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Home My WebLink About12 CALPERS Plan Agenda Item # 12 Public Utility District WORKSHOP To: Board of Directors From: Nancy Waters Date: September 011 2010 Subject: CaIPERS- Actuarial Presentation Required for the Employee-Funded 2.7% @ 55 Plan Amendment 1. WHY THIS MATTER IS BEFORE THE BOARD Government Code requires a presentation to the Board by a certified actuary prior to final adoption of amendment to CalPERS plan. 2. HISTORY The District has been contracted with the California Public Employees Retirement System (CalPERS) with a retirement formula of 2% @ 60 since August, 2004. District employees requested a consideration of an enhanced formula of 2.7% @ 55, with the increased costs being funded by the employees. The cost of the change is 8.908%, as determined by the CalPERS actuarial valuation. All District employees have had the opportunity to vote whether or not to proceed with the the employee- funded improvement; the vote was 59-5 in favor of proceeding. At the July 21 st meeting, the Board approved the CalPERS Resolution of Intent to amend the contract. 3. NEW INFORMATION The next step of this process is required by Government Code Section 7507. This law requires a presentation to the Board by an Actuary to state the impact of the proposed changes upon future annual costs, including normal cost and any additional accrued liability. This Certification of Compliance is required by CalPERS even though the employees have agreed to fund the increased costs. Steven Itelson, an independent Actuarial Consultant (Attachment 1), has been retained to make this presentation to the Board for their review and discussion. CaIPERS has these specific requirements for contract amendments: • A Resolution of Intention must be approved by the Board (approved on July 21, 2010) • Employees must vote (completed in July) • Actuarial presentation to the Board (tonight's workshop) • Adoption of the final resolution (September 18th meeting) 4. FISCAL IMPACT There is no additional cost to the District with this action. All new costs will be borne by the employees. 5. RECOMMENDATION Review and discuss the actuarial presentation. Ga:� /�• Mary Chap n ichael D. Holley Administrative Services Manager General Manager Attachment 1 STEVEN T. ITELSON, F.S.A. CONSULTING ACTUARY RESUME EDUCATION Harvey Mudd College, B.S., Mathematics San Francisco State University, M.A., Mathematics ACHIEVEMENTS AND AWARDS Fellow of the Society of Actuaries Member of the American Academy of Actuaries Enrolled Actuary "Health Care Inflation," long letter to editor, Society of Actuaries' Pension Section News, October 2000. Co-author of "Financing Retiree Benefits in Municipalities," Society of Actuaries' Pension Forum, September 1991 (reprinted from Benefits Law Journal, Winter 1990-91) Published "Selection of Interest Assumptions for Pension Plan Valuation," part of the Society of Actuaries examination syllabus, 1988 (updated 1990) WORK EXPERIENCE Mr. Itelson is a self-employed Consulting Actuary in San Francisco. His areas of expertise are defined benefit pension plans and retiree health benefit funding. He has extensive experience in both public and private plan design, valuation, and experience studies. He worked for Milliman & Robertson, Inc., from 1990 to 1991. Prior to joining M&R, he had nearly 12 years of service with The Segal Company and spent four years with the Wyatt Company. In addition to his actuarial practice, Mr. Itelson has been a part-time community college mathematics instructor since 1991. DESCRIPTION OF THE FIRM Steven T. Itelson, Consulting Actuary, is a sole proprietorship which is a licensed business in San Francisco. The firm was started in April 1991 after Mr. Itelson left Milliman & Robertson. Since its founding, over 95% of revenue has come from the public sector. Mr. Itelson's clients for retiree medical funding studies are shown below. Some of these agencies have had periodic valuations by the firm since 1996. Clients whose work is in progress have not been listed below. Public sector pension and retiree medical programs have been the focus of Mr. Itelson's career for 30 years. He was actuary for Marin County's retirement plan from 1979 to 1990; he served as the Retirement Board's actuary for San Jose Police and Fire from 1983 to 1990 and worked with San Jose management on union negotiations and other issues from 1991 to 1999. Mr. Itelson worked with the California State Teachers' Retirement System and the retirement programs for San Francisco and Oakland City employees. A separate page shows work done on major public sector retirement systems. Mr. Itelson's innovative approaches for partial funding of retiree medical benefits for public plans are described in his article in Pension Forum; he began using these methods in 1984. Castro Valley Sanitary District Citrus Heights Water District City of Lafayette City of Novato City of Santa Cruz East Bay Dischargers Authority El Dorado County Fire El Dorado Hills Fire Department El Dorado Irrigation District Fairfield-Suisun Sewer District Half Moon Bay Fire Healdsburg Unified School District Kingsburg Elementary School District Merced Irrigation District Mid Peninsula Water District Modesto Irrigation District Napa Sanitary District Novato Unified School District Oro Loma Sanitary District Pacifica School District Regional Transportation District(Reno) Rescue Fire Protection District Sacramento Public Library Authority Sacramento Suburban Water District San Mateo Foster City School District San Mateo Union High School District South Bayside System Authority South San Francisco Unified School District Southwest Transportation JPA Stege Sanitary District Stopwaste.org Town of San Anselmo Town of Fairfax Vallejo City Unified School District West County Wastewater District Willows Unified School District MAJOR PUBLIC SECTOR PROJECTS SAN FRANCISCO CITY AND COUNTY RETIREMENT SYSTEM 1998-99 Review of pre-retirement decrements and retiree mortality. Working as subcontractor, I interfaced with System's consulting actuarial firm. 1990 Backup Actuary. Did full reviews of all components of salary scales and family composition assumptions. Changed to market-related asset value. 1987 Helped System implement IRC 414(h)(2)pickup of employee contributions. CALIFORNIA PERS 1985 Supervisory Actuary. Report to Board on IDDA,asset valuation,and other topics. NORTH DAKOTA PERS 1987-90 Supervisory Actuary. Annual valuations, experience analyses, pricing of dozens of benefit improvement proposals. WYOMING RETIREMENT SYSTEM 1987-90 Supervisory Actuary. Annual valuations;priced proposed benefit improvements. MARIN COUNTY EMPLOYEES RETIREMENT ASSOCIATION 1981-90 Supervisory Actuary. Separate valuations for County,small agencies,city,special districts. 1986 First County to recognize contingency reserve in assets,eliminating potential problem with US Health and Human Services that plagued all other 1937 Act Counties in 1989. 1981 First 1937 Act County to use market-related asset valuation method for equities. SAN JOSE POLICE AND FIRE DEPARTMENT RETIREMENT PLAN 1992-99 Worked for City management in negotiations to provide benefit improvements. 1983-90 Supervisory Actuary. Biennial valuations, experience analyses, dozens of benefit improvement pricings. 1989 Convinced Board, City, and bargaining units to change City Code which specified actuarial valuation method that was inherently unstable. 1984 Developed rolling 10-year term funding method for retiree medical, resulting in benefit negotiated for current and future retirees. VARIOUS CITIES, SCHOOL DISTRICTS, AND OTHER AGENCIES 1987 to Date Supervisory Actuary for dozens of valuations of current and proposed retiree health and welfare programs. Enabled employers and bargaining units to negotiate to provide some level of benefits where none existed, and to price existing benefits and possible changes. Reports for school districts includes calculations to comply with Assembly Bill 3141. Note: Projects done prior to April 1991 were as an employee of national actuarial consulting firms.