HomeMy WebLinkAbout03-025 - Resolutions RESOLUTION NO. FD 03-025
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
RANCHO CUCAMONGA FIRE PROTECTION DISTRICT,
RANCHO CUCAMONGA, CALIFORNIA, ADOPTING A
RESOLUTION OF INTENTION TO APPROVE AN
AMENDMENT TO CONTRACT BETWEEN THE BOARD OF
ADMINISTRATION, CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM AND THE BOARD OF DIRECTORS OF
THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT
WHEREAS, the Public Employees' Retirement Law permits the participation of public
agencies and their employees in the Public Employees' Retirement System by
the execution of a contract, and sets forth the procedure by which said public
agencies may elect to subject themselves and their employees to amendments
to said Law; and
WHEREAS, one of the steps in the procedures to amend this contract is the adoption by the
governing body of the public agency of a resolution giving notice of its intention to
approve an amendment to said contract, which resolution shall contain a
summary of the change proposed in said contract; and
WHEREAS, the following is a statement of the proposed change:
To provide Section 20965 (credit for Unused Sick Leave) for local
miscellaneous members.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Rancho Cucamonga
Fire Protection District that said Board does hereby give notice of intention to
approve an amendment to the contract between the Rancho Cucamonga Fire
Protection District and the Board of Administration of the Public Employees'
Retirement System, a copy of said amendment being attached hereto, as an
"Exhibit" and by this reference made a part hereof.
Please see the following page for
formal adoption,certification and signatures
Resolution No. FD 03-025
Page 2 of 12
PASSED, APPROVED, AND ADOPTED this 16`" day of July 2003.
AYES: Alexander, Gutierrez, Kurth, Williams
NOES: None
ABSENT: Howdyshell
ABSTAINED: None
William J. exander, resident
ATTEST:
rJr
D ra X Ada , Secretary
I, DEBRA J. ADAMS, SECRETARY of the Rancho Cucamonga Fire Protection District, do
hereby certify that the foregoing Resolution was duly passed, approved, and
adopted by the Board of Directors of the Rancho Cucamonga Fire Protection
District, at a Regular Meeting of said Board held on the 16th day of July 2003.
Executed this 17'h day of July 2003 at Rancho Cucamonga, California.
Debra J. Ada , Secretary
Resolution No. FD 03-025
Page 3 of 12
Ca1PERS
EXHIBIT
California
Public Employees' Retirement System
�7
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
Board of Directors
Rancho Cucamonga Fire Protection District
400
The Board of Administration, California Public Employees' Retirement System,
hereinafter referred to as Board, and the governing body of the above public agency,
hereinafter referred to as Public Agency, having entered into a contract effective
February 15, 1975, and witnessed February 12, 1975, and as amended effective June
16, 1979, May 26, 1990, November 21, 1991, November 16, 1995, June 1, 1996,
November 21, 1996, November 2, 2000 and December 1, 2002 which provides for
participation of Public Agency in said System, Board and Public Agency hereby agree
as follows:
A. Paragraphs 1 through 12 are hereby stricken from said contract as executed
effective December 1, 2002, and hereby replaced by the following paragraphs
numbered 1 through 13 inclusive:
1. All words and terms used herein which are defined in the Public
Employees' Retirement Law shall have the meaning as defined therein
unless otherwise specifically provided. "Normal retirement age" shall
mean age 55 for local miscellaneous members and age 50 for local safety
members.
Resolution No. FD 03-025
Page 4 of 12
PLEASE DO NOT SIGN "EXHF�.i Ir ;
2. Public Agency shall participate in the Public Employees' Retirement
System from and after February 15, 1975 making its employees as
hereinafter provided, members of said System subject to all provisions of
the Public Employees' Retirement Law except such as apply only on
election of a contracting agency and are not provided for herein and to all
amendments to said Law hereafter enacted except those, which by
express provisions thereof, apply only on the election of a contracting
agency.
3. Employees of Public Agency in the following classes shall become
members of said Retirement System except such in each such class as
are excluded by law or this agreement:
a. Local Fire Fighters (herein referred to as local safety members);
b. Employees other than local safety members (herein referred to as
local miscellaneous members).
4. In addition to the classes of employees excluded from membership by
said Retirement Law, the following classes of employees shall not become
members of said Retirement System:
a. POLICE OFFICERS.
5. This contract shall be a continuation of the benefits of the contract of the
Alto Loma Fire District and the Cucamonga Fire Protection District,
hereinafter referred to as "Former Agency", pursuant to Section 205672
of the Government Code, Former Agency having ceased to exist and
having been required by law to be succeeded by Public Agency on
February 15, 1975. Public Agency, by this contract, assumes the
accumulated contributions and assets derived therefrom and liability for
prior and current service under Former Agency's contract with respect to
the Former Agency's employees. Legislation repealed said Section
effective January 1, 1988.
6. The percentage of final compensation to be provided for each year of
credited prior and current service as a local miscellaneous member in
employment before and not on or after December 1, 2002 shall be
determined in accordance with Section 21354 of said Retirement (Law
(2% at age 55 Full).
Resolution No. FD 03-025
Page 5 of 12
r'!EASE DO NOT SIGN TXHIBI
7. The percentage of final compensation to be provided for each year of
credited prior and current service as a local miscellaneous member in
employment on or after December 1, 2002 shall be determined in
accordance with Section 21354.4 of said Retirement Law (2.5% at age 55
Full).
a. The percentage of final compensation to be provided for each year of
credited prior and current service as a local safety member shall be
determined in accordance with Section 21362.2 of said Retirement Law
(3% at age 50 Full).
9. Public Agency elected and elects to be subject to the following optional
provisions:
a. Section 21574 (Fourth Level of 1959 Survivor Benefits).
b. Section 20965 (Credit for Unused Sick Leave).
C. Section 20042 (One-Year Final Compensation).
d. Section 21024 (Military Service Credit as Public Service), Statutes
of 1976.
10. Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of prior and future service liability with
respect to local miscellaneous members and local safety members of said
Retirement System.
11. Public Agency shall also contribute to said Retirement System as follows:
a. Contributions required per covered member on account of the 1959
Survivor Benefits provided under Section 21574 of said Retirement
Law. (Subject to annual change.) In addition, all assets and
liabilities of Public Agency and its employees shall be pooled in a
single account, based on term insurance rates, for survivors of all
local miscellaneous members and local safety members.
b. A reasonable amount, as fixed by the Board, payable in one
installment within 60 days of date of contract to cover the costs of
administering said System as it affects the employees of Public
Agency, not including the costs of special valuations or of the
periodic investigation and valuations required by law.
Resolution No. FD 03-025
Page 6of12
C. A reasonable amount, as fixed by the Board, payable in one
installment as the occasions arise, to cover the costs of special
valuations on account of employees of Public Agency, and costs of
the periodic investigation and valuations required by law.
12. Contributions required of Public Agency and its employees shall be
subject to adjustment by Board on account of amendments to the Public
Employees' Retirement Law, and on account of the experience under the
Retirement System as determined by the periodic investigation and
valuation required by said Retirement Law.
13. Contributions required of Public Agency and its employees shall be paid
by Public Agency to the Retirement System within fifteen days after the
end of the period to which said contributions refer or as may be prescribed
by Board regulation. If more or less than the correct amount of
contributions is paid for any period, proper adjustment shall be made in
connection with subsequent remittances. Adjustments on account of
errors in contributions required of any employee may be made by direct
payments between the employee and the Board.
B. This amendment shall be effective on the day of
BOARD OF ADMINISTRATIONr ` . BOARD OF DIRECTORS
PUBLIC EMPLOYEES' RETIREMENTEM RANCHO CUCAMONGA FIRE
` PROTECTION DISTRICT
BY BY
KENNETH W. MA CHIEF PRESIDING OFFICER
ACTUARIAL& YER SERVICES DIVISION
PY ES' RETIREMENT SYSTEM
\CSC,
Witness
�a
Att�1 ,
Clerk
AMENDMENT ERR 1041
PERS-CON-702A(Rev.8\02)
Resolution No. FD 03-025
Page 7 of 12
CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2001
MISCELLANEOUS PLAN FOR RANCHO CUCAMONGA FIRE PROTECTION DISTRICT
EMPLOYER NUMBER 1041
Benefit Description:20965,Credit for Unused Sick Leave
Present Value of Projected Benefits
The table below shows the change in the total present value of benefits for the proposed plan amendment.
The present value of benefits represents the total dollars needed today to fund all future benefits for
current members of the plan,i.e.without regard to future employees. The difference between this amount
and current plan assets must be paid by future employee and employer contributions. As such,the change
in the present value of benefits due to the plan amendment represents the`cost"of the plan amendment.
However,for plans with excess assets some or all of this"cost"may already be covered by current excess
assets.
As of June 30,2001 Current Plan Post-Amendment
Total Assets at Market Value(MVA) $ 2,066,375 $ 2,066,375
Actuarial Value of Assets(AVA) 2,218,634 2,218,634
AVA/MVA 107.4% 107.4%
Present Value of Projected Benefits(PVB) S 2,516,807 S 2,533,964
Actuarial Value or Assets(AVA) 2.218.634 22. 18.634
Present Value of Future Employer and Employee
Contributions(PVB—AVA) S 298,173 S 315,330
Change to PVB 17,157
Accrued Liability
It is not required,nor necessarily desirable,to have accumulated assets sufficient to cover the total present
value of benefits until every member has left employment Instead,the actuarial funding process
calculates a regular contribution schedule of employee contributions and employer contributions(called
normal costs)which are designed to accumulate with interest to equal the total present value of benefits
by the time every member has left employment. As of each June 30,the actuary calculates the
"desirable"level of plan assets as of that point in time by subtracting the present value of scheduled future
employee contributions and future employer normal costs from the total present value of benefits. The
resulting"desirable"level of assets is calledtheaccrued liability.
A plan with assets exactly equal to the plan's accrued liability is simply"on schedule"in funding that
plan,and only future employee contributions and future employer normal costs are needed. A plan with
assets below the accrued liability is"behind schedule",or is said to have an unfunded liability,and must
temporarily increase contributions to get back on schedule. A plan with assets in excess of the plan's
accrued liability is"ahead of schedule",or is said to have excess assets,and can temporarily reduce future
contributions. A plan with assets(AVA)in excess of the total present value of benefits is called super-
funded,and neither future employer nor employee contributions are required. Of course,events such as
plan amendments and investment or demographic gains or losses can change a plan's condition from year
to year. For example,a plan amendment could cause a plan to move all the way from being super-funded
to being in an unfunded position.
May 7,2003 Page I of 6
9:12 AM
Resolution No. FD 03-025
Page 8of12
CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2001
MISCELLANEOUS PLAN FOR RANCHO CUCAMONGA FIRE PROTECTION DISTRICT
EMPLOYER NUMBER 1041
Benefit Description:20965,Credit for Unused Sick Leave
The changes in your plan's accrued liability,unfunded accrued liability,and the funded ratio as of June
30,2001 due to the plan amendment are shown in the table below.
As of June 30,2001 Current Plan Post-Amendment
Entry Age Normal Accrued Liability(AL) $ 1,672,603 $ 1,683,411
Actuarial Value of Assets(AVA) 2.218634 2.218.634
Unfunded Liability/(Excess Assets)(UAL-AL-AVA) $ (546,031) S (535,223)
Funded Ratio(AVA/AL) 132.6% 131.8%
Change to AL 10,808
Total Employer Contribution Rate
While the tables above give the changes in the accrued liability and funded status of the plan due to the
amendment,there remains the question of what will happen to the employer contribution rate because of
the change in plan provisions.
CaIPERS policy is to implement rate changes due to plan amendments immediately on the effective date
of the change in plan benefits. This change is displayed as the"Change to Total Employer Rate"on the
following page. If the contract amendment effective date is on or before June 30,2003,the change in the
employer contribution rate should be added to the employer's current rate. In general,the policy also
provides that the change in unfunded liability due to the plan amendment will be separately amortized
over a period of 20 years from the effective date of the amendment and all other components of the plan's
unfunded liability/excess assets will continue to be amortized separately.
However,your actuary may choose to apply different rules to plans with a current employer contribution
rate of zero. The pre-amendment excess assets in these plans were sufficient to cover the employer's
normal cost for one or more years into the future. A plan amendment will use up some or all of the pre-
amendment excess assets. In order to maintain our goal of providing rates that are relatively stable,while
taking into account known or expected future events,your actuary may decide to spread any remaining
excess assets over a single number of years. This is known as a"fresh start"and will generally be for a
period not less than 15 years,and in no case less than 5 years. You may call your actuary to discuss
further alternative financing options. If the amendment uses up all excess assets and creates an unfunded
liability(i.e.from being ahead of schedule to behind schedule),the total post-amendment unfunded
liability may be amortized over 20 years.
In no case may the annual contribution with regard to a positive unfunded liability be less than the amount
which would be required to amortize that unfunded liability,as a level percent of pay,over 30 years.
The table on the following page shows the change in your plan's employer contribution rate due to the
plan amendment for fiscal 2003-2004.
May 7,2003 Page 2 of 6
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Resolution No. FD 03-025
Page 9 of 12
CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2001
MISCELLANEOUS PLAN FOR RANCHO CUCAMONGA FIRE PROTECTION DISTRICT
EMPLOYER NUMBER 1041
Benefit Description:20965,Credit for Unused Sick Leave
As of June 30,2001 Current Plan Post-Amendment
2003-2004 Employer Rate
Payment for Normal Cost 9.082% 9.211%
Payment on Amortization Bases -7.425% -7.257%
Payment for 1959 survivor Benefit Program 0.000% 0.000%
Total Employer Rate 1.657% 1.954%
Change to Normal Cost 0.129%
Change to Total Employer Rate 0.297%
Current Amortization Basel 15-year
Amendment Amortization Hue
-Fresh Start' N/A
-Multiple Hue' 20-year
2003-2004 Employee Rate
Total Employee Rate 8.000°/ 8.0000/6
Change to Total Employee Rate 0.000%
2004-2005
Estimated Employer Rate 4(recognizing-6% 6.5% 6.8%
investment return for 2001-2002)
Projection Amortization Base Multiple Hue Multiple Base
1—Details of the current amortization base are shown on page 7 of June 30,2001 annual valuation report If you have adopted any other
subsequent amendmmts,the commit amortization base is the schedule after these adapted amendments.
2- If a fixed number of years is sbown,it=.a that the current unfunded actuarial liability is projected and amortzed over this fixed number of
years. This anu rtimfim replaces the amortization schedule shown in your lune 30,2001 annual valuation and any other subsequent
amendments you have adopted.
3- If 20-year is shown,it means that the change in liability due to plan amendments is amortized separately over a 20-year period. This
ano Haman schedule is in addition to the amortization schedule shown in the lune 30,2001 annual valuation and any other subsequent
amendments you have adopted.
4- Excludes 1959 survivor Benefit Program rate.
In the above table,the information shown in the 2003-2004 box represents the actual initial contribution
rate that will apply during fiscal 2003-2004 if you adopt the amendment- However,these figures do not
incorporate the—6%investment return in 2001-2002. The estimated employer rates shown in the 2004-
2005 box do take the negative return into consideration and will give you a better estimate of what to
expect in 2004-2005.
Note that the change in normal cost in the table above may be much more indicative of the long tens
change in the employer contribution rate due to the plan amendment. The plan's payment on
amortization bases shown in the table above is a temporary adjustment to the employer contribution to
"get the plan back on schedule". This temporary adjustment to the employer rate varies in duration
from plan to plan. For example,a plan with initial excess assets being amortized over a short period of
time will typically experience a large rate increase when excess assets are fully amortized. While a plan
amendment for such a plan may produce little or no increase in the employer contribution rate now,the
change in normal cost due to the plan amendment will become fully reflected in the employer
contribution rate as soon as initial excess assets are fully amortized.
May 7,2003 Page 3 of 6
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Resolution No. FD 03-025
Page 10 of 12
CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2001
MISCELLANEOUS PLAN FOR RANCHO CUCAMONGA FIRE PROTECTION DISTRICT
EMPLOYER NUMBER 1041
Benefit Description:20965,Credit for Unused Sick Leave
Disclosure
If your agency is requesting cost information for two or more benefit changes,the cost of adopting more
than one of these changes may not be obtained by adding the individual costs. Instead,a separate
valuation must be done to provide a cost analysis for the combination of benefit changes. If the proposed
plan amendment applies to only some of the employees in the plan,the rate change due to the plan
amendment still applies to the entire plan,and is still based on the total plan payroll.
Any mandated benefit improvements not included in the June 30,2001 annual valuation have not been
incorporated into this cost analysis.
Please note that the cost analysis provided in this document may not be relied upon once the CaIPERS
actuarial staff have completed the next annual valuation,that is,the annual valuation as of June 30,2002.
If you have not taken action to amend your contract,and we have already completed the June 30,2002
annual valuation report,you must contact our office for an updated cost analysis,based on the new annual
valuation.
Descriptions of the actuarial methodologies,actuarial assumptions,and plan benefit provisions may be
found in the appendices of the June 30,2001 annual report. Please note that the results shown here are
subject to change if any of the data or plan provisions change from what was used in this study.
Certification
This actuarial valuation for the proposed plan amendment is based on the participant,benefits,and asset
data used in the June 30,2001 annual valuation,with the benefits modified if necessary to reflect what is
currently provided under your contract with CaIPERS,and further modified to reflect the proposed plan
amendment. The valuation has been performed in accordance with standards of practice prescribed by the
Actuarial Standards Board,and the assumptions and methods are internally consistent and reasonable for
this plan,as prescribed by the Ca1PERS Board of Administration according to provisions set forth in the
California Public Employees' Retirement Law.
441--��4
Gale D.Patrick,F.S.A.,M.A.A.A.
Enrolled Actuary
Senior Pension Actuary,CAPERS
Fin Prmesslds: Annual-103550 Base-128892 Proposal-128893
May 7,2003 Page 4 of 6
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Resolution No. FD 03-025
Page 11 of 12
CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:NNE 30,2001
MISCELLANEOUS PLAN FOR RANCHO CUCAMONGA FIRE PROTECTION DISTRICT
EMPLOYER NUMBER 1041
Benefit Description:20965,Credit for Unused Sick Leave
Summary of Plan Amendments Valued
COVERAGE GROUP 70001
Pre-Amendment
• Benefit not part of Contract Package.
Post-Amendment
• Allows unused sick leave to be converted to Service.
May 7,2003 Page 5 of 6
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Resolution No. FD 03-025
Page 12 of 12
CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2001
MISCELLANEOUS PLAN FOR RANCHO CUCAMONGA FIRE PROTECTION DISTRICT
EMPLOYER NUMBER 1041
Benefit Description:20965,Credit for Unused Sick Leave
COVERAGE GROUP 70002
Pre-Amendment
• Benefit not part of Contract Package.
Post-Amendment
• Allows unused sick leave to be converted to Service.
May 7,2003 Page 6 of 6
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