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HomeMy WebLinkAboutFinance Committee Agenda - October 15, 2015CITY OF NEWPORT BEACH FINANCE COMMITTEE AGENDA - Final 100 Civic Center Drive - Newport Coast Conference Room, Bay 2E Thursday, October 15, 2015 - 4:00 PM Finance Committee Members: Keith Curry, Chair / Council Member Diane Dixon, Mayor Pro Tem Tony Petros, Council Member William C. O’Neill, Committee Member Larry Tucker, Committee Member John Warner, Committee Member Vacant, Committee Member Staff Members: Dave Kiff, City Manager Dan Matusiewicz, Finance Director / Treasurer Steve Montano, Deputy Director, Finance Marlene Burns, Administrative Specialist to the Finance Director The Finance Committee meeting is subject to the Ralph M. Brown Act. Among other things, the Brown Act requires that the Finance Committee agenda be posted at least seventy-two (72) hours in advance of each regular meeting and that the public be allowed to comment on agenda items before the Committee and items not on the agenda but are within the subject matter jurisdiction of the Finance Committee. The Chair may limit public comments to a reasonable amount of time, generally three (3) minutes per person. The City of Newport Beach’s goal is to comply with the Americans with Disabilities Act (ADA) in all respects. If, as an attendee or a participant at this meeting, you will need special assistance beyond what is normally provided, we will attempt to accommodate you in every reasonable manner. Please contact Dan Matusiewicz, Finance Director, at least forty-eight (48) hours prior to the meeting to inform us of your particular needs and to determine if accommodation is feasible at (949) 644-3123 or dmatusiewicz@newportbeachca.gov. NOTICE REGARDING PRESENTATIONS REQUIRING USE OF CITY EQUIPMENT Any presentation requiring the use of the City of Newport Beach’s equipment must be submitted to the Finance Department 24 hours prior to the scheduled meeting. I.CALL MEETING TO ORDER II.ROLL CALL III.PUBLIC COMMENTS Public comments are invited on agenda items. Speakers must limit comments to three (3) minutes. Before speaking, we invite, but do not require, you to state your name for the record. The Finance Committee has the discretion to extend or shorten the speakers’ time limit on agenda items, provided the time limit adjustment is applied equally to all speakers. As a courtesy, please turn cell phones off or set them in the silent mode. IV.CONSENT CALENDAR MINUTES OF SEPTEMBER 16, 2015A. Recommended Action: Approve and file. DRAFT MINUTES 091615 V.CURRENT BUSINESS DISCUSS SCHEDULE FOR NEXT FINANCE COMMITTEE MEETING OF NOVEMBER 12, 2015 A. Summary: Due to a scheduling conflict, the Finance Committee should discuss an alternate meeting date and/or time for the November meeting. Recommended Action: Finance Committee should set the date and time for the November Finance Committee Meeting. RETIREE HEALTH LIABILITY (OPEB)B. Summary: The City obtains an actuarial valuation for its retiree health program every other year. The purpose of the valuation is to measure the City’s liability for retiree health benefits and to determine the City’s accounting requirements under the Government Accounting Standards Board (GASB) Statement No. 45. Marilyn Jones, Consulting Actuary, from Nyhart will be present to answer any questions regarding the June 30, 2015, valuation. Recommended Action: Staff welcomes the Finance Committee to discuss the June 30, 2015, Actuarial Valuation and to provide comment to staff’s proposed changes to the discount rate used in measuring the related OPEB liabilities. STAFF REPORT ATTACHMENT A IMPLEMENTATION OF BUDGET PREPARATION FRAMEWORK - REVIEW OF OPERATING BUDGET, SESSION 1 C. Summary: During the August 13, 2015, Finance Committee meeting, members discussed pursuing actions for bringing greater transparency and accountability during the annual budget development process. Staff believes that following a proposed budget preparation framework consisting of budget principles, and associated strategies and tactics can be a reliable vehicle for improving the City’s budget process. In furtherance of Budget Framework Tactic T.10.1, the goal of this presentation will be to familiarize members of the Finance Committee with the elements of the FY 2015-16 Recreation and Senior Services Department departmental budget, provide opportunity for questions, and to gain clarity in the funding allocations for departmental programs. Staff will schedule similar Finance Committee presentations covering the operating budgets of other departments over the next few months. Recommended Action: In furtherance of Budget Framework Tactic T.10.1, review, ask questions, and provide comment relating to the Recreation and Senior Services FY 2015-16 operating budget. STAFF REPORT ATTACHMENT A ATTACHMENT B VI.ADJOURNMENT 1 Burns, Marlene From:Jim Mosher Sent:Sunday, October 11, 2015 8:15 PM To:Burns, Marlene Cc:Matusiewicz, Dan Subject:Suggested corrections to Finance Committee draft minutes Attachments:2015Oct15_FinanceCommittee_AgendaItem_IV.A_Comments_JimMosher.pdf Marlene, Please find attached some suggested minor corrections to the draft September 16th Finance Committee minutes (to be considered at this Thursday's meeting of the Committee). I might also point out a couple of problems I noticed with the agenda on Legistar: https://newportbeach.legistar.com/View.ashx?M=A&ID=437367&GUID=64FE55A0-7A1A-48D2-8C07-076230758A2A 1. It says in the fine print at the top that, as required by the Brown Act, the public may comment on "items not on the agenda but are within the subject matter jurisdiction of the Finance Committee," but no specific time has been set for this in the agenda. Formerly Item III. PUBLIC COMMENTS read "Public comments are invited on agenda and non-agenda items generally considered to be within the subject matter jurisdiction of the Finance Committee," but for some reason the part in bold has been lost. The missing words should probably be restored, or a new item added for non-agenda comments (many committees put that near the end). 2. Prior to the addition of citizen members in January, the agendas always ended, just before the Adjournment, with an item "(6) FINANCE COMMITTEE ANNOUNCEMENTS OR MATTERS WHICH MEMBERS WOULD LIKE PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR REPORT (NON-DISCUSSION ITEM)." Although not required by the Brown Act, that item looks like it has been inadvertently omitted since February. 3. Although apparently required by the Brown Act only with respect to ADA issues, I might suggest it would also be good to specify a clear person the public should contact with more general questions about the Committee or the agenda, or more generally how to contact the Finance Department (especially since they are asked to do so with regard to requests to use City presentation equipment). A reasonable person might suppose it's the same as the ADA contact person, but it's not obvious. And it might even be useful to list a generic contact, since the specific person listed may be out of their office, in which case the public is uncertain who to call or email. Yours sincerely, Jim Mosher October 15, 2015, Finance Committee Meeting Comment These comments related to the Newport Beach City Council Finance Committee are submitted by: Jim Mosher ( jimmosher@yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229) PUBLIC COMMENT ON A NON-AGENDA ITEM Chair Curry and members of the Committee, my name is Jim Mosher. As I am sure most of the Finance Committee members are aware, there is currently a vacancy on the Committee. In view of that, I think those who were not present at Tuesday’s Council meeting deserve to know that at it Councilman Scott Peotter presented his nomination to fill the vacancy, which he has been empowered to do by the Committee’s enabling resolution, and his nominee happened to be me. Normally, the ratification of a fellow Council member’s nomination is a matter of professional courtesy; or in the words of the prayer that opened Tuesday’s meeting, an action taken out of a spirit of love, humility, respect for others and a desire to work together for a greater good. Instead, possibly for the first time in the City’s 109 year history, and without benefit of those voting against him having engaged the person in question in a dialog on the matters of concern to them, a majority of the Council refused to accept their colleague’s recommendation for the position – because, we are told, the appointment would have wreaked havoc on the City. As a result, if the current vacancy on the Finance Committee is not to become permanent, Councilman Peotter has now apparently been given the difficult task of finding a citizen volunteer who has not supported him politically (for the record, I did not vote for him or any of the current City Council members), who has directed budget management in a private or public sector financial department for a minimum of 15 to 20 years, and who will be more serious and diligent than me about staying focused on the issues, going into the numbers and thinking well about them – yet a volunteer who has not previously shown enough interest in the City’s finances to have commented on them or to have attended any of the meetings of the Finance Committee. While I freely admit to not having a financial background, the charges against me I most resent are that I am frequently wrong about facts and have a long history of advocating positions counterproductive to a well managed City. The impression that my facts are wrong is certainly one that might result from the format of public meetings in Newport Beach, in which after public speakers speak City staff is invited to rebut their comments, but the speaker is given no opportunity to respond to the rebuttal. The more times one speaks, the more times the public hears the speaker is wrong. And the public has certainly heard many times that I am wrong. Despite that impression, I take particular pride in my efforts to verify the accuracy of what I say -- although I recognize that effort is ultimately limited by the accuracy of the information on which it is based, which is City documents. October 15, 2015, Finance Committee comment - Jim Mosher Page 2 of 2 But since facts ultimately speak for themselves, and mine in the end most often prove to be correct, I far more resent the statement that my positions are part of a misguided effort counterproductive to the well-being of the City and by implication that they are out of tune with the mainstream of public thought. As one of many examples to the contrary, all the current City Council members and at least one of the current citizen appointees on the Finance Committee publicly stated that passage of Measure Y in 2014 would be beneficial to the City. The “correctness” of that position is certainly questionable since 69.4% of the voting public demonstrated with their votes that they thought passage was NOT beneficial and NOT good for the well-being of the City – a position I had consistently taken at every public meeting. While the Council and Committee members may continue to feel my understanding of Measure Y and my position on it was wrong, pre-judging alternate viewpoints as invalid and excluding from ones deliberations all those with whom one disagrees doesn’t seem good governance. As a second and more discrete example, at its August 13th meeting the Finance Committee discussed the City’s Vehicle Replacement Policy, F-9. Although it may not be clear from the written minutes, I believe I was the only one in the room to suggest staff should revisit the proposed revision making it appear it was mandatory to shift vehicles out of active service when they reached a preset mileage or number of years. Again, my position may have been, and may still be, wrong, but at its October 13th Study Session, the full Council directed Policy F-9 back to the Finance Committee to address that exact issue. Thus in retrospect my comments on August 13th do NOT seem to have been out of the mainstream of thought nor to have had the time-wasting “counterproductive to good management” irrelevance the Committee seems to have assigned to them. While appreciating the psychological difficulty of working with, rather than against, ones persistent critics, I find it strange the Council has so little confidence in its own power as to be unwilling to even try that experiment for the three months remaining in the existing vacancy. I believe I would make a very good Finance Committee member and bring to the Committee a perspective that a candidate with a more solid financial background, but a lesser understanding of the past and current workings of the Newport Beach City government, could not. I wish to assure the Council and the Committee that my application for appointment remains active and I hope I will be included in any future interview process. Finance Committee Meeting Minutes September 16, 2015   Page 1 of 5 CITY OF NEWPORT BEACH FINANCE COMMITTEE SEPTEMBER 16, 2015 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 4:00 p.m. in the Newport Coast Conference Room, Bay 2E, 100 Civic Center Drive, Newport Beach, California 92660. II. ROLL CALL PRESENT: Council Member Keith Curry (Chair); Mayor Pro Tem Diane Dixon; Committee Member William C. O'Neill; Committee Member Larry Tucker ABSENT: Council Member Tony Petros (arrived at 4:06 p.m.); Committee Member Bill McCullough (Unexcused); Committee Member John Warner (Excused) STAFF PRESENT: City Manager Dave Kiff, Finance Director Dan Matusiewicz, Deputy Finance Director Steve Montano, Administrative Specialist to the Finance Director Marlene Burns, Budget Manager Susan Giangrande, IT Manager Rob Houston, Assistant City Manager Carol Jacobs, Revenue Manager Evelyn Tseng, Accounting Manager Rukshana Virany MEMBER OF THE PUBLIC: Jim Mosher III. PUBLIC COMMENTS Jim Mosher referenced his earlier comments regarding the hurried adoption of the budget by City Council and reported that it is still not available on the City's website. He referenced the City Charter and a requirement to make available, a list of all contracts held by the City, including those from the City Attorney's office and stressed that the City Attorney's role is to review contracts. He opined having one department to write, review, award, and archive contracts is not a good policy. Additionally, he commented on the City budget relative to the organization of the City's various departments and employees and stated it is somewhat confusing. Council Member Curry pointed out that Council had the benefit of three study sessions to review the City's budget prior to acting on same. It was noted that City staff is working on getting the budget on the City's website. IV. APPROVAL OF MINUTES A. Summary: Approval of the August 13, 2015, Finance Committee Minutes. Recommended Action: Approve and file. Chair Curry noted that Committee Members O'Neill and Tucker submitted recommended changes to the minutes. Chair Curry opened public comments. Finance Committee Meeting Minutes September 16, 2015   Page 2 of 5 Seeing no one wishing to address the Committee, Chair Curry closed public comments. Mayor Pro Tem Dixon moved, and Committee Member O'Neill seconded, to approve the August 13, 2015, Finance Committee Minutes, as corrected. The motion carried with 4 ayes, 0 abstentions and 3 absent (Council Member Petros, Committee Member McCullough, and Committee Member Warner). Council Member Petros arrived at this juncture (4:06 p.m.). V. CURRENT BUSINESS A. RECOMMENDED BUDGET PRACTICES FOR THE DEVELOPMENT OF THE ANNUAL BUDGET Summary: During the August 13, 2015, Finance Committee meeting, members discussed three recommended actions for bringing greater transparency and accountability during the annual budget development process. Staff will present a proposed framework for improving budget practices. Staff will also present proposed broad community goals that can be incorporated into the Fiscal Year 2016-2017 budget. Recommended Action: Suggest changes to staff’s presented budget practices and, if necessary, make recommendations for submission to the City Council for approval. Finance Director/Treasurer Dan Matusiewicz presented details of the staff report noting the importance of deciding the Finance Committee's involvement prior to City Council adoption. He addressed the purpose of today's agenda item including providing transparency and increasing confidence in the budget development process. He commented on the development of broad objectives and goals, strategies, and tactics to achieve those goals. City Manager Dave Kiff stated the document shows how he looks at the budget, commented on the steps taken in preparing the budget and asked for input from the Committee. Chair Curry commented on the context of the process and assignment of resources. Committee Member O'Neill referenced Strategic Objectives S.5 and S.7 and commented positively on the City's "fresh start" concept. He referenced the budget cycle and recommended the City look ahead four or five years down the road during the budget process. City Manager Kiff commented on the City's informal budget approach which is different from a 0 percent growth budget. He addressed MOUs relative to Police and Fire services and noted the ongoing cost escalation resulting from MOUs. In reply to Committee Member O'Neill's question regarding pension liabilities and the possibility of pulling that information out of Department budgets so that the true increase can be determined, Finance Director/Treasurer Matusiewicz felt that the City does a better job than most cities as it is one of the few cities that shows unfunded liabilities as a separate line item. Discussion followed regarding increases in overall Department budget that includes accelerated payments on unfunded liabilities. Mayor Pro Tem Dixon suggested pulling that information out, going forward, so that the Committee may see true, programmatic costs. Finance Committee Meeting Minutes September 16, 2015   Page 3 of 5 City Manager Kiff stated that the City wants to be in a position where program costs are identified so that the Finance Committee and Council can consider the true costs. Discussion followed regarding improvements made and the need to make further improvements and data provided by the new ERP system. Finance Director/Treasurer Matusiewicz mentioned the future availability of a performance-based budgeting module in the new ERP system to track key metrics. Discussion followed regarding the ERP, elements programmed by Finance, internal service cost centers, unfunded liabilities spread as a percentage of payroll, total annual costs of pension payments to CalPERS, employees paying a greater percentage of their pensions, unfunded liabilities associated with people that are no longer employed by the City and maintaining a flat versus balanced budget. Ensuing discussion continued regarding the need to clean-up the document, the process followed by other cities, presenting the proposed budget to Council during a study session, the possibility of Council setting broader goals and the importance of having Council involved, every step of the way. Council Member Petros stated he would like for Council to understand the underlying foundation for the City's budget. City Manager Kiff stated he would like the Finance Committee to review the proposed budget framework in order to understand how this might work, in practice. He noted the importance of having each Member speak about the items they need or the questions that they need answered, in preparation of the upcoming budget discussions. Committee Member O'Neill commented on the importance of holding study sessions and thoroughly reviewing the details. Deputy Finance Director Steve Montano addressed related action items and recommendations as stated in the report. The item will be submitted to Council in October, and subsequently, the Finance Committee and Council will participate in budget reviews. These will be held from October through February, prior to the budget adoption and commented on next steps. Discussion followed regarding review of waste-water rates and whether the matter will be going to Council. Chair Curry opened public comments. Jim Mosher commented on the benefits of seeing the information in writing in terms of making it easier for the public to understand the process. He addressed the City's list of goals and objectives in terms of pension obligations and questioned having so many goals at a time. He commented on specific objectives in terms of avoiding bias in outsourcing, including titles of Council policies when they are referenced, and a "results-based" budgeting approach and performance measurements. B. PUBLIC EMPLOYEES RETIREMENT SYSTEM AND OTHER POST-EMPLOYMENT BENEFITS PRIMER Summary: Staff will provide a pension and other post-employment benefits presentation that will describe the basic mechanics and challenges associated with pension and OPEB benefit funding. Recommended Action: Finance Committee Meeting Minutes September 16, 2015   Page 4 of 5 Receive and file. Chair Curry introduced the item and prefaced the report with a brief background. Finance Director/Treasurer Matusiewicz noted that this report is intended as information, only, and that the latest valuations for this year, are not yet available. These should be available, next month. Chair Curry added that the numbers are typically, two-years in arrears. Finance Director/Treasurer Matusiewicz addressed setting aside resources during the expected service life of the employee to have enough resources in order to last them through their expected retirement life. When people live longer, the employer is at risk for additional contributions. He addressed the importance of investment earnings with respect to pension costs over time Chair Curry commented on policy tensions and assumptions. Discussion followed regarding longer life expectancy issues affecting subsequent budgets and past performance being indicative of the future. Finance Director/Treasurer Matusiewicz addressed earnings, unfunded liabilities, market value of City assets, and trends over time, actions to mitigate rising pension costs, "fresh starts" implemented over the years, employee contributions towards pensions and accelerated payments towards unfunded liabilities. Brief discussion followed regarding State trends, expectations, and negative amortization, and costs/benefits analyses, impacts of "fresh starts", savings achieved by accelerating costs at the front end and new opportunities and challenges. Finance Director/Treasurer Matusiewicz addressed increased costs in pensions, loss associated with policy changes in amortization, changes in mortality assumptions and “rate smoothing" techniques. Chair Curry added that the City is making constructive actions to address the issue and commented on challenges and driving the allocation of resources, going forward. Discussion followed regarding the constantly changing nature of the unfunded actuarial liability, ensuring that services are not impacted and steps that can be taken. City Manager Kiff commented on the need for the Legislation to act within the next four or five years and noted that things will get worse before they improve. He added that his inclination would be to keep "fresh starting" and addressed the City's reserves and paying high-interest debt first. Discussion followed regarding possible options for different approaches, fiscal impacts of "fresh start", throwing good money after bad, setting caps, incremental costs, pros and cons of various options. Finance Director/Treasurer Matusiewicz offered to provide a sample scenario using the "fresh start" strategy at a future meeting noting that the concept is too theoretical at this point without actual data to present. Chair Curry opened public comments. Finance Committee Meeting Minutes September 16, 2015   Page 5 of 5 Jim Mosher commented on buying out of the CalPERS plan and asked regarding the possibility of individuals being offered cash rather than pension benefits. In answer to his questions, it was noted that it is not financially feasible buy out of the PERS plan nor legally permissible to cash out employees. Chair Curry closed public comments. Discussion followed regarding next steps, practices of other cities and counties, and items to be considered by the Finance Committee during upcoming meetings. VI. ADJOURNMENT The Finance Committee adjourned at 5:37 p.m. to the next regular meeting of the Finance Committee on October 15, 2015, at 4:00 p.m. Filed with these minutes are copies of all materials distributed at the meeting. The agenda for the Regular Meeting was posted on September 9, 2015, at 4:17 p.m., in the binder and on the City Hall Electronic Board located in the entrance of the Council Chambers at 100 Civic Center Drive. Attest: ___________________________________ _____________________ Keith Curry, Chair Date Finance Committee Chair October 15, 2015, Finance Committee Agenda Comments These comments on items on the Newport Beach City Council Finance Committee agenda are submitted by: Jim Mosher ( jimmosher@yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229) Item IV.A. MINUTES OF SEPTEMBER 16, 2015 The following minor corrections are suggested: Page 1, Item 3, paragraph 2: “Council Member Chair Curry pointed out that Council had the benefit of three study sessions to review the City's budget prior to acting on same.” Page 4, paragraph 6 from end: “Chair Curry added that the City is making taking constructive actions to address the issue and commented on challenges and driving the allocation of resources, going forward.” Page 4, paragraph 4 from end: “City Manager Kiff commented on the need for the Legislation Legislature to act within the next four or five years and noted that things will get worse before they improve.” [?] Page 5, paragraph 2: “In answer to his questions, it was noted that it is not financially feasible to buy out of the PERS plan nor legally permissible to cash out employees.” Page 5, last paragraph: “The agenda for the Regular Meeting was posted on September 9, 2015, at 4:17 p.m., in the binder and on the City Hall Electronic Board located in the entrance of the Council Chambers at 100 Civic Center Drive.” [This may well be true, but to the best of my knowledge the agenda was not publicly visible online until Sunday afternoon, September 13th, a bare 72 hours before the Tuesday meeting. It is commendable that, by contrast, the agenda packet for the current (October 15th) meeting was posted online on October 9th, nearly a week in advance of the meeting.] Committee Member O’Neill’s proposed changes to the 9/16/2015 meeting minutes:  Page 3 of 5. Before the second full paragraph starting “Discussion followed regarding improvements…”, I suggest the following: “Committee Member O’Neill stated his agreement with Council Member Dixon’s goals of driving many budgetary decisions by using hard-data analysis. Committee Member O’Neill asked whether the implementation of the new ERP system would be equipped to engage in that type of analysis. Chair Curry noted that one of the principal drivers of the decision to implement the new ERP system was to aid in budgetary decisions. Finance Director/Treasurer Matusiewicz concurred and discussed the timing of the rollout of the ERP system. Committee Member O’Neill expressed his appreciation for the responses and noted his appreciation for the past Council’s decision to roll out the ERP system.”  Page 4 of 5. Before the third-to-last full paragraph, starting with “Discussion followed regarding possible…”, insert the following: “Committee Member O’Neill noted his agreement with the past Council’s decision to engage in a “Fresh Start” and also noted that whether the decision was politically popular, it was the right act because of the generational problem that UAL has become throughout the State.” CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT Agenda Item No. 5B October 15, 2015 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE FROM: Finance Department Dan Matusiewicz, Finance Director 949-644-3123, danm@newportbeachca.gov SUBJECT: RETIREE HEALTH LIABILITY (OPEB) SUMMARY: The City obtains an actuarial valuation for its retiree health program every other year. The purpose of the valuation is to measure the City’s liability for retiree health benefits and to determine the City’s accounting requirements under the Government Accounting Standards Board (GASB) Statement No. 45. Marilyn Jones, Consulting Actuary, from Nyhart will be present to answer any questions regarding the June 30, 2015, valuation. RECOMMENDED ACTION: Staff welcomes the Finance Committee to discuss the June 30, 2015, Actuarial Valuation and to provide comment to staff’s proposed changes to the discount rate used in measuring the related OPEB liabilities. BACKGROUND: Public employee compensation combines three distinct elements, including salaries and wages, benefits provided during active service (for example, health care for active employees), and benefits provided following the completion of active service. The City provides a contribution towards post-employment benefits (Other Post-Employment Benefits or “OPEB”) including medical, dental and vision benefits to its retirees and surviving spouses. A defined benefit plan is an arrangement where the employer extends a promise to provide post-employment benefits usually based on salary and years of service. In these arrangements, the employer carries substantial funding risk. A defined contribution plan provides a means for both employees and employers to contribute to the participant’s benefit account whereby the employer carries no further funding risk beyond the agreed upon contribution. Retiree Health Liability (OPEB) October 15, 2015 Page 2 Legacy Defined Benefit Plan For employees hired prior to January 1, 2006, the City makes annual contributions to the California Employers’ Retiree Benefit Trust Fund (CERBT) that is dedicated to prefunding the OPEB defined benefit for eligible California public agencies. That money is invested over the employees’ working lives and earnings on these funds are re- invested. By the time employees reach retirement, the accumulated assets in the trust are available to pay benefits as they become due. The objective is to accumulate sufficient assets to pay a legacy benefit that provides monthly contributions ranging between $400 and $450 toward health benefits for life. To meet this objective, an OPEB funding plan receives contributions in accordance with an actuarially based funding schedule. The actuarially determined OPEB funding schedule determines exactly how much the City should contribute each year to ensure that the benefits being earned will be securely funded in a systematic fashion. Current Defined Contribution Plan To virtually eliminate the City’s defined benefit plan liability over time, the City implemented a Retiree Health Savings (RHS) Program on January 1, 2006. This defined contribution program is for all active full-time employees and retirees that are eligible for continuing medical coverage at retirement. This program includes several funding components: mandatory employee contribution of 1 percent of base pay; City contribution of $2.50 per month for each year of age plus service during active employment; and a mandatory transfer of accumulated leave during any leave buyout (specific amount determined by bargaining unit). On average, the annual City expense to maintain this benefit ranges between $1,020 and $2,400 per employee at a total annual cost of approximately $800,000. DISCUSSION: Actuarial Valuation Highlights: The amount of the Actuarial Accrued Liability (AAL) for the City’s retiree health benefits program as of June 30, 2015, is $42,638,555. The City has accumulated $14,818,836 in the CERBT trust to prefund the AAL. The Unfunded Actuarial Accrued Liability (UAAL) as of June 30, 2015, is $27,747,929. This amount represents the difference between accrued liabilities and the actuarial value of assets (AVA) of $14,890,626 accumulated to finance the City’s OPEB obligation. The AAL is based on a discount rate of 7.0 percent, down from 7.25 percent which was used in the June 30, 2013 actuarial valuation, and it assumes that the City will continue to pre-fund its annual required CERBT contribution. The funded ratio at June 30, 2015, was 35 percent; however, the plan is projected to be fully funded by June 30, 2026. Retiree Health Liability (OPEB) October 15, 2015 Page 3 The discount rate is based on the expected price inflation and real rate of returns. The lower the discount rate, the greater the pension liabilities. While the lower discount rate will increase the Annual Required Contribution (ARC) and actuarial liability, it will also more accurately reflect the current expectation of what the market will deliver in the future to ensure that benefits are properly funded in a systematic fashion. As the financial community is grappling with a range of appropriate investment earnings expectations, Newport Beach has the opportunity to reduce its discount rate to become less reliant on investment earnings to fund OPEB liabilities. Staff requested that the actuary include information related to an additional decrease to the discount rate, reducing it by an additional 0.5 percent to 6.5 percent. Implementing that assumption will increase the actuarial accrued liability at June 30, 2015, by $1,967,449 to $44,606,004. It will increase the ARC by $209,226 to a total contribution in Fiscal Year 2016-2017 of $3,925,087. The ARC is the employer’s periodic required contribution to a defined benefit OPEB plan. The ARC is the sum of two parts: (1) the normal cost, which is the cost for OPEB benefits attributable to the current year of service, and (2) an amortization payment, which is a catch-up payment for past service costs to fund the Unfunded Actuarial Accrued Liability. Under GASB 45, it is not required that public entities actually fund the entire ARC each year. However, doing so sends an important message to the financial community and our residents that the City takes its financial obligations seriously. Therefore, the City funds 100 percent of the ARC every year and publicly discloses such information in the City’s annual financial statements. The June 30, 2015, actuarial valuation provides the ARC for Fiscal Year 2016-2017 and for Fiscal Year 2017-2018. The table below shows the year-to-year change in ARC. Annual Required Contribution (ARC) Explicit Implicit Total Fiscal Year 2015‐16 2,845,895$ ‐$              2,845,895$  Fiscal Year 2016‐17 2,647,512$ 1,068,349$ 3,715,861$  Fiscal Year 2017‐18 2,726,938$ 1,100,399$ 3,827,337$  The City’s healthcare plan, offered through the California Public Employees Retirement System (CalPERS), is an experience-related plan that includes both active employees and retirees with blended premium rates for all members. The prior valuation did not require the City to include the implicit subsidy. The implicit rate is an inherent subsidy of retiree healthcare costs by active employee healthcare costs when healthcare premiums paid by retirees and actives are the same. The true healthcare costs for retirees are, on average, greater than active employees’ healthcare costs. With an implicit rate subsidy, the active employee premiums and related benefits are subsidizing the retiree premiums. This subsidization increases the cost of the retiree insurance plan. Retiree Health Liability (OPEB) October 15, 2015 Page 4 The cost of the subsidy needs to be recognized, funded and properly accounted for. It is important to note that while the implicit subsidy component of the ARC is just over $1 million, a portion of this amount ($625,000) can be drawn from the CERBT trust to cover current costs. A change in Actuarial Standard of Practice (ASOP) # 6 now requires that inclusion of implicit rate subsidies in the valuation of medical costs regardless of how the plan insurance premiums are derived. The implicit subsidy accounts for $7,116,207 of the $42,638,555 actuarial accrued liability. The portion due to the explicit contribution liability is $35,522,348 and remains relatively constant from the amount at June 30, 2013, ($35,563,794) due to more favorable experience (e.g., the fund's assets earn more than projected, salaries do not increase as fast as assumed, members retire later than assumed, etc.). This favorable experience is offset by the lowering of the discount rate to 7.0 percent, which increases cost. Staff welcomes the Finance Committee to discuss the June 30, 2015, Actuarial Valuation and to provide comment to staff’s proposed changes in discount rate. Marilyn Jones, Consulting Actuary from Nyhart, will be available to answer any technical questions concerning the actuarial valuation or any other questions the Committee may have concerning OPEB plans and liabilities. Prepared by: Submitted by: /s/Susan Giangrande /s/Dan Matusiewicz Susan Giangrande Dan Matusiewicz Budget Manager Finance Director Attachment: A. City of Newport Beach Retiree Health Program Actuarial Valuation as of June 30, 2015 ATTACHMENT A City of Newport Beach Retiree Health Program Actuarial Valuation as of June 30, 2015 530 B Street, Suite 900 San Diego, CA 92101-4404 (p) 619-239-0831 (f ) 619-239-0807 www.nyhart.com  Indianapolis  Chicago  Kansas City  Atlanta   St. Louis  San Diego  Houston  Denver  An Alliance Benefit Group Licensee October 6, 2015 PRIVATE Ms. Susan Giangrande Budget Manager City of Newport Beach One Civic Center Drive Newport Beach, CA 92660 Re: GASB Actuarial Valuation Dear Ms. Giangrande: We are presenting our report of the June 30, 2015 actuarial valuation conducted on behalf of the City of Newport Beach (the “City”) for its retiree health program. The purpose of the valuation is to measure the City’s liability for retiree health benefits and to determine the City’s accounting requirements under the Government Accounting Standard Board Statements No. 43 & 45 (GASB 43 & 45) in regard to unfunded liabilities for retiree health benefits. The objective of GASB 45 is to improve the information in the financial reports of government entities regarding their post-employment benefits (OPEB) including retiree health benefits. The objective of GASB 43 is to establish uniform reporting for funded OPEB Plans. The Nyhart Company is an employee owned actuarial, benefits and compensation consulting firm specializing in group health and retiree health and qualified pension plan valuations. We have set forth the results of our study in this report. We have enjoyed working on this assignment and are available to answer any questions. Sincerely, NYHART Marilyn K Jones, ASA, MAAA, EA, FCA Consulting Actuary MKJ:rl Enclosure City of Newport Beach Actuarial Valuation Retiree Health Program As of June 30, 2015 September 2015 Prepared By: Nyhart 530 B Street, Suite 900 San Diego, CA 92101-4404 (619) 239-0831 www.nyhart.com  Indianapolis  Chicago  Kansas City  Atlanta   St. Louis  San Diego  Houston  Denver  An Alliance Benefit Group Licensee K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx City of Newport Beach Retiree Health Benefits Program GASB Actuarial Valuation As of June 30, 2015 Table of Contents Page Section I. Executive Summary ................................................................................................. 1 Section II. Financial Results ...................................................................................................... 4 Section III. Projected Cash Flows .............................................................................................. 9 Section IV. Benefit Plan Provisions ............................................................................................ 11 Section V. Valuation Data .......................................................................................................... 14 Section VI. Actuarial Assumptions and Methods......................................................................... 16 Section VII. Actuarial Certification ............................................................................................... 21 Section XIII. Definitions ................................................................................................................ 22 K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 1 SECTION I. EXECUTIVE SUMMARY Background The City of Newport Beach (the “City”) selected The Nyhart Company to perform an actuarial valuation of its retiree health program. The purpose of the actuarial valuation is to measure the City’s liability for retiree health benefits and to estimate the City’s accounting requirements for other post-employment benefits (OPEB) under Governmental Accounting Standards Board Statements No. 43 & 45 (GASB 43 and GASB 45). GASB 45 requires accrual accounting for the expensing of OPEB. The expense is generally accrued over the working career of employees, rather than on a pay-as-you-go basis. GASB 43 requires additional financial disclosure requirements for funded OPEB Plans. Effective January 1, 2006, the City implemented a Retiree Health Savings program (RHS Plan) for all new full-time employees and for full-time employees whose age plus years of service as of January 1, 2006 was less than 46 for public safety employees and 50 for all other employees. A Hybrid Plan was provided for full-time active employees whose age plus years of service as of January 1, 2006 was 46 or more for public safety employees and 50 or more for all other employees (unless opting into the RHS Plan). Employees in the Hybrid Plan continue to be eligible to receive the City’s fixed dollar contribution under the prior defined benefit plan at retirement but the contribution is paid into the employee’s RHS account. Employees already retired and eligible for a City contribution at January 1, 2006 also continue to receive the City’s fixed dollar contribution under the prior defined benefit plan but instead of being applied towards medical coverage, the fixed dollar contribution amount less the Public Employees Medical and Hospital Care Act (PEMHCA) minimum required employer contribution for those continuing coverage through PEMHCA is made to an RHS account established for the retiree. Part-time employees retiring from the City can elect to continue medical coverage through PEMHCA and receive a City contribution equal to the PEMHCA minimum required employer contribution. As of the valuation date there are 539 retirees receiving the City’s flat dollar contribution plus 25 retirees receiving the PEMHCA minimum required contribution. There are also 111 active employees under the Hybrid Plan eligible to receive the City’s flat dollar contribution in the future if retiring from the City. In addition, there are 88 part-time employees who may become eligible to continue coverage through PEMHCA at retirement. The remaining 579 employees participate in the RHS Plan. The City may be responsible for the PEMHCA minimum required contribution if these employees retire from the City and continue coverage under PEMHCA. The City participates in the CalPERS Health Program for its retiree medical coverage. In general, the premium rates charged to participating employers are the same for each medical plan within each region (or “community”) and are the same for both active and retired employees covered under the same medical plan. An implicit rate subsidy can exist when the non-Medicare rates for retirees are the same as for active employees. Since non-Medicare eligible retirees are typically much older than active employees, their actual medical costs are typically higher than for active employees. GASB 45 requires that implicit rate subsidies be considered in the valuation of medical costs. In past valuations the liability for the implicit rate subsidy was excluded from the valuation as the GASB had provided for an exemption for community- rated plans. This valuation includes an estimate of the liability for the implicit rate subsidy. Section IV of the report provides a full description of the plan provisions that were included in the valuation and the current premium costs for coverage. K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 2 Results of the Retiree Health Valuation We have determined that the amount of the actuarial liability for the City's retiree health plan as of June 30, 2015, the measurement date, is $47,414,343 (including $38,297,319 for the City’s explicit contribution and $9,117,024 for the implicit rate subsidy). This value is based on an assumed discount rate of 7.0%. The amount represents the present value of all benefits projected to be paid by the City for current and future retirees. If the City were to place this amount in a fund earning interest at the rate of 7.0% per year, and all other actuarial assumptions were met, the fund would have enough to pay the City’s required contribution for retiree health benefits. This includes benefits for the current retirees as well as the current active employees expected to retire in the future. The valuation does not consider employees not yet hired as of the valuation date. If the amount of the actuarial liability is apportioned into past service, current service and future service components; the past service component (actuarial accrued liability) is $42,638,555 (including $35,522,348 for the City’s explicit contribution and $7,116,207 for the implicit rate subsidy), the current service component (normal cost or current year accrual) is $610,915 (including $403,729 for the City’s explicit contribution and $207,186 for the implicit rate subsidy) and the future service component (not yet accrued liability) is $4,164,873 (including $2,371,242 for the City’s explicit contribution and $1,793,631 for the implicit rate subsidy). Changes from Prior Valuation The valuation reflects updated premium, plan and census information. The plan was modified to reduce the City contribution for spouse coverage. In addition, the valuation reflects several assumption changes (as noted in Section VI) including updates to the medical trend rates and bringing in assumptions from the CalPERS experience study for similar groups as the City. A reconciliation of the approximate change from the prior valuation is provided in the following table: Actuarial Liability at June 30, 2013 @7.25% $38,001,000 Decrease due to passage of time ( 116,000) Decrease due to more favorable experience ( 879,000) Increase due to new entrants 249,000 Increase due to lowering the discount rate to 7.0% 1,042,000 Actuarial Liability at June 30, 2015 @7.0% - Without Implicit Liability $38,297,000 Increase due to inclusion of the liability for the implicit rate subsidy 9,117,000 Actuarial Liability at June 30, 2015 @7.0% - With Implicit Liability $47,414,000 Portion attributable to current year accrual or normal cost ( 611,000) Portion of liability not yet accrued or future normal cost accruals ( 4,164,000) Actuarial Accrued Liability at June 30, 2015 @7.0% - With Implicit Liability $42,639,000 Annual Required Contribution The City’s annual required contribution (accrual expense) for the 2016/2017 fiscal year is $3,582,661 (net of Hybrid Plan contribution made by active employees and including $1,068,349 for the implicit rate subsidy). The annual required contribution is comprised of the present value of benefits accruing in the current fiscal year (normal cost with interest) plus an 11-year amortization (on a level-percentage of pay basis) of the unfunded actuarial accrued liability. Thus, it represents a means to expense the plan's liabilities in an orderly manner. The change in the net OPEB obligation/(asset) at the end of the fiscal year will reflect any actual contributions made by the City during the period for retiree health benefits including any pre-funding amounts and implicit rate subsidy. K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 3 Funding The City’s funding policy is to fund 100% of the annual required contribution as determined under GASB 45 through the California Employers’ Retiree Benefit Trust (CERBT). The actuarial value of assets in the CERBT as of June 30, 2015 is $14,890,926. The unfunded actuarial accrued liability (UAAL) at June 30, 2015 is $27,747,629 (including $7,116,207 for the implicit rate subsidy). The funded ratio is 35% at June 30, 2015 (42% for the City’s explicit contribution). The UAAL as a percentage of payroll is 39%. The CERBT provides participating employers with the choice of three investment allocation strategies. The expected rate of return of assets is dependent on the funding strategy of a participating employer and which investment allocation strategy is selected. For employers fully funding their annual required contribution, strategy 1 has a CERBT published median yield of 7.28%, strategy 2 has a published median yield of 6.73% and strategy 3 has a published median yield of 6.12%. The valuation was performed using a 7.0% discount rate assuming the City remains in strategy 1 for the 2016/2017 and 2017/2018 fiscal years and assumes a 0.28% additional margin for adverse deviation applied to the CERBT stated median discount rate. Section II-L of the report provides the results using an alternative discount rate of 6.5%. Actuarial Basis The actuarial valuation is based on the assumptions and methods outlined in Section VI of the report. To the extent that a single or a combination of assumptions is not met the future liability may fluctuate significantly from its current measurement. As an example, the healthcare cost increase anticipates that the rate of increase in medical cost will be at moderate levels and decline over several years. Increases higher than assumed would bring larger liabilities and expensing requirements. A 1% increase in the healthcare trend rate for each future year would increase the annual required contribution by 8%. The impact is mitigated because the City’s contribution for most retirees is a flat dollar amount and not subject to future increases unless the retiree is covered under PEMHCA and the PEMHCA minimum contribution exceeds the flat dollar amount in the future. Another key assumption used in the valuation is the discount (interest) rate which is based on the expected rate of return of plan assets. The valuation is based on a discount rate of 7.0%. A 0.5% decrease in the discount rate would increase the annual required contribution by 6%. A 0.5% increase in the discount rate would decrease the annual required contribution by 5%. GASB 45 requires that implicit rate subsidies be considered in the valuation of medical costs. An implicit rate subsidy occurs when the rates for retirees are the same as for active employees. Since pre-Medicare retirees are typically much older than active employees, their actual medical costs are almost always higher than for active employees. The valuation results were determined using the higher expected costs associated with retired employees. Scheduled to take effect in 2018, the "Cadillac Tax" is a 40% non-deductible excise tax on employer- sponsored health coverage that provides high-cost benefits. For pre-65 retirees and individuals in high- risk professions, the threshold amounts are currently $11,850 for individual coverage and $30,950 for family coverage. For insured plans, the insurance company is responsible for payment of the excise tax. For self-funded plans, the employer is responsible for payment of the excise tax. The valuation does not include any additional liability for the Cadillac Tax. The valuation is based on the census, plan and rate information provided by the City. To the extent that the data provided lacks clarity in interpretation or is missing relevant information, this can result in liabilities different than those presented in the report. Often missing or unclear information is not identified until future valuations. K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 4 SECTION II. FINANCIAL RESULTS A. Valuation Results The table below presents the employer liabilities associated with the City’s retiree health benefits program determined in accordance with GASB 43 & 45. The actuarial liability (AL) is the present value of all the City’s contributions projected to be paid under the program. The actuarial accrued liability (AAL) reflects the amount attributable to the past service of current employees and retirees. The normal cost reflects the accrual attributable for the current period. Miscellaneous Safety Total 1. Actuarial Liability (AL) Actives $ 8,190,749 $ 5,423,030 $13,613,779 Retirees 16,596,960 17,203,604 33,800,564 Total AL $24,787,709 $22,626,634 $47,414,343 Explicit Contribution $20,110,933 $18,186,386 $38,297,319 Implicit Subsidy $ 4,676,775 $ 4,440,249 $ 9,117,024 2. Actuarial Accrued Liability (AAL) Actives $ 5,771,075 $ 3,066,916 $ 8,837,991 Retirees 16,596,960 17,203,604 33,800,564 Total AAL $22,368,035 $20,270,520 $42,638,555 Explicit Contribution $18,685,542 $16,836,806 $35,522,348 Implicit Subsidy $ 3,682,493 $ 3,433,714 $ 7,116,207 3. Normal Cost $ 303,514 $ 307,401 $ 610,915 Explicit Contribution $ 196,707 $ 207,022 $ 403,729 Implicit Subsidy $ 106,807 $ 100,379 $ 207,186 No. of Active Employees 508 270 778 Average Age 44.6 39.0 42.7 Average Past Service 12.3 11.7 12.1 No. of Retired Employees* 302 262 564 Average Age 68.4 64.9 66.8 Average Retirement Age 57.5 51.3 54.7 *Counts exclude 103 retirees waiving coverage and not receiving any City contribution B. Reconciliation of Market Value of Plan Assets The reconciliation of Plan Assets for the last four fiscal years is presented below: 6/30/2012 6/30/2013 6/30/2014 6/30/2015 1. Beginning Market Value of Assets $8,240,851 $ 8,146,021 $10,632,403 $14,909,052 2. Contribution 2,314,000 3,051,000 4,881,000 2,763,005 3. Fund Earnings (gross) 144,158 1,026,517 2,118,149 ( 43,051) 4. Benefit Payments ( 2,542,050) ( 1,577,434) ( 2,704,796) ( 2,794,465) 5. Administrative Expenses ( 10,938) ( 13,701) ( 17,704) ( 15,705) 6. Ending Market Value of Assets $8,146,021 $10,632,403 $14,909,052 $14,818,836 7. Estimated Gross Rate of Return 2% 12% 18% 0% K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 5 C. Development of Actuarial Value of Assets The actuarial value of assets is based on the expected market value appreciation. The actual market appreciation or depreciation, both realized and unrealized, is phased in over five years as the expected growth is phased out. The table below presents the development of the actuarial value of assets. 6/30/2012 6/30/2013 6/30/2014 6/30/2015 1 Market value of assets $14,818,836 2 Actual gross rate of return 1.78% 11.57% 18.09% ( 0.29%) 3 Expected rate of return 7.25% 7.25% 7.25% 7.25% 4 Actual fund earnings $144,158 $1,026,518 $2,118,149 ( 43,051) $ 3,245,774 5 Expected fund earnings 588,798 643,507 849,095 1,079,197 3,160,597 6 Gain(loss) [(4) - (5)] (444,640) 383,011 1,269,054 (1,122,248) 7 Percent of gain/(loss) recognized 6/30/2015 80% 60% 40% 20% 8 Recognized gain/(loss) [(6) x (7)] (355,712) 229,807 507,622 (224,450) 157,267 9. Blended value of assets at 6/30/2015 [(1) - (4) + (5) + (8)] $14,890,926 10.Percent increase/(decrease) of (9) over (1) 0.5% 11.Actuarial value of assets, not more than 120% nor less than 80% of market value $14,890,926 D. Development of Unfunded Actuarial Accrued Liability (UAAL) @ June 30, 2015 The table below presents the development of the unfunded actuarial accrued liability (UAAL). The UAAL is the excess of the actuarial accrued liability (AAL) over the actuarial value of eligible plan assets. Explicit Implicit Total 1. Actuarial Accrued Liability (AAL) $35,522,348 $ 7,116,207 $42,638,555 2. Actuarial Valuation of Assets ( 14,890,926) ( 0) ( 14,890,926) 3. Unfunded AAL $20,631,422 $ 7,116,207 $27,747,629 E. Required Supplementary Information (Funding Progress @6/30/2015) The table below presents a sample disclosure of the funding progress as of the beginning of the fiscal year. 1. Actuarial Accrued Liability (AAL) $35,522,348 $ 7,116,207 $42,638,555 2. Actuarial Valuation of Assets ( 14,890,926) ( 0) ( 14,890,926) 3. Unfunded AAL $20,631,422 $ 7,116,207 $27,747,629 4. Funded Ratio 42% 0% 35% 5. Current Payroll $70,277,000 $70,277,000 $70,277,000 6. UAAL as % of Payroll 29% 10% 39% F. Projected Actuarial Value of Assets @June 30, 2016 The table below presents the development of the expected actuarial value of assets at June 30, 2016 for purposes of developing the annual required contribution. 1. Actuarial Value of Assets at June 30, 2015 $14,890,926 2. Expected Fund Earnings @7.0% 1,068,152 3. Expected City Contributions* 4,214,876 4. Expected Benefit Payments & Expenses* ( 3,478,104) 5. Projected Actuarial Value of Assets at June 30, 2016 $16,695,850 * Based on projected City contributions equal to $4,214,876 and reimbursements for direct payments for benefits and implicit rate subsidies equal to $3,478,104. K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 6 G. Development of Unfunded Actuarial Accrued Liability@6/30/2016 The table below presents the development of the unfunded actuarial accrued liability. The unfunded actuarial accrued liability is the excess of the actuarial accrued liability (AAL) over the actuarial value of eligible plan assets1. Explicit Implicit Total 1. Actuarial Accrued Liability (AAL) $35,547,601 $7,189,644 $42,737,245 2. Actuarial Value of Assets1 ( 16,695,850) ( 0) ( 16,695,850) 3. Unfunded AAL $18,851,751 $7,189,644 $26,041,395 H. Amortization of Unfunded Actuarial Accrued Liability The amortization of the UAAL component of the annual required contribution (ARC) is being amortized on a level-percentage of pay basis over a period of 11 years. Under the level-percentage of pay method, the amortization payment is scheduled to increase in future years based on wage inflation. 1. Unfunded AAL (UAAL) $18,851,751 $ 7,189,644 $26,041,395 2. Amortization Factor 8.559010 8.559010 8.559010 3. Amortization of UAAL $ 2,202,562 $ 840,009 $ 3,042,571 I. Annual Required Contribution (ARC) The table below presents the development of the annual required contribution (ARC) under GASB 45 for the fiscal year ending June 30, 2017 and estimated for the fiscal year ending June 30, 2018. FY2016/2017 1. Normal Cost at End of Fiscal Year $ 444,950 $ 228,340 $ 673,290 2. Amortization of Surplus 2,202,562 840,009 3,042,571 3. Annual Required Contribution (ARC) $ 2,647,512 $ 1,068,349 $ 3,715,861 4. Expected Hybrid Employee Contributions ( 133,200) ( 0) ( 133,200) 5. City ARC $ 2,514,312 $ 1,068,349 $ 3,582,661 6. Expected Payroll $72,385,000 $72,385,000 $72,385,000 7. City ARC as % Payroll 3.5% 1.5% 5.0% FY2017/2018 1. Normal Cost at End of Fiscal Year $ 458,299 $ 235,190 $ 693,489 2. Amortization of Surplus 2,268,639 865,209 3,133,848 3. Annual Required Contribution (ARC) $ 2,726,938 $ 1,100,399 $ 3,827,337 4. Expected Hybrid Employee Contributions ( 133,200) ( 0) ( 133,200) 5. City ARC $ 2,593,738 $ 1,100,399 $ 3,694,137 6. Expected Payroll $74,556,000 $74,556,000 $74,556,000 7. City ARC as % Payroll 3.5% 1.5% 5.0% 1 Based on projected actuarial accrued liability and projected actuarial value of plan assets at June 30, 2016. K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 7 J. Estimated Net OPEB Obligation at June 30, 2017 and June 30, 2018 The table below shows an estimate of the net OPEB obligation/(asset) at the end of the upcoming fiscal years assuming the City contributes at the annual required contribution by the end of the fiscal year and that the City’s net OPEB obligation/(asset) at June 30, 2015 is ($1,500,000). 2015/2016 2016/2017 2017/2018 1. Annual Required Contribution (ARC) $2,713,000 $3,583,000 $3,694,000 2. Interest on Net OPEB Obligation ( 105,000) ( 206,000) ( 197,000) 3. Adjustment to ARC 161,000 344,000 354,000 4. Annual OPEB Cost $2,769,000 $3,721,000 $3,851,000 5. Estimated City Contributions Made ( 4,215,000) ( 3,583,000) ( 3,694,000) 6. Increase in Net OPEB Obligation ($1,446,000) $ 138,000 $ 157,000 7. Net OPEB Obligation/(Asset) – Beginning of Fiscal Year ( 1,500,000) ( 2,946,000) ( 2,808,000) 8. Net OPEB Obligation/(Asset) – End of Fiscal Year ($2,946,000) ($2,808,000) ($2,651,000) K. Sensitivity Analysis: The impact of a 0.5% decrease or increase in the discount (interest) rate and the impact of a 1% increase in future healthcare trend rates on the City’s actuarial liability, actuarial accrued liability, unfunded actuarial accrued liability and the annual required contribution is provided below: 0.5% Decrease in Discount Rate Dollar ($) Increase/ (Decrease) Percentage (%) Increase/ (Decrease) - Actuarial Liability $2,655,170 8% - Actuarial Accrued Liability $1,967,449 5% - Unfunded Actuarial Accrued Liability $1,967,449 7% - Annual Required Contribution $ 209,226 6% 0.5% Increase in Discount Rate - Actuarial Liability ($2,407,087) ( 7%) - Actuarial Accrued Liability ($1,818,068) ( 4%) - Unfunded Actuarial Accrued Liability ($1,818,068) ( 7%) - Annual Required Contribution ($ 195,432) ( 5%) 1% Increase in Future Healthcare Trend Rates - Actuarial Liability $2,578,633 8% - Actuarial Accrued Liability $1,607,806 4% - Unfunded Actuarial Accrued Liability $1,607,806 6% - Annual Required Contribution $ 297,786 8% K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 8 L. Alternative Results: Alternative Discount Rate The table below shows the impact on the liability and annual required contributions using a lower discount rate of 6.5%. As of June 30, 2015 Explicit Contribution Implicit Rate Subsidy Total 1. Actuarial Liability (AL) Actives $ 9,432,850 $ 5,395,219 $14,828,069 Retirees 31,026,491 4,214,953 35,241,444 Total AL $40,459,341 $ 9,610,172 $50,069,513 2. Actuarial Accrued Liability (AAL) Actives $ 6,233,096 $ 3,131,464 $ 9,364,560 Retirees 31,026,491 4,214,953 35,241,444 Total AAL $37,259,587 $ 7,346,417 $44,606,004 3. Actuarial Value of Assets ( 14,890,826) ( 0) ( 14,890,926) 4. Unfunded AAL (UAAL) $22,368,661 $ 7,346,417 $29,715,078 Projected to June 30, 2016 1. Actuarial Accrued Liability (AAL) $37,273,106 $ 7,419,053 $44,692,159 2. Actuarial Value of Assets ( 16,695,850) ( 0) ( 16,695,850) 3. Unfunded AAL (UAAL) $20,577,256 $ 7,419,053 $27,996,309 4. Amortization Factor 8.788265 8.788265 8.788265 5. Amortization of UAAL $ 2,341,447 $ 844,200 $ 3,185,647 2016/2017 Annual Required Contribution 1. Normal Cost at End of Year $ 492,297 $ 247,143 $ 739,440 2. Amortization of UAAL at End of Year 2,341,447 844,200 3,185,647 3. Annual Required Contribution (ARC) $ 2,833,744 $ 1,091,343 $ 3,925,087 4. Expected Hybrid Employee Contributions ( 133,200) ( 0) ( 133,200) 5. City ARC $ 2,700,544 $ 1,091,343 $ 3,791,887 6. Expected Payroll $72,385,000 $72,385,000 $72,385,000 7. City ARC as % of Payroll 3.7% 1.5% 5.2% 2017/2018 Annual Required Contribution 1. Normal Cost at End of Year $ 507,066 $ 254,557 $ 761,623 2. Amortization of UAAL at End of Year 2,411,690 869,526 3,281,216 3. Annual Required Contribution (ARC) $ 2,918,756 $ 1,124,083 $ 4,042,840 4. Expected Hybrid Employee Contributions ( 133,200) ( 0) ( 133,200) 5. City ARC $ 2,785,556 $ 1,124,083 $ 3,909,640 6. Expected Payroll $74,556,000 $74,556,000 $74,556,000 7. City ARC as % of Payroll 3.7% 1.5% 5.2% K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 9 SECTION III. PROJECTED CASH FLOWS The valuation process includes the projection of the expected benefits and/or contributions to be paid by the City under its retiree health benefits program. This expected cash flow takes into account the likelihood of each employee reaching age for eligibility to retire and receive health benefits. The projection is performed by applying the turnover assumption to each active employee for the period between the valuation date and the expected retirement date. Once the employees reach their retirement date, a certain percent are assumed to enter the retiree group each year. Employees already over the latest assumed retirement age as of the valuation date are assumed to retire immediately or at first eligibility, if later. The per capita cost as of the valuation date is projected to increase at the applicable healthcare trend rates both before and after the employee's assumed retirement. The projected per capita costs are multiplied by the number of expected future retirees in a given future year to arrive at the cash flow for that year. Also, a certain number of retirees will leave the group each year due to expected deaths and this group will cease to be included in the cash flow from that point forward. Because this is a closed-group valuation, the number of retirees dying each year will eventually exceed the number of new retirees, and the size of the cash flow will begin to decrease and eventually go to zero. The expected cash flows for selected future years are provided in the table on the following page. These cash flows do not reflect the employee contributions that will be paid by Hybrid Plan active employees in future years. The estimated implicit rate subsidies are also provided. K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 10 Projected Employer Cash Flows – Representative Years Fiscal Year Future Retirees Retired Employees City Total Subsidy Total 2015/16 $ 90,119 $ 2,705,341 $ 2,795,460 $ 624,528 $ 3,419,988 2016/17 $ 167,472 $ 2,675,001 $ 2,842,473 $ 669,685 $ 3,512,158 2017/18 $ 243,000 $ 2,643,789 $ 2,886,789 $ 683,338 $ 3,570,127 2018/19 $ 311,387 $ 2,611,414 $ 2,922,801 $ 691,049 $ 3,613,850 2019/20 $ 372,572 $ 2,578,390 $ 2,950,962 $ 696,254 $ 3,647,216 2020/21 $ 426,304 $ 2,543,256 $ 2,969,560 $ 726,736 $ 3,696,296 2021/22 $ 474,885 $ 2,505,413 $ 2,980,298 $ 756,249 $ 3,736,547 2022/23 $ 518,309 $ 2,466,031 $ 2,984,340 $ 727,814 $ 3,712,154 2023/24 $ 555,273 $ 2,424,559 $ 2,979,832 $ 732,625 $ 3,712,457 2024/25 $ 586,862 $ 2,381,169 $ 2,968,031 $ 729,293 $ 3,697,324 2025/26 $ 616,111 $ 2,333,228 $ 2,949,339 $ 718,554 $ 3,667,893 2026/27 $ 644,524 $ 2,284,265 $ 2,928,789 $ 712,830 $ 3,641,619 2027/28 $ 669,816 $ 2,231,286 $ 2,901,102 $ 708,869 $ 3,609,971 2028/29 $ 694,763 $ 2,174,048 $ 2,868,811 $ 706,446 $ 3,575,257 2029/30 $ 718,737 $ 2,115,121 $ 2,833,858 $ 683,168 $ 3,517,026 2030/31 $ 743,064 $ 2,053,080 $ 2,796,144 $ 661,972 $ 3,458,116 2031/32 $ 767,326 $ 1,986,098 $ 2,753,424 $ 630,784 $ 3,384,208 2032/33 $ 792,292 $ 1,917,641 $ 2,709,933 $ 588,929 $ 3,298,862 2033/34 $ 816,637 $ 1,845,291 $ 2,661,928 $ 560,176 $ 3,222,104 2034/35 $ 841,534 $ 1,769,686 $ 2,611,220 $ 573,921 $ 3,185,141 2035/36 $ 866,514 $ 1,692,080 $ 2,558,594 $ 575,864 $ 3,134,458 2036/37 $ 890,652 $ 1,612,167 $ 2,502,819 $ 567,254 $ 3,070,073 2037/38 $ 914,384 $ 1,529,567 $ 2,443,951 $ 601,623 $ 3,045,574 2038/39 $ 937,165 $ 1,445,163 $ 2,382,328 $ 639,412 $ 3,021,740 2039/40 $ 958,301 $ 1,359,287 $ 2,317,588 $ 680,412 $ 2,998,000 2040/41 $ 977,274 $ 1,273,083 $ 2,250,357 $ 666,016 $ 2,916,373 2041/42 $ 994,008 $ 1,185,643 $ 2,179,651 $ 692,230 $ 2,871,881 2042/43 $ 1,008,849 $ 1,098,178 $ 2,107,027 $ 737,022 $ 2,844,049 2043/44 $ 1,021,543 $ 1,011,274 $ 2,032,817 $ 717,089 $ 2,749,906 2044/45 $ 1,031,772 $ 925,584 $ 1,957,356 $ 652,925 $ 2,610,281 2045/46 $ 1,039,908 $ 844,086 $ 1,883,994 $ 637,254 $ 2,521,248 2050/51 $ 1,100,568 $ 533,454 $ 1,634,022 $ 305,198 $ 1,939,220 2055/56 $ 1,067,559 $ 278,750 $ 1,346,309 $ 78,396 $ 1,424,705 2060/61 $ 943,318 $ 117,540 $ 1,060,858 $ 1,058 $ 1,061,916 2065/66 $ 766,484 $ 42,923 $ 809,407 $ 0 $ 809,407 2070/71 $ 578,185 $ 17,182 $ 595,367 $ 0 $ 595,367 2075/76 $ 386,825 $ 9,263 $ 396,088 $ 0 $ 396,088 2080/81 $ 208,088 $ 5,401 $ 213,489 $ 0 $ 213,489 2085/86 $ 81,416 $ 2,142 $ 83,558 $ 0 $ 83,558 2090/91 $ 20,842 $ 399 $ 21,241 $ 0 $ 21,241 2095/86 $ 2,927 $ 0 $ 2,927 $ 0 $ 2,927 2100/01 $ 122 $ 0 $ 122 $ 0 $ 122 All Years $49,593,990 $66,810,824 $116,404,814 $23,870,287 $140,275,101 K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 11 SECTION IV. BENEFIT PLAN PROVISI ONS This study analyzes the post-retirement health benefits provided by the City. Currently, eligible active employees are offered a choice of medical (including prescription drug coverage) plans through the CalPERS Health Program under the Public Employees’ Medical and Hospital Care Act (PEMHCA). The City offers the same medical plans to eligible retirees except once a retiree is eligible for Medicare, the retiree must join a Medicare HMO or Supplement Plan with Medicare being the primary payer. Prior to January 1, 2006, the City sponsored a defined benefit healthcare plan which provided a fixed dollar contribution towards the cost of medical coverage for eligible employees continuing medical coverage through PEMHCA at retirement. The City’s contribution varied by employee group (up to a maximum of $450 per month for Police employees and $400 for all other employees). Effective January 1, 2006, the City implemented a Retiree Health Savings program (RHS) for all new full-time employees (Category 1) and for full-time employees whose age plus service as of January 1, 2006 was less than 46 for public safety employees and 50 for all other employees (Category 2). Full-time active employees whose age plus service as of January 1, 2006 was 46 or more for public safety employees and 50 or more for all other employees (Category 3) continued to be eligible to receive the City’s fixed dollar contribution under the prior defined benefit plan at retirement but the contribution is paid into the employee’s RHS account. Employees already retired and eligible for a City contribution at January 1, 2006 (Category 4) continued to receive the City’s contribution under the prior defined benefit plan but instead of being applied towards medical coverage, the fixed dollar contribution amount less the minimum required employer PEMHCA contribution for those continuing coverage through PEMHCA is made to an RHS account established for the retiree. Employees in Category 3 could make a one-time election to be treated similarly to Category 2 employee with those not electing remaining in a Hybrid Plan (includes both the City’s fixed dollar contribution but also some components of the RHS Plan). A description of the funding components is outlined in the chart on the following page. The RHS is a Health Reimbursement Arrangement (HRA) sponsored by the City which reimburses a participant for post-employment medical (PEMHCA plan) dental, vision, long-term care, miscellaneous medical expenses, and the PEMHCA minimum. In general, the RHS is a defined contribution program sponsored by the City with several funding components as outlined in the table on the following page. Any balance in the employee’s RHS account after the death of the employee and eligible spouse and dependents will be forfeited. Part-time employees can continue medical coverage through PEMHCA and receive the PEMHCA minimum required contribution from the City which is scheduled to increase in the future based on the medical portion of CPI. A history of the increases in past years and current amounts are as follows: Calendar Year Minimum Required Employer Contribution 2007 $80.80 2008 $97.00 2009 $101.00 2010 $105.00 2011 $108.00 2012 $112.00 2013 $115.00 2014 $119.00 2015 $122.00 2016 $125.00 2017+ Adjusted Annually to reflect Medical Portion of CPI K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 12 In general, the RHS is a defined contribution program sponsored by the City with the following funding components: Category 1 Category 2 Category 3* Category 4 Part A – Pre-Retirement Employee Contributions o 1% of base pay mandatory contribution o effective immediately upon employment o 1% of base pay mandatory contribution o effective January 1, 2006 o 1% of base pay mandatory contribution o effective January 1, 2006 None Part B – Pre-Retirement City Contributions: o City contributes $2.50 per month for each year of age plus service during employment o effective upon 5 years of vesting service; immediate vesting for industrial disability o retroactively deposited; biweekly thereafter o City contributes $2.50 per month for each year of age plus service during employment o effective upon 5 years of vesting service; immediate vesting for industrial disability o retroactively deposited; biweekly thereafter None None Part C – Leave Conversion: o mandatory transfer of a portion of accumulated leave during any leave buyout o amount of leave conversion varies by bargaining unit & subject to negotiation o not payable in cash o mandatory transfer of a portion of accumulated leave during any leave buyout o amount of leave conversion varies by bargaining unit & subject to negotiation o not payable in cash o mandatory transfer of a portion of accumulated leave during any leave buyout o amount of leave conversion varies by bargaining unit & subject to negotiation o not payable in cash Part D – Conversion Contribution: None o For fully converted employees who retire from the plan only o City will make a one-time contribution of $100 per month the employee contributed to the plan prior to January 1, 2006 with a cap of $18,000 o City will make a one-time contribution of $75 per month the employee contributed to the plan January 1, 2006 with a cap of $13,500 Part E – Post Retirement Contribution o City will provide the PEMHCA minimum contribution when a retiree’s RHS account value has been exhausted o City will provide the PEMHCA minimum contribution when a retiree’s RHS account value has been exhausted o City will contribute $400 per month ($450 for Police employees retiring prior to January 1, 2006) o City will contribute $400 per month ($450 for Police employees) to retiree’s or surviving spouse’s RHS account Part F – Other Pre-Retirement Employee Contributions: None None o Active full-time employees are required to make a contribution of $100 per month None *Employees making a one-time election into the RHS Plan are treated as Category 2 employees. K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 13 Premium Rates The City participates in the CalPERS Health Program, a community-rated program, for medical coverage. The tables below summarize the calendar 2015 and 2016 monthly medical premiums for the primary medical plans in which the retirees are enrolled. 2015 Other So. Cal. Region Kaiser BS HMO BS NVP HMO PERS Care PERS Choice PERS Select Retiree Only $ 579.80 $ 598.66 $ 561.09 $ 657.32 $ 594.40 $ 585.58 Retiree Plus Spouse $1,159.60 $1,197.32 $1,122.18 $1,314.64 $1,188.80 $1,171.16 Retiree Plus Family $1,507.48 $1,556.52 $1,458.83 $1,709.03 $1,545.44 $1,522.51 Retiree Only- Medicare $ 295.51 $ 352.63 $ 352.63 $ 368.76 $ 339.47 $ 339.47 Retiree Plus Spouse – Medicare $ 591.02 $ 705.26 $ 705.26 $ 737.52 $ 678.94 $ 678.94 2015 Other So. Cal. Region (Continued) Sharp HMO UHC HMO Anthem HMO Select Anthem HMO Traditional Health Net Salud Health Net Smart Care Retiree Only $ 564.57 $ 449.10 $ 653.97 $ 743.12 $ 520.59 $ 579.88 Retiree Plus Spouse $1,129.14 $ 898.20 $1,307.94 $1,486.24 $1,041.18 $1,159.76 Retiree Plus Family $1,467.88 $1,167.66 $1,700.32 $1,932.11 $1,353.53 $1,507.69 Retiree Only- Medicare $ 327.66 $ 267.41 $ 445.38 $ 445.38 $ 276.85 $ 276.85 Retiree Plus Spouse – Medicare $ 655.32 $ 534.82 $ 890.76 $ 890.76 $ 553.70 $ 553.70 2016 Other So. Cal. Region Kaiser BS HMO BS NVP HMO PERS Care PERS Choice PERS Select Retiree Only $ 605.05 $ 654.87 $ 666.35 $ 761.50 $ 683.71 $ 625.20 Retiree Plus Spouse $1,210.10 $1,309.74 $1,332.70 $1,523.00 $1,367.42 $1,250.40 Retiree Plus Family $1,573.13 $1,702.66 $1,732.51 $1,979.90 $1,777.65 $1,625.52 Retiree Only- Medicare $ 297.23 N/A N/A $ 408.04 $ 366.38 $ 366.38 Retiree Plus Spouse – Medicare $ 594.46 N/A N/A $ 816.08 $ 732.76 $ 732.76 2016 Other So. Cal. Region (Continued) Sharp HMO UHC HMO Anthem HMO Select Anthem HMO Traditional Health Net Salud Health Net Smart Care Retiree Only $ 561.34 $ 493.99 $ 634.75 $ 710.79 $ 535.98 $ 596.98 Retiree Plus Spouse $1,122.68 $ 987.98 $1,269.50 $1,421.58 $1,071.96 $1,193.96 Retiree Plus Family $1,459.48 $1,284.37 $1,650.35 $1,848.05 $1,393.55 $1,552.15 Retiree Only- Medicare N/A $ 320.98 N/A N/A N/A N/A Retiree Plus Spouse – Medicare N/A $ 641.96 N/A N/A N/A N/A K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 14 SECTION V. VALUATION DATA The valuation was based on the census furnished to us by the City. The following tables display the age distribution for retirees and the age/service distribution for active employees as of the Measurement Date. Age Distribution of Eligible Retired Participants & Beneficiaries Age Miscellaneous Safety Total* MRC Only Waives Grand Total <50 1 2 3 5 11 19 50-54 10 26 36 2 6 44 55-59 41 37 78 3 6 87 60-64 52 70 122 5 7 134 65-69 68 60 128 4 11 143 70-74 41 28 69 3 13 85 75-79 34 21 55 2 14 71 80-84 18 8 26 1 14 41 85+ 18 4 22 0 21 43 Total: 283 256 539 25 103 667 Average Age: 68.8 65.2 67.1 60.9 71.6 67.5 Average Retirement Age: 57.7 51.6 54.8 52.3 50.2 54.0 * Note: Currently receiving the $400 or $450 per month contribution. Age/Service Distribution of All Active Benefit Eligible Employees Age 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 Total Hybrid Plan RHS Plan Part Time 20-24 22 1 23 0 10 13 25-29 48 20 0 68 0 49 19 30-34 38 57 26 3 124 0 116 8 35-39 22 36 59 9 126 0 119 7 40-44 14 21 41 23 7 3 109 0 106 3 45-49 15 17 24 22 22 17 1 118 16 94 8 50-54 8 8 21 21 16 28 5 1 108 42 56 10 55-59 8 6 8 9 6 12 6 0 55 30 18 7 60-64 4 8 6 7 4 3 4 2 38 18 11 9 65-69 1 2 0 0 1 2 0 0 1 7 4 0 3 70+ 0 0 1 0 0 1 0 0 0 2 1 0 1 Total: 180 176 186 94 56 66 16 3 1 778 111 579 88 Average Age: 42.7 55.5 40.5 41.0 Average Service: 12.1 24.6 10.4 7.6 K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 15 Age/Service Distribution of Benefit Eligible Miscellaneous Employees Age 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 Total Hybrid Plan RHS Plan Part Time 20-24 17 1 18 0 5 13 25-29 26 11 37 0 18 19 30-34 16 32 14 1 63 0 56 7 35-39 15 22 24 7 68 0 61 7 40-44 13 7 25 14 4 1 64 0 61 3 45-49 14 14 15 13 10 9 1 76 6 64 6 50-54 6 8 20 15 11 23 3 1 0 87 27 50 10 55-59 7 6 8 9 6 9 6 0 0 51 28 17 6 60-64 3 8 6 7 4 2 3 2 0 35 16 10 9 65-69 1 2 0 0 1 2 0 0 1 7 4 0 3 70+ 0 0 1 0 0 1 0 0 0 2 1 0 1 Total: 118 111 113 66 36 47 13 3 1 508 82 342 84 Average Age 44.6 56.8 42.6 40.8 Average Service 12.3 24.4 10.7 7.1 Age/Service Distribution of Benefit Eligible Safety Employees Age 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 Total Hybrid Plan RHS Plan Part Time 20-24 5 5 0 5 0 25-29 22 9 31 0 31 0 30-34 22 25 12 2 61 0 60 1 35-39 7 14 35 2 58 0 58 0 40-44 1 14 16 9 3 2 45 0 45 0 45-49 1 3 9 9 12 8 42 10 30 2 50-54 2 0 1 6 5 5 2 0 21 15 6 0 55-59 1 0 0 0 0 3 0 0 0 4 2 1 1 60-64 1 0 0 0 0 1 1 0 0 3 2 1 0 65-69 0 0 0 0 0 0 0 0 0 0 0 0 0 70+ 0 0 0 0 0 0 0 0 0 0 0 0 0 Total: 62 65 73 28 20 19 3 0 0 270 29 237 4 Average Age 39.0 51.7 37.4 45.5 Average Service 11.7 25.2 10.0 17.6 K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 16 SECTION VI. ACTUARIAL ASSUMPTIONS AND METHODS The liabilities set forth in this report are based on the actuarial assumptions described in this section. Measurement Date: June 30, 2015 Fiscal Year: July 1st to June 30th Fiscal Years Covered: Fiscal Year Ending June 30, 2017 & Fiscal Year Ending June 30, 2018 – 1 Year Lag Period Discount Rate: 7.0% for cash subsidy and PEMHCA implied subsidy, pre-funded through CERBT strategy 1 [The prior valuation assumed 0.25% higher rate for the cash subsidy and 4.25% for PEMHCA] Inflation: 2.8% per annum Wage Inflation: 3.0% per annum, in aggregate. Salary Increases: For cost method purposes the merit increases from the CalPERS pension plan are used. Pre-retirement Turnover: According to the termination rates under the CalPERS pension plan. Sample rates for Miscellaneous employees are as follows: Entry Age Service 20 30 40 50 0 17.42% 16.06% 14.68% 13.32% 5 8.68% 7.11% 5.54% 0.97% 10 6.68% 5.07% 0.71% 0.38% 15 5.03% 3.47% 0.23% 0.04% 20 3.70% 0.21% 0.05% 0.01% 25 2.29% 0.05% 0.01% 0.01% 30 0.05% 0.01% 0.01% 0.01% Sample rates for Firefighter employees are as follows: Entry Age Service 20 30 40 50 0 9.5% 9.5% 9.5% 9.5% 5 2.6% 2.6% 2.6% 1.0% 10 0.9% 0.9% 0.3% 0.3% 15 0.8% 0.8% 0.2% 0.2% 20 0.7% 0.2% 0.2% 0.2% 25 0.6% 0.1% 0.1% 0.1% 30 0.1% 0.1% 0.1% 0.1% K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 17 Sample rates for Safety employees are as follows: Entry Age Service 20 30 40 50 0 10.1% 10.1% 10.1% 10.1% 5 2.5% 2.5% 2.5% 0.9% 10 1.8% 1.8% 0.5% 0.5% 15 1.1% 1.1% 0.3% 0.3% 20 0.8% 0.2% 0.2% 0.2% 25 0.7% 0.1% 0.1% 0.1% 30 0.1% 0.1% 0.1% 0.1% Pre-retirement Mortality: According to the pre-retirement mortality rates under the CalPERS pension plan updated to reflect the most recent experience study. Sample deaths per 1,000 employees applicable to employees are as follows: Age Males Females 25 0.4 0.2 30 0.5 0.3 35 0.6 0.4 40 0.8 0.5 45 1.1 0.7 50 1.6 1.0 55 2.3 1.4 60 3.1 1.8 Post-retirement Mortality: According to the post-retirement mortality rates under the CalPERS pension plan updated to reflect the most recent experience study. Sample deaths per 1,000 employees applicable to Miscellaneous and Safety retirees are as follows: Age Males Females 55 6.0 4.2 60 7.1 4.4 65 8.3 5.9 70 13.1 9.9 75 22.1 17.2 80 39.0 29.0 85 69.7 52.4 90 129.7 98.9 Sample deaths per 1,000 employees applicable to industrial disabled retirees are as follows: Age Males Females 55 6.0 4.2 60 7.5 5.2 65 11.2 8.4 70 16.4 14.0 75 28.3 23.2 80 49.0 39.1 85 76.8 62.5 90 129.7 98.9 K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 18 Disability Rates: According to the disability rates under the CalPERS pension plan updated to reflect the most recent experience study. Sample industrial disabilities per 1,000 employees: Age Miscellaneous Safety Firefighter 25 0.0 3.2 1.2 30 0.0 6.4 2.5 35 0.0 9.7 3.7 40 0.0 12.9 4.9 45 0.0 16.1 6.1 50 0.0 19.2 7.4 55 0.0 66.8 72.1 Retirement Rates: According to the retirement rates under the CalPERS pension plan updated to reflect the most recent experience study as follows: Miscellaneous Employees Tier 1 – 2.5%@ Age 55 Tier 2 – 2.0%@ Age 60 Tier 3 – 2.0%@ Age 62 Fire Employees Tier 1 – 3.0%@ Age 50 Tier 2 – 2.0%@ Age 50 Tier 3 – 2.7%@ Age 57 Safety Employees Tier 1 – 3.0%@ Age 50 Tier 2 – 3.0%@ Age 55 Tier 3 – 2.7%@ Age 57 Participation Rates: 100% of eligible full-time employees under the Hybrid Plan are assumed to participate at retirement with 65% assumed to continue coverage through PEMHCA. 18% of eligible part-time employees are assumed to elect to continue coverage under PEMHCA at retirement. For employees in the RHS Plan, the City is responsible for the PEMHCA minimum required contribution but may be eligible for reimbursement by the retiree from their individual RHS account. For purposes of the valuation, 35% of employees in the RHS Plan are assumed to continue coverage under PEMHCA at retirement with the City paying the full PEMHCA minimum required contribution. [The prior valuation assumed 75% of future retirees continue coverage through PEMHCA.] Spouse Coverage: 60% of future retirees are assumed to cover their spouse. Male spouses are assumed to be 3 years older than female spouses. Actual spouse coverage and spouse ages are used for current retirees. Waived Retiree Re-election: 20% of the current retiree population currently under 65 re-elect PEMHCA plan at age 65; 0% of those currently over age 65 re-elect. K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 19 Claim Cost Development: The valuation claim costs are based on the premiums paid for medical insurance coverage. The City participates in CalPERS, a community rated plan. Past valuations assumed the City was exempt from the valuation of any medical plan implicit rate subsidy. An implicit rate subsidy can exist when the non-Medicare rates for retirees are the same as for active employees. Since non-Medicare eligible retirees are typically much older than active employees, their actual medical costs are typically higher than for active employees. The current valuation contains an estimate of the implicit rate subsidy. Medical Trend Rates: Medical costs are adjusted in future years by the following trends: Year PPO HMO 2016 Actual Actual 2017 7.0% 6.5% 2018 6.5% 6.0% 2019 6.0% 5.5% 2020 5.5% 5.0% 2021+ 5.0% 5.0% [The prior valuation assumed 0.5% lower initial trend rates.] Minimum Contribution: The PEMHCA minimum required contribution is assumed to increase 4.0% per year. Fixed Dollar Contribution: Assumed to remain constant in future years. Medicare Participation: Assume 100% participation. Actuarial Cost Method: The actuarial cost method used to determine the allocation of the retiree health actuarial liability to the past (accrued), current and future periods is the Entry Age Normal (EAN) cost method. The EAN cost method is a projected benefit cost method which means the “cost” is based on the projected benefit expected to be paid at retirement. The EAN normal cost equals the level annual amount of contribution from the employee’s date of hire (entry date) to their retirement date that is sufficient to fund the projected benefit. For plans unrelated to pay, the normal cost is calculated to remain level in dollars; for pay-related plans the normal cost is calculated to remain level as a percentage of pay. The City has elected to determine the EAN normal cost as a level percentage of pay. The EAN actuarial accrued liability equals the present value of all future benefits for retired and current employees and their beneficiaries less the portion expected to be funded by future normal costs. All employees eligible as of the measurement date in accordance with the provisions of the Plan listed in the data provided by the City were included in the valuation. K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 20 Actuarial Value of Assets: The valuation assumes investment gains and losses are smoothed over a 5-year period. The actuarial value of assets shall be no less than 80% of the market value of assets and shall be no more than 120% of the market value of assets. Amortization of UAAL: The unfunded actuarial accrued liability is being amortized using a level-percentage of payroll method on a closed basis. The remaining period is 11 years. CalPERS Pension Plan The rates used are from the CalPERS 1997-2011 Experience Study. K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 21 SECTION VII. ACTUARIAL CERTIFICATION This report summarizes the GASB actuarial valuation for the City of Newport Beach (the “City”) as of June 30, 2015. To the best of our knowledge, the report presents a fair position of the funded status of the plan in accordance with GASB Statements No. 43 (Financial Reporting for Post-Employment Benefit Plans Other Than Pension Plans) and No. 45 (Accounting and Financial Reporting by Employers for Post-Employment Benefits Other Than Pensions). The valuation is also based upon our understanding of the plan provisions as summarized within the report. The information presented herein is based on the actuarial assumptions and substantive plan provisions summarized in this report and participant information and asset information furnished to us by the Plan Sponsor. We have reviewed the employee census provided by the Plan Sponsor for reasonableness when compared to the prior information provided but have not audited the information at the source, and therefore do not accept responsibility for the accuracy or the completeness of the data on which the information is based. When relevant data may be missing, we may have made assumptions we feel are neutral or conservative to the purpose of the measurement. We are not aware of any significant issues with and have relied on the data provided. The discount rate and other economic assumptions have been selected by the Plan Sponsor. Demographic assumptions have been selected by the Plan Sponsor with the concurrence of Nyhart. In our opinion, the actuarial assumptions are individually reasonable and in combination represent our estimate of anticipated experience of the Plan. All calculations have been made in accordance with generally accepted actuarial principles and practice. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following:  plan experience differing from that anticipated by the economic or demographic assumptions;  changes in economic or demographic assumptions;  increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period); and  changes in plan provisions or applicable law. While some sensitivity analysis was provided in the report, we did not perform an analysis of the potential range of future measurements due to the limited scope of our engagement. To our knowledge, there have been no significant events prior to the current year's measurement date or as of the date of this report that could materially affect the results contained herein. Neither Nyhart nor any of its employees has any relationship with the plan or its sponsor that could impair or appear to impair the objectivity of this report. Our professional work is in full compliance with the American Academy of Actuaries “Code of Professional Conduct” Precept 7 regarding conflict of interest. The undersigned meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. Should you have any questions please do not hesitate to contact me. Certified by: Marilyn K. Jones, ASA, EA, MAAA, FCA Date: 6/16/2015 Consulting Actuary K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 22 SECTION VIII. DEFINITIONS The definitions of the terms used in GASB actuarial valuations are noted below. Actuarial Liability (also referred to as Present Value of Future Benefits) – Total projected benefits include all benefits estimated to be payable to plan members (retirees and beneficiaries, terminated employees entitled to benefits but not yet receiving them, and current active members) as a result of their service through the valuation date and their expected future service. The actuarial present value of total projected benefits as of the valuation date is the present value of the cost to finance benefits payable in the future, discounted to reflect the expected effects of the time value (present value) of money and the probabilities of payment. Expressed another way, it is the amount that would have to be invested on the valuation date so that the amount invested plus investment earnings will provide sufficient assets to pay total projected benefits when due. Actuarial Accrued Liability – That portion, as determined by a particular Actuarial Cost Method, of the Actuarial Present Value of plan benefits and expenses which is not provided for by the future Normal Costs. Actuarial Assumptions – Assumptions as to the occurrence of future events affecting health care costs, such as: mortality, turnover, disablement and retirement; changes in compensation and Government provided health care benefits; rates of investment earnings and asset appreciation or depreciation; procedures used to determine the Actuarial Value of Assets; characteristics of future entrants for Open Group Actuarial Cost Methods; and other relevant items. Actuarial Cost Method – A procedure for determining the Actuarial Present Value of future benefits and expenses and for developing an actuarially equivalent allocation of such value to time periods, usually in the form of a Normal Cost and an Actuarial Accrued Liability. Actuarial Present Value – The value of an amount or series of amounts payable or receivable at various times, determined as of a given date by the application of a particular set of Actuarial Assumptions. Annual OPEB Cost – An accrual-basis measure of the periodic cost of an employer’s participation in a defined benefit OPEB plan. Annual Required Contribution (ARC) – The employer’s periodic required contributions to a defined benefit OPEB plan, calculated in accordance with the parameters. Explicit Subsidy – The difference between (a) the amounts required to be contributed by the retirees based on the premium rates and (b) actual cash contribution made by the employer. Funded Ratio – The actuarial value of assets expressed as a percentage of the actuarial accrued liability. Healthcare Cost Trend Rate – The rate of change in the per capita health claims costs over time as a result of factors such as medical inflation, utilization of healthcare services, plan design, and technological developments. K:\Retmed\NEWBCH\2015\Actuarial Valuation Report Newport 2015 2nd Draft.docx Page | 23 Implicit Rate Subsidy – In an experience-rated healthcare plan that includes both active employees and retirees with blended premium rates for all plan members, the difference between (a) the age-adjusted premiums approximating claim costs for retirees in the group (which, because of the effect of age on claim costs, generally will be higher than the blended premium rates for all group members) and (b) the amounts required to be contributed by the retirees. Net OPEB Obligation – The cumulative difference since the effective date of this Statement between annual OPEB cost and the employer’s contributions to the plan, including the OPEB liability (asset) at transition, if any, and excluding (a) short-term differences and (b) unpaid contributions that have been converted to OPEB-related debt. Normal Cost – The portion of the Actuarial Present Value of plan benefits and expenses which is allocated to a valuation year by the Actuarial Cost Method. Pay-as-you-go – A method of financing a benefit plan under which the contributions to the plan are generally made at about the same time and in about the same amount as benefit payments and expenses becoming due. Per Capita Costs – The current cost of providing postretirement health care benefits for one year at each age from the youngest age to the oldest age at which plan participants are expected to receive benefits under the plan. Select and Ultimate Rates – Actuarial assumptions that contemplate different rates for successive years. Instead of a single assumed rate with respect to, for example, the healthcare trend rate assumption, the actuary may apply different rates for the early years of a projection and a single rate for all subsequent years. For example, if an actuary applies an assumed healthcare trend rate of 6.5% for year 20W0, 6.0% for 20W1, 5.5% for 20W2, then 5.0% for 20W3 and thereafter, then 6.5%, 6% and 5.5% are select rates, and 5% is the ultimate rate. Substantive Plan – The terms of an OPEB plan as understood by the employer(s) and plan participant. Company LOGO FINANCE COMMITTE OPEB Valuation Results Intro October 15, 2015 Item No. 5B1 Retiree Health Liability (OPEB) Staff Presentation October 15, 2015 O 17 OPEB Plans Legacy Plan Closed in 2001 Defined Benefit $400-450 Monthly Annuity Primary Driver of OPEB Liabilities 539 Retirees and 111 Actives New Plan is a Defined Contribution Plan 401K Style Benefit $1,000 to $2,500 annual contribution to Retiree Health Account (RHS) Virtually no residual liability after active employment 579 Participants 18 Valuation summary Valuation dated June 30, 2015 – Marilyn Jones, Nyhart Epler Actuarial Accrued Liability (AAL)* $42,638,555 Actuarial Value of Assets (AVA) $14,890,926* Unfunded Actuarial Liability (UAL) $(27,747,629) Percent Funded 35% 2016-17 Annual Required Contribution (ARC)** $3,715,861 Normal Cost $673,290 Amortization of Unfunded Actuarial Accrued Liability $3,042,571 Legacy Benefit Employee Contributions (Hybrid Participants) ($133,200) Net City ARC $3,582,661 * Market Value of Assets $14,818,836 Policy Decisions  Fully Fund ARC? Looks Better to Financial Community $1million more annually $375,000 Net Cost after Reimb. from trust  Decrease Discount Rate to 6.5%  Increases Cost $209,000 Annually Conservative Approach Less reliant on investment earnings. 20 Decrease Discount Rate to 6.5% 0.5% Decrease in Discount Rate Item Dollar ($) Increase / (Decrease) Actuarial Accrued Liability (AAL) $ 1,967,449 Unfunded Actuarial Accrued Liability (UAAL) $ 1,967,449 Annual Required Contribution (ARC) $ 209,226 Annual Required Contribution (ARC) Implicit Subsidy Explicit Implicit Total Cash Flow Fiscal Year 2015-16 $ 2,845,895 $ - $ 2,845,895 Fiscal Year 2016-17 $ 2,647,512 $ 1,068,349 $ 3,715,861 $ 669,685 Fiscal Year 2017-18 $ 2,726,938 $ 1,100,399 $ 3,827,337 $ 683,338 22 PERS Benefit Trust Funds contributed by City and Employees PERS issues monthly pension benefit to retirees City Retirees Fund Flows in PERS Retiree Health Savings Accounts (HSA) CERBT (Prefunding) Benefit Trust Administrator bills retirees and retirees submit reimbursement City pays insurance providers and requests reimbursed by the Trust Contributes Funds to Retiree Health Savings Administrator for 1.Active Employees 2.Fixed group of retirees Retirees submit qualified out-of-pocket expenditures for reimbursement City Retirees Group Insurance Contributes Annual Required Contribution (ARC) to CERBT Benefit Trust Fund Flows in OPEB 30 CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT Agenda Item No. 5C October 15, 2015 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE FROM: Finance Department Dan Matusiewicz, Finance Director (949) 644-3123, danm@newportbeachca.gov SUBJECT: Implementation of Budget Preparation Framework – Review of Operating Budget, Session 1 SUMMARY: During recent Finance Committee meetings, members discussed pursuing actions for bringing greater transparency and accountability during the annual budget development process. Staff believes that following a proposed budget preparation framework consisting of budget principles, and associated strategies and tactics can be a reliable vehicle for improving the City’s budget process. In furtherance of Budget Framework Tactic T.10.1, the goal of this presentation will be to familiarize members of the Finance Committee with the elements of the FY 2015-16 Recreation and Senior Services Department departmental budget, provide opportunity for questions, and to gain clarity in the funding allocations for departmental programs. Staff will schedule similar Finance Committee presentations covering the operating budgets of other departments over the next few months. RECOMMENDED ACTION: In furtherance of Budget Framework Tactic T.10.1, review, ask questions, and provide comment relating to the Recreation and Senior Services FY 2015-16 operating budget. DISCUSSION: The Finance Committee expressed an interest in having greater involvement in the review of the proposed budget prior to its adoption by the City Council. During the September 16, 2015, Finance Committee meeting, members discussed and agreed to pursue a Budget Preparation Framework for bringing greater transparency and accountability during the annual budget development process. Implementation of Budget Preparation Framework – Review of Operating Budget, Session 1 October 15, 2015 Page 2 The Budget Preparation Framework consists of goals, strategies and associated tactics to facilitate the establishment of priorities, guiding program activities, and allocating resources. Goals or “budget principles” represent statements that identify the broad goals that provide overall direction for the City and serve as a basis for decision making. Strategic objectives are major accomplishments that the City seeks to achieve over a specified period of time to achieve its long term goals. Tactics identify what should be done, that is, outline the specific tasks that must be accomplished to achieve the strategic objectives. Certain members of the Finance Committee expressed a desire to be more involved in the early stages of the budget process, well in advance of the budget adoption by the City Council in May. Budget development is typically well underway by February, the month that the Committee convened its first meeting in 2015. Soliciting Committee input earlier will provide the Finance Committee with a better opportunity to be involved and better understand the proposed budget. The goal of this presentation will be to familiarize members of the Finance Committee with the elements of the FY 2015-16 Recreation and Senior Services Department departmental budget, provide opportunity for questions, and to gain clarity in the funding allocations for departmental programs. Committee members can also work on developing budget recommendations on items such as pension funding, Other Post- Employment Benefits (OPEB), Facilities Financial Planning (FFP), Seawall replacement(s), programs, services, and other budget items prior to the development of the FY 2016-17 budget. This agenda item is in furtherance of Budget Framework Tactic T.10.1 and staff will schedule similar Finance Committee presentations covering the operating budgets of other departments over the next few months. Budget Framework Tactic T.10.1: Staff would take the Finance Committee (FC) through a series of three to four “deep dives” into specific budget divisions or programs, with explanations about the Budget Detail and salaries, benefits, contract service accounts, and more. Set aside enough time to do this without anyone feeling rushed. • Have each member of the FC identify 2-3 areas of interest – or questions they want answered before they have a final discussion about the budget – and complete these to general satisfaction prior to having the Council’s spring 2016 budget sessions for FY 16-17. Implementation of Budget Preparation Framework – Review of Operating Budget, Session 1 October 15, 2015 Page 3 This action will provide members with the context and understanding of the City’s programs in advance of the Fiscal Year 2016-2017 budget process and reinforce an environment of continual process improvement. Prepared and Submitted by: /s/ Dan Matusiewicz _____________________________ Dan Matusiewicz Finance Director Attachments: A. Recreation and Senior Services FY 2015-16 Operating Budget Performance Plan B. Recreation and Senior Services FY 2015-16 Operating Budget Detail ATTACHMENT A Recreation and Senior Services FY 2015-16 Operating Budget Performance Plan 150 Department Budgets MISSION STATEMENT To enhance the quality of life by providing diverse opportunities in safe and well maintained facilities, open spaces and parks. We pledge to respond to community needs by creating quality educational, environmental, recreational, cultural and social programs for people of all ages. DEPARTMENT OVERVIEW The Recreation and Senior Services (RSS) Department consists of three divisions: Administration, Recreation, and Senior Services. Under the guidance of the Department Director, the RSS Department is responsible for the creation, coordination and implementation of recreational and social opportunities that serve a population ranging from infants to those in their advanced years. In addition, the department oversees the use of 66 parks and 12 facilities while also playing a role at the Back Bay Science Center and a number of natural spaces and sensitive marine habitats throughout the City. The Oasis Senior Center focuses on serving the senior community, offering programs to enrich senior life, prevent isolation, and create positive, successful aging experiences. With all programs, the backbone of the Department’s success is the large volume of part-time staff and independent contractors out in the field serving the community as well as numerous volunteers who join us on a daily basis to fulfill our mission. These dedicated individuals, combined with the full-time staff, form a unified team that is talented, skilled and service oriented. KEY DEPARTMENT PROGRAMS y Administration y Recreation y Senior Services RECREATION & SENIOR SERVICES Department Budgets 151 GOALS y Deliver well rounded, high quality recreational and social programs as well as senior services to the Newport Beach community. y Protect and preserve natural land and marine habitats within the City of Newport Beach boundaries while fostering stewardship of the environment. y Ensure open spaces, parks and community centers are well maintained and safe for the community to enjoy. y Continue to seek partnerships and opportunities to enhance recreation and senior services while minimizing general fund support. y Participate in and support efforts for the design, development and programming of Marina Park, Big Canyon Public Access, West Newport Community Center, and a future dog park. y Promote the City of Newport Beach rental properties, including the OASIS Senior Center, Marina Park and Civic Center Community Room and Park, as premier locations for rentals. y Continue to enhance the department’s website to better market programming. y Continue to broaden our outreach to the community by such offerings as resource expos tailored to each age group. y Develop a trend analysis report that tracks participation of Department offerings to improve performance and make informed decisions that further meet the needs of the community. y Utilize new RSS Equipment Fund (Fund 619) for managing Department’s equipment replacement and court resurfacing needs. Service Indicators 2012-13 Actual 2013-14 Actual 2014-15 Estimated 2015-16 Projected Recreation Services Special Event Permits 252 276 350 350 Facility Rentals 2,638 2,489 2,500 2,500 Program Attendance 394,055 524,126 525,000 525,000 Comm.Youth Sports Program Attendance 293,938 368,730 370,000 370,000 Senior Services Facility Rentals 146 116 140 140 Program Attendance 77,600 105,509 111,500 115,000 Human Services Attendance 28,000 26,451 26,000 26,000 Transportation Services Attendance 13,007 13,956 13,900 13,900 Fitness Center Attendance 70,416 72,613 72,000 72,000 152 Department Budgets TOTAL RECREATION & SENIOR SERVICES DEPARTMENT COSTS PROGRAMS ADMINISTRATION INTENDED OUTCOME y Provide leadership and administrative support to the RSS divisions throughout all phases of executing the department’s mission and strategic goals. CORE FUNCTIONS y Executive leadership and direction y Policy development and guidance y Liaison to City Council and Parks, Beaches & Recreation Commission y Marketing y Budget development and management y Financial and statistical analysis y Payroll processing y Personnel facilitation y Contract management y Invoice processing y ActiveNet system administration y Interdepartmental and intradepartmental collaboration WORK PLAN y Provide ongoing leadership and direction for the RSS Department, to ensure quality execution of department goals. 2012-13 2013-14 2014-15 2015-16 Actual Actual Estimated Adopted Salaries and Benefits 4,752,186$4,964,843$5,607,999$6,293,014$ Maintenance and Operations 3,845,713$3,987,178$4,485,171$5,057,444$ Capital Equipment 15,149$8,920$103,239$49,430$ Total 8,613,048$8,960,941$10,196,409$11,399,888$ Department Budgets 153 y Lead marketing efforts department-wide, including publication of the Newport Navigator brochure on a quarterly basis. y Prepare, facilitate, and monitor the annual budget; maintain the budget tracking model. y Perform financial analysis and audits to support staff in implementing department goals. y Manage contractual services and contract record keeping processes; coordinate with City Attorney’s office to ensure proper contract execution. y Process payroll bimonthly; track personnel data and coordinate personnel changes. y Maintain active communication with ActiveNet, the provider of the RSS program registration system, to ensure a smooth registration process for the community. y Continue to efficiently manage front office operations, providing quality internal support services and quality customer service to the community. y Process and track invoices on a timely basis. ADMINISTRATION PROGRAM COSTS ADMINISTRATION BUDGETED STAFFING 2012-13*2013-14 2014-15 2015-16 Actual Actual Estimated Proposed Salaries and Benefits 534,907$587,674$590,457$631,619$ Maintenance and Operations 403,148$428,692$432,991$456,878$ Capital Equipment -$-$-$-$ Total 938,055$1,016,366$1,023,448$1,088,497$ * Irvine Ranch Conservancy Contract added in FY 2012-13. Positions FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 Full-Time Administrative Assistant 1.0 1.0 1.0 1.0 Budget Analyst 0.5 0.5 0.5 0.5 Marketing Specialist 1.0 1.0 1.0 1.0 Recreation & Senior Services Director 1.0 1.0 1.0 1.0 Total Full-Time 3.5 3.5 3.5 3.5 Part-Time Senior Fiscal Clerk P/T 0.5 0.5 0.5 0.5 Total Part-Time 0.5 0.5 0.5 0.5 Total Budgeted Staffing 4.0 4.0 4.0 4.0 154 Department Budgets RECREATION INTENDED OUTCOME y Provide programs and facilities for the community that enrich citizens’ lives, improve their health, and enhance community safety. CORE FUNCTIONS y Provide staffing support to City Council and the Parks, Beaches & Recreation Commission on a variety of recreational and community use issues y Allocate and patrol use of 66 parks, 12 facilities, and beaches y Provide a wide variety of high quality programming for youth and adults y Develop and conduct programs in support of environmental awareness y Maintain and operate 11 community centers y Develop future community facilities y Maintain citywide sports courts, ball fields and tot lots y Manage special event permits y Provide and facilitate community support and problem solving WORK PLAN y Continue to develop a wide variety of recreational and social programs that address the needs of tots, youth and adults in the Newport Beach community. y Collaborate with over 100 independent contractors to ensure high quality class instruction and programs year-round, focusing on expanding program offerings at Carroll Beek Community Center. y Manage the City adult sports leagues, focusing on expanding softball and basketball participation y Maintain a well trained staff to efficiently operate the aquatics program, preschool and after- school programs, youth recreational sports programs and summer day camps. y Manage the sports field allocation program in collaboration with the Youth Sport Commission members, such as Youth Soccer and Little League, serving over 6,000 youth annually through this program. y Continue to develop the Traveling Tidepool Outreach Program to educate the community about the Crystal Cove Marine Protected Area; implement a full schedule of Traveling Tidepool school tours utilizing the ISOpod for the FY15/16 school year. y Manage the Marine Protection and Education program, educating residents and visitors on how best to explore and protect natural land and marine habitats. Department Budgets 155 y Implement staffing, partnership and program plan for Marina Park operations. y Process over 2,600 reservation requests each year, for rentals of picnic areas, fields, gyms and meeting rooms. y Monitor and maintain playground equipment, play surfaces, backstops, and courts for 34 playgrounds and all active sports parks throughout the city. y Maintain adequate Park Patrol units throughout the city to ensure parks, open spaces, and facilities remain safe environments for the community to enjoy; enforce City ordinances pertaining to open spaces. y Process over 350 special events permits annually for both large and small scale events. y Sponsor special events and community programs, including the Corona del Mar Scenic 5k, the Mariners and Balboa Peninsula Independence Day Parades and Picnics, Camp Expo, Youth Track Meet, Breakfast with Santa, Mayor’s Egg Roll and neighborhood based events. y Collaborate with community partners and agencies to provide facilities and programming for the community. These groups include the Newport-Mesa Unified School District, New Irvine Ranch Conservancy, Boys & Girls Club, U.S. Fish and Wildlife, Newport Theatre Arts Center, Newport Aquatic Center, academic institutions and environmental non-governmental organizations. RECREATION PROGRAM COSTS 2012-13 2013-14 2014-15 2015-16 Actual Actual Estimated Adopted* Salaries and Benefits 2,907,301$3,053,803$3,518,094$4,081,390$ Maintenance and Operations 2,639,158$2,641,191$3,033,767$3,477,936$ Capital Equipment 9,476$5,000$88,750$39,460$ Total 5,555,935$5,699,994$6,640,611$7,598,786$ *Grand Opening of Marina Park Set for December 2015. 156 Department Budgets RECREATION BUDGETED STAFFING Positions FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 Full-Time Department Assistant 1.0 1.0 1.0 1.0 Deputy Rec & Sr Svcs Director --1.0 1.0 Facilities Maintenance Worker II 2.0 2.0 2.0 3.0 Groundsworker II 2.0 2.0 2.0 2.0 Lead Park Patrol Officer 1.0 1.0 1.0 1.0 Marine Protection & Education Supervisor 1.0 1.0 1.0 - Office Assistant -2.0 2.0 3.0 Park Patrol Officer --1.0 1.0 Recreation Coordinator 3.0 5.0 5.0 5.0 Recreation Manager 2.0 2.0 2.0 3.0 Recreation Superintendent 1.0 1.0 -- Recreation Supervisor 5.0 5.0 5.0 7.0 Total Full-Time 18.0 22.0 23.0 27.0 Part-Time Assistant Recreation Coordinator P/T 1.76 0.50 0.50 0.50 Facilities Maintenance Worker II P/T ---0.40 Marine Naturalist Interpreter P/T 1.95 2.35 2.60 2.60 Office Assistant P/T 2.57 0.88 0.88 1.60 Park Patrol Officer 1.75 1.75 2.57 2.57 Pool Swim Instructor 3.18 3.18 3.18 3.18 Recreation Leader 8.75 9.35 12.04 12.30 Senior Pool Lifeguard 1.52 1.52 1.52 1.52 Senior Recreation Leader I 5.3 5.55 5.70 7.84 Total Part-Time 26.78 25.08 28.99 32.51 Total Budgeted Staffing 44.78 47.08 51.99 59.51 Department Budgets 157 SENIOR SERVICES INTENDED OUTCOME y Ensure that senior citizens of Newport Beach are able to live healthy and active lifestyles by providing services that assist them in their daily living and provide activities that enhance their lives. CORE FUNCTIONS y Maintain and operate the OASIS Senior Center y Provide a wide variety of recreational and educational services for seniors y Provide help and assistance to those who are struggling with aging issues y Provide information on health and social aging issues y Provide a wide variety of health and wellness programs to assist in the well being of of older adults y Operate a full service fitness center for the 50 plus population y Administer facility rentals at the OASIS Senior Center for private and community functions y Provide transportation services to and from the Center and medical appointments WORK PLAN: y Continue to develop a wide variety of recreational, social, and human service programs that address the needs of seniors in the Newport Beach community. y Partner with the Friends of OASIS nonprofit organization in providing volunteer assistance to the Center and monetary support for programs. The Friends of OASIS membership continues to grow to 6,500 at its peak. y Collaborate with a multitude of community organizations to enhance programming and services. These organizations include: Age Well, OC Department of Health, University of California at Irvine, Hoag Memorial Hospital Presbyterian, Braille Institute, Orange County Council on Aging, and the Orange County Transit Authority. y Continue to market the OASIS Fitness Center to ensure optimum usage of the facility. y Support continuing education for staff to better understand how to serve the senior community. Staff includes professionals in the fields of Gerontology, Administration, Recreation, Transportation, and Health & Fitness. y Actively seek out and consider customer feedback when developing program offerings; encourage customer participation in the development process. 158 Department Budgets y Consider programming impact on parking when scheduling classes to enable maximum parking availability for participants throughout the day. y Expand classes, activities and services into the evening hours to accommodate working adults. y Expand our health and wellness programs to address the growing aging population and their ability to stay active for a longer period in life. y Expand our case management and transportation programs to be able to provide help to the growing older population who are aging in place. SENIOR SERVICES PROGRAM COSTS SENIOR SERVICES BUDGETED STAFFING Positions FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 Full-Time Department Assistant 1.0 1.0 1.0 1.0 Facilities Maintenance Worker II 1.0 1.0 1.0 1.0 Recreation Coordinator 1.0 1.0 1.0 1.0 Recreation Supervisor 3.0 3.0 3.0 3.0 Senior Services Manager 1.0 1.0 1.0 1.0 Senior Services Van Driver 4.0 4.0 4.0 4.0 Total Full-Time 11.0 11.0 11.0 11.0 Part-Time Assistant Recreation Coordinator P/T 0.88 0.88 0.88 0.88 Office Assistant P/T 0.75 0.75 0.88 0.88 Recreation Leader, OASIS 2.91 2.91 3.43 3.43 Senior Recreation Leader I 1.84 1.84 1.84 1.84 Senior Services Van Driver P/T 0.50 0.50 0.90 1.40 Total Part-Time 6.88 6.88 7.93 8.43 Total Staffing 17.88 17.88 18.93 19.43 2012-13 2013-14 2014-15 2015-16 Actual Actual Estimated Adopted Salaries and Benefits 1,309,978$1,323,366$1,499,448$1,580,006$ Maintenance and Operations 803,406$917,295$1,018,414$1,122,631$ Capital Equipment 5,672$3,920$14,489$9,970$ Total 2,119,056$2,244,581$2,532,351$2,712,607$ Department Budgets 159 PAGE LEFT INTENTIONALLY BLANK ATTACHMENT B Recreation and Senior Services FY 2015-16 Operating Budget Detail R EC R E A T I O N & S EN I O R S ER V I C E S FY 2 0 1 6 A DO P T E D B UD G E T Oc t o b e r 1 5 , 2 0 1 5 It e m N o . 5 C 1 Im p l e m e n t a t i o n o f B u d g e t P r e p a r a t i o n F r a m e w o r k – R e v i e w o f O p e r ating Budget, Session 1 St a f f P r e s e n t a t i o n Oc t o b e r 1 5 , 2 0 1 5 FY 2 0 1 6 A DO P T E D B UD G E T O VE R V I E W 2 Sa l a r i e s & B e n e f i t s $ 6 , 2 9 3 , 0 1 4 Ma i n t e n a n c e & O p e r a t i o n s $ 5 , 0 5 7 , 4 4 4 Ca p i t a l O u t l a y $ 4 9 , 4 3 0 To t a l F o r e c a s t e d E x p e n d i t u r e s $ 1 1 , 3 9 9 , 8 8 8 To t a l F o r e c a s t e d R e v e n u e s $ 5 , 4 1 0 , 7 5 0 Ne t R e c o v e r y R a t e 4 7 % RS S D EP A R T M E N T FY 2 0 1 6 A DO P T E D B UD G E T B Y P ROGRAM 3 Pr o g r a m FY 1 6 Ad o p t e d Ex p e n d i t u r e s FY 1 6 Ad o p t e d Re v e n u e s Re v e n u e So u r c e s Re c & S r S r v c s A d m i n $1 , 0 8 8 , 4 9 7 $ 0 No n e Pr o g r a m S u p p o r t $1 , 7 2 6 , 3 9 7 $ 1 6 0 , 0 0 0 Fi e l d L i g h t & S p e c i a l E v e n t P e r m i t F e e s Fe e B a s e d C l a s s e s $1 , 6 8 3 , 4 3 6 $ 2 , 1 4 5 , 0 0 0 Fe e B a s e d , T e n n i s , S u r f & S a i l i n g C l a s s e s Ad u l t S p o r t s $3 4 6 , 3 3 6 $ 3 6 8 , 7 3 0 Ad u l t S p o r t s L e a g u e F e e s Yo u t h S p o r t s $8 7 , 0 7 6 $ 2 0 , 0 8 0 Yo u t h S p o r t s L e a g u e F e e s Yo u t h P r o g r a m s $4 6 5 , 3 1 3 $ 3 5 5 , 0 0 0 Yo u t h C l a s s e s & C a m p s ; A f t e r S c h o o l P r o g Pr e s c h o o l P r o g r a m $6 6 , 2 0 9 $ 7 4 , 0 0 0 Ti n y T o t s & P r e s c h o o l P r o g r a m s Na t u r a l R e s o u r c e s $3 1 8 , 6 4 7 $ 9 9 , 4 0 0 Ma r i n e E d C l a s s e s ; P r i v a t e D o n a t i o n s Sp e c i a l E v e n t s $2 4 , 5 0 0 $ 4 , 8 0 0 Pr i v a t e D o n a t i o n s Aq u a t i c s $2 7 7 , 8 7 4 $ 1 2 0 , 0 0 0 Aq u a t i c P r o g r a m F e e s Ne w p o r t C o a s t C o m m C n t r $7 4 1 , 2 4 9 $ 3 4 8 , 0 0 0 Cl a s s e s ; F a c i l i t y R e n t a l s , D r o p I n M e m b Ma r i n a P a r k $7 5 9 , 7 6 5 $ 1 9 5 , 6 4 0 Cl a s s e s ; F a c i l i t y R e n t a l s ; C a f e Fa c i l i t i e s $1 , 1 0 1 , 9 8 3 $ 2 1 2 , 0 0 0 Ot h e r F a c i l i t y R e n t a l s , Y S C F i e l d F e e s Oa s i s $1 , 5 5 4 , 1 7 1 $ 5 0 5 , 0 0 0 Sp e c i a l E v e n t s , F a c i l i t y R e n t a l s , C l a s s e s Oa s i s F i t n e s s C e n t e r $4 6 1 , 1 6 1 $ 4 9 0 , 0 0 0 Fi t n e s s M e m b e r & P e r s T r a i n e r F e e s Se n i o r S e r v i c e s Tr a n s p o r t a t i o n $6 9 7 , 2 7 5 $ 3 1 3 , 1 0 0 Ho a g G r a n t , M e a s u r e M , T r a n s p F e e s , Fr i e n d s o f O a s i s D o n a t i o n s RS S D e p a r t m e n t T o t a l $ 1 1 , 3 9 9 , 8 8 8 $ 5 , 4 1 0 , 7 5 0 * Le a d e r s h i p Ad m i n S u p p o r t Pe r s o n n e l S u p p o r t Ma r k e t i n g Bu d g e t M g m t Co n t r a c t M g m t Pa r k s & F a c i l i t y D e v Two Rec Coordinators overseeing classes/camps; approx 1 1 , 7 5 0 registrations per year Le a g u e F a c i l i t a t i o n ; So f t b a l l , B a s k e t b a l l , So c c e r ( G r a s s & S a n d ) , Vo l l e y b a l l & F l a g Fo o t b a l l P/ T S t a f f f o r A f t e r S c h o o l , Pr e s c h o o l , S u m m e r Ca m p s , H o l i d a y C a m p s & F l a g F o o t b a l l Pr o g r a m s ; r e p r e s e n t s ap p r o x 5 , 4 4 0 re g i s t r a t i o n s p e r y e a r Marine Protection & Education - C d M Tidepool T o u r s , Traveling Tidepool Program & docent volunteer program 4 th of July events,Movie in the Park events, Mayor’s Egg Roll, B r e a k f a s t w/Santa, & C a m p Expo Ye a r R o u n d C d M & NH H S L a p S w i m ; Le a r n T o S w i m P r o g r a m Maintenance of playgrounds, buildings & sports courts; Park Patrol So c i a l , r e c r e a t i o n a l , ed u c a t i o n a l , a n d c u l t u r a l pr o g r a m s f o r s e n i o r co m m u n i t y *I n a d d i t i o n t o R S S D e p t R e v e n u e , $ 3 0 , 0 0 0 C i vi c C e n t e r a n d $ 4 6 , 6 6 7 M a r i n a P a r k C o n c e s s i o n /C a t e r i n g R e v e n u e f o r e c a s t e d i n C D D D e p t ( B l d g - A d m i n ) B u d g e t RS S D EP A R T M E N T S ER V I C E I ND I C A T O R S A DM I N • R EC R E A T I O N • S EN I O R S ER V I C E S 4 RS S A d m i n & R e c r e a t i o n S e r v i c e s F Y 1 6 A d o p t e d Ex p e n d i t u r e s $ 8 , 6 8 7 , 2 8 2 Sp e c i a l E v e n t s P e r m i t s 3 5 0 Fa c i l i t y R e n t a l s 2 , 5 0 0 Re c r e a t i o n P r o g r a m A t t e n d a n c e 5 2 5 , 0 0 0 Yo u t h S p o r t s P r o g r a m A t t e n d a n c e 3 7 0 , 0 0 0 Se n i o r S e r v i c e s F Y 1 6 A d o p t e d Ex p e n d i t u r e s $ 2 , 7 1 2 , 6 0 6 Fa c i l i t y R e n t a l s 1 4 0 Cl a s s / P r o g r a m A t t e n d a n c e 1 1 5 , 0 0 0 Hu m a n S e r v i c e s A t t e n d a n c e 2 6 , 0 0 0 Tr a n s p o r t a t i o n S e r v i c e s A t t e n d a n c e 1 3 , 9 0 0 Fi t n e s s C e n t e r A t t e n d a n c e 7 2 , 0 0 0 5 RS S S t a f f • 4 2 F u l l T i m e • 9 4 P a r t T i m e (4 1 . 4 F T E ) • 2 0 , 8 0 0 A n n u a l Vo l u n t e e r H o u r s @ Oa s i s Pa r k s & F a c i l i t i e s Ma n a g e d • 6 5 P a r k s • 1 0 C o m m u n i t y Ce n t e r s • 2 9 P l a y g r o u n d s • 1 6 T e n n i s C o u r t s • 6 H a n d b a l l C o u r t s • 4 P i c k l e b a l l C o u r t s • 1 6 O u t d o o r Ba s k e t b a l l C o u r t s • 2 S w i m m i n g P o o l s • 2 5 S p o r t s F i e l d s • 6 9 V o l l e y b a l l Co u r t s •4 L e a s e d Pr o p e r t i e s o n C i t y La n d Ac r e a g e Ma n a g e d / P a t r o l l e d • 5 9 9 A c r e s P a r k s • 2 6 4 A c r e s B e a c h • 2 4 5 A c r e s B u c k Gu l l y O p e n S p a c e $4 , 6 4 2 , 0 9 4 41 % o f A d o p t e d E x p $1 , 6 5 0 , 9 2 0 14 % o f A d o p t e d E x p FY 1 6 A DO P T E D B UD G E T F O R E XP E N D I T U R E S T OT A L O F $1 1 , 3 9 9 , 8 8 8 6 Sa l a r i e s & Be n e f i t s $6 , 2 9 3 , 0 1 4 55 . 2 % Co n t r a c t e d Se r v i c e s $3 , 3 1 3 , 4 3 7 29 . 1 % IS F $8 4 1 , 2 7 0 7. 4 % Su p p l i e s $5 2 9 , 7 6 0 4. 7 % Ut i l i t i e s $2 3 0 , 5 9 9 2. 0 % Le a s e $8 1 , 2 8 8 0. 7 % Tr a i n i n g / D u e s , $6 1 , 0 9 0 , 0 . 5 % Ca p i t a l O u t l a y $4 9 , 4 3 0 0. 4 % FY 1 6 A DO P T E D B UD G E T F O R R EV E N U E S T OT A L O F $5 , 4 1 0 , 7 5 0 Cl a s s e s $4 , 1 6 5 , 8 5 0 , 7 7 . 0 % Fa c i l i t y R e n t a l s $2 6 3 , 0 0 0 , 4 . 9 % Me m b e r F e e s $2 3 6 , 0 0 0 , 4 . 3 % Ca m p s $1 6 7 , 0 0 0 , 3 . 1 % Sp e c i a l E v e n t s $1 4 6 , 3 0 0 , 2 . 7 % Me a s u r e M $1 1 1 , 0 0 0 , 2 . 1 % Pr i v a t e G r a n t s $1 0 6 , 0 0 0 , 2 . 0 % Fi e l d / L i g h t s $1 0 2 , 0 0 0 , 1 . 9 % Do n a t i o n s $7 8 , 8 0 0 , 1 . 4 % Tr a n s p F e e s $3 4 , 8 0 0 , 0 . 6 % 7 FY 1 6 A DO P T E D M AI N T E N A N C E & O PE R A T I O N E XP E N D I T U R E S T OT A L O F $5 , 0 5 7 , 4 4 4 8 Co n t r a c t $3 , 0 5 9 , 1 8 5 60 . 5 % IS F $8 4 1 , 2 7 0 16 . 6 % Su p p l i e s $5 2 9 , 7 6 0 10 . 5 % Ma i n t & R e p a i r $2 5 4 , 2 5 2 5. 0 % Ut i l i t i e s $2 3 0 , 5 9 9 4. 6 % Le a s e $8 1 , 2 8 8 1. 6 % Tr a i n i n g $5 1 , 5 3 2 1. 0 % Du e s / P b l c t n $9 , 5 5 8 0. 2 % • Co n t r a c t I n s t r u c t o r s • Bu c k G u l l y M g m t • Pr i n t S e r v i c e s • Ja n i t o r i a l S e r v i c e s • IT I S F O p e r a t i o n C h a r g e • RS S E q u i p m e n t I S F C h a r g e • Po s t a g e • RS S C l a s s / P r o g r a m S u p p l i e s • Fe n c e R e p a i r • HV A C S e r v i c e • Pl a y g r o u n d R e p a i r EX A M P L E S FY 1 6 A DO P T E D B UD G E T F O R C ON T R A C T E D S ER V I C E S T OT A L O F $3 , 3 1 3 , 4 3 7 9 Co n t r a c t In s t r u c t o r s $2 , 2 5 2 , 2 3 5 68 . 0 % Ma i n t & R e p a i r Co n t r a c t s $2 5 4 , 2 5 2 7. 7 % Pr o f & T e c h Se r v i c e s $4 2 1 , 8 4 3 12 . 7 % Ja n i t o r i a l Co n t r a c t $2 0 6 , 0 8 5 6. 2 % Pr i n t C o n t r a c t s $1 7 9 , 0 2 2 5. 4 % • Oc e a n A d v e n t u r e • Ne w p o r t S u r f C a m p • Br e n d a B e n v e n i s t e ( A r t ) • Tu m b l e - N - K i d s • Su p e r i o r F e n c e • Fo x P a i n t i n g • Co a s t R e c r e a t i o n • Ir v i n e R a n c h C o n s e r v a n c y • Ca r r i e r C o r p o r a t i o n ( H V A C ) • We s t e r n A l l i e d C o r p ( H V A C ) • AB M J a n i t o r i a l S e r v i c e s • Tr e n d O f f s e t P r i n t i n g • Ne w s o n g G r o u p P r i n t i n g EX A M P L E S E XA M P L E O F E XP E N D I T U R E C AT E G O R I E S 10 Pr o g r a m O v e r v i e w • 5. 4 F / T & 4 . 1 7 P / T F T E • 25 0 , 0 0 0 p e o p l e s e r v e d • FY 1 6 R e v e n u e : $ 5 0 5 , 0 0 0 • Pr o g r a m s f o r s e n i o r co m m u n i t y , f o c u s e d o n : - S o c i a l S e r v i c e s -F i t n e s s -A r t s -C o m p u t e r -L a n g u a g e s -S p e c i a l E v e n t s E XA M P L E O F E XP E N D I T U R E C AT E G O R I E S 11 Pr o g r a m O v e r v i e w • 1 F / T & 8 . 8 1 P / T F T E • Ap p r o x 4 , 2 5 0 re g i s t r a t i o n s p e r y e a r • FY 1 6 R e v e n u e : $ 3 5 5 , 0 0 0 • Af t e r S c h o o l P r o g r a m s at t h r e e s c h o o l s i t e s • Su m m e r D a y C a m p s a t tw o s i t e s • Ho l i d a y C a m p s 12 Fo r e c a s t e d A n n u a l R e v e n u e $ 9 9 6 , 3 3 0 An n u a l E x p e n d i t u r e s : Pe r s o n n e l $ 5 2 8 , 2 9 8 Ma i n t e n a n c e & O p e r a t i o n s $ 8 6 5 , 7 4 4 Fo r e c a s t e d A n n u a l E x p e n d i t u r e s $ 1 , 3 9 4 , 0 4 2 An n u a l R e c o v e r y R a t e 7 1 % M AR I N A P AR K O VE R V I E W M AR I N A P AR K R EV E N U E S OU R C E S 13 Fo r e c a s t e d A n n u a l R e v e n u e $ 9 9 6 , 3 3 0 Pr e s c h o o l E d u c a t i o n a l P r o g r a m s Yo u t h E n r i c h m e n t P r o g r a m s Ad u l t F i t n e s s C l a s s e s Ad u l t D a n c e C l a s s e s Ad u l t E d u c a t i o n a l P r o g r a m s En r i c h m e n t S u m m e r C a m p s Be a c h S p o r t s S u m m e r C a m p s Fa c i l i t y R e n t a l s Sa i l i n g P a r t n e r R e v e n u e Re s t a u r a n t R e n t