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HomeMy WebLinkAboutMiscellaneous and Safety Plans - City of Huntington Beach - U 'LMNtAL COMMUNICATION Meeting Date• Agenda Item No._��� CITY OF HUNTINGTON BEACH Pd_t-F L MISCELLANEOUS AND SAFETY PLANS F Ca1PERS Actuarial Issues — 6/30/12 Valuation Preliminary Results Presented by John E. Bartel Prepared by Bianca Lin Tina Haugbro Bartel Associates, LLC April 7, 2014 Agenda Topic Page Definitions 1 Ca1PERS Upcoming Issues 3 Miscellaneous Plan: Demographic Information 5 Plan Funded Status 6 Contribution Rates& Projections 10 Safety Plan: Demographic Information 17 Plan Funded Status 19 Contribution Rates & Projections 22 GASB 68 29 PEPRA Cost Sharing 31 171. oAclients\cit,of huntitigion beach\pmject,\calper,\6-30-12\ba hmtingtonbe..hci I4-04-07 calper,misc s,fop 12--il doe, DEFINITIONS mwmvmaor>ataft 2�20.2= WM"W.-Q=Wd aw. i aria r� ■ PVB-Present Value of all Projected Benefits: • Discounted value (at valuation date - 6/30/12), of all future expected benefit payments based on various (actuarial)assumptions ■ Actuarial Liability: • Discounted value (at valuation date)of benefits earned through valuation date [value of past service benefit] • Portion of PVB "earned"at measurement ■ Current Normal Cost: • Portion of PVB allocated to (or"earned" during)current year • Value of employee and employer current service benefit April 7,2014 1 DEFINITIONS phawavan4rDefW �e31,=2 taemerrss Ia�pt lehaN[ Itayl4g • Target- Have money in the bank to cover Actuarial Liability (past service) ■ Unfunded Liability-Money short of target at valuation date • Excess Assets/Surplus: • Money over and above target at that point in time. • Doesn't mean you're done contributing. ■ Super Funded: • Assets cover whole pie(PVB) • If everything goes exactly like PERS calculated, you'll never have to put another (employer or employee)dime in. April 7,2014 2 - CALPERS UPCOMING ISSUES ® CalPERS actuarial staff recommended& CalPERS Board adopted changes to contribution policy. Four reasons why: • Asset corridor generates volatility with extreme events • Slow funded status progress • Current method needs improved transparency • GASB 68 encourages faster funding by requiring a lower discount rate for slower funding ® Changes—Direct rate smoothing based on: • 5-year ramp up • No asset smoothing • Future Gains/losses 25 year amortization period ❑ With 5 year ramp up means paid over 30 years • Method&Assumption changes 15 year amortization period ❑ With 5 year ramp up means paid over 20 years • No cap on rate increases each year I�_3 April 7,2014 3 CALPERS UPCOMING ISSUES • CalPERS actuarial staff recommended& CalPERS Board adopted assumption changes: • No changes on economic assumptions • Future mortality improvement with 20 years projection • Earlier retirements for Police Safety and • Higher future pay increases for Safety • Impact on assumption changes using newly adopted contribution policy—20 years amortization with 5 years ramp up and 5 years ramp down ■ Timing: • Direct Rate Smoothing: ❑ Included in 6/30/13 valuation(first impact 2015/16 rates) ❑ Full impact in 2019/20 rates. • Assumption changes: ❑ Included in 6/30/14 valuation (first impact 2016/17 rates) ❑ Full impact in 2020/21 rates. April 7,2014 4 - SUMMARY OF DEMOGRAPHIC INFORMATION-MISCELLANEOUS 1994 2003 2011 2012 Actives ■ Counts 709 663 586 574 ® Average Age 44 46 46 47 City Service 12 13 12 12 PERSable Wages $47,300 $55,700 $71,800 $75,300 ■ Total PERSable Wages millions 36.6 40.6 46.0 47.2 Receiving Payments ■ Counts Service 362 650 649 Disablity 81 93 93 • Beneficiaries 64 94 93 . Total 301 507 837 835 ■ Average Annual City Provided Benefit' Service $18,000 $26,700 $27,400 ® Disability 9,400 9,600 9,800 Service Retirements in last 5 years 23,700 34,200 35,600 Average City provided pensions are based on City service&City benefit formula,and are not representative of benefits for long service employees. April 7,2014 5 96 F- PLAN FUNDED STATUS-1VlISCELLANEOUS r � 900 800 700 600 500 1 400 300 200 100 1995 1996 1997 1998 1999 2000 21101 2002 2003 20114 2005 2006, 2007 2008 2009 2010 2011 2012 �Actiyc 675 fi(0 (,55 G45 6r,6 7111 705 702 663 64U 648 687 729 742 723 616 586 574 QI'rans(crs 121 I27 134 137 1G7 172 211 232 24R 245 244 2711 279 312 324 320 1 315 1 319 113VsstcdTerj-naiionsj 72 1 94 1 9l 1 120 106 1 109 1 113 1 123 133 152 I70 173 187 1 2119 203 213 220 236 SR cc chingPa—entsl 331 1 328 1 346 1 364 396 1424 442 451 507 551 580 600 1 625 1 641 695 725 1 837 1 835 April 7,2014 6 - PLAN FUNDED STATUS-MISCELLANEOUS Present Value of Benefits Present Value of Benefits June 30,2011 June 30,2012 Unfunded PVB Unfunded PVB t ^+4. (Unfunded (Unfunded Liability) f (! Actuarial Actuarial Liability Liability June 30,2011 June 30, 2012 $ 415,200,000 Actuarial Liability $ 431,200,000 - - 347,800,000 Actuarial Asset Value 357,900,000 _ _------- (67,400,000); (Unfunded Liability) (73,300,000) June 30, 2011 June 30, 2012 $ 415,200,000 Actuarial Liability $ 431,200,000 309,600,000 ' Market Asset Value 298,600,000 (105,600,000) (Unfunded Liability) (132,600,000)' f April 7,2014 7 • FUNDED RATIO-MISCELLANEOUS 30.00 22.50% 1 5.00% �r 7.50% 0.00% -5.7%Unmodified -7.50% -15.00% -22.50% -30 00% 1996 1997 1998 1999 2000 2001 2002 2t)O3 2004 2005 2000 2007 2008 2009 2010 201I 2012 2013 2014 12.7%16.5%19.7%18.0%111.1%4.5% -4.2% 3.4%, 7.6% 7.9% 8.1% 9.2% 8.11% 5.6% 5.9% 6.9% 5.8% 7.5% t MVA 15.3% 0.1%19.5%12.5%10-1%-72%-6.0%3.7% 16.6%12.3%11.9%18.8%-5.1% -24.013.3% 1.7% 0_I% 13.2%12.2% Above assumes contributions,payments,etc.received evenly throughout year. June 30,2013 return of 13.2%from CalPERS 6/30/13 CAFR. E_7_- April 7,2014 8 -. FUNDED RATIO-MISCELLANEOUS 160% 140% 120% t 100% i s _ 80% 1 60% 40% 20% 1995 1996 1997 1998 1999 2000 2001 20112 2011i 21104 2005 2006 21107 211118 2009 2010 21111 2012 21113 2014 m undod Ratio-AVA 104% 1118% 726% lit""/o 143% I40% 134°i� 116% 102% l00% 98% 99'Y 97% 96% mL ded Ratio-MVA 110% 117% 140% I57% 152% I48% 125% I06% 92% 99% 102% 104% 114% 98% 65% 69% 75% 69% 7i% 76% 6/30/13&6/30/14 funded status estimated. AVA is being set equal to MVA and a separate AVA will not be used in future years. April 7,2014 9 - CONTRIBUTION RATES-MISCELLANEOUS 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 98/99 9 0 0 1 0 2 0 3 11 4 0 i 05/06 06/07 07/08 08/09 09/10 10/11 II/12 12/13 13/14 14/15 —D ER Normal Costi7% 6.1% 6.3% 6.4% 6.9% 7.0% 6.9% 6.9% 7.7% 7.6% R.0-/ R.1% 8.7% 8.6% f Total E R Cent Rate 1.7% U.II% O.U% 0.11% O.U% 0.U% 0.0% 7.2% 7.8% 81% 8.2% 9,8% 10,2 15.3% 16.3%21.4%21.9% 7__1 April 7,2014 10 CONTRIBUTION PROJECTIONS-MISCELLANEOUS ■ Market Value Investment Return: • June 30, 2012 0.1 2 • June 30, 2013 13.2 3 Poor Expected Good • June 30, 2014 - 2019 0.2 - 4.3 7.5 4 10.6 - 15.1 ■ No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements ■ Excludes Employer Paid Member Contributions (EPMC) • City elected to pay for 2011 assumption changes without a phase in • Resulted in approximately $470 thousand in savings ■ New hire assumptions: • Assumes 80 of 2013 new hires will be Classic Tier 2 Members (lateral) and 20 will be New Members with PEPRA benefits. ■ Assumes Classic Members will decrease from 80 to 0 of new hires over 20 years. 2 Based on CaIPERS CAFR. 3 Based on CaIPERS CAFR. 4 CaIPERS investment return through January 31,2014 was 8.9 3 ) April 7,2014 11 CONTRIBUTION PROJECTIONS-MISCELLANEOUS Employer Contribution Rate if Market Value of Assets were used Actuarial Market 2014/15 2014/15 • Plan Assets AVA MVA ■ ER Normal cost 8.6 8.6 ■ Amortization bases: 13.3 25.5 ■ Total Contribution Rate 21.9 34.1 • Amortization period z 17 years 17 years b fff April 7,2014 12 C--NTRIBUTI--N PR,—JECTI,--NS WITH APPR(--,VED MCRTALITY AND --THER AssumPTICN CHANGES-MISCELLANECUS 40 ...... 35.4 31.1 130 27.2 26.7 27.1 25.6 �20 10 0 13/14 14/15 15/16 16/17 17/18 18/19 —mortality and OtherAssumption Chan, April7,2014 15 CC,NTRIBUTI--,N PR,--,JECTI(--,NS WITH APPR--,VED MORTALITY AND'�:THER ASSUMPTION CHANGES MISCELLANECUS 40 30 14 "L 20 0101, %16 10 q 0 c::::�'Mortahty And Other Assumption Chan7ges April 7,20 14 16 SUMMARY CF DEMOGRAPHIC INFORMATION- SAFETY 1994 ,2003 A '2011 2012 u Actives ■ Counts 388 371 358 352 ® Average Age 40 40 42 43 City Service 15 12 13 14 ® PERSable Wages $56,600 $78,000 $109,900 $111,500 ® Total PERSable Wages millions 24.0 31.8 43.0 42.9 Receiving Payments w Counts ® Service 171 224 247 Disablity 183 206 207 ® Beneficiaries 20 61 43 ® Total 197 374 491 497 ■ Average Annual City Provided Benefits Service $43,100 $58,400 $60,100 Disability 31,600 43,000 44,500 ® Service Retirements in last 5 years 46,800 71,900 81,200 5 Average City provided pensions are based on City service&City benefit formula,and are not representative of benefits for long service employees. April 7,2014 17 - F777 MEMBERS INCLUDED IN VALUATION- SAFETY 500 450 400 350 300 250 200 I 150 I 100 50 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 oActive 388 371 364 364 357 372 363 381 370 371 349 351 372 375 374 387 379 358 352 Qrransfers 41 41 46 45 44 60 74 77 75 65 61 57 61 71 79 83 78 81 81 Wested Terminations 10 9 26 19 23 21 24 26 28 30 30 40 40 40 40 32 33 36 1 39 011eceiving Payments 197 246 1 249 263 287 306 1 318 1 323 348 1 374 407 1 417 427 1439 1457 1 462 475 491 497 a April 7,2014 18 ' PLAN FUNDED STATUS- SAFETY Present Value of Benefits Present Value of Benefits June 30,2011 June 30,2012 Unfunded 11\13 _ Unfunded P\13 77 > t 4 (Lnt undcd tl - "��$ (l.nlunded Actuarial Actua.tat = I-abilm) >,�< LinM1ilih) I,inhilit, "f June 30, 2011 June 30, 2012 $ 531 800,000 Actuarial Liability $ 552,500,000 402,900,000 Actuarial Asset Value 420,500,000 (128,900,000), (Unfunded Liability) (132,000,000) June 30, 2011 June 30, 2012 $ 531,800,000 _ Actuarial Liability $ 552,500,000 358,700,000 Market Asset Value 350,600,000 (173,100,000); (Unfunded Liability) (201,900,000) April 7,2014 19 FUNDED RATIO- SAFETY 30,00 22.50 15.00 Fk 7.50 0.00 Q -5.7%Unmodified -7.50 -15.00 -22.50 -30.00 1995 1996 1997 1998 I999 2000 200I 2002 2003 200i 2005 2006 2007 2008 2009 2010 2011 2012 21113 2014 --tr--AVA 9.0 13.6 5.8 9.6 I39 15.8 6 4.8 3.3 Z6 8.0 8.3 9.2 7.9 5.7 6.l 69 6.2 7.5 fMVA16.3 15.3 kO.1 9.1 112.5 IM, -7.2 6.0 13.7 116.6 112.3 111.9 118.8 -5.1 -24.013.3 121.7 10.1 1132 7.5 Above assumes contributions,payments,etc.received evenly throughout year. June 30,2013 return of 13.2 from Ca1PERS 6/30/13 CAFR. April 7,2014 20 FUNDED RATIO-SAFETY 140 120 i 1 100 1. 80 60 3 40 20 3 O m U 81 77 0 2707 f 01 2 0 98 99 2 200120 0r 2006 2007 77 2111 2005 2 - nLd R,t, -AVA 6 96 84 83 83 382 6 76 GfLun dcd Ram-MVA O 1 67 71 6/30/13&6/30/14 funded status estimated AVA is being set equal to MVA and a separate AVA will not be used in future years. 3 April 7,2014 21 CONTRIBUTION RATES- SAFETY 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 98/99 99/0U 0 I 11 2 0 3 03/04 04/05 05/06 06/07 07/08 09/09 09/10 10/11 11/12 12/13 13/14 14/15 -f-ERNonnal Cost 13.5 11.0 12.5 12.5 17.6 17.2 I7.3 16.2 16.4 16.7 16.4 16.5 16.5 18.1 19.3 18.9 18.7 f Total ER Cont Rare 16.3 511 0.0 0.0 0.0 9.0 25.1 30.0 28.6 28.3 28.J 28.0 29.2 34.2 3i.0 38.4 39.1 1 April 7,2014 22 - CONTRIBUTION PROJECTIONS- SAFETY ■ Market Value Investment Return: • June 30, 2012 0.1 6 • June 30, 2013 13.2 Poor Erected Good • June 30, 2014 - 2019 0.2 - 4.3 7.5 8 10.6 - 15.1 ■ No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements ■ Excludes Employer Paid Member Contributions (EPMC) ■ City elected to pay for 2011 assumption changes without a phase in • Resulted in approximately $560 thousand in savings ■ New hire assumptions: • Assumes 60 of 2013 new hires will be Classic Tier 2 Members (lateral) and 40 will be New Members with PEPRA benefits. • Assumes Classic Members will decrease from 60 to 0 of new hires over 10 years 6 Based on CaIPERS CAFR. Based on CaIPERS CAFR. CaIPERS investment return through January 31,2014 was 8.9 April 7,2014 23 CONTRIBUTION PROJECTIONS- SAFETY Employer Contribution Rate if Market Value of Assets were used Actuarial Market 2014/15 2014/15 ■ Plan Assets AVA MVA ■ ER Normal cost 18.7 18.7 ■ Amortization bases: 20.3 32.1 ■ Total Contribution Rate 39.1 50.8 ■ Amortization period z 27 years 27 years April 7,2014 24 BEFORE DRS, WITH DRS AND WITH DRS,1VI(---,RTALITY AND �—THER ASSUMPTION CHANGES- SAFETY 60 ------ i --55-6 55.2 ��54'6—:- 5,1 6 50 r... 48.5' .-46:8 45.22 44 q o/� r 40.t 40 — -�40.1 401 _ y .400--._ ._40:1._ _.. 38�.4-- -_39 7---- i i 30 - 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 i _-Before Direct Rate Smoothing�With Direct Rate Smoothing:�:IDRS,Mortality and Other Assumption Change April 7,2014 25 BEFC'RE DRS,WITH DRS AND WITH DRS,MCIRTALITY AND THER ASSUMPTICN CHANGES- SAFETY $30,000 ----- $29)133 _- ---$28467— $27.-1-52 $24;9-16/^ --$24,665—$25;2301 -$2,4;095— �,$22,�7-17-$22 563 $20 5 72'$27,034� ;.$29�4__-$21;133 $20,000 $19 525' - -$1.9364 $19;947— -,�,: :. $18,722_ -$1a,6b- i �$10,000 000's omitted $0 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 i 1-, Before Direct Rate Smoothing-=With Direct Rate Smooth ing�DRS,Mortality and Other Assumption Changes April 7,2014 26 C,—INTRIBUTI,—,N PR--JECTICNS WITH APPR,--,VED Mr--,RTALITY AND'--THER Assum-PTI,--,N CHANGES-SAFETY 60 56.8 51.3 50 ----- 46.2 b 45.5 46.0 44.2 40 30 20 10 13/14 14/15 15/16 16/17 17/18 18/19 c:---�Mortafity and Other Assumption C April 7,2014 27 C,--,NTRIBUTI,--,N PR,--,JECTI,--,NS WITH APPR,--,VED MCRTALITY AND,--THER AssumPTICN CHANGES- SAFETY 60 F ------- 40 IN.1� 30 20 10 3� :4 4 F—c---::'Mortality and Other Assumpticom:C�hanges April 7,2014 28 GASB 68 ■ Pension Accounting: • GASB 68, Accounting for Employers, approved June 25, 2012 • Replaces GASB 27, effective 2014/15 ■ Major Issues: 40 Unfunded liability on balance sheet 40 Expense calculation disconnected from contribution calculation • Discount rate is ❑ Expected return on plan assets when assets sufficient to pay benefits ❑ Municipal bond rate when assets not sufficient to pay benefits Likely caused COPERS to odify assets s oothin and/or a ortization policy to avoid usin discount rate loner than expected return (7.5 ). • June 30, 2012 Unfunded Actuarial Liability in Millions Total Pension Fiduciary Net Net Pension Plan Liability AAL Position MVA Liability UAL -Safety $552.5 $350.6 $201.9 Miscellaneous 431.2 298.6 132.6 -Supplemental 57.6 33.5 24.1 Total Net Pension Liability $358.6 t� April 7,2014 29 --- GASB 68 City of Huntington Beach j ManagemenCs'Discussion and Analysis for the Year Ended September 30,2013 Seloav is a summary schedule crt the City`s net position at September 30, 2013 tin thousands). A atF�Icfeiw) arcPnt septemner 49, septempes a0, lnoteaseGovernmental Aet{vltle6 201E 2012 Curmnl a0d Other Assets 5 170,030 3 154,811 $ 15'2o t:8pual A::ei5 fkrl.ttJ tiG"S,;l=JJ 147 i101i TotalAmCs 831.iE7 St6,171 15.E65_ 1.856 CurIVI coo Other U01till"fo 21,242 13,1ti7 O,D75' G1.3). W;td.7w'I©Xiy'a:30r4 DT;6d0 Total llabilitfes 1D3.327 105,788 2.5:9 2.4% Net fs05111w NetmwItrlteot In CapilalAssels 617,267 613,0d0 4,202 W1s tt8Dlficte0 ;i;66t' 44,220 7.l;.17 17.71* Vnrestriam C t:076 z: WV 12V1 Total Net Poston S 7n.910 S 7rtl't a 5 12.627 1.656 Amcunt �arcan! Sepfrmper L0, Scptcm6cr 00 In.. tncrra,c Business-'(gpe Activities 2U1i 2012 I IDecreasz) loecrease) Cut Nil and Qthwt Avwbi M. vi'w2 s 1,133 1.1%, CeatalA5a l's 143.,,AO 14=1.t31 _��,58i zvll: Total Aliwts 2%.016 _—7AG,623 3.043 2117 &.L;WWl aa0 Viper 1+001bt1es W 6,447 f51v) •7.B1i lvngTWn+OGfivAiQrrs 1,112 4, 3 V •!%Ire. Total Vabilites - -7,947 -7,502- (455) 4.1% NIA pceili0o: Me,Frimal test In C00 01 A7lels 14MIJ5 143:s31 3,93 26111 Resmcw 27.45$ 27,694 t3i6) A.Vi unrestricted rt3,M 1,961t aw.6 Total Net FQ%Von 9.... 2E6.9s9 s 23S.4Z1 s s.s4e Y,+f i6 April 7,2014 30 PEPRA COST SHARING ■ Target of 50% of total normal cost for everyone ■ New members must pay greater of 50% of total normal cost or bargained amount if higher ■ Employer cannot pay any part of new member required employee contributions ■ Employer may impose current employees pay 50% of total normal cost(limited to certain amounts) if not agreed through collective bargaining by 1/1/18 ■ Miscellaneous Plan: Current Members New Members 2.5 55 2.5 67' • Employer Normal Cost 8.6% 6.25% • Member Normal Cost 8.0% 6.25% • Total Normal Cost 16.6% 12.5% Also referred to as 2%@62. April 7,2014 31 PEPRA COST SHARING ■ Safety Plan Current Members New Members 3 50 2.7 57 • Employer Normal Cost 18.7% 11.25% • Member Normal Cost 9.0% 11.25% • Total Normal Cost 27.7% 22.50% April 7,2014 32