2006/06/13 City Council Resolution (5)RESOLUTION NO. 2006-153
RESOLUTION OF THE COUNCIL OF THE CITY OF ROHNERT PARK
APPROVING AMENDMENT NUMBER 1
TO TASK ORDER NO. 2005-11
WITH
WINZLER & KELLY ENGINEERS
FOR AUTHORIZATION OF ENGINEERING SERVICES FOR PUBLIC
FACILITIES FINANCE PLAN UPDATE CITY PROJECT #2004 -20
WHEREAS, On July 26, 2005 the Council authorized and directed Winzler &
Kelly to perform the work shown in Task Order 2005 -11.
WHEREAS, Since that time the City has requested additional work be performed
and added additional services to the Scope of Services in Task Order 2005 -11. The
additional items are for a Post - Retirement Health Program Actuarial Valuation and
Actuarial Services for Ca1PERS coverage,
WHEREAS, These items are necessary for the analysis of funding for
maintenance and service for new development. The additional items authorized are
presented in Attachment "A" to the amended Task Order.
WHEREAS, Winzler and Kelly Consulting Engineers has been managing the
Public Facilities Finance Plan Program since its inception and will be able to manage the
additional work efficiently;
NOW, THEREFORE, be it resolved by the City Council of the City of Rohnert
Park that Task Order No. 2005 -11 with Winzler and Kelly Consulting Engineers for the
Public Facilities Finance Plan Update be amended and increased in an amount not to
exceed $14,375 is approved,
DULY AND REGULARLY ADOPTED this 13 day of June, 2006.
ATTEST:
CITY OF ROHNERT
tyor
BREEZE: AYE FLORES: AYE MACKENZIE: AYE VIDAK- MARTINEZ: AYE SMITH: AYE
AYES: (5) NOES: (0) ABSENT: (0) ABSTAIN: (0)
AMENDMENT NUMBER 1
TO TASK ORDER NO. 2005-11
CITY OF ROHNERT PARK
AND
WINZLER & KELLY CONSULTING ENGINEERS
AUTHORIZATION OF ENGINEERING SERVICES
FOR PUBLIC FACILITES FINANCE PLAN UPDATE
CITY PROJECT # 2004 -20
SECTION 1— PURPOSE
To amend Task Order 2005 -11 for the Public Facilities Finance Plan Update for
additional work to be performed and added additional services to the Scope of Services.
Authorizing Winzler & Kelly to proceed with the Post - Retirement Health Program Actuarial
Valuation and Actuarial Services for CalPERS coverage in accordance with the provisions of the
MASTER AGREEMENT between the City of Rohnert Park ( "City ") and Winzler & Kelly
( "Consultant ") hereto dated July 26, 2005.
SECTION 2 — SCOPE OF WORK
The items authorized by this Task Order are presented in Attachment "N'— Scope of
Services.
SECTION 3 — COMPENSATION AND PAYMENT
Compensation shall be as provided in the AGREEMENT between the parties hereto
referenced in SECTION 1 above. The total cost for services as set forth in SECTION 2 shall be
actual costs (time and materials) based on Consultants' standard labor charges in accordance with
the provisions of the AGREEMENT for an amount not -to- exceed $14,375, which include the
fees proposed by the Actuarial Consultant and Winzler & Kelly's markup on the sub - consultant.
SECTION 4 — TIME OF PERFORMANCE
The work described in SECTION 2 shall be completed during Fiscal Year 2005/06.
SECTION 5 — ITEMS AND CONDITIONS
All items and conditions contained in the AGREEMENT for professional services
between City and Consultant are incorporated by reference.
Approved this 13'h day of June, 2006.
CITY OF ROHNERT PARK
Stephen R. Donley, City Manager
Per Resolution No. 2006- adopted
by the Council on June 13, 2006
ATTEST:
City Clerk
WINZLER & KELLY ENGINEERS
(Date) Marc Solomon, Regional Manager (Date)
'Attachment A'
Proposal: Post - Retirement Health Program Actuarial Valuation
Citv of Rohnert Park
Oliver Consulting
104 Caledonia St., Suite A
Sausalito, CA 94965
(415)- 331 - 5784
July 18, 2005
TABLE OF CONTENTS
1 Project Description
1.1 Purpose- .................. ........... ............. - ............. ........ .......... ...................... 1
1.2 Description of Program .................. --- ....... ........... ..................... ..............
..._....1
2 Approach
2.1 Actuarial Assumptions .......................................................... ..............................2
2.2 Actuarial Funding Method ..................................................... ..............................3
23 Project Plan .......... .................................................... ..................... . . . .. .........3
2.4 Deliverables and Report ........................................................ ..............................4
3 Qualifications and References
3.1 Qualifications ......................................................................... ..............................5
3.2 References .............................................................................. ..............................6
4 Timing and Fees
4.1 Timing .... ............................... ............................................... ..............................7
4.2 Fees ........................................................................................ ..............................7
Appendix A
Project Plan Chart
Oliver Consulting Page 1
City of Rohnert Park Post - Retirement Health Plan
Project Description
1.1 Pill-pose
The purpose of the actuarial valuation of the post - retirement health and life insurance
program is to determine the unfunded actuarial accrued liabilities associated with the
program and appropriate funding levels. It has been two years since the last valuation,
which was conducted by Oliver Consulting based on July 1, 2003 data. The new
valuation would take into account significant developments during the intervening years
including (l) Medicare D prescription drug coverage, (2) final Government Accounting
Standards Board standards for public employer reporting for post - retirement health and
life insurance programs (GASB Statement No. 45), (3) the impact on anticipated
retirement patterns of the new CalPERS retirement benefit formulas starting July 1, 2007,
(4) changes in CalPERS actuarial assumptions that serve as a basis for many of the
actuarial assumptions used in the valuation, and (5) changes to the City's dental and
vision plans.
1.2 Description of Program
The program includes medical, dental, vision and life insurance coverages.
Health Coverage
Upon retirement for service or disability or upon death while employed, employees of the
City who meet certain criteria may continue health coverage under the City's medical,
dental, and vision plans for themselves and their eligible dependents. The City pays
portions of the premiums.
Plan 1 is applicable to all retirees hired before July 1, 1993 and generally requires 10
years of continuous City service. Retirement must be directly from service with a
CaIPERS pension. In this case, the City pays the cost of the lowest- premium medical
coverage and the entire cost of the dental and vision plans for the retirees, their spouses,
and their dependent children.
Plan 2 is applicable to retirees hired on or after July 1, 1993 and also generally requires
l 0 years of continuous City service and the other requirements outlined above. It provides
the same benefits outlined in Plan 1, but the City pays a percentage of the premiums paid
under Plan l based on continuous City service (50% for 10.00 -14.99 years, 65% for
15.00 -19.99 years, 80% for 20.00 -2499 years, and 100% for 25 years or more.
Additional Benefits are payable to certain Key Management retirees and beneficiaries.
Benefits are also payable to retired City Council members who meet certain criteria,
including being sworn in to the Council prior to November 10, 1992.
Oliver Consulting Page I
City of Rohnert Park Post- Retirement Health Pl(m Proposal
Approach
Our approach to performing the valuation is described below.
2.1 Actuarial Assumptions
The actuarial assumptions are the foundation of an actuarial valuation. In the case of a
health plan valuation these assumptions are particularly important due to the sensitivity of
the results certain assumptions (for example: rates of increase in medical premiums,
interest rates, and retirement age).
The assumptions may be divided into two categories -- economic assumptions and
demographic assumptions.
Economic Assumptions
Interest Rate
Inflation Rate
Rate of Increase in Medical Premiums
Rate of Increase in Dental Plan Costs
Rate of Increase in Vision Plan Costs
Demographic Assumptions - Before Retirement
Withdrawal
Disablement
Death
Service Retirement
Demographic Assumptions - After Retirement
Death
Other Significant Demographic Assumptions
Percent of Employees Married at Retirement
Medicare Eligibility
We will review the demographic assumptions used in the prior study and make
adjustments as necessary based on the new CaIPERS assumptions, Rohnert Park's
experience, and the new CAPERS retirement benefit formulas_
The interest rate and inflation rate assumptions will be derived so that they are consistent
with each other and reflect anticipated future Iong -term trends. Assumptions used for
these purposes by other public employers in the state, and nationwide, will also be taken
into account in this process, as will the requirements of Government Accounting
Oliver Consulting Page 2
City of Rohnert Park_ Post - Retirement Hecdth Flan Proposal
Standards Board (GASB) Statement No. 45 regarding post retirement health and life
Insurance programs.
Kates of increase in future medical, dental, and vision premiums will be based on historic
and anticipated future experience of the health plans covering Rohnert Park personnel and
retirees. Historic and anticipated future national trends will be taken into account as well
as plan - specific experience. Particular attention will be paid to recent increases in medical
premium rates.
Both our economic and demographic assumptions will be reviewed with the City prior to
commencement of the study.
In addition to the above assumptions, base average claim cost figures will be determined
for the dental and vision plans. These will be used as the starting point for our
projections. These base claim cost figures will take into account the changes in the plans'
designs as well as past experience under the plans.
We will also take into account the estimated impact of Medicare D.
2.2 Actuarial Funding Method
Actuarial funding methods are used to spread the estimated costs of the program over
each employee's career with the City. Different methods spread costs in different ways
for instance as a level percentage of the employee's pay or as the actuarial present value
of the portion of benefits considered earned in each year.
We will use the "Entry Age Normal Cost" nlethod.in the study. This method has as its
goal allocating costs between the past and the future as a level percentage of employee's
pay.
The portion of the estimated cost allocated to the employee's service in the coming
year is called the "normal (or current service) cost ". The difference between the
accumulated value of past normal costs and the reserve allocated to the program is
called the "unfunded actuarial accrued liability ". This amount is generally paid off
over a number of years like a mortgage.
2.3 Project Plan
The steps involved in the study are shown on the chart in Appendix A.
Oliver Consulting Page 3
CiIE 0 f Park _ _ Post= Retirem.eni Health Plan Prot�osal
2.4 Delivei-ables and Report
A report will be prepared, similar in format to our prior report. If will include:
Summary of demographic data
Description of the program, Nvith examples
The unfunded actuarial accrued liability) and recommended contribution rates
Analysis of factors influencing changes in results since the last valuation
Government Accounting Standards Board Statement No. 45 disclosure
Sensitivity of overall results to changes in the assumptions regarding
Interest rate, and
Future increases in medical premiums
A description of the actuarial assurrtptions and methods underlying the calculations.
I See Section 2.2 for definition of unfunded actuarial accrued liability.
Oliver Consulting Page 4
City of Rohnert Park Post - Retirement Health Mai Proposal
Qualifications and References
3.1 Qualifications
Responsibility for these actuarial services will rest with Marilyn Oliver, FSA.
Marilyn Oliver, F.S.A., E.A. has practiced over 25 years as a consultant in the
retirement and other post- retirement benefits area.
Over the course of her career she has conducted numerous valuations, experience studies,
and special studies for public systems, including special funding and design studies for
new retirement plan tiers, alternate post - retirement cost -of living arrangements, early
retirement incentive programs, and post - retirement health plan studies. Public sector
entities for which she has performed services include: the City of Brisbane; City of
Petaluma,. Marin County, Tulare County, and the State of Washington.
hi the private sector she has performed similar funding, design, and experience studies.
She has served both as a consultant for clients such as American Ultramar (Beacon Oil)
and Chronicle Companies and as an in -house actuary for Pacific Telesis Group; the
former Bell Operating Company covering California and Nevada. While at Pacific Telesis
Group Ms. Oliver conducted numerous studies in the post - retirement medical plan area —
including studies of the Company's unfunded liability for post - retirement medical, studies
used to determine health plan reimbursement from AT &T as part of divestiture, and a
large study of age and sex specific historic claims rates.
She has appeared before public boards and been a speaker at a variety of actuarial
functions, including Society of Actuaries meetings, Enrolled Actuaries annual meetings,
the Western Pension Conference, and the San Francisco Actuarial Club. Topics upon
which she has spoken have included funding post - retirement medical plans using 401(h)
accounts, mortality tables and trends, and retirement plan design. and funding. She is a
past president of the San Francisco Actuarial Club.
Ms. Oliver is a past Chair of the Society of Actuaries Retirement Systems Professional
Development and Education Committee and the Society of Actuaries Pension Section.
She was active in the development of the 1994 Uninsured Pensioner Mortality Table, a
nationwide table for pensioner mortality.
Ms. Oliver graduated from the University of Arizona with a Master of Arts Degree in
Mathematics.
Oliver Consulting Page 5
Cit , of Rolnzerl Park _ Post - Retirement Health Plan Proposal
3.2 Refet-ences
Mr_ Michael J. Smith
'Treasurer
County of Marm
3501 Civic Center Drive, Room 200
San Rafael, California 94903
(415)- 499 -6140
Project: Special Actuarial Valuations and Reviews
Mr. Fred Malmlund
Business Manager
Aptos /La Selva Fire Protection District
6934 Soquel Drive, Aptos, CA 95003
831 -685 -6690
t'i-oject: Post - retirement Medical Program Study
Ms. Jane Sakson
Budget Analyst
Office of Financial Management
P.O. Box 43113
Olympia, Washington 98504 -3113
Phone: 360- 902 -0549
Project: Special Costing regarding Washington State Retirement Systems
Oliver Consulting Page 6
Rolnzert Park Post- Retirenaenf Health Playa Proposol
Timing and Fees
4.1 Tinging
The timeline is shown on the Project Plan in Appendix A.
4.2 Fees
Hourly rates and a total not -to- exceed cost are shown below.
Hourly rates:
Marilyn Oliver $ 180- ! hour
Peer Review $ 180 /hour
Actuarial Support $ 75 / hour
Estimated Fees:
Estimated fees for the project are from $7,500 to $9,000. These fees include 3 meetings in
I obncrt Park and are inclusive of all expenses. The not -to- exceed cost is $9,000.
Oliver Considling Page 7
City of Rohnert Park
1. Meetin $
Planning Meeting
2. Data Compilation
Gather Financial Data and individual
Employee and Retiree
Demographic Data
Process Demographic Data
Set
Actuarial Assumptions
Valuation
4. Report
Program and Test
Valuation Software and Summary Excel Spreadsheets
Run Valuation Software
and
Summarize Results
Review and Analyze
Results
Week 3
Week 4
Prepare
Draft Report
Review
Draft Report
6 Week 7
Agenda of Initial
Planning Meeting
1. Scope of Project
2. Data Sources
3. Actuarial Assumptions
4. Actuarial Methods
Final Report
Completed after review
of draft report by City
Not Included on Chart,
but Included in Fee Quote
Two additional meetings
Oliver Consulting Appendix A
OLIVER CONSULTING
CONSULTING ACTUARIES
I04 CA I.E DON IA STR EKT, SUITE, A
SAUSAIATO, CALIFORNIA 94965
415- 331 -5784, VOICE
415- 331 - 0559, FAX
August 30, 2005
Charlie Yanucil
Senior Planner
Winder & Kelly Consulting Engineers
495 Tesconi Circle
Santa Rosa, CA 95401 -4696
Re: Actuarial Set-vices for Rohnert Park's CalPERS Covera
Dear Mr. Yanucil:
This letter outlines actuarial services and associated fees.
_r6ect_Descri Description
The project consists of calculating estimated contribution rates for Rohnert Park's coverage
under the California Public Employees Retirement System (CaIPERS). Contribution rates are
calculated separately for Miscellaneous and Safety members.
Fees
Fees, inclusive of expenses, are estimated at $2,000 to $3,500. Actual fees will be billed at $180
per hour for Marilyn Oliver's time and for peer review and $75 per hour for actuarial support,
but will not exceed $3.500.
Should you have any questions please call.
Sincerely,
Marilyn M. Oliver, F.S.A.
Actuary and Principal