October 12, Local Agency Formation Commission. Executive Officer

Transcription

1 LOCAL AGENCY FORMATION COMMISSION ORANGE COUNTY October 12, a C HAIR DEREK J. MCGREGOR Represenraave of General Public VIC E CHAIR DR. ALLAN BERNSTEIN Counolmember City oft usun LISA BARTLETT SupeNisor 5"' Oisrrict TO: FROM: SUBJECT: Local Agency Formation Commission Executive Officer Orange County Employees Retirement System (OCERS) FY Contribution Rates and Prepayment Program CHERYL BROTHERS Councilmember Oty of Fountain Valley TODD SPITZER Supervisor 3' 0 01Str1Ct CHARLEY WILSON Director Sama Margarrra Water D1Srricc JOHN WITHERS Dlfector IN1ne Ranch Water Disrr1ct ALTERNATE WENDY 8UCKNUM Councilmember City of Mission VieJO ALTERNATE ANDREW DO 5upeNisor I" District A LTERNATE JAMES FISLER Director Mesa Water D1srr1cr ALTERNATE KATHRYN FRESHLEY Represenracive of General Public CAROLYN EMERY Executive Officer BACKGROUND OC LAFCO has been an independent member of the Orange County Employee Retirement System ("OCERS") since July 1, Each year, the Commission adopts the employer contribution rates approved by the OCERS Board of Directors for the retirement plans available to OC LAFCO employees. FY OCERS CONTRIBUTION RATES On July 18, 2016, the OCERS Board of Directors adopted new employee and employer contribution rates for fiscal year The rates adopted are for three retirement plans that are available to current and future OC LAFCO employees. The employer contribution rates for all three plans include a slight increase to the current employer rates. The Commission's current employees participate in two of the retirement plans available, the 55 plan and the 65 "PEPRA" plan. There are currently no Commission employees enrolled in the third plan, which is the 65 "non-pepra" plan. The ''PEPRA" and "non-pepra" retirement plans are a result of the enactment of the Public Employee Pension Reform Act ("PEPRA") in Depending on certain qualifications, employees hired subsequent to the PEPRA Act may enroll in one of two 1.62%@ 65 retirement plans. The FY employer contribution rate for the 1.62%@ 65 "non PEPRA" plan, which is available to new LAFCO employees that are not new members to the OCERS retirement system, is %. The FY employee contribution rate for the 65 "PEPRA" plan, which is available to new LAFCO employees that are new members to the OCERS retirement system, is %. The FY employer 2677 Norch Main Screet Suire J 050. Santa Ana. CA (7 14) FAX (7 J 4) htcp//

2 OCERS Contribution Rates and Prepayment Program October 12, 2016 Page2 of 2 contribution rate for the 55 plan is.82%. The rate increases for all three plans are approximately two percent more than the current employer rates. The contribution rates for each plan are included for the Commission's reference as Attachment A. Staff is recommending that the Commission adopt the attached resolution (Attachment B) approving the retirement rates for FY as adopted by OCERS. OCERS PREPAYMENT PROGRAM Since 2005, the Commission has participated in the OCERS Prepayment Program to realize savings in the agency's pension costs. The program allows members to prepay all or a portion of their retirement contribution at a discounted rate. The discount rate has historically been tied to the approved long-term rate of return on the retirement system's investments. To date, the Commission's participation in the prepayment program has resulted in a cumulative savings of approximately $80,000. On July 18, 2016, the OCERS board approved a current discount rate of 4.50% for early payment of employer contributions received by January 17, To continue savings in pension costs, staff will submit prepayment of retirement contributions prior to the OCERS deadline. RECOMMENDATION Staff recommends that the Commission: 1. Adopt the attached form of resolution (Attachment B) approving the retirement rates for FY as adopted by OCERS. Respectfully submitted, Attachments: A. OCERS Correspondence B. DRAFT LAFCO Form of Resolution Adopting FY Retirement Rates

3 ATTACHMENT A 1 t ' LE COUNT IT:ERS,,., ~ 1 11: r.r"'rn:~nt v tt.:.rvi Su1inJ1 thr :INil'<' and Rnm J \fm1her> of: August 26, 2016 ( 1n tll \"JI \' ( \11-fR"-' " C )K\" I l'cll "~ Cl \fl 111<\ l>l\uik"l ()I(''"' ( ol '>1' (lllll>kl,.s. l.\\111 11\ OK'"'' C'< 1 'n 1)1 P\RI \II 'I I,. llll ~' \110,(((11\f{l Ill ''"' ~II \11\! ll\i 011,._1,1 <"! I'" I '"' "" I' l<t llpi \11 "l ),~<II \1 Clk ""I C"OI '-1' HR~ 1\ on 0KA'M ( n l ' fl<>\u "' f'l'llr 11\1 SI RVl\1 s I~ 111 K '\1 1110R1n I It( \'<ol ( 'QI'" lo( 4\1 \ I"' l<1~\l \ rin' ( u\t\tl''" '' t>r "1 1 (<>I'" l'l Bl II I.\\\ I ll<ran tlk "( f ('qi "' ' \1'11.\tll)' J)l~JIU( I Cll<A" ' Cot'" I KA"l >RTA "'" \I lll>rll\._, I'll<~ k ('ol It 1 <> Ms. Carolyn Emery Orange County Local Agency Formation Commission 2677 N. Main Street. Suite 1050 Santa Ana. CA Re: New Employer/Employee Contribution Rates 2017/2018 Dear Ms. Emery: At the July 18, 2016 regular board meeting, the Board of Retirement adopted fiscal year employer and employee contribution rates for the existing plans as part of the December 31, 2015 Actuarial Valuation Report. These new rates will go into effect beginning with pay period 15 in The attached schedules include both the employer rates and a listing of the employee contribution rates for your various plans. Additional plan information including a detailed breakdown of the UAAL by rate group can be found in the Actuarial Valuation as of December 31, 2015 located on the OCERS website at: Finance page. If you have any questions or require additional information. feel free to contact me at (714) or by at bshott@ocers.org. f(i' Regards. 1 tj14"1rt '1 Brenda Shott Assistant CEO of Finance and Internal Operations cc: Benjamin Legbandt f f(a;.'1'1.>l<iallo' ('to~rllll>k.\<;"(il ~ I '('I \li 1>11 \I ( '1'1LK AMI ( A\ll'l '{C"IC>SlOlll "\\ \ti \1111 R\ ) ORANG!: COUNTY EMPI OYEES RETIREMENT SYSTl:M E. We/li11gro11 Al'<!mw, Suiu JOO. So11ta Ana. CA Teleohone (7 14) Fat (7 / 4)

4 ATTACHMENT A l - Orange County Local Agency Formation Commission Employer f Employee Contribution Rates Effective Pay Period 15, July 7, 2017 Employer Contribution Rates Rate Group Plan Rate I & J (Future Service) ~ Normal UAAL* Total 13.19% 20.63%.82% O&P Normal UAAL Total 5.46% 22.45% 27.91% T-PEPRA Normal UAAL Total 6.56% 22.45% 29.01% *UAAL Rate Adjustment for Future Service Only: General employers with the 2.7% at 55, Rate Group future service only benefit improvement, are subject to the UAAL rate adjustment of 1.82% for future service only. The UAAL rate is calculated as follows: 22.45% (original rate) % {future service adjustment) = 20.63%. **Reverse Pickups: LAFCO Bargaining Units under the 2. 7% at 55 plans are subject to an Employee-paid Reverse Pickup. which has not been accounted for in the Employer rate above. Any Reverse Pickup arrangements are between the Plan Sponsors and Employee Bargaining Units. The reverse pickup rates schedule is available online at: sponsor/reversepickups.pdf. Employee Contribution Rates Entry Age Entry Age PLAN I (2.7%@ 55) 9.66% 9.66% 9.83% 10.01% 10.18% 10.36% 10.54% 10.73% 10.92% 11.11% 11.31% 11.51% 11.71% 11.92% 12.13% 12.35% 12.57% 12.80% 13.03% 13.27% PLAN I (2.7%@55) PLAN J (2. 55) 9.20% 9.20% 9.37% 9.53% 9.70% 9.87% 10.04% 10.22% 10.40% 10.58% 10.77% 10.96% 11.15% 11.35% 11.55% 11.75% 11.96% 12.18% 12.40% 12.63% PLAN J (2.7%@ 55) PLAN P (1.62%@65) 5.97% 5.97% 6.07% 6.18% 6.29% 6.40% 6.51% 6.63% 6.75% 6.86% 6.98% 7.11% 7.23% 7.36% 7.49% 7.62% 7.75% 7.89% 8.03% 8.17% PLAN P PLANT (1.62%@ 65) PEPRA 4.64% 4.64% 4.72% 4.81% 4.89% 4.98% 5.07% 5.16% 5.25% 5.34% 5.43% 5.53% 5.63% 5.73% 5.83% 5.93% 6.03% 6.14% 6.25% 6.36% PLANT \ ic" OCEl{S 2015 Acluarial \'alu lion on line at: hllp:ll "'".otrn.orglplfnlinancc/:arruariall' al1111iun120 I ~2. 1ua.-iahalu:11inn.pdf

5 ATTACHMENT A (1.62% (@ 651 (1.62% (@ 651 PEPRA % 12.86% 8.32% 6.48% % 13.11% 8.47% 6.59% % 13.34% 8.62% 6.71% % 13.55% 8.78% 6.84% % 13.76% 8.94% 6.96% % 13.97% 9.10% 7.10% % 14.19% 9.28% 7.23% % 14.42% 9.44% 7.36% % 14.67% 9.59% 7.48% % 14.92% 9.74% 7.60% % 15.15% 9.89% 7.72% % 15.36% 10.04% 7.85% % 15.52% 10.21% 7.98% % 15.61% 10.38% 8.12% % 15.62% 10.56% 8.26% % 15.54% 10.72% 8.40% % 15.34% 10.87% 8.52% % 14.94% 10.98% 8.62% % 15.44% 11.05% 8.69% % 15.97% 11.06% 8.71% % 15.97% 11.00% 8.69% % 15.97% 10.86% 861% % 15.97% 10.58% 8.44% % 15.97% 10.93% 8.73% % 15.97% 11.30% 9.02% % 15.97% 11.30% 9.02% % 15.97% 11.30% 9.02% % 15.97% 11.30% 9.02% % 15.97% 11.30% 9.02% % 15.97% 11.30% 9.02% % 15.97% 11.30% 9.02% 66 and thereafter 15.97% 15.97% 11 30% 9.02% Average entry age and discount percentages applicable to employee contributions paid under Section are: Rate Group Plan Plan I (General) Plan J (General) Plan 0 (General) Plan P (General) Plan T (General) - PEPRA Discount% 98.86% 97.38% N/A 96.21% o/o Average Entry Age N/A

6 ATTACHMENT B CP RESOLUTION OF THE LOCAL AGENCY FORMATION COMMISSION OF ORANGE COUNTY, CALIFORNIA ADOPTING RETIREMENT RATES FOR FY October 12, 2016 On motion of Commissioner, duly seconded by and carried, the following resolution was adopted: WHEREAS, the California State Legislature adopted AB 2838 in its legislative session, which, in part, required that Local Agency Formation Commissions throughout the State of California become independent public agencies effective January 1, 2001;and WHEREAS, the Orange County Local Agency Formation Commission ("OC LAFCO") applied and was accepted as an independent member agency under the Orange County Employees Retirement System ("OCERS") on or about January 1, 2001; and WHEREAS, as a result of OC LAFCO being an independent member agency under OCERS since 2001, OC LAFCO must annually adopt both the employee and employer rates as approved by OCERS; and WHEREAS, in August 2004, the County of Orange reached agreement with a number of General Member bargaining units and certain unrepresented employees to implement a 2.7% at 55 retirement formula for both past and future service; and WHEREAS, on February 9, 2005, OC LAFCO approved implementation of a 2. 7% at 55 retirement formula, for future service only, beginning July 1, 2005; and WHEREAS, the cost to migrate to the 2.7% at 55 retirement formula was paid for by OC LAFCO employees and did not result in additional cost to LAFCO except for an annual employer contribution of 0.51 percent and annual modifications made in the retirement rates as determined by OCERS; and WHEREAS, on December 12, 2012, OC LAFCO rescinded the 2.7% at 55 retirement formula for employees hired by OC LAFCO on or after December 12, 2012; and WHEREAS, the new 2.7% at 55 retirement formula only applies to active employees and new employees hired between July 1, 2005 and December 11, 2012; and Resolution CP Page 1 of3

7 ATTACHMENT B WHEREAS, on April 20, 2010, the County of Orange approved implementation of a 1.62% at 65 retirement formula for new County employee hires only effective on or after July 1, 2010;and WHEREAS, on June 9, 2010, OC LAFCO approved implementation of a 1.62% at 65 retirement formula, for new OC LAFCO employee hires only, beginning July 1, 2010; and WHEREAS, on February 9, 2011, OC LAFCO adopted a temporary resolution establishing that new employees enrolled in the 1.62% at 65 retirement formula are subject to pay the reverse pickup cost; and WHEREAS, on June 8, 2011, OC LAFCO adopted a revised resolution replacing the February 9, 2011 resolution, establishing OC LAFCO as responsible for the employee reverse pickup, the annual employer contribution of 0.51 percent and annual modifications made in the retirement rates for the 1.62% at 65 as determined by OCERS; and WHEREAS, the new employee who elects the 1.62% at 65 will be eligible to receive a contribution from OC LAFCO to a defined contribution plan, in which OC LAFCO will match one hundred percent (100%) of the employee's contribution up to two percent (2%) of the employee's salary during the first year of enrollment, and will match fifty percent (50%) of the employee's contribution up to two percent (2%) of the employee's salary in the following years; and WHEREAS, on September 12, 2012, the California Public Employees' Pension Reform Act (AB 340) was chaptered into law and became effective January 1, 2013; and WHEREAS, the California Public Employees' Pension Reform Act (AB 340) imposed certain limitations on public employee pension formulas for public employees considered new members, as that term is defined by Government Code Section (f) (''New Members"); and WHEREAS, the enactment of the California Public Employees' Pension Reform Act (AB 340) required OCERS to establish two versions of the 1.62% at 65 retirement plan, one for new OC LAFCO employees that are not New Members ("non-pepra 1.62 Plan") and one for new OC LAFCO employees that are New Members ("PEPRA 1.62 Plan"); WHEREAS, the employer retirement rate for the 1.62% at 65 retirement plan, as established by OCERS, for is percent for new LAFCO employees that are not New Members ("non-pepra" 1.62 Plan); and Resolution CP Page 2 of3

8 ATTACHMENTS WHEREAS, the employer retirement rate for the "PEPRA 1.62 Plan," as established by OCERS, for is percent; and WHEREAS, the employer retirement rate for the 2.7% at 55 retirement plan, as established by OCERS, for is.82 percent; and NOW, THEREFORE, the Orange County Local Agency Formation Commission DOES HEREBY RESOLVE, DETERMINE AND ORDER as follows: OC LAFCO adopts and approves implementation of retirement rates as established by OCERS, effective July 1, AYES: NOES: STATE OF CALIFORNIA ) ) SS. COUNTY OF ORANGE ) I, Derek J. McGregor, Chairman of the Orange County Local Agency Formation Commission, hereby certify that the above and foregoing resolution was duly and regularly adopted by said Commission at a regular meeting thereof, held on the 12th day of October IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of October, Derek J. McGregor Chairman of the Orange County Local Agency Formation Commission By: DEREK J. MCGREGOR Resolution CP Page 3 of3