249,964)
Net Savings $ 180,078
The decrease in savings from last year is due to the high interest rate earnings expected in
fiscal year 2006-2007. Last year, we estimated savings to the City of$265,695 based on the
City's investments earning an interest rate of 3.25%. The updated estimated savings for the
present fiscal year is $230,000 due a slightly higher interest rate of 3.25%.
With your approval, the Finance Director can approve the LUMP SUM PAYMENT
REQUESTS and a check will be processed in the amount of $11,308,862 ($8,300,730 for
Safety employees and $3,008,132 for Miscellaneous employees).
Environmental Status:
Not applicable.
Attachment(s):
City Clerk's
Page Number No. Description
1. Prepayment of the Employer Contributions for Fiscal Year 2006-07 —
Safety Plan
2. Prepayment of the Employer Contributions for Fiscal Year 2006-07 —
Miscellaneous Plan
G:\RCA\RCA-Finance\FN 06-003 PERS Prepayment 2006-20071.doc -2-
6/6/2006 11:28 AM
ATTACHMENT # 1
Actuarial & Employer Services Branch
P.O. Box 942709
Sacramento, CA 94229-2709
Telecommunications Device for the Deaf-(916) 795-3240
FAX(916)795-3005
May 2, 2006
Employer Number : 0097
Employer Name : CITY OF HUNTINGTON BEACH
Rate Plan: SAFETY
Re: Lump Sum Payment to prepay 2006-2007 employer contribution rate
Dear Requestor:
As requested, 2006-2007 employer contribution rate information on your lump sum payment follows.
If you are aware of others interested in this information (i.e. payroll staff, county court
employees, port districts,etc.), please inform them.
The information is based on the most recent annual valuation and assumes payment made between July
1 and July 15, 2006 and no further contractual or financing changes taking effect before June 30, 2007.
The change in your 2006-2007 employer contribution rate after you make the proposed lump sum
payment, is displayed in the"Change to Total Employer Rate"line below.
As of June 30, 2004 $ %
2006-07 Employer Contributions ($) mid year $8,616,382 28.556%
2006-07 Employer Payment($) beg year* $8,300,730 * N/A
2006-07 Revised Employer Contrib ($) mid year 1 $0 00/0
Change to Total Employer Contribution Rate 1 (28.556%
* Pay this amount(see attachment). Your pre-payment 2006-2007 Employer Contribution is from
your June 30, 2004 actuarial valuation report. It has been reduced by a half year interest credit at the
7.75% actuarial assumed interest rate(resulting in an approximate 3.66% discount). To the extent your
actual 2006-2007 payroll or CalPERS actual 2006-07 net investment earnings differ from our
assumptions, we anticipate the differences will be reflected in your 2009-2010 and later employer
contribution rates. If your rate plan is in a risk pool, these earnings and payroll
differences will be shared by all employers in that risk pool, under current practice.
To initiate this change, the enclosed Lump Sum Payment Request must be completed and returned to the
Fiscal Services Division with a wire transfer or a check between July 1 and July 15. A copy should be
sent to us.
If you have questions, please call (888) CalPERS (225-7377).
Richard Santos
Associate Pension Actuary, CalPERS
Actuarial&Employer Services Branch
P.O. Box 942709
Sacramento, CA 94229-2709
Telecommunications Device for the Deaf-(916)795-3240
FAX(916)795-3005
LUMP SUM PAYMENT REQUEST
Please complete and return this form to the following address,with a copy to the address above.
Ca1PERS
Fiscal Services Division
Attn: Susan Patchett
P O Box 1982
Sacramento,CA 95809-1982
If a wire transfer is being used after March 8, 2006, it should go to the following account:
ABA#0260-0959-3
Bank of America Sacramento Main
555 Capitol Mall,Suite 1555
Sacramento,CA 95814
For credit to State of CA,CalPERS
Account#01482-80005
Please e-mail your actuary and Susan Patchett (Susan PatchettOCalPERS.CA.GOV) on the day of the
wire.
Employer Name: CITY OF HUNTINGTON BEACH
Employer Number: 0097
Member Group or Plan: SAFETY PLAN
Coverage Group affected by the Payment(choose one within the affected plan): 74001, 75001, 76001
Amount: $8,300,730
Purpose: To prepay the 2006-2007 employer contribution rate
Base(s)to which payment is applied: N/A
In recognition of our payment please revise our employer contribution rate effective July 1, 2006:
Name and Title: (Please Print):
Signature: Date:
Mailing Address:
Street Address:
City/State/Zip:
Telephone Number: Fax Number:
E-mail Address:
ACTO PP 2-2006
ATTAC H M E N T #2
Actuarial $ Employer Services Branch
P.O. Box 942709
Sacramento, CA 94229-2709
Telecommunications Device for the Deaf-(916)795-3240
FAX(916) 795-3005
May 2, 2006
Employer Number : 0097
Employer Name : CITY OF HUNTINGTON BEACH
Rate Plan: MISCELLANEOUS
Re: Lump Sum Payment to prepay 2006-2007 employer contribution rate
Dear Requestor:
As requested, 2006-2007 employer contribution rate information on your lump sum payment follows.
If you are aware of others interested in this information (i.e. payroll staff, county court
employees, port districts,etc.), please inform them.
The information is based on the most recent annual valuation and assumes payment made between July
1 and July 15, 2006 and no further contractual or financing changes taking effect before June 30, 2007.
The change in your 2006-2007 employer contribution rate after you make the proposed lump sum
payment, is displayed in the"Change to Total Employer Rate"line below.
As of June 30, 2004 $ %
2006-07 Employer Contributions($) mid year $3,122,522 7.849%
2006-07 Employer Payment ($) beg year* $3,008,132 * N/A
2006-07 Revised Employer Contrib ($) mid year $0 00/0
Change to Total Employer Contribution Rate 7.849%)
* Pay this amountrsee attachments Your pre-payment 2006-2007 Employer Contribution is from
your June 30, 2004 actuarial valuation report. It has been reduced by a half year interest credit at the
7.75%actuarial assumed interest rate (resulting in an approximate 3.66%discount). To the extent your
actual 2006-2007 payroll or CalPERS actual 2006-07 net investment earnings differ from our
assumptions, we anticipate the differences will be reflected in your 2009-2010 and later employer
contribution rates. If your rate plan is in a risk pool, these earnings and payroll
differences will be shared by all employers in that risk pool, under current practice.
To initiate this change, the enclosed Lump Sum Payment Request must be completed and returned to the
Fiscal Services Division with a wire transfer or a check between July 1 and July 15. A copy should be
sent to us.
If you have questions, please call (888)CaIPERS (225-7377).
Richard Santos
Associate Pension Actuary, CalPERS
Actuarial&Employer Services Branch
P.O. Box 942709
Sacramento,CA 94229-2709
Telecommunications Device for the Deaf-(916)795-3240
FAX(916)795-3005
LUMP SUM PAYMENT REQUEST
Please complete and return this form to the following address,with a copy to the address above.
Ca1PERS
Fiscal Services Division
Attn: Susan Patchett
P O Box 1982
Sacramento,CA 95809-1982
If a wire transfer is being used after March 8, 2006,it should go to the following account:
ABA#0260-0959-3
Bank of America Sacramento Main
555 Capitol Mall,Suite 1555
Sacramento,CA 95814
For credit to State of CA,CalPERS
Account#01482-80005
Please e-mail your actuary and Susan Patchett (Susan Patchett(&CalPERS.CA.GOV) on the day of the
wire.
Employer Name: CITY OF HUNTINGTON BEACH
Employer Number: 0097
Member Group or Plan: MISCELLANEOUS PLAN
Coverage Group affected by the Payment(choose one within the affected plan): 70001
Amount: $3,008,132
Purpose: To prepay the 2006-2007 employer contribution rate
Base(s)to which payment is applied: N/A
In recognition of our payment please revise our employer contribution rate effective July 1, 2006:
Name and Title: (Please Print):
Signature: Date:
Mailing Address:
Street Address:
City/State/Zip:
Telephone Number: Fax Number:
E-mail Address:
ACTO PP 2-2006
RCA ROUTING SHEET
INITIATING DEPARTMENT: FINANCE
SUBJECT: Prepayment of the PERS Employer Contributions
COUNCIL MEETING DATE: June 19, 2006
RCA.ATTACHMENTS STATUS
Ordinance (w/exhibits & legislative draft if applicable) Attached ❑
Not Ap licable E
Resolution (w/exhibits & legislative draft if applicable) Attached ❑
Not Applicable
Tract Map, Location Map and/or other Exhibits Attached ❑
Not Applicable E
Attached ❑
Contract/Agreement (w/exhibits if applicable) Not Applicable
(Signed in full by the City Attorney)
Attached ❑
Subleases, Third Party Agreements, etc. Not Applicable
(Approved as to form by City Attorney)
Certificates of Insurance (Approved b the City Attorne Attached ❑
( pp Y Y Y) Not Applicable
Attached ❑
Fiscal Impact Statement (Unbudget, over $5,000) Not Applicable E
Attached ❑
Bonds (If applicable) Not Applicable E
Attached ❑
Staff Report (If applicable) Not Applicable E
Commission, Board or Committee Report applicable)licable Attached ❑
p ( pp ) Not Applicable E
Findings/Conditions for Approval and/or Denial Attached
Findin ❑
g pp Not Applicable E
EXPLANATION FOR MISSING ATTACHMENTS'
REVIEWEa RETURNED ' FORWARDED
Administrative Staff ) )
Assistant City Administrator (initial) ( ) )
City Administrator (Initial) ( )
City Clerk ( )
EXPLANATION FOR RETURN OF ITEM:
(Below Space For City Clerk's Use Only)
RCA Author: Robert Sedlak x5907