HomeMy WebLinkAbout04.b. Receive follow-up information on Contra Costa County Employees' Retirement Association (CCCERA) formulasS
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Item 4.b.
Central Contra Costa Sanitary District
January 12, 2018
TO: ADMINISTRATION COMMITTEE
FROM: TEJI O'MALLEY HUMAN RESOURCES MANAGER
REVIEWED BY: ANN SASAKI, DEPUTY GENERAL MANAGER
ROGER S. BAILEY GENERAL MANAGER
SUBJECT: RECEIVE FOLLOW-UP INFORMATION ON CONTRA COSTA COUNTY
EMPLOYEES' RETIREMENTASSOCIATION (CCCERA) FORMULAS FOR
CALCULATING EMPLOYER AND EMPLOYEE CONTRIBUTION RATES
At a previous Administration Committee meeting, staff was directed to provide the Committee with the
methodology that is utilized by CCCERA to determine both the employer and employee contribution rates.
At the December 12, 2017 Committee meeting, when receiving the information on the methodology, the
Committee asked staff to provide additional information. Please refer to Attachment 1, which contains the
Fiscal Year 2017-18 rates as requested.
Attachment 2, provided for your reference, includes the original memo submitted to the Committee on
December 12, 2017.
Staff will be available to answer any questions during the meeting.
ATTACHMENTS:
1. FY 2017-18 Rates
2. December 12, 2017 Memo to Administration Committee
January 12, 2018 Special ADMIN Committee Meeting Agenda Packet - Page 9 of 19
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Attachment 1
FY 2017-18 Pension Contribution Rates
(expressed as a percentage of payroll)
Normal
Costs
Unfunded Actuarial
Accrued Liability (UAAL)
Legacy Employer Basic and COLA
17.08%
36.31%
Legacy Employee (Basic and COLA)
11.85%
0%
PEPRA Employer Basic and COLA
11.70%
36.31%
PEPRA Employee Basic and COLA
11.70%
0%
Calendar Year 2016 OPEB Expense
Normal Costs $2,325,000.00
Expense per Employee $7,881.36
FY 2017-18 Fringe Benefits
(expressed as a percentage of payroll)
Exclusive of OPEB Normal Costs 31.89%
Inclusive of OPEB Normal Costs d 38.97%
January 12, 2018 Special ADMIN Committee Meeting Agenda Packet - Page 10 of 19
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Attachment 2
Central Contra Costa Sanitary District
December 12, 2017
TO: ADMINISTRATION COMMITTEE
FROM: TEJI O'MALLEY, HUMAN RESOURCES MANAGER
REVIEWED BY: ANN SASAKI, DEPUTY GENERAL MANAGER
ROGER S. BAILEY, GENERAL MANAGER
SUBJECT: RECEIVE INFORMATION ON CONTRA COSTA COUNTY EMPLOYEES'
RETIREMENT ASSOCIATION (CCCERA) FORMULAS FOR CALCULATING
EMPLOYERAND EMPLOYEE CONTRIBUTION RATES. CONTINUED
FROM OCTOBER 16, 2017 MEETING.
At a previous Administration Committee meeting, staff was directed to provide the Committee with the
methodology that is utilized by CCCERA to determine both the employer and employee contribution rates.
CCCERA is governed by the California Constitution (Article 16 — Public Finance, Section 17); the County
Employees Retirement Law of 1937 (CERL); the California Public Employees' Pension Reform Act of
2013 (PEPRA), and is subject to various other state and federal laws, including the I ntemal Revenue
Code. CCCERA determines the contribution rates by formulas set forth within CERL, specifically Section
31676.16 for employers and Section 31676.11 (Legacy) and Section 7522.20 (PEPRA) for employees.
Contribution rates are split into the following three components:
1. Employer Normal Costs (Basic and the Cost of Living Adjustment (COLA)) - the amount of
contribution required by the employer to fund the cost allocated to each year of service.
2. Employee Normal Costs (Basic and the Cost of Living Adjustment (COLA)) - the amount of
contribution required by the employee to fund the cost allocated to each year of service.
3. Unfunded Actuarial Accrued Lia>bili U_AAL] - the difference between the actuarial accrued
liability of the plan and the assets of the plan.
To determine the employee "normal costs," CCCERA utilizes the following formulas:
Tier
Formula
Legacy
Basic share: Must provide for an average annuity at age 60 equal to
1/120 of the projected final average salary (FAS).
Cost -of -Living: Half of future Cost -of -Living costs.
PEPRA
Half of the total Normal Cost rate.
December 12, 2017 Regular ADMIN Committee Meeting Agenda Packet - Page 68 of 72
January 12, 2018 Special ADMIN Committee Meeting Agenda Packet - Page 11 of 19
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The legacy employee's basic contribution rate for any given year of service is determined as that
percentage of compensation which, if paid annually from an employee's first year in the retirement system
through to the age of 60, would accumulate to the amount necessary to fund an annuity that is 1/1 20th of
the projected FAS. As an example, the annuity would be $1,000 on a projected FAS of $120,000. This
amount changes every year when CCCERA completes its valuation, which utilizes economic and
demographic assumptions, as well as actual experience, to project the total normal costs associated with
the pension benefit.
Any normal costs that remain after the employee share is calculated is bome by the employer. Based on
the most recent valuation that was completed in December 2016 and projects the Fiscal Year (FY) 2018-
19 rates, the split is approximately 60% to the employer and 40% to the employee. Any COLA
adjustments are split evenly amongst the employee and employer. PEPRA employee and employer
normal costs are split evenly amongst the two parties.
Staff will be available to answer any questions during the meeting.
December 12, 2017 Regular ADMIN Committee Meeting Agenda Packet - Page 69 of 72
January 12, 2018 Special ADMIN Committee Meeting Agenda Packet - Page 12 of 19