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Home My WebLink About06. Receive summary of results of July 1, 2016 Other Post Employment Benefits (OPEB) Governmental Accounting Standards Board (GASB) 45 actuarial valuation 6■ central Contra Costa Sanitary District April 25, 2017 TO: HONORABLE BOARD FINANCE COMMITTEE FROM: THEA VASSALLO, FINANCE MANAGER SUBJECT: SUMMARY OF RESULTS OF JULY 11 2010 OTHER POST EMPLOYMENT BENEFITS (OPER) GASB 45 ACTUARIAL VALUATION Jahn E. Bartell of Bartell Associates, LLC prepared the GASB 45 Actuarial Valuation Results as of July 1 , 2010 and reviewed the results with finance staff. Highlights of the valuation are discussed in this memo and the attached tables and includes historical and projected data. A key of acronyms and terms are located at the end of this memo. An actuarial study is required every two years under current GASB 45 rules. Actuarial assumptions include investment gains or losses using 5-year smoothing, discount rate, cost of retiree benefits, mortality, and number of retirements, terminations and disabilities. These factors can impact the calculation when actual results differ from projections made in the prior actuarial calculation. GASB Statement No. 45 set rules for computing the employer's expense for retiree benefits other thanp ension, called Other Post-Employment Benefits (OPEB). The calculations are similar to those used for pension valuation reports. The actuarially determined contributions (ADC) of the employer, represents a level of funding that, if paid on an ongoing basis, is projected to cover normal annual costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The current valuation includes the Board direction given at the November 10, 2015 workshop to reduce the amortization period from 22 to 18 years. The District uses the Level Dollar method to calculate ADC, keeping the annual ADC amount fairly consistent from year to year. The ADC calculated as of 71112015 is used for two y budget ears: FY 2017-18 and FY 2018-19. The ADC is made up of retiree g medical, dental and life insurance premiums paid-as-we-go and a component for future OPER expense. The ADC has decreased sli htly from $7.866 million in the 71112014 report to $7.524 million as of 7/1!2010. This is mainly due to higher earnings on PARS trust assets and savings in retiree insurance premiums compared to the 711114 actuarial report projections. The attached summary illustrates the four components that make up the Present Value of Benefits. Thep ie charts show that our PARS trust assets are increasing and the unfunded liability is decreasing. It also shoves the Market Value of Assets in the PARS NAAccount1ng\GMTEMP1\GASB 4512016-board comm report and review\Memo Board Finance Committee 3.8.17 draft.docx Trust. More detailed investment information is reviewed with the Finance Committee quarterly. Other Issues Going Forward: 0 Similar to the recently adopted GASB Statement No. 68, which required agencies to record the net pension liability on the Statement of Net Position along with other valuation calculation requirement changes, GASB Statement No. 75, effective for FY 2017-18, will require agencies to record unfunded OPEB liabilities on the Statement of Net Position. Staff is staying abreast of these new requirements and will update the Board when more specifics are known. 0 Blended premiums create an implied subsidy. Several employers use blended premiums and the practice is not uncommon. Active employee and early retiree premiums are blended (costs averaged into one rate for both groups). Generally, healthcare costs increase with age. Active employee premiums subsidize retiree premiums when the two premium amounts are blended. Because some active and retired employees, depending on Tier, must pay a portion of their healthcare premiums, consideration should be given to the current blended rate practice. Changing District premiums to unblended full cost rates by group is a more accurate and equitable method. Early retiree premiums will increase and active employee rates will decrease, and total premiums of both groups combined remain unchanged. Please contact me if you would like a copy of the full actuarial report or if you have any questions subsequent to today's meeting. OTHER POST EMPLOYMENT BENEFITS (OPEB)/GASB45 TERMS -ACRONYM KEY AAL ACTUARIAL ACCRUED LIABILITY AOC ANNUAL OPER COST ADC ACTUARIALLY DETERMINED CONTRIBUTION (PREVIOUSLY KNOWN AS THE ANNUAL REQUIRED CONTRIBUTIONS-ARC) AVA ACTUARIAL VALUE OF ASSETS MVA MARKET VALUE OF ASSETS FNC FUTURE NORMAL COST NC NORMAL COST NOO NET OPEB OBLIGATION PVPB PRESENT VALUE OF PROJECTED BENEFITS _UAAL UNFUNDED ACTUARIAL ACCRUED LIABILITY N:\Accounting\GMTEMP1\GASB 45\2016-board comm report and review\Memo Board Finance Committee 3.8.17 draft.docx July 1,2016 CIPEB Actuarial Report Highlights Central Contra Costa Sanitary District Summary of Cather Post Retirement Benefit(OPEB)Actuarial Results Current Actuarial Report dated 7/1/7816 and Two Prior Valuations Conducted Every Two Years Per GASB 45 Rules ,000 omitted Present Value of Benefits(PVB) Present Value of Benefits�PVB] Present Value of Benefits(PVB) � � i/2012 7/1/2014 7/1/2016 10% 2% 10� I —i 12% 20% f CC i 2) j / P {' ■ / 1 1 4T i3 E R i iii 3 • r a. • s + • ■Future Normal Casts(FNC) ■Future Normal Casts(FNC) Future Normal Costs(FNC) Normal Cast(NC) ■Normal Cast INC) a Normal Cost(NC) iW Actuarial Value of Assets(AVA) Actuarial Value of Assets(AVA) * - ( Actuarial Value of Assets(AVA) j ,, •-, i Unfunded Actuarial Accrued Liability(UAAL) unfunded Actuarial Accrued Liability(UAAL) unfunded Actuarial Accrued Liability(UAAL) -- ------ %Change 2016 to 87/01/12 07/01/14 07/01/2016* 2012 Future Normal Costs (FNC) $ 11,268 $ 1.21,619 $ 13,498 19,79°% Normal Cost (NC) 21134 2137.5 2,440 14.34% Actuarial Value of Assets(AVA) 22,451 33,695 43.0811 94.88% Unfunded Actuarial Accrued Liability(UAAL) 78,017 70`209 55,547 -28.42% Present Value of Benefits(PVB) $ 113,900 $ 11.8,848 $ 1.1.5,596 1.49% Actuarial Accrued Liability(AAL) $ 100,498 $ 103,904 $ 99,658 -0.84% AVA Funded Percent 22.4% 32.4% 44.0% 96.52% Participant Statistics: Active Participants: 242 259 279 15.29% Average Age: 46.2 46.0 46.5 0.65% Retiree Participants: 241 249 248 2.90% Average Age: 67.3 68.x. 69.4 3.12% *In the actuarial valuation report for July 1,2016(dated 2/17/17)the amortization was lowered to 18 years as a result of the November 2016 Board Workshop Other Post Employment Benefits(OPER)-Summary of Market Value of Investments and Earnings IACtLial Projected Projected CCCSD-Staff __ Fiscal Year District Books: - 2013-2014 2+014-2015 2015-2016 2016-2017 2017--2018 2018-20119 Beg.Market Value of Investments(MVA) $ 29,352,833 36,131,536 39,917,736 42,703 47,942,854 52,566,595 Actual PARS Trust Contributions 2,828,400 2,810,000 2,631,600 2,528,700 1,578,000 1,578,000 Ea rni ngs,net 3,950,303 _ 976,200 153,818 2,711,000 3,045,741 3,334,725 Ending MVA $ 36,131,536 39,917,736 47,703,154 47,942,854 52,566,595 57,479,320 Approximate Annual Retu rnl 13.50% 2_8OXIO 0.50% 6.2 5 W. 6.25% 6.25% ccb 04/17/17 11:04 AM N:\Accounting\GMTEMP1\GASB 45\2016-board comm report and review\Tahles-highlights for heard fin comm 7-1-16 report.xisx COMBINED TABLES