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HomeMy WebLinkAboutBUDGET AND FINANCE ACTION SUMMARY 10-14-13Central Contra Costa Sanitary District Protecting public health and the environment 5019 Imhoff Place, Martinez, CA 94= SPECIAL MEETING OF THE CENTRAL CONTRA COSTA B04RD OFDZRECTOKS: J.4.1IESA. _NEJEDLF SANITARY DISTRICT Prvs,aknr BUDGET AND FINANCE COMMITTEE D_�F7DR T7LLL �� President Pro Tem R4rZH.(' r -EF A C T 10 N SUMMARY IA'HAELR.:'AYTILL T.4DJ. PILD'h7 PHOAE: (935) 338 -9500 Chair McGill F4-I: (935) 676 -7311 Member Nejedly 1r1r1r:centralsan.o,, Monday, October 14, 2013 3:00 p.m. Middle Conference Room 1470 Executive Drive, Second Floor Concord, California PRESENT: Chair Mike McGill, Member Jim Nejedly, General Manager Roger Bailey, Finance Manager Thea Vassallo, Director of Operations Curt Swanson, Environmental Services Division Manager Danea Gemmell, Safety and Risk Management Administrator Shari Deutsch (left after Item 3.), Senior Administrative Technician Christina Gee 1. Call Meeting to Order Chair McGill called the meeting to order at 3 p.m. 2. Public Comments None. 3. Risk Management a. Review Loss Control Report and discuss outstanding claims COMMITTEE ACTION: Reviewed the report. 4. Expenditures a. Review Expenditures (Item 3.b. in Board Binder) In response to the Committee's question regarding payment to Child Environmental for wet ash hauling, Director of Operations Curt Swanson Budget and Finance Committee Action Summary October 14, 2013 Page 2 stated that, currently, the District pays Child Environmental for transporting wet ash to Scotts Fertilizer. Scotts charges a tipping fee to unload the ash on a paved all- weather site. He noted that the ash, which is 15% phosphorous, could be a valuable commodity. COMMITTEE ACTION: Reviewed and recommended Board approval. Requested the following information: Check Date Amount Vendor 196842- 197009 9123113 Various Various District Retirees If the District's auditors audit the reimbursements for Medicare Part B paid to District retirees. Check Date Amount Vendor 197027 9126113 $2,612.34 Child Environmental Directed staff to review other options for wet ash disposal. 5. Review the Memorandum on Internal Control and Required Communications letter to be issued as part of the year end June 30, 2013 audited financial statements (Attachments 2 and 3 in Item 6.a. in Board Binder) The Committee expressed concerns over the current $2 million inventory balance and the management of the Warehouse. Member Nejedly recommended that random spot checks be conducted by non - Warehouse personnel and communication be maintained with the departments. He noted that the Materials Services Supervisor should have a mechanical background to better understand the inventory. The Committee suggested disposing of obsolete items by selling them online. Member Nejedly had a concern with the open- inventory layout of the Collection System Operations (CSO) and Solids Conditioning Building warehouses. The Committee noted that staff should be prudent and conduct inventories correctly, rather than spending unnecessary money on a faulty tracking system. COMMITTEE ACTION: Directed staff to agendize a visit by the Committee to the warehouses located in the Plant in Martinez and Collection System Operations (CSO) in Walnut Creek. *6. Receive update on hiring consultant to review and make recommendations concerning the District's administrative overhead calculation Finance Manager Thea Vassallo stated that the estimated initial cost to the proposed consultant, Matrix Consulting Group, based on the preliminary scope of work, is $8, 000. Matrix Consulting Group also sells a Microsoft Excel overhead *7 IN A" Budget and Finance Committee Action Summary October 14, 2013 Page 3 model for an additional $8, 000, which includes the cost of training. Per discussion with the consultant, Ms. Vassallo estimated that a report would be generated by Matrix Consulting Group in early 2014, if the contract is executed by the end of October 2013. The Committee stressed the importance of charging a correct overhead rate and aligning the District's rate with those of two of its main customers. Contra Costa County and the City of Concord. COMMITTEE ACTION: Received the update and directed staff to add to the consultant scope of work a comparison of the District's overhead method to the Contra Costa County and the City of Concord overhead. Concurred with hiring a consultant and recommended the full Board discuss the matter (information regarding the proposed consultant that was included in the Committee agenda packet is attached). Reports and Announcements Finance Manager Thea Vassallo distributed a memo from staff responding to Member Pilecki's question at a previous Board meeting regarding the August 2013 Pacific Gas and Electric (PG &E) utility bills (attached). Member Nejedly suggested that staff schedule PG &E to conduct an energy audit. Suggestions for future agenda items Chair McGill requested that the full Board receive copies of The Segal Company's informational letters sent to employers by the Contra Costa County Employees' Retirement Association (CCCERA) Board (attached). Adjournment — at 4:09 p.m. * Attachment M � Central Contra Costa Sanitary District October 14, 2013 TO: BUDGET AND FINANCE COMMITTEE FROM: THEA VASSALLO, FINANCE MANAGER SUBJECT: ADMINISTRATIVE OVERHEAD CONSULTANT REVIEW Staff is proceeding with the Board's request to hire an outside firm to review the District's administrative overhead methodology. Staff has referenced the California Society of Municipal Finance Officers (CSMFO) recommendations for service providers and has contacted Matrix Consulting Group (MCG). MCG is located in Palo Alto and provided Union Sanitary District with a complex and detailed overhead model. MCG is willing to audit the District's current method and will provide suggestions for improvement with the goal of having a streamlined and less complex administrative overhead model. Staff has also reviewed other agency administrative overhead calculations and has found some samples that provide layman's terms and explanations that can potentially be used in the District's new model. Staff - Recommended Goal and Scope of Work Goal: • Easy to calculate and understand annual model for in -house staff calculation of administrative overhead Scope of Work for Outside Firm: • Review and audit the District's current matrix (full cost recovery model) and make suggestions for improvements • Ensure that items included in the District's calculation meet Generally Accepted Accounting Principles (GAAP), Governmental Accounting Standards Board (GASB), and Office of Management and Budget (OMB -A87) allowable items • Provide an itemized list of allowable and unallowable expenses under Federal and State grant programs • Provide direction for staff to prepare a second model that is grant compliant • Provide recommendations on how to account for hot -topic items such as Other Post - Employment Benefits (OPEB), depreciation, vehicle maintenance, and debt service • Discuss pros and cons of using multiple administrative overhead rates, such as the District's current three -year phase -in percent for external billings and full cost recovery percent for internal charges to capital projects • Provide sample calculations and comparisons of recommended methods Please provide staff with any suggested modifications to the goal or scope of work. The scope of work should be finalized prior to engaging an outside firm. • -% Matrix Consulting Group Page 1 of 1 http: / /www.matrixeg.net/ 10/9/2013 W about the matrix consulting group The goal of the welcome to MG3 The Matrix Consulting Group provides a wide range of analytical services to Matrix Consulting Group about MCr3 local and state governments. We are dedicated to working closely with our . Is to provide solutions to government clients to provide detailed analysis which leads to the Implemen• ; our diems' management, latlon of needed change. Nay elements of our approach to providing consull• ; staffing and operational what wo do ing services to government Include the following: . concerns who we are • Principals manage and serve as field analysts on each of our projects. ; Our staff ut Itze • All of our consultants are experienced governmental enalysls, with ; approaches which employment experience ranging from 10 to 30 years. ; rsoognize the unique- - Our methodologles are designed to prove to our clients and the public ; ness of our dients' client survey that an operational Issue exists and that an alternative ►viii improve . problems while bringing service delivery and/or cost effecllveness. ; to these problems the contact us • We are specialists, not generalists. Each of our consultants has ; experience gained from other jurisdictions. experience conducting scones of management studies for every ; emu AUM CWMA g Gram governmental function. ; We believe that our Wt x hawmi. • We maximize field time recognizing that our clients' operational issues : principal mission is to ate In their offices, not ours. ' provide detailed, • We take pride In meeting project schedules while exceeding the ; objective and precdcal objectives associated with every project we conduct. • solutions which our • We have a personal commitment to assist our clients In Implementing dlents can Implement without further study. appropriate solutions to organizational and operational Issues. http: / /www.matrixeg.net/ 10/9/2013 e —r Matrix Consulting Group Page 1 of 1 http: / /www.matrixcg.net/ 10/9/2013 overhead cost allocation plans law onforcomont welcome to MCt3 The Matrix Consulting Group offers a reasonable and defensible basis for criminal justice and about MICG establishing the cost of administrative support provided to third parties, dotontion systom utility funds, Internal services, grant programs, special revenue or planning what we do enterprise funds, as well as for recovery of indirect costs via budgeting firo and omorgoncy and accounting processes modlcol sorvicas who we are • OMB A -87 Compliant Cost Allocation Plans: We adhere to the omonsoncy Federal Office of Management and BudW3 Circular OMB A -87 communications guidelines for indirect cost allocation, as well as Generally Accepted and 0.911 employment Accounting Principles. community dovolopmont client survey • Full Budget Cost Allocation Plans. These plans follow the infmstructum guidelines of OMB A -67 In theory and methodology, but allow for maintonaneo and inclusion of more costs than a A-67 compliant plan. onginooring contact us Members of our team have performed hundreds or cost allocation plan public uttlltles ©are wtiv ono or=* analyses over their careers We take eudra care to ensure that all parties ilbrarlos and +mq+nwv+d impacted by cost allocation plans understand and accept the results rocroationor sorvicos administsatiyo sorvicos bonchmarking and boat monagomont practices analysis usor face cost allocation, and cost analysis studios user fee sudies e ce t it I, Ill irs additional flancial services http: / /www.matrixcg.net/ 10/9/2013 IWO Central Contra Costa Sanitary District October 14, 2013 TO: THEA VASSALLO, THERESA MCCAULEY, DAVE ROBBINS FROM: CRAIG MIZUTANI SUBJECT: AUGUST 2013 PG &E BILLS This memo addresses questions regarding the August 2013 invoices for natural gas delivery and electrical power from the local utility, Pacific Gas and Electric (PG &E). Utility costs have been higher than normal for the past several months as the Plant has imported a higher- than - normal amount of electricity in order to reduce natural gas consumption in the cogeneration unit. The reduction is required to limit the amount of CO2e (carbon dioxide equivalents) produced, to stay below the capped- sector threshold of 25,000 metric tons per year as mandated by the State of California. Table 1 below, presents a summary of the amounts paid to PG &E through August of 2013. Note that for the peak demand months, August had the lowest PG &E expenses. In addition, the table shows that overall utility costs (including landfill gas) were lowest in August as well. The District will continue to adjust the amount of imported electrical power to balance utility costs with CO2e emissions. TABLE 1- 2013 PG &E Costs ITEM Jan Feb Mar Apr May I June Jul Aug NATURAL GAS, $ PG &E $13,700 $17,628 $21,789 $19,379 $19,624 $20,642 $21,416 $27,036 PG &E Elect COST 2013 $27,000 $17,100 $16,100 $57,500 $109,200 $66,700 $67,200 $57,400 PG &E Total (Elect + NG delivery) $40,700 $34,728 $37,889 $76,879 $128,824 $87,342 $88,616 $84,436 Total LFG + NG + Elect $234,848 $212,261 $240,163 $262,189 $323,906 $282,403 $297,632 $276,289 Peak Demand Season PG &E Expenses CAA 5tia coin, Employees Retirement Association October 9, 2013 1355 willow way suite 221 concord ca 94520 Agenda Item 10 925.521.3960 fax 925.646.5747 August 13, 2013 Lou Ann Texeira Contra Costa County Local Agency Formation Commission 651 Pine Street, 6th Floor Martinez, CA 94553 Re: Actuarial Information Letters Dear Lou Ann Texeira, C rEGE -I V D C c� AUG 1 4 7mi 0 i S R L— -- —� T We have enclosed four separate letters from The Segal Company regarding information based on the December 31, 2012 valuation. These letters will outline the following: 1. Unfunded Actuarial Accrued Liability by Employer as of December 31, 2012 2. Five Year Projection of Employer Contribution Rate Changes 3. Employer Contribution Rate Reconciliation by Cost Group as of December 31, 2012 4. Employer UAAL Reconciliation by Cost Group as of December 31, 2012 Letters 1 through 3, as listed above, have been provided to you in the past, and outline information regarding the UAAL and the projection of contribution rate changes. Letter 4 is a new document outlining the UAAL reconciliation by cost group and provides additional information detailing the changes in the recommended employer contribution rates for each cost group. Please review the enclosed information and call our office with any questions. We will be happy to discuss particulars with each individual employer. Sincerely, hu Marilyn Leedo Retirement Chief Executive Officer bV 'SEGAL THE SEGAL COMPANY 100 Montgomery Street Suite 500 San Francisco, CA 94104.4308 T 415 263 8200 F 415.263 8290 www segalcoxom August 9, 2013 Ms. Marilyn Leedom Chief Executive Officer Contra Costa County Employees' Retirement Association 1355 Willow Way, Suite 221 Concord, CA 94520 Re: Determination of Unfunded Actuarial Accrued Liability for the Employers as of December 31, 2012 Dear Marilyn: John W. Monroe, ASA, h1AAA, EA. Vice Presiden- & Associate Actuufv lrnonroevsegaler, coin As requested, the following provides an allocation of the Unfunded Actuarial Accrued Liability (UAAL) as of December 31, 2012 by employer. Since the depooling action taken by the Board effective December 31, 2009, employers that are now in their own cost group have their UAAL determined separately in the valuation. For employers that do not have their own cost group, there is no UAAL maintained on an employer - by- employer basis in the valuation. In those cases, we develop contributions to fund the UAAL strictly according to projected payroll for each employer. We then use those UAAL contributions to develop a UAAL for each participating employer. Note that the UAAL we calculate for each employer is not necessarily the liability that would be allocated to that employer in the event of a plan termination by that employer. Based on the above method, we have prepared the following breakdown of the UAAL for each participating employer as shown in the enclosed Exhibit. We also show the projected payroll for each participating employer that was used in the determination of the UAAL. These calculations are based on the December 31, 2012 actuarial valuation results including the participant data and actuarial assumptions on which that valuation was based. That valuation and these calculations were completed under the supervision of John Monroe, ASA, MAAA, Enrolled Actuary. Benefits Componsat on and HR Consulting Offices throughout the United Slates and Canada Founding Member of the Multinational Group of Arluanes and Consultants, a global affiliation of independent firms Ms. Marilyn Leedom August 9, 2013 Page 2 The undersigned is a member of the American Academy of Actuaries and meets the qualification requirements to render the actuarial opinion contained herein. Sincerely, Jo Monroe J WL/liy cc: Kurt Schneider 5260966v 05337 001 EXHIBIT Contra Costa County Employees' Retirement Association UAAL Breakdown 5260966vi/05337 001 SEGAL Unfunded Employer Actuarial Accrued Liability Projected (UAAL) Payroll County $1,591,610,000 $524,630,168 Superior Court 57,888,000 24,126,973 Districts: Bethel Island Municipal Improvement District 345,000 105,963 Byron, Brentwood, Knightsen Union Cemetery District 311,000 252,278 Central Contra Costa Sanitary District 142,524,000 23,833,773 First Five - Contra Costa Children & Families Commission 5,246,000 1,611,944 Contra Costa County Employees' Retirement Association 9,934,000 3,052,314 Contra Costa Fire Protection District 228,950,000 33,582,909 Contra Costa Housing Authority 16,316,000 5,054,116 Contra Costa Mosquito and Vector Control District 8,891,000 2,731,974 East Contra Costa Fire Protection District 28,461,000 2,623,989 In -Home Supportive Services Authority 1,955,000 600,798 Local Agency Formation Commission 676,000 207,705 Moraga- Orinda Fire Protection District 46,157,000 7,617,434 Rodeo Sanitary District 609,000 494,509 Rodeo - Hercules Fire Protection District 16,445,000 1,794,995 San Ramon Valley Fire Protection District 122,740,000 19,990,338 Total: $2,279,058,000 $652,312,180 5260966vi/05337 001 SEGAL ­�'"SEGAL THE SEGAL COMPANY 100 Montgomery Streel, Suite 500 San Francisco, CA 94104 4306 T 415 263 8200 F 415 263 8290 www segalco com August 9, 2013 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 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, 2012 actuarial valuation results. Key assumptions and methods are detailed below. It is important to understand that these results are entirely dependent on those assumptions. Actual results as determined in future actuarial valuations will differ from these results. In particular, actual investment returns and actual salary levels different than assumed can have a significant impact on future contribution rates. 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 that are reflected include the asset gains and losses that are funded as a level percentage of the Association's total active payroll base. The changes in contribution rate are due to: (1) deferred gains and losses from the actuarial asset smoothing methodology; (2) gains due to investment income earned on the difference between the Market Value of Assets (MVA) and Actuarial Value of Assets (AVA) (and losses when the opposite occurs); 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 components 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, 2012 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 M c Founding Member of the Multinational Group of Actuaries and Consultants, a global affiliation of Independent firms c Ms Marilyn Leedom August 9, 2013 Page 2 The rate changes shown below represent the average rate for the aggregate plan. Rate Change Component Valuation Date (12/31) 2013 2014 2015 2016 2017 (1) Deferred (Gains) /Losses 0.03% -0.93% -0.43% -0.12% -0.15% (2) (Gain) /Loss of From March 12, 2013 Letter 9,24% 10.02% 9.44% 8.96% Investment Income on -0.12% -0.12% -0.05% -0.02% -0.01% Difference Between through 12/31/2012 and Changes 11.95 %1 12.95% 12.46% 11.98% MVA and AVA in Demographic Assumptions (3) 18 -Month Rate Delay 1.09% 0.56% 0.00% -0.05% -0.03% Incremental Rate Change 1.00% -0.49% -0.48% -0.19% -0.19% Cumulative Rate Change 1.00% 0.51% 0.03% -0.16% -0.35% The difference between these cumulative rate changes and those shown in our March 12, 2013 letter (i.e., previous five -year projection) are as follows: These differences are mainly due to the inclusion of changes in demographic assumptions in the December 31, 2012 valuation. The differences also reflect actual experience from the December 31, 2012 valuation instead of projected experience that was part of the previous projection. The average employer contribution rate as of the December 31, 2012 Actuarial Valuation is 49.82 %, and based on the cumulative rate changes above is projected to progress as shown below. Valuation Date 12/31) 2012 2013 2014 2015 2016 Average Employer Cumulative Rate Change 50.33% 49.85% 49.66% 49.47% Contribution Rate From March 12, 2013 Letter 9,24% 10.02% 9.44% 8.96% 8.75% Reflecting Actual Experience through 12/31/2012 and Changes 11.95 %1 12.95% 12.46% 11.98% 11.79% in Demographic Assumptions Difference 1 2.71% 1 2.93% 1 3.02% 1 3.02% 1 3.04% These differences are mainly due to the inclusion of changes in demographic assumptions in the December 31, 2012 valuation. The differences also reflect actual experience from the December 31, 2012 valuation instead of projected experience that was part of the previous projection. The average employer contribution rate as of the December 31, 2012 Actuarial Valuation is 49.82 %, and based on the cumulative rate changes above is projected to progress as shown below. 1 Actual change in the average employer contribution rate as shown on page 65 of the December 31, 2012 valuation. 5261816v1/05337 001 Valuation Date 12/31) 2013 2014 2015 2016 2017 Average Employer 50.82% 50.33% 49.85% 49.66% 49.47% Contribution Rate 1 Actual change in the average employer contribution rate as shown on page 65 of the December 31, 2012 valuation. 5261816v1/05337 001 Ms. Marilyn Leedom August 9, 2013 Page 3 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 gains 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. 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, 2012 non - economic assumptions remain unchanged. > December 31, 2012 retirement benefit formulas remain unchanged. > December 31, 2012 1937 Act statutes remain unchanged. In particular, these projections do not reflect any potential changes in benefits or contributions due to AB 340 ( "PEPRA ") or AB 197. > UAAL amortization method remains unchanged (i.e., 18 -year layers, level percent of pay). > December 31, 2012 economic assumptions remain unchanged, including the 7.25% investment earnings assumption. > We have assumed that returns of 7.25% are actually earned on a market value basis for each of the next four years after 2012. > Active payroll grows at 4.00% per annum. 5261816v1 /05337.001 Ms. Marilyn Leedom August 9, 2013 Page 4 > Deferred investment gains and losses are recognized per the asset smoothing schedule prepared by the Association as of December 31, 2012. They are funded as a level percentage of the Association's total active payroll base. > 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. > The VI used for these projections is based on the December 31, 2012 Actuarial Valuation and is assumed to stay constant during the projection period. > All other actuarial assumptions used in the December 31, 2012 actuarial valuation are realized. > No changes are made to actuarial methodologies, such as adjusting for the contribution rate delay in advance. > The projections do not reflect any changes in the employer contribution rates that could result due to future changes in the demographics of CCCERA's active members or decreases in the employer contribution rates that might result from new hires going into the PEPRA tiers. Finally, we emphasize that projections, by their nature, are not a guarantee of future results. 1`he 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, 2012 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. The undersigned is a member of the American Academy of Actuaries and meets the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion herein. 52618160105337 001 Ms. Marilyn Leedom August 9, 2013 Page 5 Please let us know if you have any questions. Sincerely, John Monroe AW/hy Enclosure cc: Kurt Schneider 52618160105337.001 C O 7 W N 0 N M c o � = E ,O V I C �o E Y en C (j 6 k G E U W 0 U � c o .e UU !0 Y C O U O CL E W a E W ❑ vr'iagr ee ee O Mrf b VI e:• eee .N., f3 S R O -49; ..�04 G a a .73 inN U C a Y g C C' z ❑ � P 9 8 eeqq Z6 y^ N h M N N ^0044 N .NO 9 Q .''.' 4444 it W P 0044 y❑ U e E a G � N V U — u ❑ U � U F e��'�s e_e eyye a_ n °Om e e e ee a eee e _ 0 0 Cj 4 4 c o o 99 U = mt� N V G G n � VsW N W Wadu. 0 2 Y Ch a .'s'a :'e e e e ee n n 0 N a e e e N r ^ .a �m 00000 i7-7 V777 'S iOOrO 00040 r 6 r o F y V W 9 Y N N a V w U a U C o �- :.7 m W �. 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X 0 0 0 0 CCCCC w nSSSS 0 0 0 0 0 m e N �a r _ �'°°°'SSSS 0 0 0 0 0 e ° w a;°gaa a.0 4 0 U U U U U it S S 11 it a > L B O S S E `ae�� e e e e e eeeee L Y Y Y 4 w >�rY EEY�me 99999 g 9 9y E E y E 6 E E E GO�. 7.Z +�47W+7 tr7 UUU UU ti Z L c of O Y O'. 9 K W J a W N 0 0 M M Ln 0 N -�rSEGAL 100 Montgomery Street Suite 500 San Francisco, CA 94104 -4308 T 415 263 8260 F 415 263 8290 www segalco.com August 9, 2013 Ms. Marilyn Leedom Chief Executive Officer Contra Costa County Employees' Retirement Association 1355 Willow Way, Suite 221 Concord, CA 94520 Re: Contra Costa County Employees' Retirement Association Employer Contribution Rate Reconciliation by Cost Group December 31, 2012 Actuarial Valuation Dear Marilyn: John W. Monroe, ASA, MAAA, EA Vice President & Associate Actuary jmonroe @segalco corn As requested, we are providing a reconciliation of employer contribution rate changes separately for each of the twelve cost groups. The attached exhibit details the changes in the recommended employer contribution rates for each cost group from the December 31, 2011 valuation to the December 31, 2012 valuation. OBSERVATIONS > The average employer rate increased from 37.87% of payroll as of December 31, 2011 to 49.82% of payroll as of December 31, 2012. As discussed in our December 31, 2012 actuarial valuation report, this increase was primarily due to changes in actuarial assumptions and an investment return on actuarial value that fell short of the 7.75% assumed rate. The changes in actuarial assumptions increased the average employer contribution rate by 8.24% of payroll. The investment loss increased the average employer contribution rate by 3.44% of payroll. This loss was allocated to each cost group in proportion to the assets for each cost group. The estimated impact of the assumption changes and the investment loss varies by cost group with the Safety cost groups experiencing larger rate increases. > Note that there were also changes in the employer rates caused by the 18 -month delay in implementation of the contribution rates calculated in the December 31, 2011 valuation, the effect of actual versus expected individual salary increases and the effect of actual versus expected total payroll growth and the effect of net other experience. Benefits, Compensation and HR Consulting Offices throughout the United States and Canada 1161 4 A i_ i Founding Member of the Multinational Group of Actuaries and Consultants, a global affiliation of independent firms Ms. Marilyn Leedom August 9, 2013 Page 2 The undersigned is a member of the American Academy of Actuaries and meets the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion herein. Please let us know if you have any questions. Sincerely, f n Monroe J WL/hy Enclosures cc: Kurt Schneider 5260741 vi /05337.001 H e G o •� w a ° L C N Up L N o e� a L Lr7 O •p v u y 'O a C O p u iy u CC ., ° L G L C L •a E C ° E aui O 7t Y Y n 'L c L Vii W C U vi Z tn r :m y V C U. 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QI M a 0 M O C m 0 M w1 00 of c r O, 00 0 M OO a 00 G �la G O a C C o U a o W ca � E r' Gc7 N 'O d I,y 'O M C L u d E aE) u t� ac ;o e 0 u Ee m c � t °- o � a a W O L ry 4z r t It d N o ) O ) t ,o e f h f c~i O t a r cl C b v tl d N Z 3 h O i i U ) + h e � 4 r u ovi � e � ) N i i u i � 3 � C i h Y ZS J 3 C v E .i c I � 1 h ) 6 i is 3 C In L J Q 7 C i tl i b � t d ou i � U 3 4 u u d J a C7 W cn f`1 O LO r 0 0 Ln V "SEGAL THE SEGAL COMPANY 100 Montgomery Street Suite 500 San Francisco, CA 94104.4309 T 415 263.8200 F 415 263.8290 www.segalco.com August 9, 2013 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 B Asseciatu Actuary jn•onroe @segalco cam Re: Contra Costa County Employees' Retirement Association Unfunded Actuarial Accrued Liability Reconciliation by Cost Group December 31, 2012 Actuarial Valuation Dear Marilyn: As requested, we are providing a reconciliation of the Unfunded Actuarial Accrued Liability (UAAL) separately for each of CCCERA's cost groups. The attached Exhibit presents the changes in the UAAL by cost group from the December 31, 2011 valuation to the December 31, 2012 valuation. Note that we have combined the results for Cost Group #1 and #2 (County and Small Districts Tier 1 and 3) and Cost Group #7 and #9 (County Tier A and C) as the UAAL for these cost groups is still pooled. The Exhibit shows that the increase in UAAL was primarily due to changes in actuarial assumptions and an investment return on actuarial value that fell short of the 7.75% assumed rate. The investment loss was generally allocated amongst the cost groups based on the valuation value of assets for each cost group. All other elements of the changes in UAAL were determined based on the data specific to each separate cost group. Please let us know if you have any questions. 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C� v v 4 V1 fi O i O b O O fi E d ai V fi m d 4 d d d l J Q W N O 0 a h �O h cS '� 4' Em ees' Fbtirement Association P Y 1355 willow way suite 221 concord rn Q4sgn 925.521.3960 fax: 925.646.5747 August 23, 2013 To All Interested Parties: CCCERA's Board of Trustees meeting on September 4, 2013 will include a discussion of the California Public Employees' Pension Reform Act of 2013 (PEPRA) as it applies to Pensionable Compensation. This subject will be of interest to all employers of the Association. Staff has completed a review of all pay items currently in use by all employers and the potential inclusion or exclusion of those pay items in Pensionable Compensation. The pay items to be discussed in regards to Pensionable Compensation only apply to new members on or after January 1, 2013. The Board will review and discuss the staff findings at this meeting. Please join us for this educational presentation /discussion regarding the pay items under PEPRA for new members on or after January 1, 2013. The Retirement Board administers the fund for the benefit of all member groups. Trustees must weigh the merits of all policies, plus assess the effect these mandates may have on active, retired and employer members. A balanced outlook is imperative; all members are vitally important to system sustainability. We invite you to attend this meeting, ask questions and learn more about these critical subjects. Sincerely, Marilyn Leedom Chief Executive Officer MEL Employees' Fbtirement Association 1355 willow way suite 221 concord ca 94520 925.521.3960 RETIREMENT BOARD MEETING FIRST MONTHLY MEETING 9:00 a.m. September 4, 2013 fax 925.646.5747 Retirement Board Conference Room The Willows Office Park 1355 Willow Way Suite 221 Concord, California THE RETIREMENT BOARD MAY DISCUSS AND TAKE ACTION ON THE FOLLOWING: Pledge of Allegiance. 2. Accept comments from the public. 3. Approve minutes from the June 26 and July 10, 2013 meetings. 4. Routine items for September 4, 2013. a. Approve certifications of membership. b.Approve service and disability allowances. c. Accept disability applications and authorize subpoenas as required. d.Approve death benefits. CLOSED SESSION ** 5. The Board will go into closed session under Gov. Code Section 54957 to consider recommendations from the Medical Advisor and/or staff regarding the following disability retirement applications: Member Type Sought Recommendation a. Julie Raner Service Connected Service Connected 6. The Board will continue in closed session pursuant to Govt. Code Section 54956.9(a) to confer with legal counsel regarding existing litigation : a. Contra Costa County Deputy Sheriffs Association, et al., v. CCCERA, et al., Contra Costa County Superior Court, Case No. N12 -1870. 7. The Board will continue in closed session pursuant to Govt. Code Section 54956.9(b). OPEN SESSION The Retirement Board will provide reasonable accommodations for persons with disabilities planning to attend Board meetings who contact the Retirement Office at least 24 hours before a meeting. 8. Consider and take possible action to direct staff on pay items beyond base pay for PEPRA tiers. Consider and take possible action to direct staff regarding pay items used to enhance the final retirement benefit. 10. Consider and take possible action to cause an election to be held to fill the vacancy in the seventh member seat. 11. Consider and take possible action regarding the investment consultant for CCCERA. 12. Presentation of Administrative expenses: Budget vs. Actual as of June 30, 2013. 13. Consider and take possible action on SACRS Voting Proxy. 14. Consider and take possible action to reschedule the October 9, 2013 Board Meeting. 15. Consider authorizing the attendance of Board and/or staff: a. Investment Fundamentals, PIMCO, September 19 -20, 2013, Newport Beach, CA. b. Fall Conference, CRCEA, October 21 - 23, 2013, Fresno, CA. c. Fall Conference, SACRS, November 12 - 15, 2013, Indian Wells, CA. 16. Miscellaneous a. Staff Report b.Outside Professionals' Report c. Trustees' comments The Retirement Board will provide reasonable accommodations for persons with disabilities planning to attend Board meetings who contact the Retirement Office at least 24 hours before a meeting. NTRA . COSTA COUNCOiY E Employees' Retirement Association MEMORANDUM Date: September 6, 2013 To: CCCERA Employers From: Kurt Schneider, Retirement Deputy Chief Executive Officer Subject: Pensionable Compensation for PEPRA Tiers This is an update regarding pensionable compensation for PEPRA Tiers. On December 21, 2012, CCCERA advised all employers to report as pensionable and collect contributions only on PEPRA members' base pay. After consideration and analysis of all pay items beyond base pay ( "differentials "), the CCCERA Board determined on September 4, 2013 that no additional differentials will be included in pensionable compensation. All employers should continue to report to CCCERA as pensionable, and collect contributions on, base pay only. No pay items beyond base pay will be used in the calculation of the retirement benefit for members covered by the PEPRA benefit formulas. Please contact me with any questions regarding this memorandum. 1355 Willow Way Suite 221 Concord CA 94520 925.521.3960 FAX: 925.646.5747 www.cccera.org I�IRA COSTA �_ -ERA COCOLJIVlY _.. Employees' Retirement Association RETIREMENT BOARD MEETING SECOND MONTHLY MEETING 9:00 a.m. September 11, 2013 Retirement Board Conference Room The Willows Office Park 1355 Willow Way, Suite 221 Concord, California * * * ** *AMENDED * * * * ** THE RETIREMENT BOARD MAY DISCUSS AND TAKE ACTION ON THE FOLLOWING: Pledge of Allegiance. 2. Accept comments from the public. Review of total portfolio performance including: a. Consideration of any managers already under review or to be placed under review. b. Consideration of any changes in allocations to managers 4. Consider and take possible action on the International Value Equity Semi - Finalist Report. Consider and take possible action on the Small to Mid -cap Private Equity Semi - Finalist Report. 6. Presentation from Paulson & Co, Inc. Real Estate Fund II. Consider and take possible action on staff recommendation regarding Paulson & Co, Inc. Real Estate Fund II. Consider authorizing the attendance of Board and/or staff: a. Trustees' Roundtable, CALAPRS, September 13, 2013, San Jose, CA. b. 23`d Annual Northern California Public Retirement Seminar, The Public Retirement Journal, September 26, 2013, Sacramento, CA. 9. Miscellaneous a. Staff Report b. Outside Professionals' Report c. Trustees' comments The Retirement Board will provide reasonable accommodations for persons with disabilities planning to attend Board meetings who contact the Retirement Office at least 24 hours before a meeting. CONTRA __ COSTA COUNTY Employees' Retirement Association RETIREMENT BOARD MEETING Retirement Board Conference Room FIRST MONTHLY MEETING The Willows Office Park 9:00 a.m. 1355 Willow Way Suite 221 October 2, 2013 Concord, California THE RETIREMENT BOARD MAY DISCUSS AND TAKE ACTION ON THE FOLLOWING: Pledge of Allegiance. 2. Recognition of Nannette Mendoza for 25 years of service. Accept comments from the public. 4. Approve minutes from the July 24, and August 14, 2013 meetings. Routine items for October 2, 2013. a. Approve certifications of membership. b. Approve service and disability allowances. c. Accept disability applications and authorize subpoenas as required. d. Approve death benefits. e. Accept Asset Allocation Report 6. Presentation of Cash Flow report for the 6 months ended June 30, 2013. CLOSED SESSION 7. The Board will go into closed session under Govt. Code Section 54956.9(a) to confer with legal counsel regarding existing litigation : a. Contra Costa County Deputy Sheriffs Association, et al., v. CCCERA, et al., Contra Costa County Superior Court, Case No. N12 -1870. OPEN SESSION Educational presentation from Fiduciary Counsel on Fiduciary Duties. Educational presentation on Brown Act and gift reporting requirements. 10. Consider and take possible action on staff recommendation regarding Lord Abbett. 11. Consider and take possible action on staff recommendation regarding the GSAM Park Account. 12. Consider and take possible action on staff recommendation for an actuarial audit. The Retirement Board will provide reasonable accommodations for persons with disabilities planning to attend Board meetings who contact the Retirement Office at least 24 hours before a meeting. 13. Consider and take possible action to change the date for the November 6, 2013 Board meeting. 14. Consider authorizing the attendance of Board and/or staff: a. Annual Employee Benefits Conference, IFEBP, October 20 — 23, 2013, Las Vegas, NV (note conflict with Board meeting). 15. Miscellaneous a. Staff Report b. Outside Professionals' Report c. Trustees' comments The Retirement Board will provide reasonable accommodations for persons with disabilities planning to attend Board meetings who contact the Retirement Office at least 24 hours before a meeting.