HomeMy WebLinkAbout06.a.2) General Manager Written AnnouncementsBoard Meeting of April 5, 2012
Written Announcements:
Employee Status Updates
a) Retirements
Information Technology Analyst John Phillips will retire on April 7, 2012 after 10
years of service; and Pumping Stations Supervisor Steve Larsen will retire on
April 9, 2012 after 27 years of service.
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Promotions
Associate Engineer Michael Penny has been promoted to Senior Engineer in the
Engineering Department (Environmental Services Division), effective March 26,
2012.
c) Human Resources Manager Christopher Ko Elected Vice -
President of Northern California Chapter of International
Public Management Association
Human Resources Manager Christopher Ko was elected as the Vice - President of
the Northern California Chapter of the International Public Management
Association — Human Resources (NCCIPMA -HR) at its Annual Chapter
Conference on Wednesday, March 21, 2012. He has been a Board member with
NCCIPMA -HR since March 2010. His new term as Vice - President will begin on
July 1, 2012.
District Awards
d) District Receives the Certificate of Achievement for
Excellence in Financial Reporting
The Certificate of Achievement for Excellence in Financial Reporting has been
awarded to the District by the Government Finance Officers Association of the
United States and Canada (GFOA) for its comprehensive annual financial report
(CAFR). The Certificate of Achievement is the highest form of recognition in the
area of governmental accounting and financial reporting, and its attainment
represents a significant accomplishment by a government and its management.
Written Announcements
April 5, 2012
Page 2 of 2
An Award of Financial Reporting Achievement has been awarded to the
individual(s), departments or agency designated by the government as primarily
responsible for preparing the award - winning CAFR. The CAFR was judged by an
impartial panel to meet the high standards of the program including demonstrating
a constructive "spirit of full disclosure" to clearly communicate its financial story
and motivate potential users and user groups to read the CAFR. Once the actual
award is received, it will be presented to the Board President at a regular Board
meeting. The notification letter is attached for your information.
Project Related Updates
e) Public Bidding for North Orinda Sewer Renovations (Phase
4), District Project 5973
North Orinda Sewer Renovations (Phase 4), District Project 5973 is part of the
ongoing Collection System Renovation Program. The project will install
approximately 13,600 linear feet of 6- and 8 -inch sewer lines within public rights -
of -way and easements by using horizontal directional drilling, pipe- bursting, and
open -cut methods.
This project will be advertised on April 12 and 19, 2012. Bids will be opened on
Wednesday, May 2, 2012. The construction cost is currently estimated at
$2,000,000. More information will be presented when the Board is asked to
approve the construction contract on May 17, 2012.
CCCERA Matters
f) Contra Costa County Employees' Retirement Association
Five -Year Projection of Employer Rate Changes
Attached is a copy of Segal Company's, CCCERA Actuary, letter regarding
updated five -year projections of employer contribution rate Changes Based on
Estimated 2.7% Gross Market Value investment return for 2011 instead of the
estimated 7.75% return. This reduced rate of return results in increases to the
District's retirement rates as shows in the Exhibit attached to the letter.
Government Finance Officers Association
203 N. LaSalle Street - Suite 2700
Chicago, IL 60601
Phone (312) 977 -9700 Fax (312) 977 -4806
March 14, 2012
Jim Kelly
General Manager
Central Contra Costa Sanitary District
5019 Imhoff Place
Martinez CA 94553
Dear Mr. Kelly:
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B Y:
t/o.a.z)d)
We are pleased to notify you that your comprehensive annual financial report for the fiscal year ended June 30, 2011
qualifies for a Certificate of Achievement for Excellence in Financial Reporting. The Certificate of Achievement is the
highest form of recognition in governmental accounting and financial reporting, and its attainment represents a significant
accomplishment by a government and its management
The Certificate of Achievement plaque will be shipped to:
Debbie Ratcliff and Colette Curtis -Brown
Controller and Finance Administrator
under separate cover in about eight weeks. We hope that you will arrange for a formal presentation of the Certificate and
Award of Financial Reporting Achievement, and that appropriate publicity will be given to this notable achievement. A
sample news release is enclosed to assist with this effort. In addition, details of recent recipients of the Certificate of
Achievement and other information about Certificate Program results are available in the "Awards Program" area of our
website, www.gfoa.org.
We hope that your example will encourage other government officials in their efforts to achieve and maintain an
appropriate standard of excellence in financial reporting.
Sincerely,
Government Finance Officers Association
i YA
Stephen J. Gauthier, Director
Technical Services Center
SJG /ds
Randy Musgraves ;)
From: Kurt Schneider <KSchneider @ret.cccounty.us>
Sent: Wednesday, March 28, 2012 4:19 PM
To: Randy Musgraves
Subject: RE: 5 -year projections
Randy,
It's a little complicated. The projections in this letter don't take into account any demographic changes since
12/31/2010. Those will be taken into account in the valuation. Payroll will not be exactly what was projected, and
neither will anything else. I'll try to answer your question.
First of all, the projections assume payroll will increase 4.25% per year, so the 3.15% is already assumed to apply to a
larger payroll than the current payroll. If payroll increases by more than 4.25% per year, then the loss in assets will
actually cost less than 3.15% of payroll for 18 years. However, the increase in payroll more than assumed would mean
the active liability would have grown more than assumed leading to an additional piece of UAAL that needs to be
funded, so an increase in payroll above the 4.25% assumption could cause a net increase in the contribution rate above
the projections.
Or to put it another way, all this letter says is that Central San has another $9.5 million it will need to fund on top of
what was included in the August 2011 letter due to investment performance in 2011. Whether payroll grows or shrinks
the $9.5 million stays the same.
I hope this helps.
Kurt
>>> Randy Musgraves <RMusgraves @centralsan.org> 3/28/2012 3:41 PM >>>
Thanks Curt. If I understand it correctly then, If there is an increase in payroll the 3.15% in on top of that.
Is this correct?
- - - -- Original Message---- -
From: Kurt Schneider fmailto :KSchneider @ret.cccounty.usl
Sent: Wednesday, March 28, 2012 2:26 PM
To: Randy Musgraves
Subject: 5 -year projections
Randy,
Attached is the letter that we handed out at the Board meeting today. It is not much new information. Segal took the
previous projection from last August and factored in the 2011 investment loss of 5.65 %. That loss gets phased in over 5
years, but ultimately has to be made up over 18 years by the employer. That means the rate for Central San is now
projected to be 3.15% of payroll higher than it was projected to be before the 2011 investment experience.
Let me know if you have any questions.
Kurt
V
7rSEGAL
THE SEGAL COMPANY
100 Montgomery Street Suite 500 San Francisco, CA 94104 -4308
T 415.263.8200 F 415.263.8290 www,segalco.com
March 22, 2012
Ms. Marilyn Leedom
Chief Executive Officer
Contra Costa County Employees' Retirement Association
1355 Willow Way, Suite 221
Concord, CA 94520
John W. Monroe, ASA, MAAA, EA
Vice President & Associate Actuary
jmonroe @segalco.com
Re: Contra Costa County Employees' Retirement Association
Five -Year Projection of Employer Contribution Rate Changes
Based on Estimated 2.7% Gross Market Value Investment Return for 2011
Dear Marilyn:
As requested, we have updated our five -year projection of estimated employer contribution rate
changes for CCCERA. This projection is derived from the December 31, 2010 actuarial
valuation results and incorporates an estimated gross market value investment return of 2.7%
for the 2011 calendar year. Key assumptions and methods are detailed below.
Results
The estimated contribution rate changes shown on the next page apply to the recommended
average employer contribution rate. For purposes of this projection, the rate changes are
assumed to be from asset gains and losses that are funded as a level percentage of the
Association's total active payroll base. The asset gains and losses are due to: (1) deferred gains
and losses from the actuarial asset smoothing methodology; (2) losses due to investment
income not earned on the difference between the Actuarial Value of Assets (AVA) and Market
Value of Assets (MVA); and (3) contribution gains and losses which occur from delaying the
implementation of new rates until 18 months after the actuarial valuation date.
The following table provides the year -to -year rate changes from each of the above causes and
the cumulative rate change over the five -year projection period. To obtain the estimated
average employer contribution rate at each successive valuation date, these cumulative rate
changes should be added to the rates developed from the December 31, 2010 valuation. These
rate changes become effective 18 months following the actuarial valuation date shown in the
table.
Benefits, Compensation and HR Consulting Offices throughout the United States and Canada
+� o
Founding Member of the Multinational Group of Actuaries and Consultants, a global affiliation of independent firms
@ 01 54
Ms. Marilyn Leedom
March 22, 2012
Page 2
The rate changes shown below represent the average rate for the aggregate plan.
Rate Change
Component
Valuation Date (12/31)
2011
2012
2013
2014
2015
(1) Deferred (Gains) /Losses
2.64%
3.15%
0.51%
-0.36%
0.06%
(2) Loss of Investment
Income on Difference
0.27%
0.29%
0.04%
0.01%
0.03%
Between AVA and MVA
(3) 18 Month Rate Delay
0.48%
0.41%
0.42%
0.22%
0.03%
Incremental Rate Change
3.39%
3.85%
0.97%
-0.13%
0.12%
Cumulative Rate Change
3.39%
7.24%
8.21%
8.08%
8.20%
The rate change for an individual cost group or employer will vary depending primarily on the
size of that group's assets and liabilities relative to its payroll. The ratio of the group's assets to
payroll is sometimes referred to as the volatility index (VI). A higher VI results in more volatile
contributions and can result from the following factors:
> More generous benefits
> More retirees
> Older workforce
> Shorter careers
> Issuance of Pension Obligation Bonds (POBs)
The attached exhibit shows the VI for CCCERA's cost groups along with the "relative VI"
which is the VI for that specific cost group divided by the average VI for the aggregate plan.
Using these ratios we have estimated the rate change due to these generally investment related
net losses for each individual cost group by multiplying the rate changes shown above for the
aggregate plan by the relative VI for each cost group. These estimated rate changes for each
cost group are shown in the attached exhibit.
5182167v 1 /05337.001
Ms. Marilyn Leedom
March 22, 2012
Page 3
Note that because we have estimated the allocation of the rate changes across the cost groups,
the actual rate changes by group may differ from those shown in the exhibit, even if the plan -
wide average rate changes are close to those shown above.
Key Assumptions and Methods
The projection is based upon the following assumptions and methods:
> December 31, 2010 non - economic assumptions remain unchanged.
> December 31, 2010 retirement benefit formulas remain unchanged.
> December 31, 2010 1937 Act statutes remain unchanged.
> UAAL amortization method remains unchanged (i.e., 18 -year layers, level percent of
pay).
> December 31, 2010 economic assumptions remain unchanged, including the 7.75%
investment earnings assumption.
> The gross market value investment return of 2.7% during 2011 was reduced by an
estimated 0.6% to account for investment and administrative expenses.
> Deferred investment gains and losses are recognized per the asset smoothing schedule
prepared by the Association as of June 30, 2011. In addition, the estimated investment
loss for the second half of 2011 is also recognized over a five -year period. They are
funded as a level percentage of the Association's total active payroll base.
> We have assumed that returns of 7.75% are earned on a market value basis for each of
the next four years after 2011.
> Deferred investment gains are all applied directly to reduce the UAAL. Note that this
assumption may not be entirely consistent with the details of the Board's Interest
Crediting and Excess Earnings Policy.
> Active payroll grows at 4.25% per annum.
> The VI used for these projections is based on the December 31, 2010 Actuarial
Valuation and is assumed to stay constant during the projection period.
> All other actuarial assumptions used in the December 31, 2010 actuarial valuation are
realized.
5182167v1/05337.001
Ms. Marilyn Leedom
March 22, 2012
Page 4
> No changes are made to actuarial methodologies, such as adjusting for the contribution
rate delay in advance.
Finally, we emphasize that projections, by their nature, are not a guarantee of future results.
The modeling projections are intended to serve as illustrations of future financial outcomes that
are based on the information available to us at the time the modeling is undertaken and
completed, and the agreed -upon assumptions and methodologies described herein. Emerging
results may differ significantly if the actual experience proves to be different from. these
assumptions or if alternative methodologies are used. Actual experience may differ due to such
variables as demographic experience, the economy, stock market performance and the
regulatory environment.
Unless otherwise noted, all of the above calculations are based on the December 31, 2010
actuarial valuation results including the participant data and actuarial assumptions on which
that valuation was based. That valuation and these projections were completed under the
supervision of John Monroe, ASA, MAAA, Enrolled Actuary.
Please let us know if you have any questions.
Sincerely,
'&�% M��
John Monroe
AW/bgb
Enclosure
cc: Kurt Schneider
5182167v1/05337.001
Exhibit
Contra Costa County Employees' Retirement Association
Estimated Employer Rate Change by Cost Group (CG) Based on December 31, 2010 Valuation with Estimated 2.7% Gross Market Value Return for 2011
* Excludes Post Retirement Death Benefit reserve and is based on December 31, 2010 Actuarial Valuation.
** Based on December 31, 2010 Actuarial Valuation.
These rates do not include any employer subvention of member contributions or any member subvention of employer contributions.
Total
Plan
$5,013,007,758
$687,443,206
7.29
1.00
3.39%
3.85%
0.97
-0.13
0.12%
3.39%
7.24%
8.21%
8.08%
8.20
5182167vl/05337.001 SEGAL
CG #1 & CG #2
Combined
CG #3
CG #4
CG #5
CG #6
Enhanced
Enhanced
Enhanced
Enhanced
Non - Enhanced
General
CCC Sanitary District
Housing Authority
CCCFPD
District
Tier 1& 3
Tier 1
Tier 1
Tier 1
Tier 1
Market Value of Assets (MVA)*
$2,764,282,879
$167,463,823
$32,533,750
$34,471,858
$3,784,636
Projected Payroll for 2011
$498,826,811
$24,455,315
$5,334,523
$4,010,138
$725,188
Volatility Index (VI) = MVA/Payroll
5.54
6.85
6.10
8.60
5.22
Relative Volatility Index (VI) = CG VI / Total Plan VI
0.76
0.94
0.84
1.18
0.72
Estimated Incremental Rate Change as of 12/31/2011
2.58%
3.18%
2.84%
4.00%
2.43%
Estimated Incremental Rate Change as of 12/31/2012
2.93%
3.62%
3.22%
4.54%
2.76%
Estimated Incremental Rate Change as of 12/31/2013
0.74%
0.91%
0.81%
1.14%
0.69%
Estimated Incremental Rate Change as of 12/3112014
-0.10%
-0.12%
-0.11%
-0.15%
-0.09%
Estimated Incremental Rate Change as of 12/31/2015
0.09%
0.11%
0.10%
0.14%
0.09%
Cumulative Rate Change as of 12/3112011
2.58%
3.18%
2.84%
4.00%
2.43%
Cumulative Rate Change as of 12/31/2012
5.51%
6.80%
6.06%
8.54%
5.19%
Cumulative Rate Change as of 12/31/2013
6.25%
7.71%
6.87%
9.68%
5.88%
Cumulative Rate Change as of 12/31/2014
6.15%
7.59%
6.76%
9.53%
5.79%
Cumulative Rate Change as of 12/31/2015
624%1
770%1
6.86%1
9.67%1
5.88%
* Excludes Post Retirement Death Benefit reserve and is based on December 31, 2010 Actuarial Valuation.
** Based on December 31, 2010 Actuarial Valuation.
These rates do not include any employer subvention of member contributions or any member subvention of employer contributions.
Total
Plan
$5,013,007,758
$687,443,206
7.29
1.00
3.39%
3.85%
0.97
-0.13
0.12%
3.39%
7.24%
8.21%
8.08%
8.20
5182167vl/05337.001 SEGAL
CG #7 & CG #9
Combined
CG #8
CG #10
CG #11
CG #12
Enhanced
Enhanced
Enhanced
Enhanced
Non - Enhanced
County
CCFPD/East CCCFPE
Moraga- Orinda FD
San Ramon Valley FD
Rodeo - Hercules FPD
Safety Tier A & C
Safety Tier A
Safety Tier A
Safety Tier A
Safety Tier A
Market Value of Assets (MVA)*
$1,038,683,813
$642,267,640
$115,535,117
$194,942,706
$19,041,536
Projected Payroll for 2011
$87,286,098
$37,147,936
$7,894,991
$19,504,281
$2,257,925
Volatility Index (VI) = MVA/Payroll
11.90
17.29
14.63
9.99
8.43
Relative Volatility Index (VI) = CG VI / Total Plan VI
1.63
2.37
2.01
1.37
1.16
Estimated Incremental Rate Change as of 12/31/2011
5.53%
8.04%
6.80%
4.65%
3.92%
Estimated Incremental Rate Change as of 12/31/2012
6.28%
9.13%
7.73%
5.28%
4.45%
Estimated Incremental Rate Change as of 12/31/2013
1.58%
2.30%
1.95%
1.33%
1.12%
Estimated Incremental Rate Change as of 12/31/2014
-0.21%
-0.31%
-0.26%
-0.18%
-0.15%
Estimated Incremental Rate Change as of 12/31/2015
0.20%
0.28%
0.24%
0.16%
0.14
Cumulative Rate Change as of 12/31/2011
5.53%
8.04%
6.80%
4.65%
3.92
Cumulative Rate Change as of 12/31/2012
11.81%
17.17%
14.53%
9.93%
8.37
Cumulative Rate Change as of 12/31/2013
13.39%
19.47%
16.48%
11.26%
9.49%
Cumulative Rate Change as of 12/31/2014
13.18%
19.16%
16.22%
11.08%
9.34%
Cumulative Rate Change as of 12/31/2015
13.38%
19.44%
16.46%
11.24%
9.48%
* Excludes Post Retirement Death Benefit reserve and is based on December 31, 2010 Actuarial Valuation.
** Based on December 31, 2010 Actuarial Valuation.
These rates do not include any employer subvention of member contributions or any member subvention of employer contributions.
Total
Plan
$5,013,007,758
$687,443,206
7.29
1.00
3.39%
3.85%
0.97
-0.13
0.12%
3.39%
7.24%
8.21%
8.08%
8.20
5182167vl/05337.001 SEGAL