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HomeMy WebLinkAboutCC AG PKT 2012-04-09 #E AGENDA STAFF REPORT DATE: April 9, 2012 TO: Honorable Mayor and City Council THRU: Jill R. Ingram, City Manager FROM: Sean P. Crumby, Assistant City Manager SUBJECT: RETIREE HEALTH BENEFITS SUMMARY OF REQUEST: That the City Council receive and file the following a brief introduction of the topic by City staff, Actuary John Bartel will provide an overview of the actuarial report and will be available to answer questions. BACKGROUND AND ANALYSIS: The Governmental Accounting Standards Board (GASB) Statement No. 45, Accounting Standards for Other (than pension) Post-Employment Benefits (OPEB) established new financial reporting requirements in fiscal year '08-09. Accordingly, the City implemented Statement 45 during the same fiscal year. Historically, the City has budgeted and accounted for retiree healthcare benefits as they were paid. Instead, Statement 45 requires the City to account for these promises on an accrual basis (as benefits are earned). In connection with the upcoming collective bargaining and as a result of the requirements of Statement 45, the City retained Bartel & Associates to prepare an actuarial study to determine the City's potential unfunded liability. Bartel's study will reflect any changes to the City's upcoming collective bargaining agreements. The City will be meeting with the employee associations to discuss any changes to the collective bargaining agreements. If the City Council decides that fully funding the unfunded liability is in the interest of the City, it may wish to direct staff to explore this further. Attached is "Retiree Healthcare Plan June 30, 2011 GASB 45 Actuarial Valuation Final Results," dated January 23, 2012, by Bartel Associates LLC. ENVIRONMENTAL IMPACT: There is no Environmental Impact related to this item. Agenda Item E LEGAL ANALYSIS: The City Attorney has reviewed and approved as to form. FINANCIAL IMPACT: There is no Financial Impact. RECOMMENDATION: It is recommended that the City Council receive and file this informational report relating to retiree medical benefits. SUB ITTED BY: NOTED AND APPROVED: //// ///, 111.0i.) R., Sean P. Crumby &R. Ingram, City pager Assistant City Manager/Public Works Prepared by: Patrick Gallegos, Administrative Manager Attachments: A. Retiree Healthcare Plan Page 2 O SEAL de; y v a; CITY OF SEAL BEACH Bin-r C L RETIREE HEALTHCARE PLAN / ISSOCIATES. I.LC June 30, 2011 GASB 45 Actuarial Valuation Final Results Presented by John E. Bartel, President Prepared by Catherine Wandro, Assistant Vice President Katherine Moore, Actuarial Analyst Bartel Associates, LLC January 23, 2012 CONTENTS Topic Page Benefit Summary 1 Data Summary 5 Actuarial Assumptions Highlights 8 Assets 11 Results 13 Actuarial Certification 23 Exhibits 24 O\Chcnts\Co)of Seal Beach\OPEBB 1 VaflRepons\BA SealBeachCl 12-01-23 OPEB 11-06-30 final molls doc BENEFIT SUMMARY � I I O Eligibility 0 Retire from the City under CaIPERS (Age 50 and 5 years of CaIPERS service or disability) O Benefit o Continued participation in the City's health insurance program (PEMHCA) o City pays a portion of the PEMHCA monthly premium up to a capped amount based on bargaining group, hire date, retirement date, and City service O Misc Caps OCEA, Supervisors&Professionals Executive&Mid-Management o DOH before 4/13/2009': a DOH before 1/1/200843: • DOR< 1/1/2011 DOR< 1/1/2010 > 55 &20 Single PPO Rate > 50 &20 Family Active Cap > 55 &30 Family PPO Rate DOR> 1/1/2010 • DOR> 1/1/2011 > 50 &20 Mid-Mgmt—Single Kaiser4 > 55 &20 Single Kaiser2 Exec—Family Kaiser4 > 55 &30 Family Kaiser2 > 50 & 30 Family Kaiser4 o DOH on or after 4/13/2009: o DOH on or after 1/1/2008: PEMHCA Minimum only PEMHCA Minimum only ($108 in 2011) ($108 in 2011) Caps are frozen by City at time of retirement,based on current practice. 2 Reduces to Medicare eligible rate for post 65. 3 Executives with service retirement may also receive an additional$175/month until eligible for Medicare. a Average of 2 lowest cost PEMHCA health plans,if greater than Kaiser. Reduces to Medicare eligible rate for post 65. 6^` January 23,2012 1 BENEFIT SUMMARY I I � O Safety Caps POA& PMA o DOH before 1/1/20085: G DOR< 1/1/2010: > 50 & 15 2-party cost of any PEMHCA plan except PERSCare > 50 &25 Family cost of any PEMHCA plan except PERSCare DOR> 1/1/2010: > 50 & 15 Single Kaiser6 > 50 &20 2-Party Kaiser6 > 50 &25 Family Kaiser6 o DOH on or after 1/1/2008: PEMHCA minimum only ($108 in 2011) O Current o Miscellaneous: Retirees Service<20 PEMHCA Minimum, equal method based on Service>20 Cap fixed at active cap at time of retirement prior © Safety: MOUs n Hired <8/1/1983 Cap fixed at active cap at time of retirement • Hired> 8/1/1983 PEMHCA Minimum, unequal method 5 Caps are frozen by City at time of retirement,based on current practice. 6 Average of 2 lowest cost PEMHCA health plans,if greater than Kaiser. Reduces to Medicare eligible rate for post 65. January 23,2012 2 BENEFIT SUMMARY � I 1 Surviving o Eligibility: CaIPERS retirement plan election that provides for a surviving Spouse spouse benefit Benefit o Benefit: • Miscellaneous—PEMHCA Minimum only • Police—same as retiree benefit o Dental& o Unused medical cap can be used for dental and vision Vision D Life o None D Estimated o 2010/11 - $335,400 Pay-As- o 2009/10 - $264,602 You-Go o 2008/09 - $240,618 0 2007/08 - $201,704 January 23,2012 3 BENEFIT SUMMARY I I -- �� i / ' This page intentionally blank 6�L January 23,2012 4 DATA SUMMARY I 1 7 Participants-June 30, 2011 Supervisors Exec/ OCEA &Prof. Mid-Mgmt POA PMA Total 0 Actives o Count(PEMHCA Min Only) 29 (3) 18 (3) 16 (5) 21 (7) 9 (0) 93 (18) o Average Age 38.2 49.8 45.5 40.0 50.6 43.3 o Average City Svc. 9.5 11.2 5.5 7.5 21.8 9.9 o Average CaIPERS Svc. 9.7 13.5 13.2 11.0 22.3 12.6 o Average Pay $50,595 $62,102 $113,686 $89,654 $130,600 $80,239 o Total Payroll (000's) 1,467 1,118 1,819 1,883 1,175 7,462 © Retirees': o Count 12 10 10 21 13 66 o Avg. Age 67.8 67.1 70.0 62.2 65.5 65.8 o Avg. Retirement Age: • Service Retirement 57.3 59.5 61.2 53.2 53.1 57.3 • Disability Retirement - - - 47.7 44.9 46.9 o Avg. Monthly Benefit $356 $390 $483 $576 $454 $469 Excludes 19 waived retirees. , SEA Q._I •°� ` January 23,2012 5 1-d-: DATA SUMMARY I 1 1 Participants-January 1, 2009 Supervisors Exec/ OCEA &Prof. Mid-Mgmt POA PMA Total B Actives o Count 28 17 18 22 8 93 o Average Age 36.9 48.3 46.3 41.0 48.3 42.8 o Average City Svc. 7.4 12.6 4.2 9.5 18.3 9.2 o Average CaIPERS Svc. 7.5 13.1 12.6 12.3 19.9 11.7 o Average Pay $45,711 $55,536 $111,202 $81,024 $109,749 $74,045 o Total Payroll (000's) 1,280 944 2,002 1,783 878 6,886 52 Retirees8: o Count 8 9 8 17 14 56 o Average Age 63.5 64.6 70.0 61.9 64.1 64.3 o Avg. Retirement Age: > Service Retirement 56.9 56.9 61.2 54.3 51.3 56.6 • Disability Retirement 46.7 - - 48.5 45.8 47.3 o Avg. Monthly Benefit $369 $387 $454 $482 $409 $428 B Excludes 21 waived retirees. 0 January 23,2012 6 �ii DATA SUMMARY 1 1 Data Reconciliation9 Surviving Actives Retirees Spouses Total ❑ January 1, 2009 93 74 3 170 o New Hires 14 - - 14 o New Retirees (8) 8 - - o Terminations (6) - - (6) o Death without Survivor - (1) - (1) o Death with Survivor - (1) 1 - o Data Corrections - 1 - 1 ❑ June 30, 2011 93 81 4 178 9 Includes waived retirees. (iTh January 23,2012 74) ACTUARIAL ASSUMPTIONS HIGHLIGHTS L 1 1 Assumption January 1, 2009 Valuation June 30, 2011 Valuation ❑ Valuation Date o January 1, 2009 o June 30, 2011 o 2009/10 and 2010/11 ARCs o 2011/12 and 2012/13 ARCs ❑ Funding Policy o Contribute full ARC to o Same Ca1PERS CERBT ❑ Discount Rate o 735% o 7.25% - CERBT Option#1 ❑ Payroll Increases o Aggregate—3.25% annually o Aggregate—3.25% annually o Merit—Ca1PERS 1997-2002 o Merit—Ca1PERS 1997-2007 Experience Study Experience Study ❑ Mortality, o Ca1PERS 1997-2002 o Ca1PERS 1997-2007 Termination, Experience Study Experience Study Disability o Mortality Projection Table AA ❑ Retirement o Ca1PERS 1997-2002 o Ca1PERS 1997-2007 Experience Study Experience Study Misc. Police Misc. Police Benefit 2.5%@55 3%@50 Benefit 2.5%@55 3%@50 Hire Age 35 31 Hire Age 34 31 Exp Ret Age 60 55 Exp Ret Age 58 54 PJanuary 23,2012 8 V ACTUARIAL ASSUMPTIONS HIGHLIGHTS � I I Assumption January 1,2009 Valuation June 30, 2011 Valuation © Medical Trend Increase from Prior Year Increase from Prior Year Non-Medicare Medicare Non-Medicare Medicare Year HMO PPO HMO PPO Year All Plans 2010 9.1% 9.8% 9.4% 10.1% 2010 n/a 2011 8.4% 9.0% 8.7% 9.3% 2011 Premiums 2012 7.8% 8.3% 8.0% 8.5% 2012 Premiums 2013 7.1% 7.5% 7.3% 7.7% 2013 9.0% 9.4% 2014 6.5% 6.8% 6.6% 6.9% 2014 8.5% 8.9% 2015 5.8% 6.0% 5.9% 6.1% 2015 8.0% 8.3% 2016 5.2% 5.3% 5.2% 5.3% 2016 7.5% 7.8% 2017+ 4.5% 4.5% 4.5% 4.5% 2017 7.0% 7.2% o 2009 PEMHCA premiums: 2018 6.5% 6.7% ➢ Blue Shield applied rollover credit 2019 6.0% 6.1% ➢ PPOs applied reserves 2020 5.5% 5.5.00% 2021+ 5.0% % o 2010 and later premiums adjusted: ➢ Blue Shield increased 1%each year for 2010-2012 ➢ PPOs increased 1%each year for 2010-2013 January 23,2012 9 E , ACTUARIAL ASSUMPTIONS HIGHLIGHTS 1 Assumption January 1, 2009 Valuation June 30, 2011 Valuation D Increase on Caps o PEMHCA minimum, equal o PEMHCA minimum, equal for Future method-4.5% method-4.5% Retirees o Premium-Based Caps- o Kaiser Caps -no medical trend medical trend increases after retirement, fixed at retirement ® Increase on Caps o PEMHCA minimum, equal o PEMHCA minimum, equal for Current method-4.5% method-4.5% Retirees o PEMHCA minimum, unequal o PEMHCA minimum, unequal method-5% method-5% o Cap fixed at retirement-no o Cap fixed at retirement-no increases increases o Premium-based cap-medical o Special cases with current trend active cap or 100% of premium -medical trend January 23,2012 10 ASSETS Market Value of Plan Assets (Amounts in 000's) Fiscal Year CERBT 2009/10 2010/11 • MVA (Beginning of Year) $ 92810 $ 1,532 • Employer Contribution 459 • Benefit Payment - • Administrative Expenses (1) (2) • Investment Return 146 373 • MVA (End of Year) 1,532 1,902 • Approximate MVA Return 15.6% 24.2% 1° Projected 6/30/09 assets of$893 thousand were used for prior valuation. P -*V %tA G January 23,2012 11 A . ASSETS Actuarial Value of Plan Assets (Amounts in 000's) Fiscal Year 2009/10 2010/11 • AVA(Beginning of Year) $ 1,046 $ 1,575 • Contributions 459 - • Benefit Payments - - • Expected Earnings 81 122 • Expected AVA(End of Year) 1,586 1,697 • MVA (End of Year) 1,532 1,902 11 • Preliminary AVA 1,575 1,738 • Minimum AVA (80% of MVA) 1,225 1,522 • Maximum AVA(120% of MVA) 1,838 2,283 • AVA(End of Year) 1,575 1,738 • Approximate AVA Return 6.7% 10.4% • 11 Expected AVA plus 20%of the difference between the MVA an d expected AVA B� tea January 23,2012 12 : RESULTS Actuarial Obligations (Amounts in 000's) 1/1/2009 Valuation 6/30/2011 Val Actual Projected Actual 1/1/2009 6/30/2009 6/30/2011 • Discount Rate 7.75% 7.75% 7.25% • Present Value of Benefits • Actives $ 4,240 $ 3,899 • Retirees 3,587 4,339 • Total 7,827 8,238 • Actuarial Accrued Liability • Actives 2,899 2,563 • Retirees 3,587 4,339 • Total 6,486 $ 6,665 6,902 • Actuarial Value of Assets (447) (1,046) (1,738) • Unfunded AAL 6,039 5,619 5,164 • Normal Cost 175 171 • Pay-As-You-Go Cost 299 356 IP January 23,2012 13 kW • RESULTS Historical Actuarial Accrued Liability (Amounts in 000's) $8,000 $7,000 $6,000 — $5,000 — $4,000 $3,000 — - $2,000 — -- $1,000 — $0 1/1/07 1/1/09 6/30/11 MI Retiree pay-go O Retiree AAL less pay-go 1 i Active AAL - ■- AVA —*—MVA PE January 23,2012 14 • RESULTS Estimated Actuarial Gains & Losses (Amounts in 000's) AAL (AVA) UAAL • 1/1/09 Actual $ 6,486 $ (447) $ 6,039 • 6/30/09 Projected 6,665 (1,046) 5,619 • 6/30/11 Expected 7,422 (1,638) 5,784 • Experience (Gains)/Losses: • Actual vs. expected premiums (477) - (477) • Contribution/Investment Gain - (100) (100) • Demographic & other (506) - (506) • Assumption Changes: • Discount rate 469 - 469 • Medical trend 528 - 528 • Kaiser caps frozen at retirement for future retirees (858) - (858) • Ca1PERS demographic assumptions 324 - 324 • Total Changes (520) (100) (620) • 6/30/11 Actual 6,902 (1,738) 5,164 P. January 23,2012 15 RESULTS Unfunded Actuarial Accrued Liability Balances (Amounts in 000's) Original Balances on Amortization Amortization Bases 6/30/2011 Payments Amortization Bases Date Years Amount Years Balance 2011/12 2012/13 • 6/30/09 UAAL 6/30/09 30 $ 5,618 28 $ 5,784 $ 353 $ 364 • Assumption Changes& 6/30/11 15 (620) 15 (620) (57) (59) (Gains)/Losses • Total 5,164 296 306 • Check 30-year 6/30/11 30 5,164 30 5,164 304 314 • Final for Results:12 6/30/11 30 5,164 28 5,164 315 326 28-yr Fresh Start 12 28-year fresh start keeps City on original 30-year amortization schedule of 6/30/09 initial UAAL(28 years remaining as of 6/30/11). January 23,2012 16 • RESULTS Annual Required Contribution (ARC) (Amounts in 000's) 1/1/2009 Valuation 6/30/2011 Valuation 2009/10 2010/11 2011/12 2012/13 • Discount Rate 7.75% 7.75% 7.25% 7.25% - • ARC - $ • Normal Cost $ 175 $ 181 $ 171 $ 176 • UAAL Amortization 350 362 315 326 • ARC 525 543 486 502 • Projected Payroll 6,997 7,225 7,829 8,083 • ARC - % • Normal Cost 2.5% 2.5% 2.2% 2.2% • UAAL Amortization 5.0% 5.0% 4.0% 4.0% • ARC 7.5% 7.5% 6.2% 6.2% n January 23,2012 17 4-:m RESULTS I I Historical Annual Required Contributions (Amounts in 000's) $800 0 $600 1 $400 0 II I , 111 lli y $200 $o 07/08 08/09 09/10 10/11 11/12 12/13 ©Normal Cost 169 175 175 181 171 176 •Amortization 431 445 350 362 315 326 ARC 600 620 525 543 486 502 4}fir!^ riTh il 'r January 23,2012 18 z RESULTS ' Estimated Net OPEB Obligation (NOO) Projection (Amounts in 000's) 1/1/09 Valuation 6/30/11 Valuation CAFR Estimate Estimate Estimate 2009/10 2010/11 2011/12 2012/13 o Discount Rate 7.75% 7.75% 7.25% 7.25% o NOO at Beginning of Year $ (118) $ (318) $ (115) $ (116) ❑ Annual OPEB Cost o Annual Required Contribution 525 543 486 502 o Interest on NOO (9) (25) (8) (8) o NOO Adjustment 7 20 7 7 o Annual OPEB Cost 523 538 485 501 ❑ Contributions o Benefit Payments Outside Trust 265 335 356 378 G Trust Funding 459 - 130 124 o Total Contributions 723 335 486 502 o NOO at End of Year (318) (115) (116) (117) January 23;2012 19 1 Estimated Pre-Funding Illustration (Amounts in 000's) Annual Begin OPEB Contribution Contrib Fiscal Year Cost Benefit Pre- Total % of Year NOO ARC (AOC) Pmts Funding Contrib Payroll Payroll 2011/12 $ (115) $ 486 $ 485 $ 356 $ 130 $ 486 $ 7,829 6.2% 2012/13 (116) 502 501 378 124 502 8,083 6.2% 2013/14 (117) 518 517 395 123 518 8,346 6.2% 2014/15 (118) 535 534 415 120 535 8,617 6.2% 2015/16 (119) 552 552 442 110 552 8,897 6.2% 2016/17 (120) 570 570 472 98 570 9,186 6.2% 2017/18 (121) 589 588 503 86 589 9,485 6.2% 2018/19 (121) 608 608 535 73 608 9,793 6.2% 2019/20 (121) 628 628 567 61 628 10,111 6.2% 2020/21 (120) 648 649 594 54 648 10,440 6.2% tr* January 23,2012 20 RESULTS I I Actuarial Obligations by Bargaining Group June 30, 2011, Discount Rate 7.25% (Amounts in 000's) Supervisors Exec/ & Mid- OCEA Professional Mgmt POA PMA Total o PVPB o Actives $ 809 $ 462 $ 425 $ 1,099 $ 1,104 $ 3,899 o Retirees 539 439 573 1,850 938 4,339 o Total 1,348 901 998 2,949 2,042 8,238 o AAL o Actives 526 323 200 546 968 2,563 o Retirees 539 I 439 573 1,850 938 4,339 o Total 1,065 762 773 2,396 1,906 6,902 o AVA13 (268) (192) (195) (603) (480) (1,738) • Unfunded AAL 797 570 578 1,793 1,426 5,164 O 2011/12 Normal Cost 30 23 28 63 27 171 • 2011/12 Pay-Go Cost 48 42 54 133 79 356 13 Assets allocated in proportion to AAL. January 23,2012 21 RESULTS 1 I Annual Required Contribution (ARC) 2011/12 Fiscal Year (Amounts in 000's) Supervisors Exec/ & Mid- OCEA Professional Mgmt POA PMA Total o ARC - $ o Normal Cost $ 30 $ 23 $ 28 $ 63 $ 27 $ 171 o UAAL Amort. 49 35 35 109 87 315 o ARC 79 58 63 172 114 486 o Projected Payroll 1,539 1,173 1,908 1,976 1,233 7,829 o ARC - % o Normal Cost 1.9% 2.0% 1.5% 3.2% 2.2% 2.2% o UAAL Amort. 3.2% 3.0% 1.8% 5.5% 7.0% 4.0% o ARC 5.1% 5.0% 3.3% 8.7% 9.2% 6.2% OD January 23,2012 22 czt ACTUARIAL CERTIFICATION This report presents the City of Seal Beach Retiree I-lealthcarc Plan("Plan")actuarial valuation as of June 30,2011. The purpose of this valuation is to determine the Plan benefit obligations and funded status under Governmental Accounting Standards Board Statements Nos.43 and 45 as of June 30,2011 and calculate the 2011/12 and 2012/13 fiscal year Annual Required Contributions. The valuation is based on the Plan provisions,participant data,contribution policy,and current administrative practice provided by the City and summarized in this report. It assumes the City funds the Plan with the California Employers' Retiree Benefit Trust(CERBT)using Asset Allocation Strategy#1. Future valuations may differ significantly if the Plan's experience differs from our assumptions or if there are changes to Plan design,administrative practice,actuarial methods or actuarial assumptions. The project scope did not include an analysis of this potential variation. We reviewed the participant data for reasonableness but did not perform an audit. The valuation was prepared using generally accepted actuarial principles and practices and the actuarial methods and assumptions summarized in this report. The assumptions represent our best estimate of expected future experience. Some of the assumptions used are required by CaIPERS for plans pre-funding benefits with the CERBT. This report presents Bartel Associates'best estimate of the Plan's liabilities,funded status,and costs in accordance with our understanding of GASB 43 and 45. The information presented in this report is intended to be used to satisfy the requirements of GASB 43 and GASB 45 and for no other purposes. The undersigned are members of the American Academy of Actuaries and meet the Academy's Qualification Standards to render the actuarial results and opinions in this report. Respectfully submitted, /!V "NAL John E.Bartel,ASA,FCA,MAAA Catherine A.Wandro,ASA,MAAA President,Bartel Associates,LLC Assistant Vice President&Actuary,Bartel Associates,LLC January 23,2012 January 23,2012 ` January 23,2012 t 23 ' " EXHIBITS Topic Page Premiums E-1 Participant Statistics E-4 Actuarial Assumptions E-23 Actuarial Methods E-30 Definitions E-32 January 23,2012 24 Q PREMIUMS � I I 2011 Monthly PEMHCA Premiums Southern California Non-Medicare Eligible Medicare Eligible Medical Plan Single 2-Party Family Single 2-Party Family Blue Shield $567.87 $1,135.74 $1,476.46 $337.88 $675.76 $1,013.64 Blue Shield NetValue 488.62 977.24 1,270.41 337.88 675.76 1,013.64 Kaiser 477.95 955.90 1,242.67 282.30 564.60 846.90 PERS Choice 516.28 1,032.56 1,342.33 375.88 751.76 1,127.64 PERS Select 451.48 902.96 1,173.85 375.88 751.76 1,127.64 PERSCare 819.18 1,638.36 2,129.87 433.66 867.32 1,300.98 PORAC 527.00 987.00 1,254.00 418.00 833.00 1,331.00 al January 23,2012 E-1 PREMIUMS I I 2012 Monthly PEMHCA Premiums Southern California Non-Medicare Eligible Medicare Eligible Medical Plan Single 2-Party Family Single 2-Party Family Blue Shield $583.60 $1,167.20 $1,517.36 $337.99 $675.98 $1,013.97 Blue Shield NetValue 501.93 1,003.86 1,305.02 337.99 675.98 1,013.97 Kaiser 512.76 1,025.52 1,333.18 277.81 555.62 833.43 PERS Choice 526.19 1,052.38 1,368.09 383.44 766.88 1,150.32 PERS Select 446.68 893.36 1,161.37 383.44 766.88 1,150.32 PERSCare 943.26 1,886.52 2,452.48 432.43 864.86 1,297.29 PORAC 556.00 1,041.00 1,323.00 418.00 833.00 1,331.00 ER January 23,2012 E-2 (0) PREMIUMS I I 2011 Dental & Vision Premiums Dental Premiums Dental Plan Single 2-Party Family Delta Care $16.36 $29.36 $43.44 Delta PPO 51.37 96.22 142.96 Vision Premiums Vision Plan Single 2-Party Family VSP 9.65 13.82 24.87 January 23,2012 E-3 • PARTICIPANT STATISTICS I Medical Plan Participation Non-Waived Participants Retirees Medical Plan Actives < 65 >_65 Blue Shield 41% 31% 45% Blue Shield NetValue 6% 9% 0% Kaiser 18% 13% 0% PERS Choice 25% 22% 41% PERS Select 2% 3% 0% PERS Care 0% 0% 7% PORAC 8% 22% 7% Total 100% 100% 100% January 23,2012 E-4 �` PARTICIPANT STATISTICS 1 1 II Active Medical Coverage Medical Plan Single 2-Party Family Waived Total Blue Shield 18 4 13 - 35 Blue Shield NetValue 4 - 1 - 5 Kaiser 9 4 2 - 15 PERS Choice 9 6 6 - 21 PERS Select - 1 1 - 2 PORAC 2 2 3 - 7 Waived - - - 8 8 Total 42 17 26 8 93 R � January 23,2012 E-5 PARTICIPANT STATISTICS 1 I Retiree Medical Coverage Under Age 65 Medical Plan Single 2-Party Family Waived Total Blue Shield 7 2 1 - 10 Blue Shield NetValue 1 1 1 - 3 Kaiser 2 1 1 - 4 PERS Choice 3 3 1 - 7 PERS Select - 1 - - 1 PORAC 2 4 1 - 7 Waived - - - 7 7 Total 15 12 5 7 39 R. •January 23,2012 E-6 PARTICIPANT STATISTICS 1 Retiree Medical Coverage Age 65 and Over Medical Plan Single 2-Party Family Waived Total Blue Shield 6 7 - - 13 PERS Choice 2 9 1 - 12 PERSCare 1 1 - - 2 PORAC 1 1 - - 2 Waived - - - 17 17 Total 10 18 1 17 46 Ra January 23,2012 E-7 `�*� PARTICIPANT STATISTICS Actives by Age and Service Miscellaneous City Service Age < 1 1-4 5-9 10-14 15-19 20-24 >25 Total < 25 2 2 - - - - - 4 25-29 - 5 5 - - - - 10 30-34 - 3 2 - - - - 5 35-39 - 5 1 - - - - 6 40-44 - 5 2 - - 1 - 8 45-49 - 3 1 1 - 1 - 6 50-54 - 1 - - - 1 1 3 55-59 - 2 - - 3 1 4 10 60-64 - - 2 2 - - - 4 > 65 - 1 - 1 2 - - 4 Total 2 27 13 4 5 4 5 60 1 p' * January 23,2012 E-8 : PARTICIPANT STATISTICS Active Age Distribution - Miscellaneous 15 0 01/01/09 Valuation 12 - • 06/30/11 Valuation 9 1 I I fill 3 0 <25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 >65 Age . _ January 23,2012 E-9 =J • PARTICIPANT STATISTICS Active Service Distribution - Miscellaneous 40 35 -- 0 01/01/09 Valuation 30 - - • 06/30/11 Valuation 25 E20 — z 15 — - 10 -- 5 ---- 0 0-4 5-9 10-14 15-19 20-24 >25 Service 67()1 ' : • January 23,2012 E-10 PARTICIPANT STATISTICS Actives by Age and Service Safety City Service Age < 1 1-4 5-9 10-14 15-19 20-24 >25 Total <25 - 1 - - - - - 1 25-29 - 1 1 - - - - 2 30-34 1 - 1 2 - - - 4 35-39 - 3 2 - 1 - - 6 40-44 1 2 2 - 1 2 - 8 45-49 - 1 - - - 4 - 5 50-54 - 1 - 1 - 1 1 4 55-59 - - 1 1 - - - 2 60-64 - - - - - - - - > 65 - - - - - 1 - 1 Total - 2 9 7 4 2 8 1 33 PIJanuary 23,2012 E-11 PARTICIPANT STATISTICS Active Age Distribution - Safety 9 8 0 01/01/09 Valuation ----------------- •06/30/11 Valuation 7 6 ° 4 2 I 0 -- - , 11 : 11 II, <25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 ?65 Age Q_-.l January 23,2012 E-12 PARTICIPANT STATISTICS Active Service Distribution - Safety 20 ❑ 01/01/09 Valuation 15 • 06/30/11 Valuation 0 t 10 - 5 0 i I , I I , ,-- - 0-4 5-9 10-14 15-19 20-24 >25 Service 06,,,,,, January 23,2012 E-13 PARTICIPANT STATISTICS j Actives by Age and Service Total City Service Age < 1 1-4 5-9 10-14 15-19 20-24 >25 Total <25 2 3 - - - - - 5 25-29 - 6 6 - - - - 12 30-34 1 3 3 2 - - - 9 35-39 - 8 3 - 1 - - 12 40-44 1 7 4 - 1 3 - 16 45-49 - 4 1 1 - 5 - 11 50-54 - 2 - 1 - 2 2 7 55-59 - 2 1 1 3 1 4 12 60-64 - - 2 2 - - - 4 >65 - 1 - 1 2 1 - 5 Total 4 36 20 8 7 12 6 93 PI r January 23,2012 E-14 PARTICIPANT STATISTICS Active Age Distribution - Total 20 ❑01/01/09 Valuation • 06/30/11 Valuation 15 10 — 5 o <25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 >65 Age January 23,2012 E-15 ",`' PARTICIPANT STATISTICS Active Service Distribution - Total (-0 50 ❑ 01/01/09 Valuation •06/30/11 Valuation 40 ---- - a� t 30 20 — 10 0 0-4 5-9 10-14 15-19 20-24 >25 Service 6� u January 23,2012 E-16 PARTICIPANT STATISTICS 1 1 Retiree Medical Coverage by Age Group Miscellaneous Age Single 2-Party Family Waived Total Under 50 - - - - - 50-54 - - - - - 55-59 2 1 - - 3 60-64 5 3 - - 8 65-69 3 3 - 1 7 70-74 3 3 - 3 9 75-79 1 2 - - 3 80-84 - 1 - 4 5 85 & Over - - - 1 1 Total 14 13 - 9 36 9 s�v>, January 23,2012 E-17 r=�' PARTICIPANT STATISTICS Retiree Age Distribution - Miscellaneous 12 ❑ 01/01/09 Valuation 10 • 06/30/11 Valuation 8 a> 6 4 2 0 1 <50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 >85 Age il I (..'4 Atoi January 23,2012 E-18 PARTICIPANT STATISTICS Retiree Medical Coverage by Age Group Safety Age Single 2-Party Family Waived Total Under 50 - - - - - 50-54 2 2 3 1 8 55-59 2 2 2 3 9 60-64 4 4 - 3 11 65-69 1 6 - 5 12 70-74 1 1 1 3 6 75-79 1 2 - - 3 80-84 - - - - - 85 & Over - - - - - Total 11 17 6 15 49 Pi ' ',7-1 i January 23,2012 E-19 PARTICIPANT STATISTICS i I Retiree Age Distribution Safety 16 14 - ❑01/01/09 Valuation 12 •06/30/11 Valuation ;, 10 I 8 6 - 4 2 <50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 >85 Age rlI January 23,2012 E-20 =° t— — --- PARTICIPANT STATISTICS Retiree Medical Coverage by Age Group Total Age Single 2-Party Family Waived Total Under 50 - - - - - 50-54 2 2 3 1 8 55-59 4 3 2 3 12 60-64 9 7 - 3 19 65-69 4 9 - 6 19 70-74 4 4 1 6 15 75-79 2 4 - - 6 80-84 - 1 - 4 5 85 & Over - - - 1 1 Total 25 30 6 24 85 January 23,2012 E-21 ' " PARTICIPANT STATISTICS Retiree Age Distribution - Total 20 18 0 01/01/09 Valuation -- 16 -- •06/30/11 Valuation -- 14 8- 12 t 10 El 1111 1111- 6 4 2 0 ( I NI <50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 >85 Age B January 23,2012 E-22 =� ACTUARIAL ASSUMPTIONS Assumption January 1, 2009 Valuation June 30, 2011 Valuation ❑ Valuation Date o January 1, 2009 o June 30, 2011 o 2009/10 and 2010/11 ARCs o 2011/12 and 2012/13 ARCS ❑ Funding Policy o Contribute full ARC to o Same Ca1PERS CERBT ❑ Discount Rate o 7.75% 0 7.25% - CERBT Asset Allocation Strategy #1 o General Inflation o 3% annually o Same o Basis for aggregate payroll and discount rate assumptions ❑ Payroll Increases o Aggregate—3.25% annually o Aggregate—3.25% annually o Merit—Ca1PERS 1997-2002 o Merit—Ca1PERS 1997-2007 Experience Study Experience Study © Mortality, o Ca1PERS 1997-2002 o Ca1PERS 1997-2007 Termination, Experience Study Experience Study Disability o Mortality Projection Table AA R January 23,2012 E-231 ACTUARIAL ASSUMPTIONS I I Assumption January 1,2009 Valuation June 30, 2011 Valuation o Retirement o Ca1PERS 1997-2002 o Ca1PERS 1997-2007 Experience Study Experience Study Misc. Police Misc. Police Benefit 2.5%@55 3%@50 Benefit 2.5%@55 3%@50 Hire Age 35 31 Hire Age 34 31 Exp Ret Age 60 55 Exp Ret Age 58 54 ❑ Ca1PERS o Ca1PERS service o Ca1PERS service Service o City service plus 'V2 service between City hire date if Ca1PERS service is unavailable ❑ PEMHCA Year Amount Year Amount Minimum 2009 $101 2011 $108 Increase 2010 105 2012 112 2011+ 4.5% increase per year 2013+ 4.5% increase per year fr. R January 23,2012 E-24 ACTUARIAL ASSUMPTIONS I I Assumption January 1,2009 Valuation June 30, 2011 Valuation ® Dental & Vision o 3% o Same Premium Increase o Increase on Caps o PEMHCA minimum, equal o PEMHCA minimum, equal for Future method—4.5% method—4.5% Retirees o Premium-Based Caps— o Kaiser Caps—no medical trend medical trend increases, fixed at retirement January 23,2012 E-25 < ACTUARIAL ASSUMPTIONS I r Assumption January 1, 2009 Valuation June 30,2011 Valuation ❑ Increase on Caps o PEMHCA minimum, equal o PEMHCA minimum, equal for Current method—4.5% method—4.5% Retirees o PEMHCA minimum, unequal o PEMHCA minimum, unequal method— 5% method— 5% o Cap fixed at retirement—no o Cap fixed at retirement—no increases increases o Premium-based cap—medical o Special cases with current trend active cap or 100% of premium —medical trend (*)January Janu 23,2012 E 26 ACTUARIAL ASSUMPTIONS ' I Assumption January 1, 2009 Valuation June 30, 2011 Valuation ❑ Medical Trend Increase from Prior Year Increase from Prior Year Non-Medicare Medicare Non-Medicare Medicare Year HMO PPO HM PPO Year All Plans 2010 9.1% 9.8% 9.4% 10.1% 2010 n/a 2011 8.4% 9.0% 8.7% 9.3% 2011 Premiums 2012 7.8% 8.3% 8.0% 8.5% 2012 Premiums 2013 7.1% 7.5% 7.3% 7.7% 2013 9.0% 9.4% 2014 6.5% 6.8% 6.6% 6.9% 2014 8.5% 8.9% 2015 5.8% 6.0% 5.9% 6.1% 2015 8.0% 8.3% 2016 5.2% 5.3% 5.2% 5.3% 2016 7.5% 7.8% 2017+ 4.5% 4.5% 4.5% 4.5% 2017 7.0% 7.2% o 2009 PEMHCA premiums: 2018 6.5% 6.7% > Blue Shield applied rollover 2010 5.5 5.1 2020 5.5%0 5.6% credit 2021+ 5.0% 5.0% • PPOs applied reserves • o 2010 and later premiums adjusted: • Blue Shield increased 1%each year for 2010-2012 • PPOs increased 1% each year for 2010-2013 ffit""c* January 23,2012 E-27 ACTUARIAL ASSUMPTIONS 1 I Assumption January 1,2009 Valuation June 30, 2011 Valuation ❑ Participation at o Currently covered- 100% o Same Retirement o Not currently covered-80% o Surviving spouses- Same as retiree ❑ Medical Plan at o Currently covered- Same as o Same Retirement current plan o Not currently covered- • Weighted premium based on current active plan elections o Medicare o Hired before 4/1/1986: o Same Eligibility >Miscellaneous-75% > Safety- 85% o Hired after 4/1/1986- 100% o All Medicare eligible retirees will elect Part B coverage (:1) January 23,2012 E-28 ACTUARIAL ASSUMPTIONS Assumption January 1, 2009 Valuation June 30, 2011 Valuation ❑ Waived Retirees o Currently over 65 —0% o Same Re-election o Currently under 65 —20% re- elect at age 65 o Marital Status at o Covered—based on current o Same Retirement coverage election o Waived— 80% married ❑ Spouse Age o Actives—males 3 years older o Same than females o Retirees—males 3 years older than females if spouse birth date not provided o Dependents o 10% elect family coverage at o Same retirement o No family coverage after age 65 January 23,2012 E-29 ACTUARIAL METHODS Method June 30, 2011 Valuation © Cost Method o Entry Age Normal o Actuarial Value of o Investment gains and losses spread over a 5-year rolling Assets period o Not less than 80% nor more than 120% of market value o Same as Ca1PERS, but shorter period o Amortization o Level percent of payroll Method © Amortization o 30 years (closed period) fresh start for 6/30/09 UAAL (28 Period years remaining on 6/30/11) O 20 years (closed period) for plan changes O 15 years (closed period) for gains and losses, actuarial method and assumption changes o Maximum 30-year combined period o Final results use fresh start 28-year period January 23,2012 E-30 ACTUARIAL METHODS Method June 30,2011 Valuation • Implied Subsidy • Employer cost for allowing non-Medicare eligible retirees to participate at active rates • Community rated plans are not required to value an implied subsidy if active rates are independent of number of retirees • PEMHCA is a community rated plan for most employers • Valuation does not include an implied subsidy • Future New • Valuation Results—Closed group, no new hires Entrants • Projections—Simplified open group projection: Actives - Total pay increased in accordance with aggregate payroll assumption Retirees - no additional retirees from new hires over 10- year projection period 637 1 January 23,2012 E-31 DEFINITIONS -- • GASB 45 • Project future employer-provided benefit cash flows for current active Accrual employees and current retirees Accounting • Discount projected cash flow to valuation date using discount rate(assumed return on assets used to pay benefits)and other actuarial assumptions to determine present value of projected future benefits(PVB) • Allocate PVB to past, current,and future periods using the actuarial cost method • Actuarial cost method used for this valuation is the Entry Age Normal Cost method which determines Normal Cost as a level percentage of payroll(same method used by CaIPERS) • Normal Cost is amount allocated to current fiscal year • Actuarial Accrued Liability (AAL) is amount allocated to prior service with employer • Unfunded AAL(UAAL) is AAL less plan assets pre-funded in a segregated and restricted trust • PayGo Cost • Cash subsidy is the pay-as-you-go employer benefit payments for retirees • Implied subsidy is the difference between the actual cost of retiree benefits and retiree premiums subsidized by active employee premiums riTh January 23,2012 E-32 DEFINITIONS Present Value of Benefits Present Value of Benefits Present Value of Benefits (Without Plan Assets) (With Plan Assets) Future Future Normal Normal Costs Costs Normal Cost Normal Cost Unfunded Actuarial Unfunded Accrued Liability Actuarial Accrued (7) t.' -' January 23,2012 E-33 DEFINITIONS I 1 • Annual • "Required contribution"for the current period including: Required > Normal Cost Contribution > Amortization of: (ARC) - Initial UAAL - AAL for plan, assumption, and method changes - Experience gains/losses(difference between expected and actual) - Contribution gains/losses (difference between ARC and contributions) • ARC in excess of pay-as-you-go costs not required to be funded • Net OPEB • Net OPEB Obligation is the accumulated amounts expensed but not funded Obligation • Net OPEB Asset if amounts funded exceed those expensed (NOO) • Annual OPEB • Expense for the current period including: Cost(AOC) > ARC • Interest on NOO • Adjustment of NOO • NOO adjustment prevents double counting of expense since ARCs include an amortization of prior contribution gains/losses previously expensed Q 1 40 1 January 23,2012 E-34 '3