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Home My WebLink About- - SEP6- Attachment - 9/6/2011-2— Costa Mesa CITY OF COSTA MESA SAFETY AND MISCELLANEOUS PLANS Ca1PERS Workshop - Based on 6/30/09 Valuations JOHN E. BARTEL B RTEL SSOCI.ATES, September 6, 2011 nBd draft.doc Agenda Topic Page Definitions 1 Police Safety Plan: Demographic Information 3 Plan Funded Status 5 Plan Assets & Actuarial Obligations 7 Contribution Rates & Projections 10 Miscellaneous Plan: Demographic Information 15 Plan Funded Status 17 Plan Assets & Actuarial Obligations 19 Contribution Rates, Projections & Policy 22 Fire Safety Plan Pooled Contribution Projections 27 Side Fund 31 Ca1PERS Smoothing 35 odclients\city of costa mesa\ca1pers\6-30-09\ba 11-09-06 costamesaci calpers mise safety t2 city council 09 Definitions ■ PVB - Present Value of all Projected Benefits: • Discounted value (at valuation date - 6/30/09), of all future expected benefit payments based on various (actuarial) assumptions ■ Actuarial Liability: • Discounted value (at valuation date) of benefits earned through valuation date [value of past service benefit] • Portion of PVB "earned" at measurement ■ Current Normal Cost: • Portion of PVB allocated to (or "earned" during) current year • Value of employee and employer current service benefit ■ Target- Have money in the bank to cover Actuarial Liability (past service) ■ Unfunded Liability - Money short of target at valuation date September 6, 2011 I Definitions ■ Excess Assets / Surplus: • Money over and above target at that point in time. • Doesn't mean you're done contributing. ■ Super Funded: • Assets cover whole pie (PVB) • If everything goes exactly like PERS calculated, you'll never have to put another (employer or employee) dime in. ■ Market Value of Assets: • Cash value of assets (at valuation date). ■ Actuarial Value of Assets: • Smoothed Market Value • Gains/Losses recognized over time to mitigate market volatility. September 6, 2011 2 Costa Mesa Summary of Demographic Information — Police Safetv ' Pre 1999 includes Fire. 2 Average City provided pensions are based on City service & City benefit formula, and are not representative of benefits for long service employees. September 6, 2011 3 Costa Mesa Participant Counts Police Safety 30011 pre 1999 Includes Fire 250 200 150 100 50 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 237 254 244 245 154 153 153 152 161 158 159 155 160 161 164 nta 75 88 94 110 80 82 89 96 100 102 108 115 123 130 133 September 6, 2011 4 Costa Mesa 19951 2001 2008 2009 Actives ■ Counts 237 153 161 164 ■ Average Age 40 37 38 39 City Service 14 11 11 11 PERSable Wages $57,800 $78,700 $109,300 $114,800 ■ Total PERSable Wages millions 13.7 12.0 17.6 18.8 Receiving Payments ■ Counts Service _ 51 72 75 Disablity 30 42 40 Beneficiaries 7 12 12 Total 75 88 126 127 ■ Average Annual City Provided Benefit2 Service $40,400 $63,700 $68,000 Disability 37,500 46,500 48,000 Service Retirements in last 5 years 45,900 88,000 92,000 ' Pre 1999 includes Fire. 2 Average City provided pensions are based on City service & City benefit formula, and are not representative of benefits for long service employees. September 6, 2011 3 Costa Mesa Participant Counts Police Safety 30011 pre 1999 Includes Fire 250 200 150 100 50 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 237 254 244 245 154 153 153 152 161 158 159 155 160 161 164 nta 75 88 94 110 80 82 89 96 100 102 108 115 123 130 133 September 6, 2011 4 Costa Mesa Actuarial Liability Plan Funded Status Police Safety Present Value of Benefits June 30, 2008 June 30, 2008 $ 164,100,000 125,400,000 (38,700,000) Jnfunded PVB (Unfunded Liability) Actuarial Liability Present Value of Benefits June 30, 2009 Actuarial Liability Actuarial Asset Value (Unfunded Liability) unded PVB anded dl tO June 30, 2009 $ 180,400,000 132,600,000 (47,800,000) June 30, 2008 June 30, 2009 $ 164,100,000 Actuarial Liability $ 180,400,000 128,300,000 Market Value of Assets 97,000,000 (35,800,000) (Unfunded Liability) (83,400,000) September 6, 2011 5 Costa Mesa Plan Funded Status Police Safety ■ What happened between 6/30/08 and 6/30/09? • Market Value Asset (loss) = (41.0) million • Unfunded Liability increase z (9.1) million ■ Reasons for Unfunded Liability increase • Actuarial Asset gain/(loss): = (2.5) million • Assumption Changes: = (3.7) million (Mortality & Retirement Rates) • Other gain/(loss): �z (2.9) million ❑ Demographic ❑ Contributions ■ 3% @ 50 Amendment • Effective 6/30/1999 • Past Service Liability (8.4) million RASeptember 6, 2011 6 Costa Mesa Actuarial Investment Return Police Safetv ■ Accumulated Market Value Gains/(Losses) x(26.3)% • [(12.9)% + (31.8)% + 5.5% + 12.9%] September 6, 2011 7 Funded Status Police Safety Pre 1999 Includes Fire 60% 40% 20% C�— ❑Funded Ratio -AVA 94% 88% 99% 100% 92% 93% 88% 78% 75% 77% 77% 77% 78% 76% 73% 73% 73% ■Funded Ratio - MVA 100% 95% 110% 111% 98% 98% 82% 71% 68% 76% 80% 82% 91% 78% 6/30/10 & 6/30/11 funded status estimated September 6, 2011 8 Costa Mesa Market Actuarial ■ June 30, 2008: • Return (5.1)% 8.9% • Gain/Loss (12.9)% 1.1% ■ June 30, 2009 • Return (24.0)% 6.4% • Gain/Loss 31.8)% (1.4)% ■ June 30, 2010 • Return 13.3% 6.1% • Gain/Loss 5.5% (1.7)% ■ June 30, 2011 • Return 20.7% 6.8% • Gain/Loss 12.9% (1.0)% ■ Accumulated Market Value Gains/(Losses) x(26.3)% • [(12.9)% + (31.8)% + 5.5% + 12.9%] September 6, 2011 7 Funded Status Police Safety Pre 1999 Includes Fire 60% 40% 20% C�— ❑Funded Ratio -AVA 94% 88% 99% 100% 92% 93% 88% 78% 75% 77% 77% 77% 78% 76% 73% 73% 73% ■Funded Ratio - MVA 100% 95% 110% 111% 98% 98% 82% 71% 68% 76% 80% 82% 91% 78% 6/30/10 & 6/30/11 funded status estimated September 6, 2011 8 Costa Mesa Funded Status (Millions) Police Safety 250.0 Pre 1999 Includes Fire 200.0 150.0 100.0 50.0 MActuarial Liability 74.8 91.3 94.2 111.8 76.7 82.8 92.2 102.1 109.8 116.2 125.8 137.4 148.6 164.1 180.4 191.6 203.1 flActuarial Asset Value 70.5 80.5 93.3 1 11 .6 70.9 77.3 81.0 79.3 82.4 89.2 97.3 106.1 115.9 125.4 132.6 140.2 149.1 6/30/10 & 6/30/11 funded status estimated September 6, 2011 9 Historical Total Contribution Rates Police Safety September 6, 2011 10 Costa Mesa Pre 1999 Includes Fire 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 fTotal Normal Cost 22.2% 21.7% 20.0% 22.9% 27.7% 27.2% 26.8% 26.8% 26.1% 26.2% 26.6% 26.6% 26.7% 26.6% 27.9% fTotal Contribution Rate 24.7% 25.8% 17.2% 23.1% 33.1% 30.0% 34.6% 37.7% 38.9% 37.0% 37.4% 38.4% 38.2% 39.1% 43.1% September 6, 2011 10 Costa Mesa Total Contribution Rate Projections Police Safety ■ Market Value Investment Return: • June 30, 2010 13.3%3 • June 30, 2011 20.7%4 • June 30, 2012 - 2016 Poor Investment Return: = 0.4% - 3.6% Expected Investment Ret: z 7.75% Good Investment Return: z 11.8% - 15.3% ■ No Other: Gains or Losses, Method or Assumption Changes or Benefit Improvements ■ Excludes Employer Paid Member Contributions (EPMC) ■ Note: • "UnMod AVA" - Anticipated contribution rates if CalPERS Board had not modified the Actuarial Value of Assets • "Mod AVA" - Anticipated contribution rates using Ca1PERS modified Actuarial Value of Assets 3 As reported by Ca1PERS press release. 4 As reported by Ca1PERS. September 6, 2011 11 Costa Mesa Total Contribution Rate Projections Police Safety Investment Return Varies 55% 50% 45% a.- y 40% 35% 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 UnMod AVA, Poor IR 38.2% 39.1% 48.6% 48.3% 47.9% 47.6% 47.6% 47.7% i UnMod AVA, Exp IR 38.2% 39.1% 48.6% 48.3% 47.6% 47.0% 46.4% 45.8% UnMod AVA, Good IR 38.2% 39.1% 48.6% 48.3% 47.6% 46.6% 45.5% 44.2% �Mod AVA, Poor IR 38.2% 39.1% 43.1% 43.5% 43.6% 44.1% 46.6% 48.7% fMod AVA, Exp IR 38.2% 39.1% 43.1% 43.5% 43.6% 43.7% 43.9% 44.0% fMod AVA, Good IR 38.2% 39.1% 43.1% 43.5% 43.6% 43.5% 43.3% 42.9% September 6, 2011 12 Costa Mesa Total Contribution Rate Projections Police Safety PERSable Payroll ('000s) ■ Ca1PERS valuation report 6/30/09 payroll $18,832 ■ Ca1PERS estimated 6/30/10 payroll from 6/30/09 valuation 19,444 ■ City FY 11/12 estimated payroll 17,100 Adiusted Valuation Pavroll 10 City AL Ad'usteds1k6Projected Ca1PERS 6/30/10 $18,255 x1.0325^1/2 = $18,549 $19,444 0 6/30/11 $ 17,677 x 1.0325^1/2 = $17,962 19,766 0 6/30/12 $17,100 x 1.0325^1/2 = $17,376 20,409 6/30/10 and 6/30/11 payroll are based on interpolation of 6/30/09 and estimated 6/30/12 payrolls. September 6, 2011 13 Costa Mesa 55% 50% 45% 40% Total Contribution Rate Projections Police Safety Investment Return Varies .■ 35% 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 W Adj. Payroll - Poor IR 38.2% 39.1% 43.1% 44.2% 45.5% 47.2% 502% 52.7% W Adj. Payroll - Exp IR 38.2% 39.1% 43.1% 44.2% 45.5% 46.8% 46.9% 47.1% W Adj. Payroll - Good IR 38.2% 39.1% 43.1% 44.2% 45.5% 46.5% 46.2% 45.8% fMod AVA,Poor IR 38.2% 39.1% 43.1% 43.5% 43.6% 44.1% 46.6% 48.7% f Mod AVA, Exp IR 38.2% 39.1% 43.1% 43.5% 43.6% 43.7% 43.9% 44.0% f Mod AVA. Good IR 38.2% 39.1% 43.1% 43.5% 43.6% 43.5% 43.3% 42.9% September 6, 2011 14 Costa Mesa Summary of Demographic Information - Miscellaneous 6 Average City provided pensions are based on City service & City benefit formula, and are not representative of benefits for long service employees. September 6, 2011 15 Costa Mesa Participant Counts Miscellaneous 450 400 350 300 250 200 150 100 50 0Active 333 342 356 368 359 361 363 373 418 424 412 407 416 416 418 400 ■Receivine Payments 113 132 136 140 143 155 162 175 187 200 220 242 267 275 284 300 September 6, 2011 16 Costa Mesa 1994 2001 2008 2009 Actives ■ Counts 333 373 418 400 ■ Average Age 41 43 43 43 City Service 10 10 10 10 PERSable Wages $45,200 $49,600 $65,300 $68,100 ■ Total PERSable Wages millions 15.1 18.5 27.3 27.3 Receiving Payments ■ Counts Service 144 238 250 Disablity 18 21 21 Beneficiaries 12 24 28 Total 113 174 283 299 ■ Average Annual City Provided Benefit6 Service $15,300 $23,300 $24,800 Disability 10,200 14,000 14,300 Service Retirements in last 5 years 18,300 26,700 27,300 6 Average City provided pensions are based on City service & City benefit formula, and are not representative of benefits for long service employees. September 6, 2011 15 Costa Mesa Participant Counts Miscellaneous 450 400 350 300 250 200 150 100 50 0Active 333 342 356 368 359 361 363 373 418 424 412 407 416 416 418 400 ■Receivine Payments 113 132 136 140 143 155 162 175 187 200 220 242 267 275 284 300 September 6, 2011 16 Costa Mesa Plan Funded Status Miscellaneous Present Value of Benefits June 30, 2008 Unfunded PVB Liability) Liability Present Value of Benefits June 30, 2009 Unfunded PVB Liability Liability) June 30, 2008 June 30, 2009 $ 165,500,000 Actuarial Liability $ 190,500,000 142,800,000 Actuarial Asset Value 151,300,000 (22,700,000) (Unfunded Liability) (39,200,000) June 30, 2008 June 30, 2009 $ 165,500,000 Actuarial Liability $ 190,500,000 145,400,000 Market Value of Assets 110,700,000 (20,100,000) (Unfunded Liability) (79,800,000) September 6, 2011 17 Costa Mesa Plan Funded Status Miscellaneous ■ What happened between 6/30/08 and 6/30/09? • Market Value Asset (loss) (46.0) million • Unfunded Liability increase (16.5) million ■ Reasons for Unfunded Liability increase • Actuarial Asset gain/(loss): = (2.9) million • Assumption Changes: = (9.7) million (Mortality & Retirement Rates) • Other gain/(loss): (3.9) million ❑ Demographic ❑ Contributions ■ 2.5% @ 55 • Effective Date: 6/30/2007 • Past Service Liability (3.9) million September 6, 2011 18 Costa Mesa Actuarial Investment Return Miscellaneous ■ Accumulated Market Value Gains/(Losses) x(26.3)% • [(12.9)% + (31.8)% + 5.5% + 12.9%] September 6, 2011 160% 140% 120% 100% 80% 60% 40% 20% 0% ❑Funded Ratio -AV ❑ Funded Ratio -MVA September 6, 2011 19 Funded Status Miscellaneous C�_ 121% 130% 133% 126% 110% 95% 94% 90% 88% 87% 86% 79% 79% 79% 135% 144% 143% 119% 100% 86% 92% 92% 94% 100% 88% 58% 61% 69% 6/30/10 & 6/30/11 funded status estimated 20 Costa Mesa Market Actuarial ■ June 30, 2008: • Return (5.1)% 8.2% • Gain/Loss (12.9)% 0.4% ■ June 30, 2009 • Return (24.0)% 6.2% • Gain/Loss 31.8)% (1.6)% ■ June 30, 2010 • Return 13.3% 6.1% • Gain/Loss 5.5% (1.7)% ■ June 30, 2011 • Return 20.7% 6.8% • Gain/Loss 12.9% (1.0)% ■ Accumulated Market Value Gains/(Losses) x(26.3)% • [(12.9)% + (31.8)% + 5.5% + 12.9%] September 6, 2011 160% 140% 120% 100% 80% 60% 40% 20% 0% ❑Funded Ratio -AV ❑ Funded Ratio -MVA September 6, 2011 19 Funded Status Miscellaneous C�_ 121% 130% 133% 126% 110% 95% 94% 90% 88% 87% 86% 79% 79% 79% 135% 144% 143% 119% 100% 86% 92% 92% 94% 100% 88% 58% 61% 69% 6/30/10 & 6/30/11 funded status estimated 20 Costa Mesa Funded Status (Millions) Miscellaneous 250.0 200.0 150.0 100.0 50.0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 ■Actuarial Liability 42.3 45.6 54.4 60.1 64.5 68.1 74.4 81.6 89.8 106. 113. 126. 137. 152. 165. 190. 202. 215. ❑Actuarial Asset Value 43.5 48.5 55.8 65.7 78.3 88.8 98.7 102. 98.4 100. 106. 113. 121. 132. 142. 151. 159. 169. September 6, 2011 30.00 25.00 20.00 15.00% 10.00 5.00 0.00 f Total Normal Cost t Total Contribution Rate P September 6, 2011 6/30/10 & 6/30/11 funded status estimated 21 Historical Total Contribution Rates Miscellaneous 22 Costa Mesa 95/96 96/97 97/98 98/99 1 99/00 1 00/01 1 01/02 1 02/03 03/04 1 04/05 05/06 06/07 07/08 08/09 1 09/10 10/11 11/12 14.1% 12.6% 13.2% 13.5% 14.1% 14.2% 14.3% 14.6% 7.1% 7.0% 7.0% 7.0% 7.0% 14.8% 15.0% 7.0% 11.6% 15.7% 18.2% 15.5% 18.3% 15.3% 19.1% 15.3% 9.0% 8.9% 8.8% 19.6% 21.4% 21.6% 26.1% 22 Costa Mesa Total Contribution Rate Projections Miscellaneous ■ Market Value Investment Return: • June 30, 2010 13.3%' • June 30, 2011 20.7%8 • June 30, 2012 - 2016 Poor Investment Return: z 0.4% - 3.6% Expected Investment Ret: z 7.75% Good Investment Return: z 11.8% - 15.3% ■ No Other: Gains or Losses, Method or Assumption Changes or Benefit Improvements ■ Excludes Employer Paid Member Contributions (EPMC) ■ Note: • "UnMod AVA" - Anticipated contribution rates if CalPERS Board had not modified the Actuarial Value of Assets • "Mod AVA" - Anticipated contribution rates using Ca1PERS modified Actuarial Value of Assets 7 As reported by Ca1PERS press release. 8 As reported by Ca1PERS. September 6, 2011 23 Costa Mesa Total Contribution Rate Projections Miscellaneous Investment Return Varies 40% 35% 30% -------- --•--••--•- ----- - 25% 20%- 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 UnMod AVA, Poor IR 21.4% 21.6% 30.2% 30.2% 30.1% 30.2% 30.4% 30.6% k - UnMod AVA, Exp IR 21.4% 21.6% 30.2% 30.2% 30.0% 29.7% 29.5% 29.3% UnMod AVA, Good IR 21.4% 21.6% 30.2% 30.2% 29.9% 29.5% 28.9% 28.2% f Mod AVA, Poor IR 21.4% 21.6% 26.1% 26.5% 26.8% 27.4% 29.4% 31.2% f Mod AVA, Exp IR 21.4% 21.6% 26.1% 26.5% 26.8% 27.0% 27.3% 27.5% f Mod AVA, Good IR 21.4% 21.6% 26.1% 26.5% 26.8% 26.9% 26.8% 26.6% September 6, 2011 24 Costa Mesa Total Contribution Rate Projections Miscellaneous PERSable Payroll ('000s) ■ Ca1PERS valuation report 6/30/09 payroll $27,258 ■ Ca1PERS estimated 6/30/10 payroll from 6/30/09 valuation 28,144 ■ City FY 11/12 estimated payroll 20,586 Adiusted Valuation Pavroll ' 6/30/10 and 6/30/11 payroll are based on interpolation of 6/30/09 and estimated 6/30/12 payrolls. September 6, 2011 25 Costa Mesa Total Contribution Rate Projections Miscellaneous Investment Return Varies 40% 35% 30% ■ 25% 20% City Ad'usted9 Ca1PERS Projected ■ 6/30/10 $25,034x 1.0325^1/2 = $25,438 $28,144 ■ 6/30/11 $22,810 x 1.0325^1/2 = $23,178 29,059 ■ 6/30/12 $20,586 x 1.0325^1/2 = $20,918 30,003 ' 6/30/10 and 6/30/11 payroll are based on interpolation of 6/30/09 and estimated 6/30/12 payrolls. September 6, 2011 25 Costa Mesa Total Contribution Rate Projections Miscellaneous Investment Return Varies 40% 35% 30% ■ 25% 20% 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 ■ W Adj. Payroll - Poor IR 21.4% 21.6% 26.1% 27.7% 29.6% 32.4% 35.4% 37.9% A - W Adj. Payroll - Exp IR 21.4% 21.6% 26.1% 27.7% 29.6% 31.9% 32.2% 32.6% • - W Adj. Payroll - Good IR 21.4% 21.6% 26.1% 27.7% 29.6% 31.7% 31.6% 31.3% fMod AVA, Poor IR 21.4% 21.6% 26.1% 26.5% 26.8% 27.4% 29.4% 31.2% Mod AVA, Exp IR 21.4% 21.6% 26.1% 26.5% 26.8% 27.0% 27.3% 27.5% f Mod AVA, Good IR 21.4% 21.6% 26.1% 26.5% 26.8% 26.9% 26.8% 26.6% September 6, 2011 26 Costa Mesa Total Pooled Plan Contributions Fire Safety ■ Employer Contribution Required • Normal Cost • Risk Pool's Amortization Bases • Side Fund • Subtotal ■ Member Contribution rates ■ Total Rates September 6, 2011 6/30/08 6/30/09 2010/2011 2011/2012 15.9% 1.9% 8.4% 26.2% 9.0% 35.2% 27 Total Pooled Plan Contribution Rates Fire Safety ■ What Happened from 6/30/08 to 6/30/09: • 2010/11 Rate • Benefit Increase from 3% @55 to 3% @ 50 • Assumption Changes • Risk Pool's Investment & Non -Investment Losses • Net increase • 2011/12 Rate 19.9% 5.9% 11.6% 37.4% 9.0% 46.4% 5.8 2.6 2.8 om; C 35.2% 11.2 46.4% September 6, 2011 28 Costa Mesa Total Pooled Plan Contribution Rates Fire Safety ■ Market Value Investment Return: • June 30, 2010 13.3%10 • June 30, 2011 20 7%lI • June 30, 2012 - 2016 Poor Investment Return: = 0.4% - 3.6% Expected Investment Ret: z 7.75% Good Investment Return: z 11.8% - 15.3% ■ No Other: Gains or Losses, Method or Assumption Changes or Benefit Improvements ■ Excludes Employer Paid Member Contributions (EPMC) ■ Note: • "UnMod AVA" - Anticipated contribution rates if CalPERS Board had not modified the Actuarial Value of Assets • "Mod AVA" - Anticipated contribution rates using Ca1PERS modified Actuarial Value of Assets 0 As reported by Ca1PERS press release. 11 As reported by Ca1PERS. September 6, 2011 29 Total Pooled Plan Contribution Rates Fire Safety Investment Return Varies (7.75%) 60% 55% 50% 45% 40% d 35% 30% 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 UnMod AVA, Poor IR 35.0% 35.2% 52.9% 53.1% 53.1% 53.3% 53.7% 55.4% UnMod AVA, Exp IR 35.0% 35.2% 52.9% 53.1% 52.9% 52.7% 52.5% 52.2% UnMod AVA, Good IR 35.0% 35.2% 52.9% 53.1% 52.8% 52.3% 51.5% 50.6% f Mod AVA, Poor IR +Mod AVA, Exp IR Mod AVA, Good IR 35.0% 35.0% 35.0% 35.2% 35.2% 35.2% 46.4% 46.4% 46.4% 47.2% 47.2% 47.2% 47.6% 47.6% 47.6% 48.7% 48.0% 47.8% 51.9% 48.4% 47.7% 54.6% 48.8% 47.5% September 6, 2011 30 Costa Mesa Side Fund Fire Safety ■ Ca1PERS requires side fund paid off with amortization schedule: • June 30, 2011 Balance $22.6 million • 7.75% interest • Level percent of pay: 3.25% payroll increase • Payment for 2011/12 = $1,568,069 • Actual amounts paid based on percentage (11.6%) times actual 2011/12 payroll. Payroll ❑ Expected $ 13,538,200 ❑ Example 1 14,538,200 ❑ Example 2 12,538,200 Contribution $ 1,568,000 1,684,000 1,452,000 ■ Difference between expected and actual payments: • goes to pool • overpayments (underpayments) do not decrease (increase) the side fund's outstanding balance ■ ■ September 6, 2011 31 Side Fund Fire Safety Costa Mesa Contribution Pre -payment • Cost effective if City expects actual 2011/12 payroll will be > $13,538,214. • Prepay gets 3.7% discount [e.g. for each $100 expected, pay ,& $96.34] Contribution rate (11.6%) adjusted each year based on • amortization payment and • CalPERS expected City projected payroll. ■ Expected amortization payment: 0 2011/12 $ 1,568,100 0 2012/13 1,619,000 0 2013/14 1,671,700 1 1 0 2033/34 3,169,200 ❑ 2034/35 0 9ASeptember 6, 2011 32 Costa Mesa Contribution Policy ■ Consider policy implications of not increasing Ca1PERS contributions: • UAL not being paid off • Generational shift of Unfunded Liability ■ Similar to minimum payment on credit card balance September 6, 2011 33 Contribution Policy ■ Consider one of the following: om; C • Adjust contribution to get rate close to rate prior to asset smoothing modification ❑ Requires changing amortization period each year O Asking Ca1PERS to use "Fresh Start" O Higher rates 2011/12 and beyond • Use one time money to buy down the UAL ❑ Requires discussing with CaIPERS before sending money September 6, 2011 34 Costa Mesa Ca1PERS Smoothing Method 6/30/2009: Unmodified Modified Market Value 100.0% 100.0% Actuarial Value 120.0% 137.0% 6/30/2010: 13.3% 13.3% Market Value 113.3% 113.3% Actuarial Value: 1. Project @ 7.75% 129.3% 147.6% 2. Adjust:[(MV-AV) x (1/15)] 128.2% 145.3% 3. Limited by corridor [Unmodified: 120%, Modified: 130%] 128.2% 145.3% Actuarial Rate of Return 6.9% 6.1% Ratio of Actuarial Value to Market Value 113.2% 128.2% September 6, 2011 35 Costa Mesa Ca1PERS Smoothing Method Actuarial Asset Values • Project Assets forward • Asset Gain/Losses Recognized • Ratio of Actuarial to Market Value of Assets Actuarial Asset Methods • Amortization o Years o Factor • Minimum 9A September 6, 2011 36 Unmodified Modified 7.75% 7.75% 15 Years 15 Years 80-120% 60-140% 30 Years 30 Years 6% 6% Normal Cost Normal Cost less 30 Year less 30 Year Amortization Amortization of Surplus of Surplus Costa Mesa