HomeMy WebLinkAboutC-4684 - Agreement 13-035-01 and Agreement No. 11-002-01 for Actuarial Valuation Study ProjectAGREEMENT NO. 13-035-01
BETWEEN
SOUTHERN CALIFORNIA ASSOCATION OF GOVERNMENTS
AND
` CITY OF NEWPORT BEACH
THIS AGREEMENT, is made and entered into, by and between the Southern California
Association of Governments ("SCAG") and City of Newport Beach ( "City ") regarding an
\ Actuarial Valuation Study project ( "Study ") as further detailed below.
�J RECITALS
WHEREAS, SCAG is a Joint Powers Agency and a federally designated Metropolitan Planning
Organization for Southern California. SCAG is primarily responsible for developing the regional
transportation plan and transportation improvement program for the counties of Los Angeles,
Orange, San Bernardino, Riverside, Ventura, and Imperial;
WHEREAS, SCAG requires certain technical, professional, or support services from time to time
to support various mandated activities and requirements of the agency;
WHEREAS, SCAG seeks to engage in the Actuarial Valuation Study project in order to comply
with the requirements of the California Employers' Retiree Benefit Trust (CERBT) to provide
California Public Employees' Retirement System (CalPERS) trust administrators with an
updated actuarial report every two (2) years to satisfy the requirements of the Governmental
Accounting Standards Board Statement 45 (GASB 45);
WHEREAS, City is a member of SCAG and has elected to participate in a joint procurement
with SCAG for purposes of pursuing the Study;
WHEREAS, SCAG has retained the services of Nyhart Epler, ( "Consultant ") to perform the
actuarial valuation studies for SCAG and City; and,
WHEREAS, City agrees to the performance of the services on the terms and conditions set forth
below.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the City hereby agree as follows:
1. Agreement. This "Agreement' is comprised of these terms and conditions and any attached
exhibits.
2. Term. The services provided pursuant to this Agreement shall commence upon execution
of this Agreement and continue until June 30, 2016.
3. Scope of Work.
a. SCAG agrees to engage Consultant to perform the Scope of Work on behalf of the
City, as set forth in the "Scope of Work," Exhibit A, attached hereto and
incorporated by this reference. Consultant shall furnish all technical and
professional services necessary to perform the tasks set forth in the Scope of
Work. Performance of work is contingent upon issuance of a Purchase Order by
SCAG to Consultant to conduct the work.
b. The Project Manager assigned by the City, Susan Giangrande, shall coordinate
work related to this Project through the Consultant, Nyhart Epler. The City's
Project Manager shall supply resources for this Project as described in the SCAG
Scope of Work, and coordinate and oversee the Consultant throughout the
duration of the Study.
C. The City maintains final approval of final work products provided under the
Agreement for work explicitly performed for the City.
4. Compensation
The maximum amount payable under this Agreement, including all expenses, shall not
exceed $25,000 per annual valuation report, not to exceed a total amount of $75,000.
5. Invoicine
a. Invoices for payment to Consultant shall be administered and paid by SCAG;
provided, however, that no payment shall be made by SCAG until said Consultant
invoices have been reviewed and approved.
b. SCAG shall provide a copy of a Consultant invoice to the City's Project Manager
within five (5) business days of receipt of invoice. The City's Project Manager
shall review and approve the Consultant invoice within five (5) business days of
receipt of the copy of the invoice from SCAG. If there is any dispute related to
the invoice, City shall make a good faith effort to resolve the dispute with
Consultant prior to SCAG's payment of Consultant invoice.
C. SCAG shall issue City an invoice for reimbursement for Consultant services. The
City shall reimburse SCAG within ten (10) business days of receipt of SCAG
invoice.
6. Ownership of Materials. Work products, documents, analysis, and materials provided
pursuant to the Scope of Work explicitly for the City, shall become the property of the
City.
7. Independent Contractor. SLAG, their members, officers, employees, consultants and
agents shall be independent contractors in the performance of this Agreement, and not
officers, employees, consultants or agents of the City.
Disputes. The parties agree to submit any disputes arising under this Agreement to neutral
mediation before resorting to litigation.
9. Limitation of Liability. In no event shall either party be liable to the other Party in
connection with the provision or use of the services for claims, demands, costs or damages
arising from or connected with this Agreement.
10. Termination of Agreement. Any Party may terminate this Agreement for convenience or
for cause by giving written notice to the other parties of such termination at least thirty
(30) calendar days before the effective date of such termination. In the event a party
terminates for cause, it shall provide a reasonable opportunity for the other Party to cure
prior to termination.
11. Entire Agreement. This writing contains the entire agreement relating to the subject
matter hereof, and the parties have made no agreements, representations or warranties
relating to the subject matter hereof which are not set forth herein. This Agreement may
not be modified or altered without formal written amendment thereto.
IN WITNESS WHEREOF, The Southern California Association of Governments and City of
Newport Beach hay ca sed this Agreement to be executed by their duly authorized
representatives.
For SLAG
Basil Panas
Chief Financial Officer
Date: 6 f � 06 �
Approved as to Legal Form:
S�'�
Joao Arica
Chief Counsel/Director of Legal Services
r City of NewportBeach
Dan Matusiewicz
Finance Director
Date: 7 " t 3
Approved as to Legal Form:
A/
C�d�)
Aaron C. Hale
City Attorney
Attest:
City Clerk
EXHIBIT A
SCOPE OF WORK
Consultant shall provide services for the following Actuarial Valuation Components and based
upon the specific Plan Description for the City of Newport Beach as further detailed below.
Actuarial Valuation Components:
1. Analyze the data to assess any inconsistencies and make recommendations for enhancing
data quality
2. Prepare an actuarial valuation following GASB 43 and GASB 45 standards
3. Prepare a report which includes:
• The actuarial present value of total projected benefits
• Actuarial accrued liability
• Actuarial value of assets
• The unfunded actuarial accrued liability
• Normal cost
4. Annual required contribution of the employer(s) as a level dollar amount and as a level
percentage of covered payroll
5. Net OPEB obligation (for employer disclosure under GASB statement 45)
6. Prepare the necessary material for the Comprehensive Annual Financial Report to comply
with GASB OPEB reporting and disclosure requirements
7. Prepare the annual gain/loss analysis to determine reasons for changes in the unfunded
actuarial accrued liability, whenever a prior actuarial valuation is available to support this
8. Determine the implicit rate subsidy, if any, and the impact it would have on the OPEB
liability
9. Prepare a cash flow analysis (the "pay -as- you -go cost ")
10. Prepare a sensitivity analysis showing the impact of alternative assumptions on the
employer's contributions (healthcare trend rates and investment rate assumptions)
11. As appropriate, provide recommendations on managing the OPEB liability. This may
include changes in plan design
12. As appropriate, review and update plan documents and design. Make recommendations as
to formalizing informal plans
Plan Description
The City of Newport Beach implemented a defined contribution plan for retiree medical benefits,
effective January 1, 2006. The defined contribution plan, called the Retiree Health Savings
program (RHS), is a Health Reimbursement Arrangement (HRA) sponsored by the City, held in
trust and managed by ICMA -RC (Trustee), under IRS Revenue Ruling 2002 -41 (June 26, 2002)
and IRS Notice 2002 -45 (June 26, 2002). It provides reimbursement for post - employment
medical (PEMHCA plan) dental, vision, long -term care, miscellaneous medical expenses, and
the PEMHCA minimum. The plan is only provided to full -time employees. Part -time
employees can participate in PEMHCA, but the only City contribution is the PEMHCA
minimum if they are participating in PEMHCA. There are five funding components for the
RHS:
• Part A — Mandatory contribution of 1% of base pay, immediate upon enrollment.
• Part B — City contributes $2.50 per month for each year of age and service during
employment. Part B contributions are effective upon vesting at 5 years of service and are
retroactively deposited.
• Part C — Mandatory transfer of a portion of accumulated leave during any leave buyout.
The amount of leave conversion varies by bargaining unit.
• Part D — for active employees as of January 1, 2006, the City will make a one -time
contribution upon retirement from the City of $100 per month times the months the
employee contributed to the prior defined contribution plan with a cap of $18,000.
• Part E — Post retirement contribution, the City will provide the PEMHCA minimum
contribution when a retiree's RHS account value has been exhausted.
Prior to the implementation of a defined contribution plan for retiree medical benefits, the City
provided a defined benefit plan. The defined benefit plan required seven years of service and
retirement, either service retirement or disability retirement, from the City. The benefit was $400
per month for the retiree and surviving spouse. Funding of the defined contribution plan was
divided between the City which paid 50% of costs, active employees paid 25% of costs, and
retirees contributed 25% of cost. Police employees retired prior to January 1, 2006, receive $425
per month for the retiree and surviving spouse with the additional $50 paid half by the City and
half by the current active Police employees. There are currently 170 active employees who will
be eligible for the defined contribution plan if they retire from the City_ As of June 30, 2012,
there were approximately 670 retirees, terminated employees and/or eligible beneficiaries.
Participation in the RHS is required for new employees, however at implementation, only certain
employees were required to convert to the RHS: sworn/safety employees whose age plus service
years was less than or equal to 45 and miscellaneous employees whose age plus service years was
less than or equal to 49. For retirees as of January 1, 2006, and active employees whose age plus
years of service was greater than mentioned above, a conversion plan was established. The
funding components of the conversion plan are:
• Part A — For active employees, a mandatory contribution of I% of base pay.
• Part B — No part B contribution.
• Part C —Mandatory transfer of a portion of accumulated leave during any leave buyout.
The amount of leave conversion varies by bargaining unit.
Part D — for active employee as of January 1, 2006, the City will make a one -time
contribution upon retirement from the City of $75 per month times the months the
employee contributed to the prior defined contribution plan with a cap of $13,500.
Part E - Post retirement contribution, the City will provide $400 per month to the retiree's
or to the surviving spouses' RHS account. Police retirees and their surviving spouses
who retired prior to January 1, 2006, receive a $450 per month.
Part F — Active employees participating in the conversion plan are required to make a
contribution of $100 per month to the City as long as they are employed by the City in a
full -time position.
The plan's assets are invested with the California Employers' Retirement Benefit Trust (CERBT)
which is offered through CalPERS.
Copies of the trust document, employee union contracts /memorandums of understanding,
employee manuals and communications related to post - employment benefits will be provided to
the actuarial firm selected. In addition, a complete census of members including, but not limited
to: employee /retiree age, Medicare status, marital status, dependent data, insurance participation,
premium amounts, and RHS contributions will be provided.
Deliverables
I. The consultant shall deliver three (3) bound copies of the actuarial valuation and all
supporting calculations and exhibits. Consultant shall also deliver an unbound copy of the
valuation suitable for reproduction of the report for internal use.
2. Consultant may be required to make an oral presentation to the applicable agency's executive
management, governing board or a committee, if it is recommended and requested by
agency's management.
3. The final actuarial valuation report shall contain a glossary of terms and sufficient
explanatory text to permit a reasonable understanding of the actuarial assumptions, and cost
methods used for actuarial valuations to support the conclusions.
4. The explanatory text shall include, but not be limited to, a summary of the plan, description
of actuarial assumptions, and cost methods used. A display of age groups, service matrices
for active and retired employees and mortality assumptions, as well as other relevant data
should also be included with final actuarial report.
�� q
AGRFFMFNT NO. 11-002-01
BETWEEN
SOUTHERN CALIFORNIA ASSOCATION OF GOVERNMENTS
AND
CITY OF NEWPORT BEACH
THIS AGREEMENT, is made and entered into, by and between the Southern California
Association of Governments ( "SCAG ") and City of Newport Beach ( "City ") regarding an
Actuarial Valuation Study project (`Study") as further detailed below.
RECITALS
WHEREAS, SCAG is a Joint Powers Agency and a federally designated Metropolitan. Planning
Organization for Southern California. SCAG is primarily responsible for developing the regional
transportation plan and transportation improvement program for the counties of Los Angeles,
Orange, San Bernardino, Riverside, Ventura, and Imperial;
WHEREAS, SCAG requires certain technical, professional, or support services from time to time
to support various mandated activities and requirements of the agency;
WHEREAS, SCAG seeks to engage in the Actuarial Valuation Study project in order to comply
with the requirements of the California Employers' Retiree Benefit Trust (CERBT) to provide
California Public Employees' Retirement System (CalPERS) trust administrators with an
updated actuarial report every two (2) years to satisfy the requirements of the Governmental
Accounting Standards Board Statement 45 (GASB 45);
WHEREAS, City is a member of SCAG and has elected to participate in a joint procurement
with SCAG for purposes of pursuing the Study;
WHEREAS, SCAG has retained the services of Bartel Associates, LLC, (`Consultant") to
perform the actuarial valuation studies for SCAG and City; and,
WHEREAS, City agrees to the performance of the services on the terms and conditions set forth
below.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the City hereby agree as follows:
Agreement. This "Agreement" is comprised of these terms and conditions and any attached
exhibits.
2. Term. The services provided pursuant to this Agreement shall commence upon execution
of this Agreement and continue until June 30, 2013.
Scope of Work.
a. SCAG agrees to engage Consultant to perform the Scope of Work on behalf of the
City, as set forth in the "Scope of Work," Exhibit A, attached hereto and
incorporated by this reference. Consultant shall furnish all technical and
professional services necessary to perform the tasks set forth in the Scope of
Work. Performance of work is contingent upon issuance of a Purchase Order by
SCAG to Consultant to conduct the work.
b. The Project Manager assigned by the City, Susan Giangrande, shall coordinate
work related to this Project through the Consultant, Bartel Associates, LLC, The
City's Project Manager shall supply resources for this Project as described in the
SCAG Scope of Work, and coordinate and oversee the Consultant throughout the
duration of the Study.
c. The City maintains final approval of final work products provided under the
Agreement for work explicitly performed for the City.
4. Compensation
The maximum amount payable under this Agreement, including all expenses, shall not
exceed $25,000 per annual valuation report, not to exceed a total amount of $75,000.
5. Invoicine
a. Invoices for payment to Consultant shall be administered and paid by SCAG;
provided, however, that no payment shall be made by SCAG until said Consultant
invoices have been reviewed and approved.
b. SCAG shall provide a copy of a Consultant invoice to the City's Project Manager
within five (5) business days of receipt of invoice, The City's Project Manager
shall review and approve the Consultant invoice within five (5) business days of
receipt of the copy of the invoice from SCAG. If there is any dispute related to
the invoice, City shall make a good faith effort to resolve the dispute with
Consultant prior to SCAG's payment of Consultant invoice.
C. SCAG shall issue City an invoice for reimbursement for Consultant services. The
City shall reimburse SCAG within ten (10) business days of receipt of SCAG
invoice.
6. Ownership of Materials. Work products, documents, analysis, and materials provided
pursuant to the Scope of Work explicitly for the City, shall become the property of the
City.
7. Independent Contractor. SCAG, their members, officers, employees, consultants and
agents shall be independent contractors in the performance of this Agreement, and not
officers, employees, consultants or agents of the City.
8. Disputes. The parties agree to submit any disputes arising under this Agreement to neutral
mediation before resorting to litigation.
9. Limitation of Liability. In no event shall either party be liable to the other Party in
connection with the provision or use of the services for claims, demands, costs or damages
arising from or connected with this Agreement.
10. Termination of Agreement. Any Party may terminate this Agreement for convenience or
for cause by giving written notice to the other parties of such termination at least thirty
(30) calendar days before the effective date of such termination. In the event a party
terminates for cause, it shall provide a reasonable opportunity for the other Party to cure
prior to termination.
11. Entire Agreement. This writing contains the entire agreement relating to the subject
matter hereof, and the parties have made no agreements, representations or warranties
relating to the subject matter hereof which are not set forth herein. This Agreement may
not be modified or altered without formal written amendment thereto.
IN WITNESS WHEREOF, The Southern California Association of Governments and City of
Newport Beach have caused this Agreement to be executed by their duly authorized
representatives.
For SC or City of ewport Beach
Wayne Moore Tracy Mc aner
Chief Financial Officer Administrative Services Director
Date: l0' l l- ID
Approved as to Legal Form:
JoA Africa
Chief Counsel/Director of Legal Services
Date: I b I 6 I I b
Approved as to Legal Form:
Leonie Mulvihill
Assistant City Attorney
c
Attest:
CRY Clerk
NA'FAZI
EXHIBIT A
SCOPE OF WORK
Consultant shall provide services for the following Actuarial Valuation Components and based upon
the specific Plan Description for the City of Newport Beach as further detailed below.
Actuarial Valuation Components:
1. Analyze the data to assess any inconsistencies and make recommendations for enhancing
data quality
2. Prepare an actuarial valuation following GASB 43 and GASB 45 standards
3. Prepare a report which includes:
• The actuarial present value of total projected benefits
• Actuarial accrued liability
• Actuarial value of assets
• The unfunded actuarial accrued liability
• Normal cost
4. Annual required contribution of the employer(s) as a level dollar amount and as a level
percentage of covered payroll
5. Net OPEB obligation (for employer disclosure under GASB statement 45)
6. Prepare the necessary material for the Comprehensive Annual Financial Report to comply
with GASB OPEB reporting and disclosure requirements
7. Prepare the annual gain/loss analysis to determine reasons for changes in the unfunded
actuarial accrued liability, whenever a prior actuarial valuation is available to support this
8. Determine the implicit rate subsidy, if any, and the impact it would have on the OPEB
liability
9. Prepare a cash flow analysis (the "pay -as- you -go cost ")
10. Prepare a sensitivity analysis showing the impact of alternative assumptions on the
employer's contributions (healthcare trend rates and investment rate assumptions)
11. As appropriate, provide recommendations on managing the OPEB liability. This may
include changes in plan design
12. As appropriate, review and update plan documents and design. Make recommendations as
to formalizing informal plans
Page i of 3
Plan Description:
The City of Newport Beach implemented a defined contribution plan for retiree medical benefits
effective January 1, 2006. The defined contribution plan, called the Medical Expense
Reimbursement Program (MERP), is a Health Reimbursement Arrangement (HRA) sponsored
by the City, held in trust and managed by ING (Trustee), under IRS Revenue Ruling 2002 -41
(June 26, 2002) and IRS Notice 2002 -45 (June 26, 2002), It provides reimbursement for post -
employment medical (PEMHCA plan and City sponsored Blue Cross plan), dental, vision, long-
term care, miscellaneous medical expenses, and the PEMHCA minimum. The plan is only
provided to full -time employees. Part -time employees can participate in the City's medical plans
or in PEMHCA, but the only City contribution is the PEMHCA minimum if they are
participating in PEMHCA. There are five funding components for the MERP:
• Part A — Mandatory contribution of l % of base pay, immediate upon enrollment.
• Part B — City contributes $2.50 per month for each year of age and service during
employment. Part B contributions are effective upon vesting at 5 years of service and are
retroactively deposited to January 1, 2006.
• Part C — Mandatory transfer of a portion of accumulated leave during any leave buyout.
The amount of leave conversion varies by bargaining unit.
• Part D — for active employee as of January 1, 2006, the City will make a one -time
contribution upon retirement from the City of $100 per month times the months the
employee contributed to the prior defined contribution plan.
• Part E — Post retirement contribution, the City will provide the PEMHCA minimum
contribution when a retiree's MERP account value has been exhausted.
Prior to the implementation of a defined contribution plan for retiree medical benefits, the City
provided a defined benefit plan. The defined benefit plan required seven years of service and
retirement, either service retirement or disability retirement, from the City. The benefit was $400
per month for the retiree and surviving spouse. Funding of the defined contribution plan was
divided between the City which paid 50% of costs, active employees paid 25% of costs, and
retirees contributed 25% of cost.
Conversion to the MERP is required for new employees, however at implementation, only
certain employees were required to convert to the MERP: sworn/safety employees whose age
plus service years was less than or equal to 45 and miscellaneous employees whose age plus
service years was less than or equal to 49. For retirees as of January 1, 2006, and active
employees whose age plus years of service was greater than mentioned above, a conversion plan
was established. The funding components of the conversion plan are:
• Part A — For active employees, a mandatory contribution of I% of base pay.
• Part B — No part B contribution.
• Part C — Mandatory transfer of a portion of accumulated leave during any leave buyout.
The amount of leave conversion varies by bargaining unit.
* Part D — for active employee as of January 1, 2006, the City will make a one -time
contribution upon retirement from the City of $75 per month times the months the
employee contributed to the prior defined contribution plan.
Page 2 of 3
Part E - Post retirement contribution, the City will provide $400 per month to the retiree's
or to the surviving spouses' MERP account. Police retirees and their surviving spouses
who retired prior to January 1, 2006, receive a $450 per month.
Part F — Active employees participating in the conversion plan are required to make a.
contribution of $100 per month to the City as long as they are employed by the Clay in a
full -time position.
One of the two health plans offered by the City is a non- community -rated plan and retirees are
offered the same premium rates as active employees. This requires than an implied subsidy (the
difference between expected claims and premiums paid for retirees) be valued for the life of the
retiree and accrued as a cost of the MERP plan. The City has elected to fund the implied subsidy
on a pay -as- you -go basis since employer contributions to active and retiree medical plans are
fixed, and significant uncertainty exits whether additional cash flows will occur in the future as a.
result of the implied subsidy.
The plan's assets are invested with the California Employers' Retirement Benefit Trust (CERBT)
which is offered through CAPERS.
Copies of the trust document, employee union contracts /memorandums of understanding,
employee manuals and communications related to post employment benefits will be provided to
the actuarial firm selected.. In addition, a complete census of members including, but not limited
to: employee /retiree age, Medicare status, marital status, dependent data, insurance participation,
premium amounts, and MERP contributions will be provided.
Deliverables:
The consultant shall deliver three (3) bound copies of the actuarial valuation and all
supporting calculations and exhibits. Consultant shall also deliver an unbound copy of
the valuation suitable for reproduction of the report for internal use.
1 Consultant may be required to make an oral presentation to the applicable agency's
executive management, governing board or a committee, if it is recommended and
requested by agency's management.
3. The final actuarial valuation report shall contain a glossary of terms and sufficient
explanatory text to permit a reasonable understanding of the actuarial assumptions, and
cost methods used for actuarial valuations to support the conclusions.
4. The explanatory text shall include, but not be limited to, a summary of the plan,
description of actuarial assumptions, and cost methods used. A display of age groups,
service matrices for active and retired employees and mortality assumptions, as well as
other relevant data should also be included with final actuarial report.
Page 3 of 3