HomeMy WebLinkAbout02-200 - Resolutions RESOLUTION NO. 02-200
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RANCHO CUCAMONGA ADOPTING A RESOLUTION OF
INTENTION TO APPROVE AN AMENDMENT TO CONTRACT
BETWEEN THE BOARD OF ADMINISTRATION, CALIFORNIA
PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY
COUNCIL OF THE CITY OF RANCHO CUCAMONGA
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 21354.4 (2.5% @ 55 Full Formula) for local
miscellaneous members.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Rancho Cucamonga, California that said City Council does hereby give notice of intention to
approve an amendment to the contract between said public agency 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.
Pkam see Bre following page
for formal adoption,certification and signatures
Resolution No. 02-200
Page 2 of 29
PASSED, APPROVED, AND ADOPTED this 201h day of June 2002.
AYES: Alexander, Biane, Curatalo, Dutton, Williams
NOES: None
ABSENT: None
ABSTAINED: None
[L!� We
—
William J. Al an r, Ma r
ATTEST:
Debra J. AdantXMC, City Clerk
I, DEBRA J. ADAMS, CITY CLERK of the City of Rancho Cucamonga,
California, do hereby certify that the foregoing Resolution was duly passed, approved and
adopted by the City Council of the City of Rancho Cucamonga, California, at a Special Meeting
of said City Council held on the 20`h day of June 2002.
Executed this 24`h day of June 2002, at Rancho Cucamonga, California.
D bra J. Adam , MC, City Clerk
Resolution No. 02-200
Page 3 of 29
Ca1PERS
EXHIBIT
California
Public Employees'Retirement System
AMENDMENT
� }�7 ��.
Between the
Board of Administration
California Public Employees' Retirement System
and the
City Council
City of Rancho Cucamonga
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
January 28, 1978, and witnessed January 26, 1978, and as amended effective
September 22, 1980, November 16, 1981, September 26, 1988, April 5, 1996 and
November 2, 2000 which provides for participation of Public Agency in said System,
Board and Public Agency hereby agree as follows:
A. Paragraphs 1 through 11 are hereby stricken from said contract as executed
effective November 2, 2000, and hereby replaced by the following paragraphs
numbered 1 through 11 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.
2. Public Agency shall participate in the Public Employees' Retirement
System from and after January 28, 1978 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.
Resolution No. 02-200
Page 4 of 29
PL'ASE DO NOT SIGN "EXHIS. ;
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. 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. SAFETY EMPLOYEES.
5. The percentage of final compensation to be provided for each year of
credited prior and current service as a local miscellaneous member shall
be determined in accordance with Section 21354.4 of said Retirement Law
(2.5% at age 55 Full).
[Note that a future legislative proposal is being considered which
could amend Government Code Section 21354.4 to make the 2.5% at
55 benefit formula applicable to both active members and inactive
members who have not yet retired. If enacted, this amendment could
have an effect on your agency's actuarial valuation and employer
contribution rates in future years.]
6. Public Agency elected and elects to be subject to the following optional
provisions:
a. Section 20042 (One-Year Final Compensation).
b. Section 21024 (Military Service Credit as Public Service), Statutes
of 1976.
C. Section 21151 (Industrial Disability Retirement For Local
Miscellaneous Members).
d. Section 21427 (Improved Nonindustrial Disability Allowance).
e. Section 21574 (Fourth Level of 1959 Survivor Benefits).
f. Section 20614, Statutes of 1978, (Reduction of Normal Member
Contribution Rate). From September 22, 1980 and until November
16, 1981, the normal local miscellaneous member contribution rate
shall be 0%. Legislation repealed said Section effective September
29, 1980.
Resolution No. 02-200
Page 5 of 29
PLEASE DO NOT SIGN "EXHIC ONLY"
g. Section 20690, Statutes of 1980, (To Prospectively Revoke Section
20614, Statutes of 1978).
7. Public Agency, in accordance with Government Code Section 20834, shall
not be considered an "employer' for purposes of the Public Employees'
Retirement Law. Contributions of the Public Agency shall be fixed and
determined as provided in Government Code Section 20834, and such
contributions hereafter made shall be held by the Board as provided in
Government Code Section 20834.
8. 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 of said Retirement System.
9. 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.
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.
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.
10. 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.
Resolution No. 02-200
Page 6 of 29
it. 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 ADMINISTRATION C by COUNCIL
PUBLIC EMPLOYEES' RETIREMENT SYSTEM OOF RANCHO CUCAMONGA
BY r�\0 BY
KENNETH W. MARZION, CHIEF PRESIDING OFFICER
ACTUARIAL& EMPLOYER SERVI DIVISION
PUBLIC EMPLOYEES' RETIREE SYSTEM
Witness e
-P
Clerk
AMENDMENT
PERS-COW702A 1111ev.M)
Resolution No. 02-200
Page 7 of 29
t CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2000 -
' MISCELLANEOUS PLAN FOR THE CITY OF RANCHO CUCAMONGA
EMPLOYER NUMBER 1172 .
Benefit Description:Section 21354.4,2.5%@55 Full Formula
(Includes All Non-Retired Local Miscellaneous Members)
New CalPERS' Board Resolution Concerning Value of Assets
On June 20,2001,the CalPERS'Board adopted a new resolution concerning the value of assets to be
-- used in determining the employer contribution rate due to benefit increases for amendments to public
agency contracts. This new resolution applies to all contract amendments based upon the June 30,2000
nmml etuatial v Watinn and for wbieh a Resolution of Intention to amend-is filed with CalPERS by
June 30,2002.
This new resolution provides an increase in the actuarial value of assets in the amount of two times the
increase in the Present Value of Benefits. Under the new resolution,the employer has the option of
taking no increase in the actuarial value of assets and allowing the regular asset smoothing method to
operate as it normally would. hon addition,the employer may limit the actuarial value of assets used for
rate setting purposes to 100%of market value if normal application of the resolution would otherwise
exceed this limit. Under no circumstances will an actuarial value of assets in excess of 110%of market
value be utilized. Further,the new resolution will apply to agencies whether or not they utilized the 95%
asset valueofferedin the previous resolution.
The available rate choices are offered under three different Alternatives:
. • Alternative I—No increase in Actuarial Value of Assets . .
• Alternative 2—Actuarial Value of Assets increased by twice the increase in the Present Value of
Benefits due to the amendment,limitedto 100%of Market Value of Assets
• Alternative 3—Actuarial Value of Assets increased by twice the increase in the Present Value of
Benefits due to the amendment,limited to 110%of Market Value of Assets
The employer should carefully consider its choices in choosing its new rate under the options made
available by the new resolution. The recent stock market volatility and the choices created under this
new board resolution can complicate your plan's future financial position. For many plans at CaIPERS,
the financial soundness of the plan will not be jeopardized regardless of the choice made by the employer.
However,it is possible that,for some plans,some choices under the resolution would represent poor
financial decisions. You are strongly encouraged to have in-depth discussions with your CalPERS
actuary about the financial consequences of any amendment.
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.
In this analysis,the increase in the present value of benefits due to the amendment is$7,263,183. Two
times this increase is$14,526,366,or 26.9%of market value of assets. Therefore,under alternative 2,the
actuarial value of assets will be increased to 100.0%of the market value of assets. Under alternative 3,
the actuarial value of assets will be increased to 110.0%of the market value of assets.
January 8,2002 Page 1 of 7
3:09 PM
Resolution No. 02-200
Page 8 of 29
r'
. r
CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2000
MISCELLANEOUS PLAN FOR THE CITY OF RANCHO CUCAMONGA
EMPLOYER NUMBER 1172
Benefit Description:Section 21354.4,2.5%Q 55 Full Formula
(Includes All Non-Retired Local Miscellaneous Members)
As of June 30,2000 Current Plan Post-Amendment Post-Amendment Post-Amendment
Alternative 1 Alternative 2 Alternative 3
-- rk -S--5-3-,95"85—
(MVA)
,(MVA)
Actuarial Value of Assets(AVA) 51,313,926 51,313,926 53,958,085 59,353,894
Increase in AVA 0 2,644,159 8,039,968
AVA I MVA 95.1% 95.1% 100.0% 110.0%
Present Value of Projected $ 54,994,831 S 62,258,014 S 62,258,014 S 62,258,014
Benefits(PVB)
Actuarial Value of Assets(AVA) 51.313.926 51-313,926 53,958 59353.894
Present Value of Future Employer
and Employee Contributions S 3,680905 $ 10,944,088 S 8,299,929 S 2,904,120
(PVB-AVA)
Change to PVB 7,263,183 7,263,183 7,263,183
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 fromthe total present.value of benefits. The
resulting"desirable"level of assets is called the accrued 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 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.
The changes in your plan's accrued liability,unfunded accrued liability,and the funded ratio as of June
30,2000 due to the plan amendment are shown in the table below.
January 8,2002 Page 2 of 7
Resolution No. 02-200
Page 9 of 29
CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2000
MISCELLANEOUS PLAN FOR THE CITY OF RANCHO CUCAMONGA
EMPLOYER NUMBER 1172
Benefit Description:Section 21354.4,2.5%Q 55 Full Formula
(Includes All Non-Retired Local Miscellaneous Members)
As of June 3q 2000 Current Plan Post-Amendment Post-Amendment Post-Amendment
Alternative 1 Alternative 2 Alternative 3
Entry Age Normal Accrued S 34,844,606 S 39,508,810 S 39,508,810 S 39,508,810
Liability(AL)
Actuarial Value of Assets(AVA) 51.313.926 51313.926 53,958,085 59353.894
Unfunded Liability/(Excess $ (16,469,320) S (11,805,116) $ (14,449,275) S (19,845,084)
Assets)(UAL=AL-AVA)
Funded Ratio(AVA/AL) 147.3% 129.9% 136.6% 150.2%
Change to AL 4,664,204 4,664,204 4,664,204
Change to UAL 4,664,204 2,020,045 (3,375,764)
Total Employer Contribution Rate
While the tables above give the changes in the"cost"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.
CalPERS policy is to implement rate changes due to plan amendments immediately on the effective date
of the change in plan benefits. 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 employees
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 10 years. 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.
One aspect of the Board's June 20,2001 Resolution is that,generally,if an agency elects an alternative
which increases the actuarial value of assets(alternative 2 or 3),the result will be a)ower short-term
contribution and a higher longer-term contribution. To illustrate this we have estimated what the impact
might be when the June 30,2001 valuation is prepared. Please be aware this estimate assumes there are
no changes to actuarial assumptions or methods, there are no actuarial gains or losses,and there are no
plan changes such as work force changes and employer paid member contributions converted to pay.
However,we have taken into account CalPERS'June 30,2001 year-end market value rate of return,
-7.2%. The actual employer rate from July 1,2003 to June 30,2004 will be set by the June 30,2001
annual valuation and will likely deviate from this estimate.
January 8,2002 Page 3 of 7
3:09 PM
Resolution No. 02-200
Page 10 of 29
CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2000
MISCELLANEOUS PLAN FOR THE CITY OF RANCHO CUCAMONGA
EMPLOYER NUMBER 1172
Benefit Description:Section 21354.4,2.5%Q 55 Full Formula
(Includes All Non-Retired Local Miscellaneous Members)
The table below shows the change in your plan's employer contribution rate due to the plan amendment.
As of Jame 30,2000 Current Plan Post-Amendment Post-Amendment Post-Amendment
Alternative 1 Alternative 2 Alternative 3
Payment for Normal Cost 7.003% 8.261% 8.261% 9.261%
Payment on Amortization Bases -7.003% -8.122% -8.261% -8.261%
Payment for 1959 survivor 0.000% 0.000% 0.000°/ 0.000%
Benefit Program
Total Employer Rate 0.000% 0.139% 0.000% 0.000%
Change to Normal Cost - 1.258% 1.258% 1.258°%
Change to Tom]Employer Rate 0.139% 0.000% 0.000%
Current Amortization Blatt 23-year
Amendment Amortization Base
-Fresh start' 10-year 13-year 24-year
Multiple Bases N/A N/A N/A
2003-2004
Estimated Employer Rate a 0.0% 1.4% 2.3% 6.5
(recognizing-7.2%investment
return for 2000-2001)
Projection Amortization Base 17-year Multiple Base Multiple Base Multiple Base
1-Details of the current amortization base are shown on page 7 of June 30,2000 annual valuation report If you have adopted any other
subsequent arnendmmu,the current amortization base is the schedule after these adopted amendments.
2- If,fixed numbs of years is shown,it roams that the current unfunded actuarial liability is projected and arrhortized over this fixed nurhber of
years. This mowtintion replaces the amortization schedule shown in your June 30,2000 annual valuation and any other subsequent
amendrrcnts you have adopted-
3- 11720-year is shown,it mans that changes in liability due to plan amendments and changes in actuarial value of assets are amortized
separately over a 20-year period. This amortization schedule is in addition to the arrhortintion schedule shown in the June 30.2000 annual
valuation and any other subsequent ameodnimbs you have adopted. ..
4- Excludes 1959 Survivor Benefit Program rate.
in the above table,the information shown in the 2002-2003 box represents the actual initial contribution
rate that will apply during fiscal 2002-2003 if you adopt the amendment by June 30;2002. However,
these figures do not incorporate the-7.2%investment return in 2000-2001. The estimated employer rates
shown in the 2003-2004 box do take the negative return into consideration and will give you a better
estimate of what to expect in 2003-2004.
Note that the change in normal cost in the table above may be much more indicative of the long term
change in the employer contribution rate due to the plan amendment. The plan's unfunded
liability/excess asset cost 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.
Jarmary 8.2002 Page 4 of 7
Resolution No. 02-200
Page 11 of 29
i CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2000
MISCELLANEOUS PLAN FOR THE QTY OF RANCHO CUCAMONGA -
EMPLOYER NUMBER 1172
Benefit Description:Section 21354A,251/6 Q 55 Full Formula
(Includes All Non-Retired Local Miscellaneous Members)
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. histead,a separate
valuation must be done to provide a cost analysis for the combination of benefit changes. If the proposed
p
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 30,2000 annual valuation(such as the
change to the 90%cap for safety plans)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 CalPERS
actuarial staff have completed the next annual valuation,that is,the annual valuation as of June 30,2001.
If you have not taken action to amend your contract,and we have already mailed the June 30,2001
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 30,2000 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 30,2000 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 CalPERS Board of Administration according to provisions set forth in the
California Public Employees'Retirement Law. The valuation has been prepared in accordance with
generally accepted actuarial practice except that,under a CalPERS Board resolution,an increased
actuarial value of assets may be substituted for the actuarial value of assets that would have been
produced by the current and generally accepted actuarial asset smoothing method described in the annual
report. If your agency elects not to increase the actuarial value of assets permitted by the Board
resolution,then noJexxccepptiioon_exists.
Gale D.Patrick,F.S.A.,M.A.A.A.
Enrolled Actuary
Senior Pension Actuary,CalPERS
Fin Process Ids: Annual-71597 Base-80866 Alt]-80867 A1t2-80868 Alt3-80869
January 8,2002 Page 5 of 7
3:09 PM
Resolution No. 02-200
Page 12 of 29
1'
CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2000 -
MISCELLANEOUS PLAN FOR THE CITY OF RANCHO CUCAMONGA
EMPLOYER NUMBER 1172
Benefit Description: Section 21354A,2.5%@ 55 Full Formula
(Includes All Non-Retired Local Miscellaneous Members)
Summary of Plan Amendments Valued
COVERAGE GROUP 70001
Pre-Amendment
• The Service Retirement benefit calculated for service earned by this group of members is
a monthly allowance equal to the product of the 2%@ 55 benefit factor,years of service,
and final compensation. (Final compensation is reduced by$133.33 per month for
members with a modified formula). The benefit factors for retirement at integral ages are
shown below:
Retirement 2%at 55 Retirement 2%at 55
Age Factor Pte@ Factor
50 1.426% 57 2.104%
51 1.522% 58 2.156%
52 1.628% 59 2.210%
53 1.742% 60 2.262%
54 1.866% 61 2.314%
55 2.000% 62 2.366%
56 2.052% 63 and older 2.418%
• This group of members is required to contribute 7%of reportable earnings. (Members
with a modified formula contribute 7%of reportable earnings in excess of$133.33 per
month).
Post-Amendment
The Service Retirement benefit calculated for service earned by this group of members
(including all non-retired members)is a monthly allowance equal to the product of the
2.5%@ 55 benefit factor,years of service,and final compensation. (Final compensation
is reduced by$133.33 per month for members with a modified formula). The benefit
factors for retirement at integral ages are shown below:
Retirement 2.5%at 55
Age Factor
50 2.000%
51 2.100%
52 2.200%
53 2.300%
54 2.400%
55 and older 2.500%
• This group of members is required to contribute 8%of reportable earnings. (Members
with a modified formula contribute 8%of reportable earnings in excess of$133.33 per
month).
January 8,2002 Page 6 of 7
Resolution No. 02-200
Page 13 of 29
CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2000
MISCELLANEOUS PLAN FOR THE CITY OF RANCHO CUCAMONGA
EMPLOYER NUMBER 1172
Benefit Description:Section 21354.4,2.5%Q 55 Full Formula
(Includes All Non-Retired Local Miscellaneous Members)
Probability of Retirement for New Miscellaneous Benefit Formulas
The introduction of the three new miscellaneous formulas will affect future retirement behavior. As a
result,we developed 3 sets of probability of retirements to reflect the estimated changes in retirement
---patternAtifis go y, .a.,..mpacu:" =y f pn 1 c 'll hav Ac we perform _ __
experience studies in the future,we will modify our retirement assumptions accordingly. The table below
contains the new probability of retirement..
2.5% 55 2.7% 55 3% 60
Retirement a Male Female Male Female Male Female
50 5% 7% 5% 7% 5% 7%
51 2% 5% 2% 5% 2% 5%
52 3% 5% 3%
53 3% 5% 3%
54 4% 5% 4% 6%
55 8% 9%
56 r 1 7%
57 1 6% 8% 7% 8% 7%
58 6% 10% 8% 10% 9% 11%
59 9% 9% 10% 9% 11% 10%
60 16% 12% 17% 13% 19% 15%
61 15% 10% 16% 11% 17% 12%
62 26% 21% 28% 23% 31% 25%
63 22% 18% 23% 20% 26% 22%
64 15% 13% 16% 14% 18% 16%
65 25% 25% 2701. 27%
66 14% 150 15% 16°h 17°h 18%
67 12% 14% 13% 16% 14% 17%
88 12% 11% 13% 12% 15% 1 13%
69 9% 13% 10% 14% 11% 15%
70 100% 100% 100% 100% 100% 100%
].nary 8,2002 Page 7 of 7
°.110➢AA
Resolution No. 02-200
Page 14 of 29
CITY OF RANCHO CUCAMONGA
SUMMARY OF ACTUARIAL VALUATION
PROVIDED BY
CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM
JUNE 20,2002
• Change in Present Value of Benefits $7,263,183
• Increase in Actuarial Value of Assets $ -0-
• Change in Unfunded Accrued Liability $4,664,204
• Change in the Total Employer Rate 0.139%
Suzy of Actuarial Valuation
wow
CITY OF RANCHO CUCAMONGA
MISCELLANEOUS EMPLOYEES SUPPLEMENTAL PLAN
Actuarial Study
JOHN E. BARTEL, Aon Consulting
m
May 30, 2002 0
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Topic Page
Benefit Summary 1
Actuarial Assumptions 3
Actuarial Methods 7
Demographic Information 9
Valuation Results 11
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BENEFIT SUMMARY
■ Eligibility ■ Miscellaneous employees
■ Retire directly from the Ci - Age 56 with 10 years service
■ Benefit ■ Executive Management and City Council - Including car allowance in
pensionable earnings
■ 3% @ 60 @ 10 years service, offset by 2.5% @ 55 benefit using same
service
Net Benefits for 3% @ 60
Age 3%@60 2.5%@55 Net
56 2.600 2.500 0.100
57 2.700 2.500 0.200
58 2.800 2.500 0.300
59 2.900 2.500 0.400
60+ 3.000 2.500 1 0.500
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■ Cost of Living Increases ■ Benefits adjusted same as Ca1PERS (2% COLA) N
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■ Death Benefit ■ None
■ Disability Benefit ■ None, unless eligible to service retire
AM
2
ACTUARIAL ASSUMPTIONS
Assumption Supplemental Plan
■ Interest rate: 7.5%
+1.0%
■ Salary increases:
• Individual Service Ann. Incr.
0- 2 14.20%
3- 7 6.36
8-29 4.80
30+ 3.75
• Aggregate payroll 3.75%
■ General inflation 3.50%
CDC
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Assumption CAPERS Supplemental Plan N
■ Service retirement (3% @ 60) Age Rate Age Rate Age Rate Age Rate o
50 5% 61 17% 50 0 % 61 17%
51 2 62 31 51 0 62 31
52 3 63 26 52 0 63 26
53 3 64 18 53 0 64 18
54 4 65 30 54 0 65 30
55 8 66 17 55 0 66 17
56 7 67 14 56 32 67 14
57 8 68 15 57 8 68 15
58 9 69 11 58 9 69 11
59 11 70 100 59 11 70 100
60 19 60 19
Average retirement age Average retirement age
59.6 60.1
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ACTUARIAL ASSUMPTIONS
Assumption CAPERS Supplemental Plan
■ Termination (including with and First 5 Year Same
without refund and disability) . Svc Rate Svc Rate
0-1 . 6.4% 3-4 6.39
1-211.5 4-5 5.1
2-3 7.9
After 5 Years
Age Rate Age Rate
20 6.0% 45 0.80/
25 3.9 50 0.7
30 2.5 55 0.6
35 1.6 60 0.6
40 1.1
■ Mortality rates Ca1PERS' 1988-1992 Same
Experience Stud
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Future Normal
Costs
F
Current
Normal Cost
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ACTUARIAL METHODS
■ PVB - Projected Value of all Benefits:
• Discounted value, at measurement (valuation date — 1/1/02), of all future expected
benefit payments
• Expected benefit payments based on various (actuarial) assumptions
■ AL — Actuarial Liability:
• Discounted value, at measurement (valuation date — 1/1/02), of benefits earned
through measurement
► Service @ measurement
► Salary, inflation, etc. projected same as PVB calculation
• Portion of PVB "earned" at measurement
■ Normal Cost:
• Discounted value, at measurement (valuation date — 1/1/02), of benefits earned
during coming year
► Service during year
► Salary, inflation, etc. projected same as PVPB calculation
N
• Portion of PVPB "earned" during year E
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■ Cost Method ■ Entry Age Normal
■ Acceptable under GASB 27
■ Same as Ca1PERS
■ Annual Required ■ 20 & 30 year amortization of unfunded actuarial liability
Contribution ■ Level percentage of pay
■ Acceptable under GASB 27
■ Same as CalPERS
8
DEMOGRAPHIC INFORMATION
MISC CCL FPD Total
■ Actives 320 5 14 339
■ Average:
• Age 42.7 55.6 42.5 42.9
• Service 8.9 7.1 7.1 8.8
• Pay 49,982 15,798 49,000 49,437
■ Aggregate Payroll 15,994,000 79,000 686,000 16,759,000
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Service
Age 0-4 5-9 10-14 15-19 1 20-24 1 25-29 30-34 Total No
15-24 Count 13 13
Average Salary 33,632 33,632
25-29 Count 26 2 28
Average Salary 37,362 37,68 37,384
30-34 Count 24 4 34
Average Sal 42,7281 39,004 42,792 42,078
35-39 Coun 24 9 19 2 54
Average S 47,948 43,477 48,210 61,464 47,796
40-44 Count 18 9 26 9 1 63
Average 44,034 38,027 52,407 63,805 32,772 49,277
45-49 Count 19 11 17 7 4 1 59
Average S 50,593 48,62 48,728 71,710 53,568 59,3M 52,543
50-54 Count 7 16 10 11 47
Average Salary 37,3461 93,444 53,2711 62,639 71,9051 1 59,818
55-59 Count 4 4 17 5 2 32
Average Salary 72,678 57,765 52,692 56,710 69,624 57,510
60-64 Count 4 2 1 7
Average Salary 38,413 46,464 92,496 48,440
65-69 Count 1 1 2
Average S 15,438 52,896 34,167
70+ Count
Average Salary-
Total Coun 136 44 104 35 19 1 339
Average S 43,429 47,481 50,315 62,915 66,829 59,39A 49,437
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10
VALUATION RESULTS
■ Present Value of Benefits $7,737,000
■ Actuarial Liability 4,663,000
■ $ Contribution
(20-year amortization)
• Normal Cost $ 315,000
• Amortization 320.000
• Total 635,000
■ Contribution Rate
(20-year amortization)
• Normal Cost 1.9%
• Amortization 1.9
• Total 3.8
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■ $ Contribution o
(30-year amortization) N
• Normal Cost $ 315,000
• Amortization 248.000
• Total 563,000
■ Contribution Rate
(30-year amortization)
• Normal Cost 1.9%
• Amortization 1.5
• Total 3.4
E Interest Rate Sensitivity
(20-year amortization)
• +1.0% (0.5)%
• - 1.0% 0.7
A
12
ACTUARIAL CERTIFICATION
We prepared a June 30, 2002 actuarial study for the City of Rancho Cucamonga PARS
Retirement Enhancement Plan. The employee data and financial information used in this
study were not audited by us. On the basis of our review of the data, we believe that the
information is sufficiently complete and reliable, and that it is appropriate for the purposes
intended.
In my opinion, each assumption used in this valuation is reasonable taking into account the
Plan's experience. The methods employed in this valuation are consistent with generally
accepted actuarial principles and practices.
Therefore, the information as presented in this Study fully and fairly discloses the actuarial
position of the Plan.
John E. Bartel, ASA, MAAA, EA
Vice President
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