HomeMy WebLinkAboutBUDGET & FINANCE AGENDA 06-15-09Central
Chair Lucey
Member Nejedly
Monday, June 15, 2009
3:00 p.m.
Executive Conference Room
5019 Imhoff Place
Martinez, California
Sanitary District
INFORMATION FOR THE PUBLIC
ADDRESSING THE COMMITTEE ON AN ITEM ON THE AGENDA
Anyone wishing to address the Committee on an item listed on the agenda will be heard when the
Committee Chair calls for comments from the audience. The Chair may specify the number of minutes
each person will be permitted to speak based on the number of persons wishing to speak and the time
available. After the public has commented, the item is closed to further public comment and brought to the
Committee for discussion. There is no further comment permitted from the audience unless invited by the
Committee.
ADDRESSING THE COMMITTEE ON AN ITEM NOT ON THE AGENDA
[n accordance with state law, the Committee is prohibited from discussing items not calendared on the
agenda. You rray address the Committee on any items not listed on the agenda, and which are within their
jurisdiction, under PUBLIC COMMENTS. Matters brought up which are not on the agenda may be
referred to staff for action or calendared on a future agenda.
AGENDA REPORTS
Supporting materials on Committee agenda items are available for public review at the Reception, SOl9
Imhoff Place, Martinez. Reports or information relating to agenda items distributed within 72 hours of the
meeting to a majority of the Committee are also available for puhlic inspection at the Reception. During
the meeting, information and supporting materials are available in the Conference Room.
AMERICANS WITH DISABILITIES ACT
In accordance with the Americans V4'ith Disabilities Act and California Law, it is the policy of the Central
Contra Costa Sanitary District to offer its public meetings in a manner that is readily accessible to
everyone, including those Frith disabilities. If you are disabled and require special accommodations to
participate, please contact the Secretary of the District at least -l8 hours in advance of the meeting at (925)
229-7303.
(925) 228-9500
~~ ~yw.centralsan.ur`,
® !, ;ed Papet
BUDGET AND FINANCE COMMITTEE
Budget and Finance Committee
June 15, 2009
Page 2
1. CALL MEETING TO ORDER
2. PUBLIC COMMENTS
3. OLD BUSINESS
"a. Review Outstanding Question
4. CLAIMS MANAGEMENT
*a. Review Outstanding Claims
5. REPORTS/ANNOUNCEMENTS
a. State Financial Crisis
`b. Report on CCCERA Subsidy by the District
*c. Lawsuit by Matthew Parkinen
d. Insurance Premiums (See item 4.m. in Board Binder)
6. REVIEW EXPENDITURES (Item 4.a. in Board Binder)
7. ADJOURNMENT
* Attachment
3. a.
Central Contra Costa Sanitary District
June 12, 2009
TO: BOARD BUDGET AND FINANCE COMMITTEE
FROM: RANDALL MUSGRAVES ~~M
DEBBIE RATCLIFF /J,L
SUBJECT: June 1, 2009 Finance Committee Meeting
There was one outstanding question from the last Board Budget and Finance
Committee meeting which required additional staff research. The question and answer
is provided below:
Alhambra Valley Assessments -Explain the variance on the April 2009
Financial Statements.
There is a delay between the time a permit is issued and the financing on the tax
rolls. The negative variance results from recording the connection fee in a
clearing account when the permit is pulled. The amount will be cleared when the
AVAD is put on the tax roll. Revenue will be recognized annually for the term of
the AVAD.
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5.b.
Central Contra Costa Sanitary District
June 15, 2009
TO: BUDGET AND FINANCE COMMITTEE
VIA: JAMES M. KELLY, GENERAL MANAGER
FROM: RANDALL MUSGRAVES, DIRECTOR O ADMI ISTRATION ~M
DEBBIE RATCLIFF, CONTROLLER /J/L
SUBJECT: CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT
ASSOCIATION (CCCERA) SUBSIDY REPORT
Conclusions /Actions
The following conclusions have been reached from Mr. Bartel's research and findings
and are discussed in detail in this memo.
Now is not the time to move from CCCERA to CaIPERS due to the
economic downturn resulting in low calculations of District assets based
upon market value.
2. In CCCERA, the District appears to be receiving a greater subsidy from the
General Enhanced Rate Group than it is paying to the Safety Rate Groups.
3. Staff will report the results of the five CaIPERS retirement plans actuarial
valuations upon receipt from CaIPERS.
History
The District retained the services of Mr. John Bartel to: (1) provide an analysis and
comparison of the Contra Costa County Employees' Retirement System (CCCERA) and
California Public Employee Retirement System (CaIPERS), (2) determine if the District
is subsidizing the County, and (3) obtain CaIPERS cost impact of five retirement plans.
Mr. Bartel provided a report dated October 30, 2008 (Report #1). However, at that time
data relating to vested employees who have left the District but are not retired was not
provided by CCCERA. The focus of the report was to evaluate the feasibility and
benefit to the District of moving from CCCERA to CaIPERS and to determine if the
District was subsidizing the County, and if so by how much.
Staff wrote a letter dated December 15, 2008 requesting the data. The District's
consultant, Mr. Bartel, did receive the data in a timely manner. Both the CCCERA staff
and the Actuary, Segal, were courteous and professional in meeting with and providing
information to Mr. Bartel.
A second, and final consultant report (Report #2) dated June 5, 2009, was submitted to
the District by Mr. Bartel. The focus of the report was to determine if the District was
subsidizing the County and by how much.
Findings
CCCERA vs CaIPERS/Report #1
The following summarizes the findings already reported to the Board.
A valuation of the District's assets and liabilities would be performed in order to
move. Both systems require the District to pay its share. CCCERA's Termination
Policy allows the District to withdraw under one of two methods, see page 7. Both
methods would determine the District's assets at market value. With the current
financial environment, and a low market, the District would be disadvantaged to
calculate assets at this time. Mr. Bartel recommends that the District should wait
until a favorable market valuation is possible.
CCCERA terminal pay is impacted by the Ventura decision. District employee's
terminal pay averages to a 22% increase while CaIPERS averages 7% (the
employee's contribution rate).
Using Delta Diablo's actual experience, it appears that over time, the District could
provide a better retirement benefit (2.7% ~ 55) for a similar cost as CCCERA
current benefit (2% @ 55). This is believed to be true by the consultant also.
However, a recent change by CaIPERS requires them to use the same demographic
assumptions as CCCERA. This produces an increased cost for the increased
benefit of 9-15%, see page 8, at the present time.
A move to CaIPERS requires a majority vote by the employees. A proposal of 2.7%
CQ? 55 would be needed in order to provide an incentive to move. This benefit level is
similar to the current CCCERA retirement benefit.
Retirees would be left in CCCERA. The District has two methods to fund the
retirees. The first is to buy out of the system. This is very expensive. Both Delta
Diablo and the City of Pittsburg found this method too expensive. The second
method is to leave the assets associated with the retirees in CCCERA and 100% of
the calculated liability. The liability would be recalculated every two years to ensure
the District is covering its liability. The unfunded liability could go up or down. Delta
Diablo's unfunded liability went from 100% to 105%.
CCCERA Subsidy Analysis /Report #2
CCCERA is a cost sharing multiple employer plan. Calculations for assets and liabilities
exist for retirees and four Rate Groups. Retiree liability is calculated with matching
asset value. Non-retirees assets and liabilities are then divided into four Rate Groups.
1. General Enhanced
2. General Non-Enhanced
3. Safety Enhanced
4. Safety None-Enhanced
The District belongs to the General Enhanced Rate Group
Mr. Bartel has concluded that there are three factors affecting subsidization.
1. Terminal Pay
2. Demographic Experience
3. Rate Group Asset Allocation
In summary, Mr. Bartel believes that the District is being subsidized by the General
Enhanced Rate Group. This is because the District provides an improved terminal pay
benefit than the other agencies provide in the General Enhanced Rate Group. The
District also receives a slight subsidy for its demographic experience. These two
subsidies are offset by a subsidy from General Enhanced Rate Groups to Safety Rate
Groups. Mr. Bartel believes that the net effect is that the District receives a greater
subsidy than it has paid out to the Safety Rate Groups. Mr. Bartel was unable to
determine the amounts due to the pooling philosophy, practices and calculations, since
the retirement system began. It is impossible to review and recalculate all previous
annual calculations to determine the dollars or percentages to date. The ability to
accurately determine the amounts of subsidies was greatly hampered by the
methodology, calculation, and allocation of the pooled assets to the District.
CaIPERS Retirement Plan Applications
Staff also submitted applications for five CaIPERS retirement plans in an effort to
obtain an actuarial valuation cost to compare with CCCERA. CaIPERS has recently
completed the work but has not yet submitted the results. The five CaIPERS
retirement plans are:
- 2% @ 55 using highest one year salary
- 2.5% @ 55 using highest one year salary
- 2.7% @ 55 using highest one year salary
- 3% Q 60 using highest one year salary
- 2.7% @ 55 using final three year salary
A third and final report will be presented to the Committee and Board by staff upon
receipt of the valuations.
Mr. Bartel recommended that the District staff attend the CCCERA Board meetings on a
regular basis and monitor their activities and decisions and monitor the Actuary's,
Segal, work and presentations. He also suggested that District staff request permission
from CCCERA to contract with Segal to provide financial analysis specific to the District.
It is unclear if CCCERA would view this as a conflict of interest for CCCERA and/or
Segal. Staff will be pursuing his recommendations.
~.~_ i~
CEN"fRAL COSTA COUP"t'Y Sn~l'1'A"I'10~ Dls"I-RIC'f
CCCERA Studv
Is the District Subsidizing Others?
JOfi1 E. B:~R"I~H:L
.lone ~. '_OU~)
Agenda
Topic Pale
CCCERA Background 1
Terminal Pay 2
Demographic Experience 3
Rate Group Asset Allocation
County's Pension obligation Bonds 7
Excess Earnings Allocation 8
8;~~ ~ ~ ~, ~,~,,,~ ,. , ., „~~ ,,,....~ ...., ,. ~ ,, , ~~,
CCCERA BA('KCROIINI)
^ CCCERA is Cost Sharing Multiple Employer Plan
^ Fi~c Groups
Retirees
Four Rate Groups
^ Rate Groups
General Enhanced
General Non-Enhanced
Safety Enhanced
Safety Non-Enhanced
g%1
.a~„~ 5. 'uae
~?QI
~hF:RAlIN:11. P:11'
^ Terminal Pay
CCCERA Assumption - 1 1.5`%,
I)ish~ict ~ 22°/n
^ L,osses go to pool
~~
DEI~tOC:R.aPHIC EXPERIENCE
Active Participant Statistics
CCCERA 12/31/07 Valuation Data
Enhanced General
Ticr l Tier 3 Total
^ Count
^ Average Age
^ Average Service
^ Average Entry Age
^ Projected Average
Salary
^ Total Projected Salary
(OOOs)
B; l
Junr ;. >(qia
931 6,766 7,697
50.4 46.1 46.6
16.7 8.8 9.7
33.7 37.3 36.9
CCCSD
264
47.6
13.4
34.2
$ 79,474 $ 64,472 $ 67,412 $86,545
82.653 436,221 518,874 22,848
DEMOGRAPHIC EXPERIENCE
i i
^ CCCSD demographic infol-mation
Higher average age
Higher average service
Higher average salary
^ CCCSD average higher cost mitigated by pool
RATE GROUP ASSET ALLOCATION
1. Assets allocated to Retirees
2. Remaining assets allocated to Active Rate Groups
a. In proportion to Expected Assets by Active rate Group
b. Not determined by rolling assets forward
c. Determined based on actuarial liabilities and expected UAAL based on
contribution rates
B/l ,~~~,~ s. znn~~
~~
RATE: GI2Ol:P ASSET ALLOCATION
~ ~
^ Potential for bias:
Higher Safety ratio of retirees to actives
When Rate Group has losses more assets allocated
When Rate Gruup has gains fewer assets allocated
^ Likely shift in assets from General to Safety
Safety retires
Safety disability
B,~ ~~ June 5, 2009
(~
~!'QI
CouN'1'Y'S PENSION ~131.IGATION BONUS
^ POB Adjustment:
Rags calculated without regard to POB
Agencies without POB rates adjusted upward based on:
^ Balance established as a "Frozen unfinuied liability"
^ Balance credited at valuation interest rate, without regard to actual
investment retun~
^ Good investment return -~ District wins
^ Bad investment retut-t~--• District loses
^ Historical market value investment returns slightly below assumed since POBs
issued
Bil ~~,~,~,; ,~~~~„
~~
E\CESS E,4RNINGS ALLOC1~r1oN
^ Earnings in excess of valuation interest rate
^ Reviewed historical Board policy (in actuarial reports) -- found nothing
unreasonable
^ Board policy changes over time -> continue to monitor
s
~~
5. c.
Central Contra Costa Sanitary District
June 15, 2009
TO: BUDGET AND FINANCE COMMITTEE
VIA: JAMES M. KELLY, GENERAL MANAGER'~I~E~
FROM: RANDALL MUSGRAVES, DIRECTOR OFV//ADMIN/ISTRATION 1"""~`
SHARI DEUTSCH, SAFETY AND RISK MANAGEMENT
ADMINISTRATOR
SUBJECT: NEW LITIGATION
This is to inform the Budget and Finance Committee and the Board that Mr. Matthew
Parkinen has filed a lawsuit in the Superior Count of Contra Costa County alleging
damages from eminent domain. The District has not yet been served.
cc: Kenton Alm, District Counsel