HomeMy WebLinkAboutStaff Report 4833
City of Palo Alto (ID # 4833)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 5/27/2014
City of Palo Alto Page 1
Summary Title: Retiree Healthcare Plan Actuarial Valuation
Title: Accept the Retiree Healthcare Plan GASB 45 Actuarial Valuation as of
June 30, 2013
From: City Manager
Lead Department: Administrative Services
RECOMMENDED MOTION
The Finance Committee accepts the June 30, 2013 actuarial valuation of Palo Alto’s Retiree
Healthcare Plan and recommends that the City Council approve full funding of the Annual
Required Contribution (ARC) for Fiscal Year 2015 and Fiscal Year 2016.
RECOMMENDATION
Staff recommends that the Finance Committee accepts the June 30, 2013 actuarial valuation of
the Palo Alto’s Retiree Healthcare Plan and recommends to the City Council to fully fund the
Annual Required Contribution for Fiscal Year 2015 and Fiscal Year 2016.
EXECUTIVE SUMMARY
This report provides the Finance Committee with the actuarial study results required by the
Government Accounting Standards Board's (GASB) Statement No. 45, Accounting and Financial
Reporting by Employers for Post-Employment Benefits Other Than Pensions. (See Attachment A:
June 30, 2013 GASB 45 Actuarial Valuation) The results of this study as compared to the 2011
study show a 9.6 percent increase in citywide costs, with the Annual Required Contribution
(ARC) increasing from $13.0 million in FY 2014 to $14.3 million in FY 2015. In addition, the
City’s actuarial unfunded liability is valued at $143.6 million as of June 30, 2013, a 16 percent
increase over the $123.3 million unfunded liability as of June 30, 2011. The increase in the
actuarial unfunded liability is primarily due to an upcoming actuarial standard which requires
that actuaries need to account for the “implied subsidy” in the analysis of the unfunded liability.
According to the Bartel Associates’ web site, “CalPERS…blends active employees with pre-
Medicare retirees and charges them the same medical premium…However, younger employees
on average are…subsidizing older employees and retirees … The Implied Subsidy is the
difference between average retiree claims and premiums charged by…CalPERS.”
City of Palo Alto Page 2
BACKGROUND
GASB 45 requires the City to complete an actuarial study on a biennial basis, to determine the
retiree medical liability and how much the City should be setting aside each year to fund the
annual required contribution (ARC). Funding the ARC, as determined by Bartel Associates, City’s
actuary, is paramount so that the City pays off the unfunded liability within 30 years.
In Fiscal Year 2008, the City established an irrevocable trust with California Employers Retirees
Benefit Trust (CERBT) for retiree medical benefits. In Fiscal Year 2008, the City transfe rred $33.8
million to the trust, with annual contributions each year thereafter. As of June 30, 2013, the
market value of the trust was $60.1 million, with a projected June 30, 2014 value of $73.1
million. In comparison, the Actuarially Accrued Liability (AAL) for Retiree Medical was valued
for June 30, 2013 at $203.6 million, indicating a 29% funded ratio. For June 30, 2014, that AAL
is projected at $213.5 million, indicating a 34% funded ratio per the report submitted by Bartel
Associates (see slide 25 of Attachment A).
DISCUSSION
Bartel Associates completed a June 30, 2013 actuarial valuation for the City on May 20, 2014
(Attachment A) that valued the City's unfunded retiree medical liability at $143.5 million,
compared to the unfunded liability of $123.3 million on January 1, 2011 – an increase of $20
million or 16%.
The Annual Required Contribution (ARC) associated with the valuation is $14.3 million for FY
2015 for all funds. This is an increase of $1.3 million (10%) over the FY 2014 ARC of $13.0
million. The General Fund’s portion of the citywide ARC is $9.6 million representing a $0.6
million, or 6 percent, increase over the FY 2014 General Fund ARC of $9.1 million. The FY 2016
ARC for all funds is projected at $14.8 million, with the General Fund’s portion at $10.0 million.
The net increase in the City’s retiree medical liability between the 2011 and 2013 valuations is
attributable to the actuarial valuation changes, demographic changes, and investment returns.
The primary increase to the City’s unfunded liability is due to the “implied subsidy”, change in
the benefits structure, and mortality improvements partially offset with lower than expected
healthcare premiums, positive investment returns, , demographic changes, and the recently
approved agreement with the Service Employees International Union (SEIU) contract.
1. Implied Subsidy:
The new Implied Subsidy valuation adds $41.4 million to the liability and $3.5 million to
the citywide ARC (slide 45).
According to the Bartel Associates’ web site, “CalPERS…blends active employees with
pre-Medicare retirees and charges them the same medical premium…However, younger
employees on average are…subsidizing older employees and retirees … The Implied
Subsidy is the difference between average retiree claims and premiums charged
by…CalPERS.”
City of Palo Alto Page 3
Cities will soon be required to account for the “implied subsidy” contained in active
employees’ retiree medical premiums, as part of their retiree medical l iability.
The Actuarial Standards Board’s new Actuarial Standard of Practice (ASOP 6) requires
inclusion of the Implied Subsidy for valuations after March 31, 2015. Agencies are also
encouraged to make the change earlier if possible. Staff recommends adopting this
change as part the FY 2015 ARC calculation.
2. Mortality Improvements:
Mortality improvement (people are living longer) projections for actives and retirees
added $5.3 million to the unfunded liability and $0.6 million to the ARC.
3. Healthcare Premiums:
Less-than-expected increases in CalPERS premiums reduced the unfunded liability by
$35.7 million.
4. Investment Return:
Increase in market value of the CERBT from $49.2 million on June 30, 2012 to $60.1
million on June 30, 2013 (22 percent increase), due to increased contributions from the
City and investment returns. (See slide 22 in Attachment A for details regarding annual
returns on CERBT.)
5. Memorandum of Agreement with SEIU
The recently adopted agreement with SEIU, which includes fixed healthcar e premium
amounts for each of the next two years, reduced about $1.9 million of the unfunded
liability.
The change in the valuation results is summarized by the table on slide 25 of Bartel Associates’
report (see below):
City of Palo Alto Page 4
RESOURCE IMPACT
The Fiscal Year 2015 Proposed Budget includes the cost to fully fund the Annual Required
Contribution of $14.3 million for all funds ($9.6 million for the General Fund). If this report is
approved by the City Council, the Fiscal Year 2016 Proposed Budget will include $14.8 million to
fund the ARC for all funds ($10.0 million for the General Fund).
ENVIRONMENTAL REVIEW
The action recommended is not a project for the purposes of the California Environmental
Quality Act.
Attachments:
Attachment A: Bartel Associates, Retiree Healthcare Valuation (as of June 30, 2013)
Report (PDF)
CITY OF PALO ALTO
RETIREE HEALTHCARE PLAN
June 30, 2013
GASB 45 Actuarial Valuation
Presented by John E. Bartel, President
Prepared by Deanna Van Valer, Assistant Vice President & Actuary
Mary Beth Redding, Assistant Vice President & Actuary
Adam Zimmerer, Actuarial Analyst
Bartel Associates, LLC
May 20, 2014
Agenda
O:\Clients\City of Palo Alto\Projects\OPEB\2013 Val\Reports\BA PaloAltoCi 14-05-20 OPEB 6-30-13 Final Results.docx
Topic Page
Benefit Summary 1
Implied Subsidy 6
Participant Statistics 9
Actuarial Assumptions Highlights 15
Actuarial Methods 20
Assets 22
Results 25
Assumption Sensitivities 42
Benefit Sensitivities 47
Actuarial Certification 49
Exhibits 50
Results by Fund and Department E-41
ATTACHMENT A
May 20, 2014 1
BENEFIT SUMMARY
Eligibility Retire directly from the City under CalPERS (age 50 and 5 years of
CalPERS service or disability)
Medical
Provider
CalPERS health plans (PEMHCA)
CalPERS administrative fees paid by City
Retiree Medical
Hired < 1/1/04
(1/1/05 SEIU,
1/1/06 PAPOA)
GROUP 1: Retired < 1/1/07 (3/1/09 for PAPOA)
• Full premium up to family coverage
GROUP 2: Retired between 1/1/07 (3/1/09 for PAPOA) and
5/1/11 (12/1/11 for IAFF)
• Same as above but premium limited to 2nd most expensive Basic
(non-Medicare) medical plan in the Bay Area Region (Blue
Shield in 2012 & 2013, United Healthcare for 2014)
GROUP 3: Retired ≥ 5/1/11 (12/1/11 for IAFF)
• 90% of premium up to 90% of Group 2 cap
• PAPOA gets 100% (same as Group 2)
• SEIU limited to dollar caps subject to bargaining for 2014 and
later (see slide #3)
May 20, 2014 2
BENEFIT SUMMARY
Retiree Medical
Hired ≥ 1/1/04
(1/1/05 SEIU,
1/1/06 PAPOA)
GROUP 4: Vesting schedule (based on all CalPERS Service)1:
Years of Service %
< 10 0%
10 50%
↓ ↓
> 20 100%
100% vesting for disability retirements
Vesting applies to 100/90 formula amounts:
2012 2013 2014
Single $ 566 $ 622 $ 642
2-Party 1,074 1,183 1,218
Family 1,382 1,515 1,559
If have 20 years City service do not need to retire directly from
City
Dental, Vision
& Medicare
Part B
None
1 Minimum 5 years City Service.
ATTACHMENT A
May 20, 2014 3
BENEFIT SUMMARY
Surviving
Spouse Benefit
100% of retiree benefit continues to surviving spouse if retiree
elects CalPERS pension survivor allowance
Waived Re-
election
Waived retirees/beneficiaries may re-elect coverage at a future
date
Pay-As-You-
Go ($000s)
(Cash only)
FY 2013/14 $8,800 estimated from data
FY 2012/13 $8,766 (from CAFR)
FY 2011/12 $8,165 (from CAFR)
FY 2010/11 $6,216
FY 2009/10 $5,519
SEIU Group 3
Medical
Benefit
100% of premium limited to fixed dollar caps (which will be
subject to bargaining)
2014 2015
Single $ 688 $ 708
2-Party 1,375 1,415
Family 1,788 1,840
Affects all SEIU Group 3 retirees and active employees
May 20, 2014 4
BENEFIT SUMMARY
Changes to Prior Valuation Benefit
Group Prior Benefit Current Benefit
Group 3
Non-
Safety
Full premium (up to family
coverage) limited to 2nd most
expensive Basic (non-Medicare)
plan in Bay Area Region in 2011
All premium increases starting
1/1/11 shared evenly between
City and employee, up to 10% of
increase per year
90% of premium (up to family
coverage) limited to 90% of 2nd
most expensive Basic (non-
Medicare) medical plan in the Bay
Area Region
Group 4
Non-
Safety
Vesting schedule applied to
2011 100/90 formula amounts
All premium & 100/90 formula
increases starting 1/1/11 shared
evenly between City and
employee, up to 10% of increase
per year
Vesting schedule applied to 100/90
formula amounts (additional detail
on slide 2)
ATTACHMENT A
May 20, 2014 5
BENEFIT SUMMARY
Monthly Benefit Cap Amounts
2013 20142
Group Single 2-Party Family Single 2-Party Family
Group 13 $1,083.11 $2,166.22 $2,816.09 $ 836.59 $1,673.18 $2,175.13
Group 2 784.63 1,569.26 2,040.04 764.24 1,528.48 1,987.02
Group 34 706.17 1,412.33 1,836.04 687.82 1,375.63 1,788.32
Group 45 622.00 1,183.00 1,515.00 642.00 1,218.00 1,559.00
% Decrease
from Group 1
Group 2 28% 28% 28% 9% 9% 9%
Group 3 35% 35% 35% 18% 18% 18%
Group 4 43% 55% 46% 23% 27% 28%
2 Large drop in most expensive premiums in 2014 due to PERS premium methodology change.
3 No cap for Group 1. Amount shown is most expensive Non-Medicare Bay Area region premium.
4 Except PAPOA
5 Assuming 20 years of service/100% vesting
May 20, 2014 6
IMPLIED SUBSIDY
Background
• For PEMHCA, employer cost for allowing retirees to participate at active rates.
• GASB 45 defers to actuarial standards of practice.
• Actuarial Standards of Practice No. 66 (ASOP 6) allows community rated plans to
value their liability using premiums, resulting in no implied subsidy.
6 Measuring Retiree Group Benefits Obligations and Determining Retiree Group Benefits Plan Costs or Contributions.
25 30 35 40 45 50 55 60 65
Blended Premium $610 $610 $610 $610 $610 $610 $610 $610 $610
Cost by Age $343 $398 $442 $486 $586 $652 $752 $885 $1,041
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
ATTACHMENT A
May 20, 2014 7
IMPLIED SUBSIDY
In April 2012, Actuarial Standards Board released 2nd Exposure Draft for ASOP 6:
• Would require implied subsidy valued for community rated plans such as PEMHCA.
• Timing:
First Exposure Draft issued April 2012 (July 15, 2012 comment deadline)
Second Exposure Draft issued March 2013 (August 30, 2013 comment deadline)
Final Standard issued May 2014
Effective date March 31, 2015 with earlier implementation encouraged
Implied Subsidy impact depends on a number of factors including:
• CalPERS provided information
• Miscellaneous/Safety mix
• Active/retiree proportions
• Level of pre-funding
May 20, 2014 8
IMPLIED SUBSIDY
Estimated 2013/14 Implied Subsidy Transfer for Medical Coverage
For Illustrative Purposes Only
(Amounts in 000’s)
Before GASB 45 Actives Retirees Total
Total Premium7 $ 15,343 $ 9,006 $ 24,349
Member Contribution8 - (103) (103)
Employer Contribution 15,343 8,903 24,246
After GASB 45 Actives Retirees Total
Total Premium $ 15,343 $ 9,006 $ 24,349
Member Contribution - (103) (103)
Implied Subsidy Transfer (1,852) 1,852 -
Employer Contribution 13,491 10,755 24,246
7 Estimated premium based on the 6/30/13 participant data and 2013 &2014 premiums
8 Assumes no member contribution for actives
ATTACHMENT A
May 20, 2014 9
PARTICIPANT STATISTICS
Participant Statistics
9 From 1/1/09 Milliman report
10 1 retiree with missing birth date assumed to retire at average retirement age
11 Excludes 3 retirees with missing retirement date
12 All retirements included. Disability retirement data unreliable.
6/30/099 6/30/11 6/30/13
Actives
• Count 955 923 948
• Average Age 45.3 44.7 45.2
• Average City Service 11.2 10.8 10.8
• Average PERS Service 13.7 11.7
• Average Salary $103,602 $86,007 $86,271
• Total Salary (000’s) $98,940 $79,384 $81,785
Retirees:
• Count 710 860 968
• Average Age10 67.2 67.0 68.2
• Average Retirement Age11
o Service n/a 55.512 57.8
o Disability n/a n/a 45.3
May 20, 2014 10
PARTICIPANT STATISTICS
Participant Statistics
June 30, 2013
13 Group 3 PAPOA have Group 2 benefits
14 Actual 2012/13 pay paid for those hired < 7/1/12. New hire pay is annualized.
15 1 retiree with missing birth date assumed to retire at average retirement age
16 Excludes 3 retirees with missing retirement date
Group 1 Group 2 Group 313 Group 4 Total
Actives
• Count n/a n/a 518 430 948
• Average Age n/a n/a 49.1 40.6 45.2
• Average Entry Age n/a n/a 32.0 35.4 33.5
• Average City Service n/a n/a 16.5 4.0 10.8
• Average PERS Service n/a n/a 17.1 5.2 11.7
• Average Salary n/a n/a $92,284 $79,027 $86,271
• Total Salary (000’s)14 n/a n/a $47,803 $33,982 $81,785
Retirees:
• Count 617 308 34 9 968
• Average Age15 72.6 61.0 56.0 56.1 68.2
• Avg Service Ret Age16 57.9 58.0 55.7 57.5 57.8
• Avg Disability Ret Age 45.2 46.8 47.5 31.1 45.3
ATTACHMENT A
May 20, 2014 11
PARTICIPANT STATISTICS
Participant Statistics
June 30, 2013
17 Actual 2012/13 pay paid for those hired < 7/1/12. New hire pay is annualized.
18 1 retiree with missing birth date assumed to retire at average retirement age
19 Excludes 3 retirees with missing retirement date
Miscellaneous Police Fire Total
Actives
• Count 765 82 101 948
• Average Age 46.4 38.5 42.1 45.2
• Average City Service 10.8 10.0 12.2 10.8
• Average PERS Service 11.7 10.8 12.8 11.7
• Average Salary $80,179 $117,217 $107,291 $86,271
• Total Salary (000’s)17 $61,337 $9,612 $10,836 $81,785
Retirees:
• Count 690 121 157 968
• Average Age18 68.9 64.4 67.6 68.2
• Avg Service Ret Age19 58.8 52.1 54.5 57.8
• Avg Disability Ret Age 48.4 40.6 47.3 45.3
May 20, 2014 12
PARTICIPANT STATISTICS
Participant Statistics
June 30, 2011
20 1 retiree with missing birth date assumed to retire at average retirement age
21 Excludes 3 retirees with missing retirement date. All retirements included. Data on disability retirements unreliable.
Miscellaneous Police Fire Total
Actives
• Count 737 82 104 923
• Average Age 45.7 38.2 43.4 44.7
• Average City Service 10.4 10.8 14.0 10.8
• Average PERS Service 13.8 11.4 15.0 13.7
• Average Salary $78,762 $117,924 $112,185 $86,007
• Total Salary (000’s) $58,047 $9,670 $11,667 $79,384
Retirees:
• Count 659 87 114 860
• Average Age20 67.5 63.0 67.2 67.0
• Average Retirement
Age21 57.2 47.9 52.1 55.5
ATTACHMENT A
May 20, 2014 13
PARTICIPANT STATISTICS
Data Reconciliation
6/30/2011 to 6/30/2013
Actives Retirees Disabled Benefic. Total
June 30, 2011 923 787 73 - 1,783
• New Hires/Rehires 143 - - - 143
• Disabled (7) - 7 - -
• Terminated22 (62) - - - (62)
• Died with Benefic.23 - (56) (3) 59 -
• Died, no Beneficiary (28) (2) (30)
• Retired (50) 50 - - -
• Reinstatement 1 (1) - - -
• Retired Disabled (84) 84 -
• Adjustment/Other - 34 21 27 82
June 30, 2013 948 702 180 86 1,916
22 All actives in June 30, 2011 valuation and not in June 30, 2013 valuation assumed terminated.
23 Retirees in the June 30, 2011 valuation not in the June 30, 2013 valuation assumed deceased.
May 20, 2014 14
PARTICIPANT STATISTICS
Medical Plan Participation – January 1, 2014
Non-Waived Participants
Retirees
Medical Plan Actives < 6524 ≥ 6525 Total
Miscellaneous/Safety M S M S M S M S
Anthem BC Select 1% 1% 0% 0% 0% 0% 0% 0%
Anthem BC Traditional 19% 17% 6% 11% 0% 0% 4% 9%
Blue Shield 12% 3% 27% 18% 33% 16% 29% 18%
Blue Shield NetValue 6% 4% 1% 4% 0% 0% 0% 3%
Kaiser 37% 32% 28% 15% 27% 41% 28% 20%
PERS Choice 13% 1% 29% 0% 23% 9% 27% 2%
PERS Select 0% 0% 1% 0% 0% 0% 0% 0%
PERSCare 2% 1% 2% 2% 16% 22% 6% 6%
PORAC 1% 35% 2% 47% 1% 13% 2% 41%
United Healthcare 10% 7% 4% 4% 1% 0% 3% 3%
Total 100% 100% 100% 100% 100% 100% 100% 100%
24 Only includes employees who retired on or after June 30, 2008.
25 Only includes retirees up to age 70.
ATTACHMENT A
May 20, 2014 15
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2011 Valuation June 30, 2013 Valuation
Valuation Date June 30, 2011
Fiscal Years 2012/13 &
2013/14 ARCs (end of year)
1 year lag
June 30, 2013
Fiscal Years 2014/15 &
2015/16 ARCs (end of year)
1 year lag
Funding Policy Full Pre-funding through
CalPERS trust (CERBT)
Asset allocation #1 beginning
6/30/2011
Same
Discount Rate 7.61% (no Margin for
Adverse Deviation)
Same
Sensitivity analysis at 7.25%
Payroll
Increases
Aggregate Increases – 3.25%
Merit Increases – CalPERS
1997-2007 Experience Study
Same
May 20, 2014 16
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2011 Valuation June 30, 2013 Valuation
Increase to
Dollar Caps for
SEIU Group 3
N/A ½ of Medical Trend, not less
than assumed inflation (3.0%).
Increase is for purposes of
financial projection only and
does not imply any obligation
to increase the cap in the future
Medical Trend
Increase from Prior Year
Year Non-Medicare Medicare
2011 Premiums
2012 Premiums
2013 9.0% 9.4%
2014 8.5% 8.9%
2015 8.0% 8.3%
2016 7.5% 7.8%
2017 7.0% 7.2%
2018 6.5% 6.7%
2019 6.0% 6.1%
2020 5.5% 5.6%
2021+ 5.0% 5.0%
Increase from Prior Year
Year Non-Medicare Medicare
2011 n/a
2012 n/a
2013 Premiums
2014 Premiums
2015 8.0% 8.3%
2016 7.5% 7.8%
2017 7.0% 7.2%
2018 6.5% 6.7%
2019 6.0% 6.1%
2020 5.5% 5.6%
2021+ 5.0% 5.0%
ATTACHMENT A
May 20, 2014 17
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2011 Valuation June 30, 2013 Valuation
Participation at
Retirement
DOH < 1/1/04: 100%
DOH > 1/1/04: 95%
Employees with cost sharing:
reduce above %’s by 5%
Groups 1 & 2: already retired
Group 3: 90%
Group 4: 85%
May 20, 2014 18
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2011 Valuation June 30, 2013 Valuation
Retirement,
Mortality,
Termination,
Disability
CalPERS 1997-2007
Experience Study
Misc Fire Police
Benefit 2.7%@55 3%@50 3%@50
2%@6026
ERA27 57.5 54.5 54.0
CalPERS 1997-2007
Experience Study
Includes fully generational
mortality projected with Scale
AA
Sensitivity analysis without
mortality projection
Misc Fire & Police
Tier 1 2.7%@55 3%@50
ERA27 59.3 55.7 & 54.5
Tier 2 2%@6026 3%@5528
ERA 61.1 n/a & 59.7
PEPRA29 2.5%@67 2.7%@57
ERA 61.0 n/a & 56.8
26 Applies to non-PEPRA (Classic) employees hired after 7/17/2010
27 Expected Retirement Age
28 Applies to non-PEPRA (Classic) Police employees hired after 12/7/2012 and Fire employees hired after 6/7/2012
29 Applies to employees hired after 1/1/2013 and considered “New Members” under PEPRA
ATTACHMENT A
May 20, 2014 19
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2011 Valuation June 30, 2013 Valuation
Medical Plan at
Retirement &
Retirees
Attaining age 65
Rates based on elections in
June 30, 2011 data (see slide
E-34 for further details)
Rates based on elections in
January 2014 (see slide E-34
for further details)
Family
Coverage at
Retirement
Actives
• Misc : 10% until age 65
• Safety : 20% until age 65
Retirees: based on current
elections until age 65
Actives
• Misc : 15% until age 65
• Safety : 40% until age 65
Retirees: based on current
elections until age 65
Waived Retiree
Re-election
N/A Pre-65 – 20% re-elect at age 65
Post-65 – 0%
CalPERS
Service
City service plus ½ service
between age 30 and City hire
date
Actual data
May 20, 2014 20
ACTUARIAL METHODS
Method June 30, 2011 Valuation June 30, 2013 Valuation
Cost Method Entry Age Normal Level % of
Pay
Same
Unfunded
Liability
Amortization
30 years open period30 30 years closed period
Sensitivity analysis: 25 & 20
year periods
Actuarial
Asset Value
Market Value of Assets31 Same
Future New
Entrants
Closed group – no new
participants
Same
Implied
Subsidy
No implied subsidy valued Implied subsidy valued
Sensitivity: no implied subsidy
30 30-year open amortization period meets GASB 45 accounting standards but results in negative amortization and does not
meet a funding policy consistent with paying off the City’s unfunded liability.
31 Using Market Value of Assets to determine the ARC will result in more volatile future ARCs than if a smoothed Market
Value were used.
ATTACHMENT A
May 20, 2014 21
ACTUARIAL METHODS
Method June 30, 2011 Valuation June 30, 2013 Valuation
Plan
Continuance
For purposes of financial projections, the plan and benefits are
assumed to continue unchanged. The calculation of this accounting
obligation does not imply that there is any legal liability to provide
or continue providing the benefits valued.
May 20, 2014 22
ASSETS
Market Value of Plan Assets – CERBT
(Amounts in 000’s)
2010/11 2011/12 2012/13
Projected
2013/1432
MVA (Beg. of Year) $ 34,014 $ 44,774 $ 49,238 $ 60,070
• Contributions 2,447 4,419 5,248 4,149
• Benefit Payments33 - - - -
• Admin. Expenses (50) (52) (80) (95)
• Investment Return 8,363 97 5,664 9,017
MVA (End of Year) 44,774 49,238 60,070 73,141
Approx. Annual Return 24.4% 0.1% 11.2% 14.7%
32 Projected from actual 12/31/2013 balance using assumed rate of return for last half of fiscal year.
33 Benefit Payments made outside of trust by City. Refer to Slide 3 for fiscal year amounts.
ATTACHMENT A
May 20, 2014 23
ASSETS
Historical Assets
(Amounts in 000’s)
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
6/30/07 6/30/08 6/30/09 6/30/10 6/30/11 6/30/12 6/30/13 Proj
6/30/14
Market Value of Assets
May 20, 2014 24
ASSETS
Historical Returns34
34 Projected return for 2013/14 uses actual investment return for first half of fiscal year and assumed rate of return for last half
of fiscal year
08/09 09/10 10/11 11/12 12/13 Proj
13/14
Assets -22.5% 15.1% 24.4% 0.1% 11.2% 14.7%
Expected Return 7.75% 7.75% 7.75% 7.61% 7.61% 7.61%
(30%)
(20%)
(10%)
0%
10%
20%
30%
ATTACHMENT A
May 20, 2014 25
RESULTS
Actuarial Obligations
(Amounts in 000’s)
6/30/11 Valuation 6/30/13 Valuation
6/30/11
Projected
6/30/12 6/30/13
Projected
6/30/14
Present Value of Benefits
• Actives $ 87,186 $ 105,008
• Retirees 115,644 139,378
• Total 202,830 244,386
Actuarial Accrued Liability
• Actives 52,409 64,264
• Retirees 115,644 139,378
• Total 168,053 $ 177,304 203,642 $ 213,458
Actuarial Value of Assets 44,774 52,331 60,070 73,124
Unfunded AAL 123,279 124,973 143,572 140,333
Funded Ratio 27% 30% 29% 34%
Normal Cost 5,091 5,674
Pay-As-You-Go Cost (Cash) 8,944 8,903 9,152
Pay-As-You-Go Cost (IS) 1,852 1,916
May 20, 2014 26
RESULTS
Historical Funded Status
(Amounts in 000’s)
$0
$50,000
$100,000
$150,000
$200,000
$250,000
1/1/09 1/1/11 6/30/11 6/30/13
Retiree pay-go Retiree AAL less pay-go Active AAL MVA
ATTACHMENT A
May 20, 2014 27
RESULTS
Actuarial Gain/Loss
(Amounts in 000’s)
AAL (AVA) UAAL
Actual 6/30/11 $ 168,053 $ (44,774) $ 123,279
Expected 6/30/14 195,805 (67,114) 128,691
Assumption Changes
• Participation at Retirement (6,859) (6,859)
• Family Coverage at Retirement 876 876
• Medical Plan Election (897) (897)
• Projected Mortality Improvement 5,290 5,290
Contribution (Gain)/Loss (1,095) (1,095)
Investment (Gain)/Loss (3,734) (3,734)
Plan Changes
• Benefit Changes → Slide 4 18,687 18,687
• Implied Subsidy 43,448 43,448
• SEIU Agreement Change (1,944) (1,944)
Experience (Gains)/Losses
• Premiums/Caps < Expected (35,674) (35,674)
• Demographic & Other (5,276) (1,199) (6,475)
Total (Gain)/Loss 17,652 (6,011) 11,641
Projected 6/30/14 213,458 (73,124) 140,334
May 20, 2014 28
RESULTS
Schedule of Funding Progress
(Amounts in 000’s)
Actuarial
Valuation
Date
Actuarial
Value of
Assets
(a)
Entry Age
Actuarial
Accrued
Liability
(b)
Unfunded
Actuarial
Accrued
Liability
(b-a)
Funded
Ratio
(a/b)
Covered
Payroll
(c)
UAAL as
Percentage
of Covered
Payroll
((b-a)/c)
1/1/2011 $ 40,213 $ 165,660 $ 125,447 24.3% $ 98,940 126.8%
6/30/2011 44,774 168,053 123,279 26.6% 80,664 152.8%
6/30/2013 60,070 203,642 143,572 29.5% 81,785 175.5%
ATTACHMENT A
May 20, 2014 29
RESULTS
Annual Required Contribution (ARC)
(Amounts in 000’s)
6/30/11 Valuation 6/30/13 Valuation
2012/13 2013/14 2014/15 2015/16
ARC - $
• Normal Cost $ 5,091 $ 5,256 $ 5,674 $ 5,880
• UAAL Amortization 7,665 7,779 8,607 8,887
• Total 12,756 13,035 14,282 14,767
Projected Payroll 83,285 85,992 87,187 90,021
ARC - %Pay
• Normal Cost 6.1% 6.1% 6.5% 6.5%
• UAAL Amortization 9.2% 9.1% 9.9% 9.9%
• Total 15.3% 15.2% 16.4% 16.4%
May 20, 2014 30
RESULTS
Annual Required Contribution (ARC)
(Amounts in 000’s)
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
09/10 10/11 11/12 12/13 13/14 14/15 15/16
Normal Cost 3,478 3,478 4,782 5,091 5,256 5,674 5,880
Amortization 6,308 6,308 7,802 7,665 7,779 8,607 8,887
ARC 9,786 9,786 12,584 12,756 13,035 14,282 14,767
ATTACHMENT A
May 20, 2014 31
RESULTS
Amortization Bases & Payments
(000’s Omitted)
6/30/2011 Valuation 6/30/2013 Valuation
6/30/2012 6/30/2013 6/30/2014 6/30/2015
UAAL Balance $ 124,973 $ 126,819 $ 140,333 $ 142,405
Amortization Payment - $ 7,665 7,779 8,607 8,887
Amortization Period 30 30 30 29
May 20, 2014 32
RESULTS
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ATTACHMENT A
May 20, 2014 33
RESULTS
Estimated Net OPEB Obligation/(Asset) Illustration
(Amounts in 000’s)
6/30/11 Valuation 6/30/13 Valuation
CAFR
2012/13
Estimate
2013/14
Estimate
2014/15
Estimate
2015/16
NOO/(NOA) at Beginning of Year $(21,271) $(21,851) $(22,174) $(22,501)
Annual OPEB Cost
• Annual Required Contribution 12,756 13,035 14,282 14,767
• Interest on NOO (1,619) (1,663) (1,687) (1,712)
• NOO Adjustment 2,057 1,340 1,360 1,404
• Annual OPEB Cost 13,194 12,712 13,954 14,459
Contributions
• Cash Benefit Payments35 8,766 8,886 9,152 9,841
• Implied Subsidy Benefit Payments36 - - 1,916 2,102
• Trust Funding 5,008 4,149 3,214 2,824
• Total Contributions 13,774 13,035 14,282 14,767
NOO/(NOA) at End of Year (21,851) (22,174) (22,501) (22,809)
35 Estimated cash payments shown for all years after 2012/13. Actual cash payments should be used for OPEB footnote.
36 Use amounts listed here for 2014/15 and 2015/16 OPEB footnotes.
May 20, 2014 34
RESULTS
Estimated Full ARC Funding Projection
(Amounts in 000’s)
FYE
Begin
Year
NOO ARC AOC
Contribution
Pay
ARC
% of
Pay
Cash
BP
IS
BP
Pre-
Funding Total
2015 $(22,174) $14,282 $13,954 $9,152 $1,916 $3,214 $14,282 $87,187 16.4%
2016 (22,501) 14,767 14,459 9,841 2,102 2,824 14,767 90,021 16.4%
2017 (22,809) 15,269 14,984 10,640 2,387 2,242 15,269 92,947 16.4%
2018 (23,095) 15,790 15,529 11,388 2,631 1,771 15,790 95,967 16.5%
2019 (23,356) 16,328 16,096 12,056 2,835 1,437 16,328 99,086 16.5%
2020 (23,587) 16,883 16,684 12,672 3,026 1,185 16,883 102,307 16.5%
2021 (23,786) 17,456 17,294 13,291 3,251 914 17,456 105,632 16.5%
2022 (23,949) 18,047 17,926 13,882 3,507 658 18,047 109,065 16.5%
2023 (24,070) 18,656 18,581 14,545 3,838 273 18,656 112,609 16.6%
2024 (24,145) 19,285 19,261 15,132 4,081 72 19,285 116,269 16.6%
ATTACHMENT A
May 20, 2014 35
RESULTS
Actuarial Obligations
June 30, 2013
(Amounts in 000’s)
Benefits <
Age 65
Benefits >
Age 65 Total
Present Value of Benefits
• Actives $ 58,253 $ 46,755 $ 105,008
• Retirees 48,165 91,212 139,378
• Total 106,418 137,968 244,386
Actuarial Accrued Liability
• Actives 34,085 30,179 64,264
• Retirees 48,165 91,212 139,378
• Total 82,250 121,391 203,642
Normal Cost 2014/15 3,289 2,386 5,674
May 20, 2014 36
RESULTS
Actuarial Obligations
June 30, 2013
(Amounts in 000’s)
Group 1 Group 2 Group 337 Group 4 Total
Present Value of
Benefits
• Actives $ - $ - $ 74,267 $ 30,741 $105,008
• Retirees 65,602 63,910 8,511 1,355 139,378
• Total 65,602 63,910 82,778 32,096 244,386
Actuarial Accrued
Liability
• Actives - - 55,118 9,145 64,264
• Retirees 65,602 63,910 8,511 1,355 139,378
• Total 65,602 63,910 63,629 10,500 203,642
Normal Cost 2014/15 - - 2,962 2,712 5,674
NC as % of Payroll 6.3% 6.9% 6.6%
37 PAPOA Group 3 members have Group 2 benefits. There are 39 PAPOA Group 3 active members.
ATTACHMENT A
May 20, 2014 37
RESULTS
Actuarial Obligations
June 30, 2013
(Amounts in 000’s)
Misc Safety Total
Present Value of Benefits
• Actives $ 74,520 $ 30,488 $ 105,008
• Retirees 90,106 49,272 139,378
• Total 164,626 79,760 244,386
Actuarial Accrued Liability
• Actives 47,555 16,709 64,264
• Retirees 90,106 49,272 139,378
• Total 137,661 65,981 203,642
Actuarial Value of Assets38 40,773 19,298 60,070
Unfunded AAL 96,888 46,683 143,572
Normal Cost 2014/15 4,041 1,634 5,674
Pay-As-You-Go Cost 2014/15 7,592 3,476 11,068
38 Allocated in proportion to the Actuarial Accrued Liability before SEIU benefit change.
May 20, 2014 38
RESULTS
Annual Required Contribution (ARC)
2014/15 Fiscal Year
(Amounts in 000’s)
Misc Safety Total
ARC - $
• Normal Cost $ 4,041 $ 1,634 $ 5,674
• UAAL Amortization39 5,811 2,795 8,607
• ARC 9,852 4,429 14,282
Projected Payroll 65,389 21,799 87,187
ARC - %
• Normal Cost 6.2% 7.5% 6.5%
• UAAL Amortization 8.9% 12.8% 9.9%
• ARC 15.1% 20.3% 16.4%
39 Allocated in proportion to the Actuarial Accrued Liability before SEIU benefit change.
ATTACHMENT A
May 20, 2014 39
RESULTS
Actuarial Obligations
June 30, 2013
(Amounts in 000’s)
FCA IAFF M/C PAPOA PMA SEIU UMPA Total
PVB
• Actives $ 820 $15,400 $18,811 $12,239 $1,458 $49,863 $6,416 $105,008
• Retirees 814 24,825 43,500 18,502 407 50,307 1,022 139,378
• Total 1,634 40,225 62,311 30,741 1,865 100,170 7,438 244,386
AAL
• Actives 721 9,077 11,373 5,380 1,122 31,773 4,818 64,264
• Retirees 814 24,825 43,500 18,502 407 50,307 1,022 139,378
• Total 1,535 33,902 54,873 23,882 1,529 82,080 5,840 203,642
AVA40 449 9,915 16,049 6,985 447 24,517 1,708 60,070
UAAL 1,086 23,987 38,824 16,897 1,082 57,563 4,132 143,572
NC 14/15 25 759 1,122 761 56 2,689 264 5,674
Pay-Go 57 1,745 3,448 1,302 19 4,372 125 11,068
40 Allocated in proportion to the Actuarial Accrued Liability before SEIU benefit change.
May 20, 2014 40
RESULTS
Annual Required Contribution (ARC)
2014/15 Fiscal Year
(Amounts in 000’s)
FCA IAFF M/C PAPOA PMA SEIU UMPA Total
ARC - $
• Normal Cost $ 25 $ 759 $1,122 $ 761 $ 56 $ 2,689 $ 264 $ 5,674
• UAAL Amort41 65 1,437 2,292 1,015 68 3,470 261 8,607
• ARC 90 2,195 3,414 1,776 124 6,159 526 14,282
Proj. Payroll 642 10,570 21,287 8,805 1,260 39,170 5,454 87,187
ARC - %
• Normal Cost 3.9% 7.2% 5.3% 8.7% 4.4% 6.9% 4.8% 6.5%
• UAAL Amort 10.1%13.6% 10.7% 11.5%5.4% 8.9%4.8% 9.9%
• ARC 14.0% 20.8% 16.0% 20.2%9.8% 15.7% 9.6% 16.4%
41 Allocated in proportion to the Actuarial Accrued Liability before SEIU benefit change.
ATTACHMENT A
May 20, 2014 41
RESULTS
Annual Required Contribution (ARC)
2015/16 Fiscal Year
(Amounts in 000’s)
FCA IAFF M/C PAPOA PMA SEIU UMPA Total
ARC - $
• Normal Cost $ 25 $ 783 $1,164 $ 787 $ 58 $ 2,783 $ 280 $ 5,880
• UAAL Amort 67 1,483 2,367 1,049 70 3,581 270 8,887
• ARC 92 2,266 3,531 1,836 128 6,364 550 14,767
Proj. Payroll 663 10,913 21,979 9,091 1,301 40,443 5,631 90,021
ARC - %
• Normal Cost 3.7% 7.2% 5.3% 8.7% 4.4% 6.9% 5.0% 6.5%
• UAAL Amort 10.1%13.6% 10.8%11.5%5.4% 8.9% 4.8% 9.9%
• ARC 13.8% 20.8% 16.1% 20.2% 9.8% 15.7% 9.8% 16.4%
May 20, 2014 42
ASSUMPTION SENSITIVITIES
Discount Rate Sensitivity
(Amounts in 000’s)
Discount Rate 7.61% 7.25%
PVPB @ 6/30/13 $ 244,386 $ 257,348
AAL @ 6/30/13
• AAL 203,642 212,483
• Assets 60,070 60,070
• Unfunded AAL 143,572 152,413
2014/15 ARC
• Normal Cost $ 5,674 $ 6,081
• UAAL Amort. 42 8,607 8,790
• Total ARC 14,282 14,871
• ARC – % of pay 16.4% 17.1%
42 Amortized over 30 years
ATTACHMENT A
May 20, 2014 43
ASSUMPTION SENSITIVITIES
Mortality Projection Sensitivity
(Amounts in 000’s)
Mortality Projection Included Not
Included
PVPB @ 6/30/13 $ 244,386 $ 236,653
AAL @ 6/30/13
• AAL 203,642 197,379
• Assets 60,070 60,070
• Unfunded AAL 143,572 137,309
2014/15 ARC
• Normal Cost $ 5,674 $ 5,484
• UAAL Amort. 43 8,607 8,183
• Total ARC 14,282 13,667
• ARC – % of pay 16.4% 15.7%
43 Amortized over 30 years
May 20, 2014 44
ASSUMPTION SENSITIVITIES
Amortization Period Sensitivity
(Amounts in 000’s)
Amortization Period 30 Years 25 Years 20 Years
PVPB @ 6/30/13 $ 244,386 $ 244,386 $ 244,386
AAL @ 6/30/13
• AAL 203,642 203,642 203,642
• Assets 60,070 60,070 60,070
• Unfunded AAL 143,572 143,572 143,572
2014/15 ARC
• Normal Cost $ 5,674 $ 5,674 $ 5,674
• UAAL Amort. 8,607 9,495 10,873
• Total ARC 14,282 15,169 16,547
• ARC – % of pay 16.4% 17.4% 19.0%
ATTACHMENT A
May 20, 2014 45
ASSUMPTION SENSITIVITIES
Implied Subsidy Sensitivity
(Amounts in 000’s)
Implied Subsidy Included Not
Included
PVPB @ 6/30/13 $ 244,386 $ 197,307
AAL @ 6/30/13
• AAL 203,642 162,199
• Assets 60,070 60,070
• Unfunded AAL 143,572 102,129
2014/15 ARC
• Normal Cost $ 5,674 $ 4,871
• UAAL Amort. 44 8,607 5,942
• Total ARC 14,282 10,813
• ARC – % of pay 16.4% 12.4%
44 Amortized over 30 years
May 20, 2014 46
ASSUMPTION SENSITIVITIES
Combination Sensitivity
(Amounts in 000’s)
Discount Rate 7.61% 7.25%
Amortization Period 30 Years 25 Years
Mortality Projection Yes Yes
Implied Subsidy Yes Yes
PVPB @ 6/30/13 $ 244,386 $ 257,348
AAL @ 6/30/13
• AAL 203,642 212,483
• Assets 60,070 60,070
• Unfunded AAL 143,572 152,413
2014/15 ARC
• Normal Cost $ 5,674 $ 6,081
• UAAL Amort. 8,607 9,749
• Total ARC 14,282 15,830
• ARC – % of pay 16.4% 18.2%
ATTACHMENT A
May 20, 2014 47
BENEFIT SENSITIVITIES
Benefit Sensitivity – SEIU Agreement
(Amounts in 000’s)
Benefits Prior Current Change
PVPB @ 6/30/13 $ 246,665 $ 244,385 $ 2,280
AAL @ 6/30/13
• AAL 205,388 203,641 1,747
• Assets 60,070 60,070 -
• Unfunded AAL 145,318 143,571 1,747
2014/15 ARC
• Normal Cost $ 5,720 $ 5,675 $ 45
• UAAL Amort.45 8,725 8,607 118
• Total ARC 14,445 14,282 163
• ARC – % of pay 16.6% 16.4% 0.2%
45 Amortized over 30 years. Previous estimates amortized SEIU plan change over 15 years.
May 20, 2014 48
BENEFIT SENSITIVITIES
Benefit Sensitivity – SEIU Agreement (SEIU Only)
(Amounts in 000’s)
Benefits Prior Current Change
PVPB @ 6/30/13 $ 102,450 $ 100,170 $ 2,280
AAL @ 6/30/13
• AAL 83,827 82,080 1,747
• Assets 24,517 24,517 -
• Unfunded AAL 59,310 57,563 1,747
2014/15 ARC
• Normal Cost $ 2,734 $ 2,689 $ 45
• UAAL Amort. 46 3,588 3,470 118
• Total ARC 6,322 6,159 163
• ARC – % of pay 7.3% 7.0% 0.3%
46 Amortized over 30 years. Previous estimates amortized SEIU plan change over 15 years.
ATTACHMENT A
May 20, 2014 49
ACTUARIAL CERTIFICATION
This report presents the City of Palo Alto’s Retiree Healthcare Plan (“Plan”) June 30, 2013 actuarial valuation. The purpose of
this valuation is to:
Determine the Governmental Accounting Standards Board Statement Nos. 43 and 45 June 30, 2013 Benefit Obligations,
Determine the Plan’s June 30, 2013 Funded Status, and
Calculate the 2014/15 and 2015/16 Annual Required Contributions.
The report provides information intended for reporting under GASB 43 and 45, but may not be appropriate for other purposes.
Information provided in this report may be useful to the City for the Plan’s financial management. Future valuations may differ
significantly if the Plan’s experience differs from our assumptions or if there are changes in Plan design, actuarial methods, or
actuarial assumptions. The project scope did not include an analysis of this potential variation.
The valuation is based on Plan provisions, participant data, and asset information provided by the City as summarized in this
report, which we relied on and did not audit. We reviewed the participant data for reasonableness.
To the best of our knowledge, this report is complete and accurate and has been conducted using generally accepted actuarial
principles and practices. Additionally, in our opinion, actuarial methods and assumptions comply with GASB 43 and 45. As
members of the American Academy of Actuaries meeting the Academy Qualification Standards, we certify the actuarial results
and opinions herein.
Respectfully submitted,
John E. Bartel, ASA, MAAA, FCA
President
Bartel Associates, LLC
May 20, 2014
Deanna Van Valer, ASA, MAAA, EA,
FCA
Assistant Vice President
Bartel Associates, LLC
May 20, 2014
Mary Elizabeth Redding, FSA, MAAA,
EA, FCA
Assistant Vice President
Bartel Associates, LLC
May 20, 2014
May 20, 2014 50
EXHIBITS
Topic Page
Premiums E- 1
Data Summary E- 5
Actuarial Assumptions E-31
Results by Fund E-42
Results by GF Department E-46
Definitions E-50
ATTACHMENT A
May 20, 2014 E-1
PREMIUMS
2012 PEMHCA Monthly Premiums
Bay Area
Non-Medicare Eligible Medicare Eligible
Medical Plan Single 2-Party Family Single 2-Party Family
Blue Shield Access+ $711.10 $1,422.20 $1,848.86 $337.99 $675.98 $1,013.97
Blue Shield NetValue 611.59 1,223.18 1,590.13 337.99 675.98 1,013.97
Kaiser 610.44 1,220.88 1,587.14 277.81 555.62 833.43
PERS Choice 574.15 1,148.30 1,492.79 383.44 766.88 1,150.32
PERS Select 487.39 974.78 1,267.21 383.44 766.88 1,150.32
PERSCare 1,029.23 2,058.46 2,676.00 432.43 864.86 1,297.29
PORAC 556.00 1,041.00 1,323.00 418.00 833.00 1,331.00
May 20, 2014 E-2
PREMIUMS
2013 PEMHCA Monthly Premiums
Bay Area
Non-Medicare Eligible Medicare Eligible
Medical Plan Single 2-Party Family Single 2-Party Family
Blue Shield $ 784.63 $1,569.26 $2,040.04 $261.32 $522.64 $ 783.96
Blue Shield NetValue 670.21 1,340.42 1,742.55 261.32 522.64 783.96
Kaiser 668.63 1,337.26 1,738.44 288.37 576.74 865.11
PERS Choice 667.03 1,334.06 1,734.28 325.74 651.48 977.22
PERS Select 487.20 974.40 1,266.72 325.74 651.48 977.22
PERSCare 1,083.11 2,166.22 2,816.09 370.43 740.86 1,111.29
PORAC 581.00 1,088.00 1,382.00 418.00 833.00 1,331.00
ATTACHMENT A
May 20, 2014 E-3
PREMIUMS
2014 PEMHCA Monthly Premiums
Bay Area
Non-Medicare Eligible Medicare Eligible
Medical Plan Single 2-Party Family Single 2-Party Family
Anthem Select $657.33 $1,314.66 $1,709.06 $341.12 $682.24 $1,023.36
Anthem Traditional 728.41 1,456.82 1,893.87 341.12 682.24 1,023.36
Blue Shield Access+ 836.59 1,673.18 2,175.13 298.21 596.42 894.63
Blue Shield NetValue 704.01 1,408.02 1,830.43 298.21 596.42 894.63
Kaiser 742.72 1,485.44 1,931.07 294.97 589.94 884.91
United Healthcare 764.24 1,528.48 1,987.02 193.33 386.66 579.99
PERS Choice 690.77 1,381.54 1,796.00 307.23 614.46 921.69
PERS Select 661.52 1,323.04 1,719.95 307.23 614.46 921.69
PERSCare 720.04 1,440.08 1,872.10 327.36 654.72 982.08
PORAC 634.00 1,186.00 1,507.00 397.00 791.00 1,264.00
May 20, 2014 E-4
PREMIUMS
PEMHCA Monthly Premium Increases
Bay Area
Non-Medicare Eligible Medicare Eligible
Medical Plan 2012 2013 2014 2012 2013 2014
Blue Shield 5.3% 10.3% 6.6% 0.1% (22.7%) 14.1%
Blue Shield NetValue 5.2% 9.6% 5.0% 0.1% (22.7%) 14.1%
Kaiser 7.3% 9.5% 11.1% (1.6%) 3.8% 2.3%
PERS Choice 1.9% 16.2% 3.6% 2.0% (15.1%) (5.7%)
PERS Select (1.1%) (0.1%) 35.8% 2.0% (15.1%) (5.7%)
PERSCare 15.1% 5.2% (33.5%) (0.3%) (14.3%) (11.6%)
PORAC 5.5% 4.5% 9.1% 0.0% 0.0% (5.0%)
ATTACHMENT A
May 20, 2014 E-5
DATA SUMMARY
Medical Plan Participation – June 30, 2013
Non-Waived Participants
Retirees
Medical Plan Actives < 65 ≥ 65 Total
Miscellaneous/Safety M S M S M S M S
Blue Shield 46% 32% 35% 31% 25% 18% 29%24%
Blue Shield NetValue 1% 1% 0% 0% 0% 1% 0%0%
Kaiser 37% 31% 31% 13% 25% 26% 27%20%
PERS Choice 15% 1% 29% 4% 17% 17% 22%11%
PERS Select 0% 0% 0% 0% 0% 0% 0%0%
PERSCare 0% 0% 3% 20% 33% 34% 21%27%
PORAC 1% 35% 2% 33% 0% 5% 1%18%
Total 100% 100% 100% 100% 100% 100% 100%100%
May 20, 2014 E-6
DATA SUMMARY
Medical Plan Participation – June 30, 2011
Non-Waived Participants
Retirees
Medical Plan Actives < 65 ≥ 65 Total
Miscellaneous/Safety M S M S M S M S
Blue Shield 47% 32% 34% 28% 20% 25% 27% 27%
Blue Shield NetValue 1% 0% 0% 0% 0% 1% 0% 0%
Kaiser 36% 28% 30% 13% 24% 23% 27% 18%
PERS Choice 16% 2% 26% 8% 18% 11% 22% 9%
PERS Select 0% 0% 0% 0% 0% 0% 0% 0%
PERSCare 0% 0% 6% 25% 37% 36% 23% 30%
PORAC 1% 38% 3% 26% 0% 3% 1% 15%
Total 100% 100% 100% 100% 100% 100% 100% 100%
ATTACHMENT A
May 20, 2014 E-7
DATA SUMMARY
Active Medical Coverage - Miscellaneous
Medical Plan Single 2-Party Family Waived Total
Blue Shield 86 72 156 - 314
Blue Shield NetValue 1 1 3 - 5
Kaiser 70 59 123 - 252
PERS Choice 32 26 43 - 101
PERS Select 2 - - - 2
PERSCare - - 1 - 1
PORAC 4 3 2 - 9
Waived - - - 81 81
Total 195 161 328 81 765
% as of June 30, 2013 25% 21% 43% 11% 100%
% as of June 30, 2011 21% 22% 47% 10% 100%
May 20, 2014 E-8
DATA SUMMARY
Active Medical Coverage - Safety
Medical Plan Single 2-Party Family Waived Total
Blue Shield 13 4 37 - 54
Blue Shield NetValue 1 - - - 1
Kaiser 12 7 33 - 52
PERS Choice - 1 1 - 2
PERS Select - - - - -
PERSCare - - - - -
PORAC 10 7 42 - 59
Waived - - - 15 15
Total 36 19 113 15 183
% as of June 30, 2013 20% 10% 62% 8% 100%
% as of June 30, 2011 23% 10% 64% 4% 100%
ATTACHMENT A
May 20, 2014 E-9
DATA SUMMARY
Retiree Medical Coverage47 - Miscellaneous
Medical Plan
Single 2-Party Family Waived Total
<65 65+ <65 65+ <65 65+ <65 65+
Blue Shield 38 54 35 35 15 5 - - 182
Kaiser 38 44 24 46 14 4 - - 170
PERS Choice 34 31 29 33 8 2 - - 137
PERS Select 1 - - - - - - - 1
PERSCare 6 77 2 46 - 1 - - 132
PORAC 3 - 1 1 1 - - - 6
Waived - - - - - - 14 48 62
Total 120 206 91 161 38 12 14 48 690
% as of June 30, 2013 46% 48% 35% 38% 14% 3% 5% 11% 100%
% as of June 30, 2011 47% 54% 40% 44% 14% 2% 0% 0% 100%
47 Approximately 69% of retirees have coverage in a Bay Area region plan. The rest are in other state regions or out of state.
May 20, 2014 E-10
DATA SUMMARY
Retiree Medical Coverage48 - Safety
Medical Plan
Single 2-Party Family Waived Total
<65 65+ <65 65+ <65 65+ <65 65+
Blue Shield 11 13 7 11 20 - - - 62
Blue Shield NetValue - 1 - - - - - - 1
Kaiser 3 14 5 19 8 2 - - 51
PERS Choice 1 8 2 14 2 1 - - 28
PERSCare 15 27 7 18 2 1 - - 70
PORAC 9 2 13 3 18 2 - - 47
Waived - - - - - - 3 16 19
Total 39 65 34 65 50 6 3 16 278
% as of June 30, 2013 31% 43% 27% 43% 40% 4% 2% 11% 100%
% as of June 30, 2011 40% 49% 29% 47% 30% 3% 0% 0% 100%
48 Approximately 51% of retirees have coverage in a Bay Area region plan. The rest are in other state regions or out of state.
ATTACHMENT A
May 20, 2014 E-11
DATA SUMMARY
Retirees Medical Coverage by Age – Miscellaneous
Age Single 2-Party Family Waived Total
Under 50 3 - 1 2 6
50-54 14 8 8 6 36
55-59 42 33 16 5 96
60-64 61 50 13 1 125
65-69 61 65 9 12 147
70-74 61 35 2 5 103
75-79 30 32 - 4 66
80-84 24 19 1 13 57
85 & Over 30 10 - 14 54
Total 326 252 50 62 690
Average Age 69.5 68.7 60.3 74.2 68.9
May 20, 2014 E-12
DATA SUMMARY
0
20
40
60
80
100
120
140
160
<50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 ≥85
Nu
m
b
e
r
Age
Retiree Age Distribution
Miscellaneous
6/30/11 Valuation
6/30/13 Valuation
ATTACHMENT A
May 20, 2014 E-13
DATA SUMMARY
Retirees Medical Coverage by Age – Police
Age Single 2-Party Family Waived Total
Under 50 2 2 3 - 7
50-54 10 3 7 1 21
55-59 5 4 10 - 19
60-64 11 6 1 1 19
65-69 5 7 2 3 17
70-74 7 4 - 2 13
75-79 4 3 - 1 8
80-84 8 1 - 2 11
85 & Over 4 2 - - 6
Total 56 32 23 10 121
Average Age 66.9 65.3 54.9 69.4 64.4
May 20, 2014 E-14
DATA SUMMARY
0
5
10
15
20
25
<50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 ≥85
Nu
m
b
e
r
Age
Retiree Age Distribution
Police
6/30/11 Valuation
6/30/13 Valuation
ATTACHMENT A
May 20, 2014 E-15
DATA SUMMARY
Retirees Medical Coverage by Age – Fire
Age Single 2-Party Family Waived Total
Under 50 1 1 3 - 5
50-54 2 2 15 1 20
55-59 3 9 9 - 21
60-64 5 7 2 - 14
65-69 6 14 2 3 25
70-74 10 14 2 1 27
75-79 14 11 - 2 27
80-84 3 9 - 2 14
85 & Over 4 - - - 4
Total 48 67 33 9 157
Average Age 72.3 69.7 55.4 71.5 67.6
May 20, 2014 E-16
DATA SUMMARY
0
5
10
15
20
25
30
<50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 ≥85
Nu
m
b
e
r
Age
Retiree Age Distribution
Fire 6/30/11 Valuation
6/30/13 Valuation
ATTACHMENT A
May 20, 2014 E-17
DATA SUMMARY
Retirees Medical Coverage by Age – Total
Age Single 2-Party Family Waived Total
Under 50 6 3 7 2 18
50-54 26 13 30 8 77
55-59 50 46 35 5 136
60-64 77 63 16 2 158
65-69 72 86 13 18 189
70-74 78 53 4 8 143
75-79 48 46 - 7 101
80-84 35 29 1 17 82
85 & Over 38 12 - 14 64
Total 430 351 106 81 968
Average Age 69.4 68.6 57.6 73.3 68.2
May 20, 2014 E-18
DATA SUMMARY
0
20
40
60
80
100
120
140
160
180
200
<50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 ≥85
Nu
m
b
e
r
Age
Retiree Age Distribution
Total
6/30/11 Valuation
6/30/13 Valuation
ATTACHMENT A
May 20, 2014 E-19
DATA SUMMARY
Actives by Age and Service – Miscellaneous
City Service
Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total
< 25 6 5 - - - - - 11
25-29 10 23 6 1 - - - 40
30-34 9 32 27 14 - - - 82
35-39 8 28 28 29 4 - - 97
40-44 5 21 22 32 12 4 - 96
45-49 3 24 22 34 16 16 4 119
50-54 5 22 23 36 29 28 17 160
55-59 2 13 20 18 16 7 14 90
60-64 - 5 9 16 12 6 3 51
≥ 65 - 1 3 4 3 5 3 19
Total 48 174 160 184 92 66 41 765
May 20, 2014 E-20
DATA SUMMARY
Actives by Age and Service – Police
City Service
Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total
< 25 1 - - - - - - 1
25-29 - 4 2 - - - - 6
30-34 2 11 15 - - - - 28
35-39 - 3 1 10 1 - - 15
40-44 2 1 3 4 1 2 - 13
45-49 - - - 1 6 5 - 12
50-54 - 1 1 1 1 1 - 5
55-59 - - - 1 - - 1 2
60-64 - - - - - - - -
≥ 65 - - - - - - - -
Total 5 20 22 17 9 8 1 82
ATTACHMENT A
May 20, 2014 E-21
DATA SUMMARY
Actives by Age and Service – Fire
City Service
Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total
< 25 - 1 - - - - - 1
25-29 - 7 2 - - - - 9
30-34 - 6 6 1 - - - 13
35-39 - 3 4 1 - - - 8
40-44 - 4 6 11 6 - - 27
45-49 1 - 2 6 10 10 2 31
50-54 - - 1 2 3 1 2 9
55-59 - - - - - - 1 1
60-64 - - - - - 1 1 2
≥ 65 - - - - - - - -
Total 1 21 21 21 19 12 6 101
May 20, 2014 E-22
DATA SUMMARY
Actives by Age and Service – Total
City Service
Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total
< 25 7 6 - - - - - 13
25-29 10 34 10 1 - - - 55
30-34 11 49 48 15 - - - 123
35-39 8 34 33 40 5 - - 120
40-44 7 26 31 47 19 6 - 136
45-49 4 24 24 41 32 31 6 162
50-54 5 23 25 39 33 30 19 174
55-59 2 13 20 19 16 7 16 93
60-64 - 5 9 16 12 7 4 53
≥ 65 - 1 3 4 3 5 3 19
Total 54 215 203 222 120 86 48 948
ATTACHMENT A
May 20, 2014 E-23
DATA SUMMARY
0
20
40
60
80
100
120
140
160
180
<25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 ≥65
Nu
m
b
e
r
Age
Active Age Distribution
Miscellaneous 6/30/11 Valuation
6/30/13 Valuation
May 20, 2014 E-24
DATA SUMMARY
0
50
100
150
200
250
0-4 5-9 10-14 15-19 20-24 >25
Nu
m
b
e
r
Service
Active Service Distribution
Miscellaneous
6/30/11 Valuation
6/30/13 Valuation
ATTACHMENT A
May 20, 2014 E-25
DATA SUMMARY
0
5
10
15
20
25
30
<25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 ≥65
Nu
m
b
e
r
Age
Active Age Distribution
Police
6/30/11 Valuation
6/30/13 Valuation
May 20, 2014 E-26
DATA SUMMARY
0
5
10
15
20
25
30
0-4 5-9 10-14 15-19 20-24 >25
Nu
m
b
e
r
Service
Active Service Distribution
Police
6/30/11 Valuation
6/30/13 Valuation
ATTACHMENT A
May 20, 2014 E-27
DATA SUMMARY
0
5
10
15
20
25
30
35
<25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 ≥65
Nu
m
b
e
r
Age
Active Age Distribution
Fire
6/30/11 Valuation
6/30/13 Valuation
May 20, 2014 E-28
DATA SUMMARY
0
5
10
15
20
25
30
35
0-4 5-9 10-14 15-19 20-24 >25
Nu
m
b
e
r
Service
Active Service Distribution
Fire
6/30/11 Valuation
6/30/13 Valuation
ATTACHMENT A
May 20, 2014 E-29
DATA SUMMARY
0
50
100
150
200
250
<25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65 ≥65
Nu
m
b
e
r
Age
Active Age Distribution
Total
6/30/11 Valuation
6/30/13 Valuation
May 20, 2014 E-30
DATA SUMMARY
0
50
100
150
200
250
300
0-4 5-9 10-14 15-19 20-24 >25
Nu
m
b
e
r
Service
Active Service Distribution
Total
6/30/11 Valuation
6/30/13 Valuation
ATTACHMENT A
May 20, 2014 E-31
ACTUARIAL ASSUMPTIONS
June 30, 2011 Valuation June 30, 2013 Valuation
Valuation Date June 30, 2011
Fiscal Years 2012/13 &
2013/14 ARCs (end of year)
1 year lag
June 30, 2013
Fiscal Years 2012/13 &
2013/14 ARCs (end of year)
1 year lag
Funding Policy Full Pre-funding through
CalPERS trust (CERBT)
Asset allocation #1 beginning
6/30/2011
Same
General
Inflation
3.00% Same
Discount Rate 7.61% (no Margin for
Adverse Deviation)
Same
Payroll
Increases
Aggregate Increases – 3.25%
Merit Increases – CalPERS
1997-2007 Experience Study
Same
May 20, 2014 E-32
ACTUARIAL ASSUMPTIONS
June 30, 2011 Valuation June 30, 2013 Valuation
Increase to
Dollar Caps for
SEIU Group 3
N/A ½ of Medical Trend, not less
than assumed inflation (3.0%).
Increase is for purposes of
financial projection only and
does not imply any obligation to
increase the cap in the future.
Medical Trend
Increase from Prior Year
Year Non-Medicare Medicare
2011 Premiums
2012 Premiums
2013 9.0% 9.4%
2014 8.5% 8.9%
2015 8.0% 8.3%
2016 7.5% 7.8%
2017 7.0% 7.2%
2018 6.5% 6.7%
2019 6.0% 6.1%
2020 5.5% 5.6%
2021+ 5.0% 5.0%
Increase from Prior Year
Year Non-Medicare Medicare
2011 n/a
2012 n/a
2013 Premiums
2014 Premiums
2015 8.0% 8.3%
2016 7.5% 7.8%
2017 7.0% 7.2%
2018 6.5% 6.7%
2019 6.0% 6.1%
2020 5.5% 5.6%
2021+ 5.0% 5.0%
ATTACHMENT A
May 20, 2014 E-33
ACTUARIAL ASSUMPTIONS
June 30, 2011 Valuation June 30, 2013 Valuation
Mortality,
Termination,
Disability
CalPERS 1997-2007
Experience Study
CalPERS 1997-2007
Experience Study
Includes fully generational
mortality projected with Scale
AA
Retirement CalPERS 1997-2007
Experience Study
Misc Fire Police
Benefit 2.7%@55 3%@50 3%@50
2%@6049
ERA50 57.5 54.5 54.0
CalPERS 1997-2007
Experience Study
Misc Fire & Police
Tier 1 2.7%@55 3%@50
ERA 59.3 55.7 & 54.5
Tier 2 2%@6049 3%@55
ERA 61.1 n/a & 59.7
PEPRA51 2.5%@67 2.7%@57
ERA 61.0 n/a & 56.8
49 Applies to employees hired after July 17, 2010
50 Expected Retirement Age
51 Applies to employees hired after 1/1/13 and considered “New Hires” under PEPRA
May 20, 2014 E-34
ACTUARIAL ASSUMPTIONS
June 30, 2011 Valuation June 30, 2013 Valuation
Medical Plan at
Retirement &
Retirees
Attaining age 65
Miscellaneous:
<65 65+
Blue Shield 35% 20%
Kaiser 25% 25%
PERS Choice 30% 20%
PERSCare 10% 35%
Safety:
<65 65+
Blue Shield 35% 20%
Kaiser 25% 25%
PERS Choice 20% 20%
PERSCare 10% 35%
PORAC 10% 0%
Miscellaneous: <65 65+
Anthem Tradition 5% 0%
Blue Shield 25% 30%
Kaiser 30% 25%
PERS Choice 30% 25%
PERSCare 5% 20%
United HC 5% 0%
Safety: <65 65+
Anthem Tradition 10% 0%
Blue Shield 20% 20%
Blue Shield NV 5% 0%
Kaiser 15% 35%
PERS Choice 0% 10%
PERSCare 0% 25%
PORAC 45% 10%
United HC 5% 0%
ATTACHMENT A
May 20, 2014 E-35
ACTUARIAL ASSUMPTIONS
June 30, 2011 Valuation June 30, 2013 Valuation
Participation at
Retirement
DOH < 1/1/04: 100%
DOH > 1/1/04: 95%
Employees with cost sharing:
reduce above %’s by 5%
Groups 1 & 2: already retired
Group 3: 90%
Group 4: 85%
Medicare
Eligible Rate
Actives hired < 4/1/86:
• Miscellaneous – 80%
• Safety – 90%
Actives hired > 4/1/86: 100%
Retirees < 65: 90%
Everyone eligible for
Medicare will elect Part B
coverage
Same
Spousal
Coverage at
Retirement
Currently covered: based on
current elections
Currently waived: 80%
Same
May 20, 2014 E-36
ACTUARIAL ASSUMPTIONS
June 30, 2011 Valuation June 30, 2013 Valuation
Family
Coverage at
Retirement
Actives
• Misc : 10% until age 65
• Safety : 20% until age 65
Retirees: based on current
elections until age 65
Actives
• Misc : 15% until age 65
• Safety : 40% until age 65
Retirees: based on current
elections until age 65
Waived Retiree
Re-election
N/A Pre-65 – 20% re-elect at age 65
Post-65 – 0%
CalPERS
Service
City service plus ½ service
between age 30 and City hire
date
Actual data
ATTACHMENT A
May 20, 2014 E-37
ACTUARIAL ASSUMPTIONS
June 30, 2011 Valuation June 30, 2013 Valuation
2014/15 HMO
Medical Claims
Costs
PEMHCA
Implied Subsidy
Estimate
Monthly claims costs estimated from Bartel Associates PEMHCA
client database and PEMHCA premiums
Bay Area Region – Non-Medicare Eligible
BS Access+ BS NetValue Kaiser
Age M F M F M F
45 $533 $645 $485 $587 $531 $642
55 890 900 810 819 886 896
60 1,137 1,063 1,034 967 1,131 1,058
Bay Area Region – Medicare Eligible
BS Access+ BS NetValue Kaiser
Age M F M Age M F
65 $306 $284 $306 $284 $295 $273
70 288 275 288 275 277 265
75 360 322 360 322 347 311
80 386 342 386 342 372 330
85 384 341 384 341 370 329
90 365 319 365 319 352 307
May 20, 2014 E-38
ACTUARIAL ASSUMPTIONS
June 30, 2011 Valuation June 30, 2013 Valuation
2014/15 PPO
Medical Claims
Costs
PEMHCA
Implied Subsidy
Estimate
Monthly claims costs estimated from Bartel Associates PEMHCA
client database and PEMHCA premiums
Bay Area Region – Non-Medicare Eligible
PERS Choice PERSCare PORAC
Age M F M F M F
45 $518 $567 $563 $616 $526 $577
55 766 741 832 804 780 754
60 920 851 999 924 934 865
Bay Area Region – Medicare Eligible
PERS Choice PERSCare PORAC
Age M F M Age M F
65 $302 $316 $322 $337 $407 $426
70 288 306 306 326 387 413
75 324 338 346 360 437 455
80 335 348 357 371 452 469
85 331 344 353 367 446 463
90 315 322 335 343 424 433
Missing PERS
Group
Retirees missing PERS group
assumed to be Misc unless
fund designates Police or Fire
N/A (none missing)
ATTACHMENT A
May 20, 2014 E-39
ACTUARIAL ASSUMPTIONS
June 30, 2011 Valuation June 30, 2013 Valuation
Surviving
Spouse
Participation
100% Same
Missing
Bargaining
Unit
Retirees missing bargaining
unit assumed to be SEIU
unless fund designates Police
(PAPOA) or Fire (IAFF)
Retirees missing bargaining unit
assumed to have the same BU
as in the prior valuation if
available; otherwise, assumed to
be SEIU unless fund designates
Police (PAPOA) or Fire
(IAFF)52
Missing Fund Retirees missing fund
assumed to be 80% GF,
10% Elec, and 10% WWT
Retirees missing fund
assumed to be 90% GF,
5% Elec, and 5% UTL52
52 Fewer than 10% of retirees have missing Bargaining Unit, Fund or Department. Does not affect results, but does affect
internal cost allocations used by the City.
May 20, 2014 E-40
ACTUARIAL ASSUMPTIONS
June 30, 2011 Valuation June 30, 2013 Valuation
Missing
Department
Liability for retirees assumed
to be 80% GF from above
assumption allocated
proportionately across all
Departments
Liability for retirees assumed to
be 90% GF from above
assumption allocated
proportionately across all
Departments52
Spouse Age Actives – Males 3 years older
than females
Retirees – Males 3 years
older than females if spouse
birth date not available
Same
Future New
Participants
None – Closed Group Same
ATTACHMENT A
May 20, 2014 E-41
RESULTS BY FUND
Actuarial Accrued Liability (AAL)
(Amounts in 000’s)
January 1, 2011 June 30, 2011 June 30, 2013
7.75% 7.61% 7.61%
Airport $ - $ - $ -
CIP 2,362 2,411 3,058
Elec53,54 16,004 16,216 23,260
Gas53 6,106 6,254 8,596
GF55 115,628 116,987 136,011
ISF – Technology 2,038 2,111 3,921
ISF – Vehicle 1,383 1,422 1,421
ISF – Printing & Mailing - - 825
Refuse 4,835 4,939 6,100
Storm Drain 1,448 1,468 811
Water53 5,087 5,200 5,518
WWC53 2,062 2,165 2,028
WWT 8,707 8,879 12,094
Total 165,660 168,053 203,642
53 AAL for UTL employees allocated to Elec, Gas, Water, and WWC in proportion to each Fund’s AAL
54 Assets for Fiber Optics Fund appropriated to Elec in 1/1/11 & 6/30/11 valuations due to no Fiber Optics employees in data
55 Assets for Printing & Mailing Fund appropriated to GF in 1/1/11 & 6/30/11 valuations due to no P&M employees in data
May 20, 2014 E-42
RESULTS BY FUND
Annual Required Contribution (ARC)
(Amounts in 000’s)
6/30/11 Valuation 6/30/13 Valuation
2012/13 2013/14 2014/15 2015/16
Airport $ - $ - $ 12 $ 12
CIP 214 219 241 249
Elec53,54 1,082 1,106 1,589 1,644
Gas53 450 460 611 636
GF55 8,896 9,084 9,648 9,970
ISF – Technology 218 224 311 320
ISF – Vehicle 116 119 91 93
ISF – Printing & Mailing - - 62 64
Refuse 376 385 375 387
Storm Drain 106 108 65 68
Water53 409 419 294 305
WWC53 196 201 140 146
WWT 691 707 842 873
Total 12,754 13,033 14,282 14,767
ATTACHMENT A
May 20, 2014 E-43
RESULTS BY FUND
Unfunded Actuarial Accrued Liability (UAAL)
(Amounts in 000’s)
January 1, 2011 June 30, 2011 June 30, 2013
7.75% 7.61% 7.61%
Airport $ - $ - $ -
CIP 1,796 1,808 2,232
Elec56,57 10,464 10,200 15,520
Gas56 3,950 3,878 5,522
GF58 91,718 90,149 99,712
ISF - Technology 1,106 1,059 2,539
ISF - Vehicle 749 726 526
ISF – Printing & Mailing - - 548
Refuse 3,437 3,400 4,073
Storm Drain 1,161 1,145 340
Water56 3,466 3,399 3,187
WWC56 1,263 1,270 822
WWT 6,338 6,243 8,552
Total 125,448 123,277 143,572
56 UAAL for UTL employees allocated to Elec, Gas, Water, and WWC in proportion to each Fund’s UAAL
57 Assets for Fiber Optics Fund appropriated to Elec in 1/1/11 & 6/30/11 valuations due to no Fiber Optics employees in data
58 Assets for Printing & Mailing Fund appropriated to GF in 1/1/11 & 6/30/11 valuations due to no P&M employees in data
May 20, 2014 E-44
RESULTS BY FUND
This page intentionally blank
ATTACHMENT A
May 20, 2014 E-45
RESULTS BY GF DEPARTMENT
Actuarial Accrued Liability (AAL)
(Amounts in 000’s)
January 1, 2011 June 30, 2011 June 30, 2013
7.75% 7.61% 7.61%
ASD $ 9,051 $ 9,003 $ 7,900
ATT 1,879 1,899 1,876
AUD 137 143 380
CLK 841 849 975
COU 1,787 1,802 1,337
CSD 12,403 12,529 14,375
FIR 31,517 32,030 39,946
HRD 3,066 3,057 2,818
LIB 4,020 4,061 4,750
MGR 1,801 1,829 1,824
PLA 6,826 6,916 7,524
PLN 241 242 -
POL 30,928 31,396 38,532
PWD 11,131 11,231 13,776
Total 115,628 116,987 136,012
May 20, 2014 E-46
RESULTS BY GF DEPARTMENT
Annual Required Contribution (ARC)
(Amounts in 000’s)
6/30/11 Valuation 6/30/13 Valuation
2012/13 2013/14 2014/15 2015/16
ASD $ 585 $ 597 $ 557 $ 574
ATT 148 151 150 155
AUD 13 13 36 37
CLK 78 80 84 86
COU 133 136 86 89
CSD 890 908 981 1,015
FIR 2,374 2,423 2,614 2,699
HRD 202 205 198 205
LIB 458 469 458 466
MGR 146 149 130 134
PLA 546 559 557 576
PLN 11 11 - -
POL 2,490 2,544 2,813 2,907
PWD 822 839 986 1,027
Total 8,896 9,084 9,650 9,970
ATTACHMENT A
May 20, 2014 E-47
RESULTS BY GF DEPARTMENT
Unfunded Actuarial Accrued Liability (UAAL)
(Amounts in 000’s)
January 1, 2011 June 30, 2011 June 30, 2013
7.75% 7.61% 7.61%
ASD $ 7,180 $ 6,938 $ 5,790
ATT 1,490 1,463 1,378
AUD 109 111 279
CLK 667 655 717
COU 1,417 1,389 982
CSD 9,838 9,654 10,507
FIR 25,000 24,682 29,328
HRD 2,433 2,356 2,069
LIB 3,189 3,129 3,475
MGR 1,428 1,410 1,339
PLA 5,414 5,329 5,511
PLN 191 186 -
POL 24,533 24,194 28,248
PWD 8,829 8,654 10,091
Total 91,717 90,150 99,714
May 20, 2014 E-48
RESULTS BY GF DEPARTMENT
This page intentionally blank
ATTACHMENT A
May 20, 2014 E-49
DEFINITIONS
GASB 45
Accrual
Accounting
• Project future employer-provided benefit cash flows for current active
employees and current retirees
• 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 CalPERS)
• 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
May 20, 2014 E-50
DEFINITIONS
Present Value of Benefits
Present Value of Benefits
(With Plan Assets)
Unfunded
Actuarial Accrued
Future
Normal
Costs
Normal Cost
Assets
Present Value of Benefits
(Without Plan Assets)
Unfunded Actuarial
Accrued Liability
Future
Normal
Costs
Normal Cost
ATTACHMENT A
May 20, 2014 E-51
DEFINITIONS
Annual
Required
Contribution
(ARC)
• “Required contribution” for the current period including:
Normal Cost
Amortization of:
- 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
Obligation
(NOO)
• Net OPEB Obligation is the accumulated amounts expensed but not funded
• Net OPEB Asset if amounts funded exceed those expensed
Annual OPEB
Cost (AOC)
• Expense for the current period including:
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
ATTACHMENT A