HomeMy WebLinkAboutStaff Report 11284
City of Palo Alto (ID # 11284)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 5/5/2020
City of Palo Alto Page 1
Summary Title: Other Post-Employment Benefits (OPEB) Bi-Annual Actuarial
Report
Title: June 30, 2019 Actuarial Valuation of Palo Alto's Retiree Healthcare Plan
and Annual Actuarially Determined Contributions (ADC) for Fiscal Years 2021
and 2022
From: City Manager
Lead Department: Administrative Services
Recommendation
Staff recommends that the Finance Committee recommend the City Council review and accept
the June 30, 2019 actuarial valuation of Palo Alto’s Retiree Healthcare Plan, recommend a
6.25% discount rate to be used in the calculation of the Actuarial Determined Contribution
(ADC), and approve full funding of the annual ADC for Fiscal Year 2021 and Fiscal Year 2022.
Executive Summary
Per the Governmental Accounting Standards Board (GASB), the City Council is required to
review and approve the actuarial valuation for retiree healthcare plan on a bi-annual basis for
the upcoming two fiscal years and approve funding of the annual ADC. The City Council should
also determine the discount rate it would like to use for the calculation of the ADC, which will
have an impact on savings that can be realized from the FY 2021 Proposed Operating Budget to
align with the refined actuarial calculation. The current discount rate assumed is 6.75 percent
as approved by the City Council in 2018 and is recommended to continue the de-risking
priorities by moving to a 6.25 percent discount rate.
Background
The City of Palo Alto offers its employees and retirees a Retiree Healthcare benefit plan which is
managed and administered by the California Public Employees’ Retirement System (CalPERS), a
State of California Retiree Healthcare Trust program. Bi-annually staff contracts with an actuary
firm which provides an actuarial report detailing the latest status of the City of Palo Alto’s
Retiree Healthcare plans for employees and retirees. The actuarial report is used to calculate
the annual ADC to the trust. In addition, updates on the rate of return, funding status, and
changes to the trust based on various impacts are detailed in the report. Unlike the pension
actuary reports, this actuary details impacts by Fund, Department, Employee Group, and
City of Palo Alto Page 2
Healthcare Plans selected.
As a refresher on the CalPERS Retiree Healthcare benefits, there are four groups of benefits
within the plan. Table 1 below outlines the different benefits levels by Group. These benefit
levels are negotiated and approved as part of the employee contracts.
City of Palo Alto Page 3
Table 1. City of Palo Alto Retiree Healthcare Benefit Plans and Tiers
Miscellaneous Safety: Fire Safety: Police
Group 1
Retired before January
1, 2007; eligibility
starting at the age 50
and 5 years of service;
full premium up to
family coverage
Retired before January 1,
2007; eligibility starting
at the age of 50 and 5
years of service; full
premium up to family
coverage
Retired before March 1,
2009; eligibility starting at
the age of 50 and 5 years of
service; full premium up to
family coverage
Group 2
Retired between
January 1, 2007 and
May 1, 2011; eligibility
starting at the age 50
and 5 years of service;
same as Group 1, but
premium limited to 2nd
most expensive
medical plan
Retired between January
1, 2007 and December 1,
2011; eligibility starting
at the age 50 and 5 years
of service; same as
Group 1, but premium
limited to 2nd most
expensive medical plan
Retired between March 1,
2009 and April 1, 2015 (POA),
between January 1, 2007 and
June 1, 2012 (PMA) ;
eligibility starting at the age
50 and 5 years of service;
same as Group 1, but
premium limited to 2nd most
expensive medical plan
Group 3
(Retirees) Retired after Group 2, did not elect into Group 4, benefit same as active employees
Group 3
(Active EEs)
Currently active, not in
Group 4. Flat Dollar
Caps equal to actives
N/A
(All active Group 3 IAFF &
FCA elected into Group
4)
N/A
(All active Group 3 POA &
PMA elected into Group 4)
Group 4
(Government
Code 22893)
Vesting Schedule: 10
years gets 50%, 20
years gets 100%,
formula amount
Vesting Schedule: 10
years gets 50%, 20 years
gets 100%, formula
amount
Vesting Schedule: 10 years
gets 50%, 20 years gets
100%, formula amount
Discussion
Staff contracted with Bartel Associates, LCC (BA) for this retiree healthcare actuarial report
(Attachment A) since the firm is familiar with the City and has the format set-up from the
previous actuary report assumptions and calculations. A contract amendment will be brought
forward to the City Council shortly for this contract for additional services related to this and
pension analysis. Staff previously selected BA through a competitive process in August 2015.
The current agreement’s term is from September 01, 2015 to August 31, 2021. Through their
work with the City, BA has continued to improve their familiarity and refine the actuarial
determined contribution calculations for the City of Palo Alto.
BA prepared the actuarial analysis to determine the City’s retiree healthcare liability and the
City of Palo Alto Page 4
ADC for Fiscal Years 2021 and 2022. The report includes an update on the funding status,
results of assumptions such as discount rate (DR), the healthcare plan premiums, and projected
future healthcare costs. Beginning with the June 30, 2017 valuation, the City has used a 6.75
percent Discount Rate for Fund 1, which is what the City Council approved as the investment
option for OPEB. The actuarial analysis is based on current employees’ accrued benefit, and
retired employees as of June 30, 2019. Employees and retirees have an open enrollment
window in October each year in which they can make changes to their healthcare plans that
take effect in January of the following year.
CalPERS Projected Contribution Levels
The actuary report has two components to the annual billing of the employer portion of
retiree healthcare contributions that comprise the Actuarial Determined Contribution (ADC),
1) the Normal Cost (NC), and 2) the Unfunded Actuarial Accrued Liability (UAAL).
- NC: This reflects a rate of contribution for the plan of retirement healthcare benefits
provided to current employees based on the current set of assumptions.
- Employer Amortization of UAAL: This is an annual payment calculated to pay down
an agency’s unfunded accrued pension liability. Assuming every assumption in the
actuarial valuation was accurate, an organization would eliminate its unfunded
pension liability if it made these payments annually for 30 years. The City Council
approved a closed amortization period and is at year 24 as of June 30, 2019. The
liability grows when the assumptions goals, such as discount rate, are not met.
This ADC for FY 2020 is $16.5 million, which is $0.5 million higher than FY 2019’s $16.0 million.
For FY 2021 the ADC calculated at the current discount rate assumption of 6.75 percent is
$14.6 million across all funds ($9.6 million in the General Fund), which represents a total
decrease of $1.9 million over the FY 2020 payment. This primarily reflects the change in
funding status that the trust has experienced from the June 30, 2017 to June 30, 2019 driven
by lower than anticipated premium costs and premium caps that limited the City’s liability as
well as increased Medicare eligibility among plan participants These payments reflect the
blended or combined cost of both the “Normal Cost” and the “Unfunded Actuarial Accrued
Liability”.
BA’s analysis, using a 6.75 percent discount rate, projects future ADCs growing from $14.6
million in FY 2021 to $19.1 million in FY 2030 or by about 31 percent. The following graph
shows historical returns, looking back to FY 2009. It uses the unaudited actual investment
return for the first half of Fiscal Year 2020 and the assumed rate of return for the last half of
Fiscal Year 2020.
Figure 1: Historical Returns of the OPEB Trust (Market Value of Plan Assets (MVA) and
Expected Return)
City of Palo Alto Page 5
Discount Rate Assumptions
This June 30, 2019 actuarial study was not available at the timing of the development of the
FY 2021 Proposed Budget. Therefore, the FY 2021 Proposed Budget, which was transmitted
on April 20, 2020, continues the funding allocation provided in the June 30, 2017 valuation.
The FY 2021 Proposed Budget includes funding of $16.8 million for the ADC, of which $10.7
million is in the General Fund. Based on the June 30, 2019 valuation, this level of funding is
more commensurate with an ADC that presumes a more conservative discount rate; a 6.25
percent discount rate would yield an ADC of $15.9 million compared to the $14.6 million
discussed above using a 6.75 discount rate.
The City Council has taken great interest and made great strides to ensure long-term liability
assumptions and costs for pension and OPEB costs are being proactively addressed including
the approved direction to assume a 6.2 percent discount rate for pension costs compared to
CalPERS rate of 7.0 percent, and the approved reduction in the prior OPEB actuarial study
from a 7.00 percent discount rate to a 6.75 percent discount rate. Continuing with these
policies, staff recommends reducing the OPEB discount rate again to 6.25 percent, aligning
with the pension assumptions currently being used. Savings of approximately $900,000 from
the FY 2021 Proposed Operating Budget would be realized with this change.
If the City Council instead chose to continue the use of the current discount rate of 6.75
percent, then greater savings of approximately $2.0 million would materialize across the
organization.
City of Palo Alto Page 6
Projected Unfunded Actuarial Accrued Liability
The acturial report includes the plan’s “Funded Status.” Overall, the Retiree Healthcare Trust is
funded at 49 percent, up 1,200 basis points from 37 percent in the June 30, 2017 actuarial
valuation.
As of June 30, 2019, the Unfunded Actuarial Accrued Liablity (UAAL) was $123.0 million for all
funds and $82.6 million for the General Fund. Begininng with the June 30, 2013 valuations, the
City aligned its acturial analysis to align with GASB’s rules regarding the “implied subsidy”. The
calculation of “implied subsidy” requires an agency to recognize that it pays the same medical
premiums for active employees as those that are retired. The implied subsidy identifies and
accounts for the agency paying the same blended premium for both active employees and
retirees, even though the cost for medical for active employees is lower than retirees. Palo Alto
has 930 active employees and 974 retirees. The calculation increases the UAAL by $20.3 million
or 16.5 percent; without the implied subsidy the UAAL would be at $102.7 million.
Table 2: Unfunded Actuarial Accrued Liability (UAAL)
As of
June 30, 2017
As of
June 30, 2019*
Projected as of
June 30, 2020*
Citywide - UAAL $153,509 $122,972 $116,579
General Fund - UAAL $100,408 $82,624 $78,327
Funded Ratio 37% 49% 54%
Citywide UAAL % Change from prior valuation -19.9% -5.2%
* This is based on a 6.75 percent discount rate.
CalPERS recognizes the varying assumptions that may impact a plan’s unfunded actuarial
accrued liability and therefore a retiree healthcare plan’s funding status, especially the
implications of the discount rate assumption. Therefore, in addition to the actuarial
assumptions used to develop this annual evaluation, BA includes an Analysis of Discount Rate
Sensitivity section in their reports in order to provide some level of sensitivity analysis of the
retiree healthcare plan.
At a 6.25 percent discount rate, the plan is estimated to have a total unfunded accrued
liability of $137.8 million compared to $123.0 million at a 6.75 percent discount rate. This
would result in a 46 percent funded status at 6.25 percent discount rate compared to a 49
percent funded status at 6.75 percent.
Stakeholder Engagement
The transmittal of the actuarial valuation as of June 30, 2019 begins conversations regarding
City of Palo Alto Page 7
the fiscal outlook for the City’s OPEB liabilities and the appropriate contribution for the FY 2021
Acturial Determined Contribution. Public discussion will be held with the Finance Committee
and as part of the budget discussions that will be taking place throughout May with the full City
Council.
Fiscal Impacts
The City of Palo Alto has already begun proactively mitigating the increasing costs of healthcare
plans for current and future retirees. It started with cost sharing with employees, capping the
plans covered, and establishing a flat contribution that can be adjusted with each labor
agreement for active employees. Staff began funding this Trust in May 2008 at a level of $33
million and it has grown to $118 million as of June 30, 2019.
This has proved very beneficial; each year the City Council has approved the full funding of the
ADC, helping to further close the unfunded gap. The City Council can eventually use the Trust to
pay healthcare benefits for current and future retirees.
Revising the discount rate to 6.25 percent, continuing to move toward the same assumptions
used with the City’s Pension contribution would result in citywide savings of $900,000 as noted
above in the FY 2021 Proposed Budget.
The City is currently monitoring and assessing the impacts and potential financial outcomes
associated with COVID-19 and the efforts to mitigate its spread. The recent market volatility
and overall impact of the current pandemic have not been considered in the valuation report.
These reports are calculated bi-annually as of June 30th, 2019 and reflect market conditions at
that point in time. This Trust saw losses in March 2020, however, has rebounded somewhat
since that time. It is being monitored closely.
Environmental Review
This report is not a project for the purposes of the California Environmental Quality Act.
Environmental review is not required.
Attachments:
• BARTEL OPEB 6-30-19 Prelim Results
CITY OF PALO ALTO
RETIREE HEALTHCARE PLAN
June 30, 2019 Actuarial Valuation
Contributions for 2020/21 & 2021/22
Preliminary Results
Prepared by Mary Beth Redding, Vice President & Actuary
Deanna Van Valer, Assistant Vice President & Actuary
Joseph Herm, Actuarial Analyst
Michelle Shen, Actuarial Analyst
Bartel Associates, LLC
March 12, 2020
CONTENTS
O:\Clients\City of Palo Alto\Projects\OPEB\2019 Val\Reports\BA PaloAltoCi 20-03-12 OPEB 6-30-19 Prelim Results.docx
Topic Page
Benefit Summary 1
Implied Subsidy 7
Participant Statistics 9
Actuarial Assumptions Highlights 15
Actuarial Methods 19
Assets 21
Results 23
Results - Details 37
Sensitivity Analysis 46
Bartel Associates OPEB Database 49
PEMHCA Regions 53
Exhibits 57
March 12, 2020 1
BENEFIT SUMMARY
Eligibility Retire directly from the City under CalPERS (age 501 and 5 years
of CalPERS service or disability)
Medical
Provider
CalPERS health plans (PEMHCA)
CalPERS administrative fees paid by City
Retiree Medical
Benefit for
Current
Retirees:
Hired < 1/1/04
(1/1/05 SEIU,
1/1/06 PAPOA)
&
Did Not Elect
into Group 4
GROUP 1: Retired < 1/1/07 (3/1/09 for PAPOA)
• Benefit = Full premium up to family coverage
GROUP 2: Retired after GROUP 1 and before
5/1/11 (12/1/11 IAFF/FCA, 6/1/12 PMA, 4/1/15 POA)
• Benefit = Same as above but premium limited to 2nd most
expensive Basic (non-Medicare) medical plan in the Bay Area
Region/Region 1 (Anthem Traditional in 2019, PERSCare in
2020)
GROUP 3: Retired after GROUP 2
• Benefit = same amount as active employees, which may change
from time to time and in the future as bargaining agreements
change (valuation assumes no future changes to active benefits)
1 Age 52 for Miscellaneous New Hires under PEPRA
March 12, 2020 2
BENEFIT SUMMARY
Retiree Medical
Benefit for
Current
Actives:
Hired < 1/1/04
(1/1/05 SEIU,
1/1/06 PAPOA)
&
Did Not Elect
into Group 4
GROUP 3: Currently active and did not elect into Group 4
• No active Group 3 POA, PMA, IAFF or FCA
• Only remaining Group 3 actives in MGMT, SEIU, UMPAPA
• Benefit = up to full premium, but limited to flat dollar caps same
as active contribution
Mgmt/Conf UMPAPA SEIU All Groups
2019 2019 2019 2020
Single $ 837 $ 840 $ 804 $ 840
2-Party 1,671 1,680 1,606 1,680
Family 2,172 2,180 2,088 2,180
For SEIU only, the 2021 cap will be increased at 50% of the
average of increase to Kaiser and PERS Choice
March 12, 2020 3
BENEFIT SUMMARY
Retiree Medical
Benefit for
those:
Hired ≥ 1/1/04
(1/1/05 SEIU,
1/1/06 PAPOA)
&
Employees
Hired Before
These Dates
Electing into
Group 42
GROUP 4: Government Code §22893 “Vesting Schedule” (based
on all CalPERS Service)3:
Years of Service % Years of Service %
< 10 0% 13 65%
10 50% 14 70%
11 55% ↓ ↓
12 60% > 20 100%
100% vesting for disability retirements
Vesting applies to 100/90 formula amounts, which are the
maximum amounts payable by the City (retirees pay any difference
between these amounts and actual premiums):
2018 2019 2020
Single $ 725 $ 734 $ 767
2-Party 1,377 1,398 1,461
Family 1,766 1,788 1,868
If have 20 years City service do not need to retire directly from
City
2 All currently active POA/PMA, IAFF/FCA are Group 4. Some Mgmt/Conf and some SEIU remained in Group 3, and some
elected into Group 4.
3 Minimum 5 years City Service.
March 12, 2020 4
BENEFIT SUMMARY
Dental, Vision
& Medicare
Part B
None
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
Summary of
Changes Since
the Prior
Valuation
Updates for 2019 and 2020 to the active contribution amounts,
which affect the GROUP 3 benefits (current actives and current
retirees).
• Changes to flat dollar amounts, amounts for 2019 differ slightly
by bargaining unit
• Prior UMPAPA benefit: 90% of premium up to 90% of Group 2
cap
• Updated UMPAPA benefit: flat dollar caps similar to SEIU and
Mgmt/Conf
March 12, 2020 5
BENEFIT SUMMARY
Pay-As-You-
Go ($000s)
Fiscal
Year
Cash
Implied
Subsidy
Total
2018/19 $ 9,960 $ 2,197 $ 12,157
2017/18 9,660 2,444 12,104
2016/17 9,713 2,203 11,916
2015/16 9,681 1,960 11,641
2014/15 8,995 1,916 10,911
2013/14 7,317 - 7,317
2012/13 8,766 - 8,766
2011/12 8,165 - 8,165
2010/11 6,216 - 6,216
2009/10 5,519 - 5,519
March 12, 2020 6
BENEFIT SUMMARY
Monthly Benefit Cap Amounts
2019 2020
Group Single 2-Party Family Single 2-Party Family
Group 14 $1,131.68 $2,263.36 $2,942.37 $1,184.84 $2,369.68 $3,080.58
Group 2 1,111.13 2,222.26 2,888.94 1,133.14 2,266.28 2,946.16
Group 3 SEIU 804.00 1,606.00 2,088.00 804.00 1,680.00 2,180.00
Group 3 MGMT 837.00 1,671.00 2,172.00 804.00 1,680.00 2,180.00
Group 3 UMPAPA 840.00 1,680.00 2,180.00 804.00 1,680.00 2,180.00
Group 4 (100% vest) 734.00 1,398.00 1,788.00 767.00 1,461.00 1,868.00
% Decrease from Group 1 (assumes Group 1 is in most expensive plan)
Group 2 2% 2% 2% 4% 4% 4%
Group 3 SEIU 29% 29% 29% 32% 29% 29%
Group 3 MGMT 26% 26% 26% 32% 29% 29%
Group 3 UMPAPA 26% 26% 26% 32% 29% 29%
Group 4 35% 38% 39% 35% 38% 39%
4 No cap for Group 1. Amount shown is most expensive Non-Medicare Bay Area/Region 1 premium.
March 12, 2020 7
IMPLIED SUBSIDY
For PEMHCA, employer cost for allowing retirees to participate at active rates.
• Kaiser 2020 Region 1 plan:
The City included the implied subsidy beginning with the June 30, 2013 valuation.
25 30 35 40 45 50 55 60 64 65 70 75 80 85
Premium 768 768 768 768 768 768 768 768 768 339 339 339 339 339
Male Cost by Age 281 310 358 423 512 642 849 1,071 1,194 308 328 345 362 396
Female Cost by Age 492 555 607 670 745 839 988 1,122 1,198 309 327 344 361 395
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
March 12, 2020 8
IMPLIED SUBSIDY
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March 12, 2020 9
PARTICIPANT STATISTICS
Participant Statistics
5 Includes 68 waived retirees over 65.
6 Excludes all waived retirees over 65; includes 38 waived under 65 retirees.
7 Excludes all waived retirees, regardless of age.
8 All retirements included. Disability retirement data unreliable.
6/30/11 6/30/13 6/30/15 6/30/17 6/30/19
Actives
• Count 923 948 955 967 930
• Average Age 44.7 45.2 45.3 45.6 44.8
• Average City Service 10.8 10.8 10.8 10.9 10.8
• Average PERS Service 13.7 11.7 11.9 11.9 11.7
• Average Salary $86,007 $86,271 $91,714 $90,739 $110,969
• Total Salary (000’s) $79,384 $81,785 $87,586 $87,745 $103,201
Retirees:
• Count 860 968 1,0075 9596 9747
• Average Age 67.0 68.2 68.9 68.9 70.0
• Average Retirement Age
o Service 55.58 57.8 57.7 57.7 58.0
o Disability n/a 45.3 45.6 45.9 46.1
March 12, 2020 10
PARTICIPANT STATISTICS
Historical Active and Retiree Counts9
9 Retiree count is subscribers: retirees and surviving spouses
6/30/09 6/30/11 6/30/13 6/30/15 6/30/17 6/30/19
Active 955 923 948 955 967 930
Retired 710 860 968 1,007 959 974
43%48% 50% 51% 50%51%
57%52% 50% 49% 50%49%
-
500
1,000
1,500
2,000
2,500
March 12, 2020 11
PARTICIPANT STATISTICS
Participant Statistics
June 30, 2019
10 Actual 2018/19 PERSable compensation.
11 Excludes retirees who have waived coverage, regardless of age.
Group 1 Group 2 Group 3 Group 4 Total
Actives
• Count n/a n/a 92 838 930
• Average Age n/a n/a 54.2 43.8 44.8
• Average Entry Age n/a n/a 32.7 35.9 34.5
• Average City Service n/a n/a 21.4 9.7 10.8
• Average PERS Service n/a n/a 21.9 10.6 11.7
• Average Salary n/a n/a $108,291 $111,263 $110,969
• Total Salary (000’s)10 n/a n/a $9,963 $93,238 $103,201
Benefitting Retirees11:
• Count 458 292 128 96 974
• Average Age 76.3 66.7 62.4 60.3 70.0
• Avg Service Ret Age 57.6 57.8 58.8 59.2 58.0
• Avg Disability Ret Age 45.5 47.0 51.2 47.1 46.1
March 12, 2020 12
PARTICIPANT STATISTICS
Participant Statistics
June 30, 2017
12 Includes 38 retirees who have waived coverage and are under age 65. Excludes waived retirees over age 65.
Group 1 Group 2 Group 3 Group 4 Total
Actives
• Count n/a n/a 133 834 967
• Average Age n/a n/a 53.1 44.4 45.6
• Average Entry Age n/a n/a 32.8 33.9 33.7
• Average City Service n/a n/a 20.0 9.4 10.9
• Average PERS Service n/a n/a 20.3 10.6 11.9
• Average Salary n/a n/a $90,623 $90,757 $90,739
• Total Salary (000’s) n/a n/a $12,053 $75,692 $87,745
Retirees12:
• Count 500 302 117 40 959
• Average Age 74.5 64.6 60.3 57.1 68.9
• Avg Service Ret Age 57.6 57.8 58.2 56.9 57.7
• Avg Disability Ret Age 45.6 46.4 49.1 44.3 45.9
March 12, 2020 13
PARTICIPANT STATISTICS
Data Reconciliation
6/30/2017 to 6/30/2019
Actives Retirees Disabled Benefic. Total
June 30, 2017 967 716 171 72 1,926
• New Hires/Rehires 157 - - - 157
• Disabled (1) - 1 - -
• Terminated13 (93) - - - (93)
• Died with Benefic.14 - (5) (1) 6 -
• Died, no Beneficiary - (18) (11) (7) (36)
• Retired/covered (90) 90 - - -
• Retired/waived (10) - - - (10)
• Waived Retiree15 - (31) (10) (4) (45)
• Adjustment/Other - 2 1 2 5
June 30, 2019 930 754 151 69 1,904
13 All actives in June 30, 2017 valuation and not in June 30, 2019 valuation assumed terminated.
14 Retirees in the June 30, 2017 valuation not in the June 30, 2019 valuation assumed deceased.
15 Retiree count as of June 30, 2017 valuation included waived retirees <65.
March 12, 2020 14
PARTICIPANT STATISTICS
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March 12, 2020 15
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2017 Valuation June 30, 2019 Valuation
Valuation Date June 30, 2017
ADC for Fiscal Years
2018/19 & 2019/20
(end of year)
1 year lag
June 30, 2019
ADC for Fiscal Years
2020/21 & 2021/22
(end of year)
1 year lag
Funding Policy Full Pre-funding through
CalPERS trust (CERBT)
Strategy #1
Same
Discount Rate 6.75%, net of expenses based
on CERBT Strategy #1
Same
Medical Trend Non-Medicare: 7.5% for 2019,
decreasing to an ultimate rate
of 4.0% in 2076
Medicare: 6.5% for 2019,
decreasing to an ultimate rate
of 4.0% in 2076
Non-Medicare: 7.25% for
2021, decreasing to an
ultimate rate of 4.0% in 2076
Medicare: 6.3% for 2021,
decreasing to an ultimate rate
of 4.0% in 2076
March 12, 2020 16
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2017 Valuation June 30, 2019 Valuation
Increase to
Group 3 Flat
Dollar Caps
½ of Medical Trend, not less
than assumed inflation
(2.75%)16
Same
Participation at
Retirement
Groups 3 & 4: 90%
Based on Plan experience
Group 3: 98%
Group 4: if eligible for City
contribution: 95%; if not: 0%
Based on Plan experience17
16 Increase is for purposes of financial projection only and does not imply any obligation to increase the cap in the future.
17 Actual participation percentage for Group 3 since 6/30/17 is 100% Miscellaneous. Note there are no active Safety members
in Group 3. Actual participation percentages for Group 4 since 6/30/17 are 83% Miscellaneous and 92% Safety, or 84%
overall. Actual participation for Group 3 and Group 4 since 6/30/17 is 88% overall. Group 4 still has limited actual
experience. We recommend continued monitoring for Group 4.
March 12, 2020 17
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2017 Valuation June 30, 2019 Valuation
Retirement,
Mortality,
Termination,
Disability
CalPERS 1997-2015
Experience Study for all but
Mortality
Mortality – CalPERS 1997-
2011 Experience Study, and
Society of Actuaries mortality
improvement scale MP-17
CalPERS 1997-2015
Experience Study
Update to most recent Society
of Actuaries mortality
improvement scale MP-19
ACA Excise
Tax
Estimate by 2% load on cash
subsidy
Remove load due to
December 2019 repeal of
Excise Tax18
18 Note for GASBS 75 purposes, the Total OPEB Liability as of Measurement Date (MD) 6/30/19 will include a 2% load, as
legislation passed after the MD may not be taken into account.
March 12, 2020 18
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2017 Valuation June 30, 2019 Valuation
Basis for
Assumptions
(6/30/19
Valuation)
No experience study performed for this Plan
CalPERS December 2017 experience study covering 1997 to 2015
experience was used
Mortality improvement: most recent Society of Actuaries scale
Inflation based on the Plan’s very long time horizon
Short-term medical trend developed in consultation with Axene
Health Partners’ healthcare actuaries. Long-term medical trend
developed using Society of Actuaries’ Getzen Model of Long-Run
Medical Cost Trends
Age-based claims are based on factors developed by Axene Health
Partners’ healthcare actuaries and demographic data from
CalPERS.
Participation and coverage based in part on Plan experience
Capital market assumptions for the recommended discount rate are
based on our study of investment advisor 10-year 2017 capital
market assumptions adjusted in some cases to reflect anticipated
long-term trends
March 12, 2020 19
ACTUARIAL METHODS
Method June 30, 2017 Valuation June 30, 2019 Valuation
Cost Method Entry Age Normal Level %
of Pay
Same
Unfunded Liability
Amortization
26 years closed period
Level % of pay (3% annual
escalation)
Sensitivity analysis:
24 & 20 years
24 years closed period
Level % of pay (3% annual
escalation)
Sensitivity analysis:
22 & 20 years
Actuarial Asset Value Market Value of Assets19 Same
Future New Entrants Closed group – no new participants
Implied Subsidy Implied subsidy valued
Plan Continuance For purposes of financial projections, the plan and benefits
are assumed to continue unchanged. The calculation of this
obligation does not imply that there is any legal liability to
provide or continue providing the benefits valued.
19 Using Market Value of Assets to determine the ADC will result in more volatile future ADCs than if a smoothed Market
Value were used.
March 12, 2020 20
ACTUARIAL METHODS
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March 12, 2020 21
ASSETS
Market Value of Plan Assets – CERBT #1
(Amounts in 000’s)
Audited
2015/16
Audited
2016/17 2017/1820
2018/19
Proj
2019/2021
MVA (Beg. of Year) $ 78,578 $ 79,843 $ 91,170 $ 107,846 $ 118,497
• Audit Adjustment22 (1,972) - - -
• Contributions 2,351 2,823 9,212 5,723 16,482
• Benefit Payments23 - - - (1,883) (12,642)
• Admin. Expenses (37) (44) (50) (53) (62)
• Investment Return24 924 8,628 7,513 6,864 12,535
MVA (End of Year) 79,843 91,250 107,846 118,497 134,810
Approx. Annual Return 1.1% 10.4% 7.8% 6.3% 10.5%
20 Taken from CERBT quarterly statements. Audited asset balances at 6/30/18 and 6/30/19 are $107,809,741 and
$118,478,415 respectively.
21 Projected from actual 12/31/2019 CERBT balance (unaudited) using assumed rate of return for last half of fiscal year.
22 Backs out accrued contribution in July 2015 for $2,047,517 and $75,658 for adjustments made by CalPERS auditors.
23 Benefit Payments made outside of trust by City for years before 2018/19. Refer to Slide 5 for fiscal year amounts.
24 Net of investment expenses.
March 12, 2020 22
ASSETS
Historical Returns25
25 Projected return for 2019/20 uses actual investment return (unaudited) 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 13/14 14/15 15/16 16/17 17/18 18/19
Proj
19/20
MVA -22.5% 15.1% 24.4% 0.1% 11.2% 18.2% -0.2% 1.1% 10.4% 7.8% 6.3% 10.5%
Expected Return 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.61% 7.25% 7.25% 6.75% 6.75% 6.75%
(30%)
(20%)
(10%)
0%
10%
20%
30%
March 12, 2020 23
RESULTS
Actuarial Obligations
(Amounts in 000’s)
6/30/17 Valuation 6/30/19 Valuation
6/30/17 Proj 6/30/18 6/30/19 Proj.6/30/20
Discount Rate 6.75% 6.75%
Present Value of Benefits
• Actives (future retirees) $ 141,887 $ 141,423
• Retirees 160,927 159,156
• Total 302,814 300,579
Actuarial Accrued Liability
• Actives (future retirees) 83,832 82,313
• Retirees 160,927 159,156
• Total 244,759 $ 255,795 241,469 $ 251,389
Actuarial Value of Assets(MV) 91,250 111,869 118,497 134,810
Unfunded AAL 153,509 143,926 122,972 116,579
Funded Ratio 37% 44% 49% 54%
Normal Cost26 7,081 6,978
Pay-As-You-Go Cost (Cash) 10,274 10,859
Pay-As-You-Go Cost (IS) 2,197 2,346
26 Includes Administration fees.
March 12, 2020 24
RESULTS
Historical Funded Status
(Amounts in 000’s)
24%27%
29%
33%37%
49%
$0
$50,000
$100,000
$150,000
$200,000
$250,000
1/1/11 6/30/11 6/30/13 6/30/15 6/30/17 6/30/19
Retiree pay-go Retiree AAL less pay-go
Active AAL MVA (xx% Funded Ratio)
March 12, 2020 25
RESULTS
Actuarial Gain/Loss
(Amounts in $000’s)
AAL (MVA) UAAL
Actual 6/30/17 projected to 6/30/18 $ 255,795 $ (111,869) $ 143,926
Expected 6/30/20 279,189 (133,878) 145,311
Assumption Changes
• CalPERS 97-15 Experience Study mortality and
updated mortality improvement scale to MP-19 1,241 1,241
• Medical Plan election percentages and spouse,
family, and employee participation assumption
changes 6,395 6,395
• Removal of ACA Excise Tax (repealed 12/2019) (4,208) (4,208)
Contribution and Benefit Payment Loss 4,534 4,534
Investment (Gain) (5,466) (5,466)
Plan Changes (Group 3 Caps) 1,050 1,050
Experience (Gains)/Losses
• Premiums/Caps lower than expected (23,400) (23,400)
• Demographic (mainly Medicare eligibility) (8,877) - (8,877)
Total (Gain)/Loss (27,800) (932) (28,732)
Projected 6/30/20 251,389 (134,810) 116,579
March 12, 2020 26
RESULTS
Actuarially Determined Contribution (ADC)
(Amounts in 000’s)
6/30/17 Valuation 6/30/19 Valuation
2018/19 2019/20 2020/21 2021/22
Discount Rate 6.75% 6.75%
ADC - $
• Normal Cost $ 7,081 $ 7,299 $ 6,888 $ 7,099
• Administrative Expenses27 - - 90 98
• UAAL Amortization 8,916 9,183 7,588 7,816
• Total 15,997 16,482 14,566 15,013
Projected Payroll 90,377 93,089 109,486 112,771
ADC - %Pay
• Normal Cost 7.8% 7.8% 6.3% 6.3%
• Administrative Expenses - - 0.1% 0.1%
• UAAL Amortization 9.9% 9.9% 6.9% 6.9%
• Total 17.7% 17.7% 13.3% 13.3%
27 PEMHCA and CERBT administration fees included after fiscal year 2020/21. PEMHCA admin fee included in Normal Cost
for years 2018/19 and 2019/20.
March 12, 2020 27
RESULTS
Historical Recommended Funding Contributions
(Amounts in 000’s)
11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22
Normal Cost 4,782 5,091 5,256 5,674 5,880 6,340 6,587 7,081 7,299 6,978 7,197
Amortization 7,802 7,665 7,779 8,607 8,887 10,025 10,351 8,916 9,183 7,588 7,816
ADC 12,584 12,756 13,035 14,282 14,767 16,365 16,938 15,997 16,482 14,566 15,013
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
March 12, 2020 28
RESULTS
Amortization Bases & Payments
(Amounts in 000’s)
6/30/17 Valuation 6/30/19 Valuation
6/30/18 6/30/19 6/30/20 6/30/21
UAAL Balance $ 143,926 $ 144,725 $ 116,579 $ 116,859
Amortization Payment 8,916 9,183 7,588 7,816
Amortization Period 26 25 24 23
March 12, 2020 29
RESULTS
Unfunded Actuarial Accrued Liability (UAAL) – % of Payroll
(Amounts in 000’s)
6/30/11 6/30/13 6/30/15 6/30/17 6/30/19
UAAL/Payroll for year
beginning on valuation date
• Miscellaneous 147% 158% 152% 149% 99%
• Safety 168% 228% 276% 269% 171%
• Total 153% 176% 178% 175% 116%
March 12, 2020 30
RESULTS
10 Year Contribution Projection
(Amounts in 000’s)
FYE ADC28
Contribution
Payroll
ADC
% of
Pay
Fund
%
Cash
Ben
Pymt
Implied
Subsidy
BP
Trust
Pre-
Funding Total
UAAL,
Beg. Of
FY
2020 $ 16,482 $ 10,928 $ 2,384 $ 3,170 $ 16,482 $ 93,089 17.7% $ 144,725 46%
2021 14,566 10,859 2,347 1,360 14,566 109,486 13.3% 116,579 54%
2022 15,013 11,622 2,619 772 15,013 112,771 13.3% 116,421 56%
2023 15,486 12,327 2,826 333 15,486 116,154 13.3% 115,990 57%
2024 15,964 12,968 2,976 20 15,964 119,638 13.3% 115,266 59%
2025 16,457 13,601 3,112 (256) 16,457 123,227 13.4% 114,225 61%
2026 16,965 14,171 3,176 (382) 16,965 126,924 13.4% 112,840 63%
2027 17,486 14,740 3,252 (506) 17,486 130,732 13.4% 111,083 65%
2028 18,023 15,282 3,211 (470) 18,023 134,654 13.4% 108,923 66%
2029 18,576 15,905 3,290 (619) 18,576 138,694 13.4% 106,329 68%
2030 19,146 16,569 3,433 (856) 19,146 142,854 13.4% 103,256 70%
28 Actuarially Determined Contribution
March 12, 2020 31
RESULTS
-$15
-$10
-$5
$0
$5
$10
$15
$20
$25
$30
$
M
i
l
l
i
o
n
s
Net Trust Payment/Reimbursement Benefit Payments Total ADC
ADC, Benefit and Trust Payment/Reimbursement Projection
(6.75% Discount Rate, 24 years level % of pay amortization)
March 12, 2020 32
RESULTS
0%
20%
40%
60%
80%
100%
120%
$0
$20
$40
$60
$80
$100
$120
$140
Fu
n
d
e
d
R
a
t
i
o
UA
A
L
(
$
M
i
l
l
i
o
n
s
)
UAAL Funded Ratio
UAAL and Funded Ratio Projection
(6.75% Discount Rate, 24 years amortization)
March 12, 2020 33
RESULTS
% of Total Actuarial Accrued Liability for Actives and Retirees
Miscellaneous
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
6/30/2009 6/30/2011 6/30/2013 6/30/2015 6/30/2017 6/30/2019
Actives Retirees
March 12, 2020 34
RESULTS
% of Total Actuarial Accrued Liability for Actives and Retirees
Safety
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
6/30/2009 6/30/2011 6/30/2013 6/30/2015 6/30/2017 6/30/2019
Actives Retirees
March 12, 2020 35
RESULTS
This chart excludes the Implied Subsidy
and is provided for informational purposes only
(Amounts in 000’s)
Cash Benefit
Present Value of Benefits $ 250,941
Funded Status 6/30/19
• Actuarial Accrued Liability 201,521
• Actuarial Value of Assets 118,497
• Unfunded AAL 83,024
Funded Ratio 58.8%
ADC 2020/21
• Normal Cost 5,765
• Administrative Expenses 90
• UAAL Amortization 4,885
• Total 10,740
• ADC % of Payroll 9.8%
March 12, 2020 36
RESULTS
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March 12, 2020 37
RESULTS - DETAILS
Actuarial Obligations
June 30, 2019
(Amounts in 000’s)
Benefits <
Age 65
Benefits >
Age 65 Total
Present Value of Benefits
• Actives (future retirees) $ 75,855 $ 65,568 $ 141,423
• Retirees 47,969 111,187 159,156
• Total 123,824 176,756 300,579
Actuarial Accrued Liability
• Actives (future retirees) 42,395 39,918 82,313
• Retirees 47,969 111,187 159,156
• Total 90,364 151,106 241,469
Normal Cost 2020/2129 3,806 3,172 6,978
29 Includes Administration fees.
March 12, 2020 38
RESULTS - DETAILS
Actuarial Obligations
June 30, 2019
(Amounts in 000’s)
Group 1 Group 2 Group 3 Group 4 Total
Present Value of Benefits
• Actives (future retirees) $ - $ - $ 17,310 $ 124,113 $ 141,423
• Retirees 49,303 56,784 30,652 22,417 159,156
• Total 49,303 56,784 47,962 146,530 300,579
Actuarial Accrued
Liability
• Actives (future retirees) - - 14,375 67,938 82,313
• Retirees 49,303 56,784 30,652 22,417 159,156
• Total 49,303 56,784 45,027 90,355 241,469
Normal Cost 2020/2130 - - 515 6,463 6,978
NC as % of Payroll n/a n/a 5.5% 6.5% 6.4%
Active Count n/a n/a 92 838 930
Projected Payroll (000’s) n/a n/a 9,417 100,069 109,486
30 Includes Administration fees.
March 12, 2020 39
RESULTS - DETAILS
Cash/Implied Subsidy – Actuarial Obligations – June 30, 2019
(Amounts in 000’s)
Cash
Subsidy
Implied
Subsidy Total
Present Value of Benefits
• Actives (future retirees) $ 117,228 $ 24,195 $ 141,423
• Retirees 133,713 25,443 159,156
• Total 250,941 49,638 300,579
Actuarial Accrued Liability
• Actives (future retirees) 67,808 14,506 82,313
• Retirees 133,713 25,443 159,156
• Total 201,521 39,949 241,469
Market Value of Assets31 98,893 19,604 118,497
Unfunded AAL 102,628 20,345 122,972
Normal Cost 2020/2132 5,855 1,122 6,978
Pay-As-You-Go Cost 2020/21 10,859 2,346 13,206
31 Allocated in proportion to AAL for illustrative purposes.
32 Includes Administration fees.
March 12, 2020 40
RESULTS - DETAILS
Cash/Implied Subsidy – Actuarially Determined Contribution – 2020/21 FY
(Amounts in 000’s)
Cash
Subsidy
Implied
Subsidy Total
ADC - $
• Normal Cost $ 5,765 $ 1,122 $ 6,888
• Administrative Expenses 90 - 90
• UAAL Amortization 6,335 1,254 7,588
• ADC 12,190 2,376 14,566
Projected Payroll 109,486 109,486 109,486
ADC - %
• Normal Cost 5.3% 1.0% 6.3%
• Administrative Expenses 0.1% 0.0% 0.1%
• UAAL Amortization 5.8% 1.1% 6.9%
• ADC 11.1% 2.2% 13.3%
March 12, 2020 41
RESULTS - DETAILS
Actuarial Obligations
June 30, 2019
(Amounts in 000’s)
Misc Safety Total
Present Value of Benefits
• Actives (future retirees) $101,340 $ 40,083 $141,423
• Retirees 98,746 60,410 159,156
• Total 200,086 100,493 300,579
Actuarial Accrued Liability
• Actives (future retirees) 61,391 20,922 82,313
• Retirees 98,746 60,410 159,156
• Total 160,137 81,332 241,469
Market Value of Assets33 78,585 39,912 118,497
Unfunded AAL 81,552 41,420 122,972
Normal Cost 2020/2134 4,929 2,048 6,978
Pay-As-You-Go Cost 2020/21 8,569 4,637 13,206
33 Allocated in proportion to the Actuarial Accrued Liability.
34 Includes Administration fees.
March 12, 2020 42
RESULTS - DETAILS
Actuarially Determined Contribution (ADC)
2020/21 Fiscal Year
(Amounts in 000’s)
Misc Safety Total
ADC - $
• Normal Cost $ 4,865 $ 2,022 $ 6,888
• Administrative Expenses 64 26 90
• UAAL Amortization35 5,048 2,541 7,588
• ADC 9,977 4,589 14,566
Projected Payroll 84,490 24,996 109,486
ADC - %
• Normal Cost 5.8% 8.1% 6.3%
• Administrative Expenses 0.1% 0.1% 0.1%
• UAAL Amortization 6.0% 10.2% 6.9%
• ADC 11.8% 18.4% 13.3%
35 Allocated in proportion to the Actuarial Accrued Liability.
March 12, 2020 43
RESULTS - DETAILS
Actuarial Obligations – By Bargaining Unit
June 30, 2019
(Amounts in 000’s)
FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total
PVB
• Actives $ 1,328 $ 19,563 $ 29,005 $ 16,122 $ 1,958 $ 64,581 $ 8,867 $ 141,423
• Retirees 1,983 29,741 46,519 19,507 3,093 54,527 3,787 159,156
• Total 3,311 49,304 75,524 35,629 5,051 119,108 12,654 300,579
AAL
• Actives 895 10,647 17,085 7,268 1,307 38,325 6,786 82,313
• Retirees 1,983 29,741 46,519 19,507 3,093 54,527 3,787 159,156
• Total 2,878 40,388 63,604 26,775 4,400 92,852 10,573 241,469
MVA36 1,412 19,820 31,213 13,139 2,159 45,566 5,189 118,497
UAAL 1,466 20,568 32,391 13,636 2,241 47,286 5,384 122,972
NC 20/21 51 887 1,514 987 85 3,131 323 6,978
Pay-Go 158 2,398 3,789 1,443 176 4,811 429 13,206
36 Allocated in proportion to the Actuarial Accrued Liability.
March 12, 2020 44
RESULTS - DETAILS
Actuarially Determined Contribution (ADC) – By Bargaining Unit
2020/21 Fiscal Year
(Amounts in 000’s)
FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total
ADC - $
• Normal Cost $ 50 $ 876 $ 1,494 $ 974 $ 84 $ 3,090 $ 319 $ 6,888
• Admin. Exp. 1 11 20 13 1 41 4 90
• UAAL Amort37 90 1,256 1,978 846 139 2,940 338 7,588
• ADC 140 2,143 3,491 1,833 224 6,072 661 14,566
Proj. Payroll 935 10,993 29,899 10,481 1,584 46,935 8,660 109,486
ADC - %
• Normal Cost 5.3% 8.0% 5.0% 9.3% 5.3% 6.6% 3.7% 6.3%
• Admin. Exp. 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.0% 0.1%
• UAAL Amort 9.6% 11.4% 6.6% 8.1% 8.8% 6.3% 3.9% 6.9%
• ADC 19.5% 11.7% 17.5% 14.1% 12.9% 7.6% 7.6% 13.3%
37 Allocated in proportion to the Actuarial Accrued Liability.
March 12, 2020 45
RESULTS - DETAILS
Actuarially Determined Contribution (ADC) – By Bargaining Unit
2021/22 Fiscal Year
(Amounts in 000’s)
FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total
ADC - $
• Normal Cost $ 51 $ 890 $ 1,550 $ 991 $ 85 $ 3,201 $ 331 $ 7,099
• Admin. Exp. 1 12 21 14 1 44 4 98
• UAAL Amort38 92 1,293 2,038 872 143 3,029 349 7,816
• ADC 144 2,196 3,609 1,876 230 6,273 684 15,013
Proj. Payroll 963 11,323 30,796 10,795 1,631 48,343 8,920 112,771
ADC - %
• Normal Cost 5.3% 7.9% 5.0% 9.2% 5.2% 6.6% 3.7% 6.3%
• Admin. Exp. 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.0% 0.1%
• UAAL Amort 9.6% 11.4% 6.6% 8.1% 8.8% 6.3% 3.9% 6.9%
• ADC 15.0% 19.4% 11.7% 17.4% 14.1% 13.0% 7.7% 13.3%
38 Allocated in proportion to the Actuarial Accrued Liability.
March 12, 2020 46
SENSITIVITY ANALYSIS
CERBT Investment Options
Updated Target asset allocations (approved by CalPERS Board October 2018)
Asset Classifications Option 1 Option 2 Option 3
Global Equity 59% 40% 22%
Fixed Income 25% 43% 49%
REIT's 8% 8% 8%
TIPS 5% 5% 16%
Commodities 3% 4% 5%
Total 100% 100% 100%
Bartel Associates expected returns, 50th percentile:
Option 1 Option 2 Option 3
Expected Real Rate of Return39 4.14% 3.54% 2.83%
Inflation Assumption 2.75% 2.75% 2.75%
Expenses (Admin. & Invest.) (0.05%) (0.05%) (0.05%)
Nominal Rate of Return 6.84% 6.24% 5.53%
Rounded to nearest 0.25% 6.75% 6.25% 5.50%
39 Includes investment expenses
March 12, 2020 47
SENSITIVITY ANALYSIS
Discount Rate Sensitivity
(Amounts in 000’s)
CERBT Strategy
#1 (Current) #2 #3
Discount Rate 6.75% 6.25% 5.50%
Present Value of Benefits $ 300,579 $ 325,064 $ 368,416
Funded Status 6/30/19
• Actuarial Accrued Liability 241,469 256,328 281,591
• Actuarial Value of Assets 118,497 118,497 118,497
• Unfunded AAL 122,972 137,831 163,094
Funded Ratio 49.1% 46.2% 42.1%
ADC 2020/21
• Normal Cost $ 6,888 $ 7,674 $ 9,054
• Administrative Expenses 90 90 90
• UAAL Amortization40 7,588 8,160 9,030
• Total 14,566 15,924 18,173
• ADC % of Payroll 13.3% 14.5% 16.6%
40 UAAL projected using the same 6/30/20 projected assets for all scenarios. UAAL amortized over 24 years for all scenarios.
March 12, 2020 48
SENSITIVITY ANALYSIS
Amortization Period Sensitivity
(Amounts in 000’s)
Amortization Period
Current
24 Years 2241 Years 20 Years
Funded Status Projected to
6/30/20
• Actuarial Accrued Liability $ 251,389 $ 251,389 $ 251,389
• Actuarial Value of Assets 134,810 134,810 134,810
• Unfunded AAL 116,579 116,579 116,579
Total Projected Payroll 2020/21 109,486 109,486 109,486
ADC 2020/21
• Normal Cost $ 6,888 $ 6,888 $ 6,888
• Administrative Expenses 90 90 90
• UAAL Amortization 7,588 8,026 8,557
• Total 14,566 15,004 15,535
• ADC % of Payroll 13.3% 13.7% 14.2%
41 The longest amortization period where the payment is large enough to cover all the interest (6.75%) on the UAAL balance.
March 12, 2020 49
BARTEL ASSOCIATES OPEB DATABASE
50% of 90% of
results results
are are
within within
this this
range range
5th Percentile
75th Percentile
50th Percentile
25th Percentile
Bartel Associates OPEB Database
Sample Percentile Graph
95th Percentile
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
Pe
r
c
e
n
t
o
f
P
a
y
March 12, 2020 50
BARTEL ASSOCIATES OPEB DATABASE
NC ADC NC ADC
95th Percentile 9.7% 24.1% 12.5% 32.2%
75th Percentile 6.2% 12.2% 6.0% 16.0%
50th Percentile 3.3% 6.2% 2.8% 7.1%
25th Percentile 1.6% 3.1% 1.6% 3.7%
5th Percentile 0.7% 0.7% 0.9% 1.4%
`
Percent of Pay (♦) 5.8% 11.8% 8.1% 18.4%
Percentile 72% 75% 83% 82%
Miscellaneous Safety
Discount Rate = 6.75%, Average Amortization Period = 24.0 Years
0%
5%
10%
15%
20%
25%
30%
35%
Pe
r
c
e
n
t
o
f
P
a
y
Bartel Associates OPEB Database
Normal Cost & Actuarially Determined Contribution
March 12, 2020 51
BARTEL ASSOCIATES OPEB DATABASE
General
Miscellaneous Safety
95th Percentile 316% 413%
75th Percentile 179% 215%
50th Percentile 91% 106%
25th Percentile 39% 47%
5th Percentile 13% 20%
Percent of Pay (♦) 195% 335%
Percentile 79% 89%
Discount Rate = 6.75%
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
Pe
r
c
e
n
t
o
f
P
a
y
Bartel Associates OPEB Database
Actuarial Accrued Liability
March 12, 2020 52
BARTEL ASSOCIATES OPEB DATABASE
March 12, 2020 53
CALPERS ISSUES
PEMHCA Regions
History
• Before 2005 – one set of basic (non-Medicare) premiums
• 2005 to 2009 – adopted regional pricing - 4 regions for agencies and schools
• 2010 to 2019 –separate region for Sacramento Area
• 2020 and later
CalPERS reviewed various alternative region models during 2018
Board adopted 3-region model at 12/2018 meeting effective for 2020 premiums
CalPERS will review every 5 years
CalPERS Objectives
• Marketability – better align premiums with local costs
• Member Impact – minimize number of members with significant premium increases
• Nomenclature – numerical rather than geographical region names
Regions for 2020:
• Region 1: combines Bay Area, Other Northern CA, and Sacramento Area regions
• Region 2: Other Southern CA region, except Riverside County, plus Ventura County
• Region 3: Counties of Los Angeles, Riverside County and San Bernardino
March 12, 2020 54
CALPERS ISSUES
PEMHCA Regions
New Region Current Region Total Lives42
1 Bay Area 183,734
Other Northern CA 34,986
Sacramento Area 38,873
2 Other SoCal except Riverside Co 49,983
LA Area/Ventura County only 12,481
3 LA Area except Ventura Co 128,223
Other SoCal Area/Riverside Co 19,742
Total 468,022
42 Data published in December 18, 2018 CalPERS Pension & Health Benefits Committee, Agenda Item 6.
March 12, 2020 55
NEXT STEPS
Next Valuation – 6/30/21 for 2022/23 & 2023/24 funding contributions
Timing:
• Present preliminary results March 16, 2020
GASBS 75
• Separate GASBS 75 reports issued each fiscal year
• Completed for 18/19 (was based on prior valuation)
• Final report for 19/20 will be prepared once fiscal year closes
March 12, 2020 56
NEXT STEPS
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March 12, 2020 57
EXHIBITS
Topic Page
Premiums E- 1
Data Summary E- 4
Actuarial Assumptions E-26
Results by Fund E-37
Results by GF Department E-39
Definitions E-41
March 12, 2020 E-1
PREMIUMS
2019 PEMHCA Monthly Premiums
Bay Area
Non-Medicare Eligible Medicare Eligible
Medical Plan Single 2-Party Family Single 2-Party Family
Anthem Select $831.44 $1,662.88 $2,161.74 n/a n/a n/a
Anthem Traditional 1,111.13 2,222.26 2,888.94 $357.44 $714.88 $1,072.32
Blue Shield Access+ 970.90 1,941.80 2,524.34 n/a n/a n/a
Health Net SmartCare 901.55 1,803.10 2,344.03 n/a n/a n/a
Kaiser 768.25 1,536.50 1,997.45 323.74 647.48 971.22
UnitedHealthcare n/a n/a n/a 299.37 598.74 898.11
Western Health Advantage 767.01 1,534.02 1,994.23 n/a n/a n/a
PERS Choice 866.27 1,732.54 2,252.30 360.41 720.82 1,081.23
PERS Select 543.19 1,086.38 1,412.29 360.41 720.82 1,081.23
PERSCare 1,131.68 2,263.36 2,942.37 394.83 789.66 1,184.49
PORAC 774.00 1,623.00 2,076.00 513.00 1,022.00 1,635.00
March 12, 2020 E-2
PREMIUMS
2020 PEMHCA Monthly Premiums
Region 1
Non-Medicare Eligible Medicare Eligible
Medical Plan Single 2-Party Family Single 2-Party Family
Anthem Select $868.98 $1,737.96 $2,259.35 $388.15 $776.30 $1,164.45
Anthem Traditional 1,184.84 2,369.68 3,080.58 388.15 776.30 1,164.45
Blue Shield Access+ 1,127.77 2,255.54 2,932.20 n/a n/a n/a
Health Net SmartCare 1,000.52 2,001.04 2,601.35 n/a n/a n/a
Kaiser 768.49 1,536.98 1,998.07 339.43 678.86 1,018.29
UnitedHealthcare 899.94 1,799.88 2,339.84 327.03 654.06 981.09
Western Health Advantage 731.96 1,463.92 1,903.10 n/a n/a n/a
PERS Choice 861.18 1,722.36 2,239.07 351.39 702.78 1,054.17
PERS Select 520.29 1,040.58 1,352.75 351.39 702.78 1,054.17
PERSCare 1,133.14 2,266.28 2,946.16 384.78 769.56 1,154.34
PORAC 774.00 1,699.00 2,199.00 513.00 1,022.00 1,635.00
March 12, 2020 E-3
PREMIUMS
PEMHCA Monthly Premium Increases/(Decreases)
Bay Area/Region 1
Non-Medicare Eligible Medicare Eligible
Medical Plan 2018 2019 2020 2018 2019 2020
Anthem Select 9.3% (2.9%) 4.5% n/a n/a n/a
Anthem Traditional (6.5%) 20.1% 6.6% n/a (3.5%) 8.6%
Blue Shield (13.3%) 9.2% 16.2% n/a n/a n/a
Blue Shield NetValue 17.8% n/a n/a n/a n/a n/a
Health Net SmartCare 6.3% 4.4% 11.0% n/a n/a n/a
Kaiser 29.1% (1.5%) 0.0% 5.3% 2.3% 4.8%
UnitedHealthCare 9.3% n/a n/a 2.0% (9.5%) 9.2%
PERS Choice (3.6%) 8.2% (0.6%) (2.2%) 4.2% (2.5%)
PERS Select (2.5%) (24.3%) (4.2%) (2.2%) 4.2% (2.5%)
PERSCare (5.4%) 28.2% 0.1% (1.9%) 3.3% (2.5%)
PORAC 5.0% 5.4% 0.0% 5.0% 5.3% 0.0%
March 12, 2020 E-4
DATA SUMMARY
Participant Statistics by Bargaining Unit
June 30, 2019
FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total
Actives
• Count 5 85 207 69 7 508 49 930
• Avg Age 43.9 42.3 47.2 40.2 44.7 44.4 50.4 44.8
• Avg City Svc 17.9 12.4 10.2 9.7 17.8 10.1 18.3 10.8
• Avg PERS Svc 17.9 12.9 11.7 11.0 18.6 10.7 19.2 11.7
• Avg Salary $176,198 $121,901 $136,149 $143,180 $213,236 $87,088 $166,590 $110,969
• Total Salary43 $881 $10,362 $28,183 $9,879 $1,493 $44,241 $8,163 $103,201
Retirees44:
• Count 6 143 298 90 6 418 13 974
• Avg Age 63.1 70.6 70.7 66.3 55.0 70.8 60.2 70.0
• Avg Service
Ret Age 56.8 54.6 58.2 52.0 50.5 59.5 57.1 58.0
• Avg Disab Ret
Age 50.1 48.4 50.5 41.4 n/a 48.2 n/a 46.1
43 Amount in 000’s. Actual 2018/19 PERSable compensations.
44 Excludes retirees who have waived coverage.
March 12, 2020 E-5
DATA SUMMARY
Participant Statistics by Bargaining Unit
June 30, 2017
FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total
Actives
• Count 5 83 210 75 8 540 46 967
• Avg Age 46.6 43.5 48.1 38.8 44.8 45.5 51.1 45.6
• Avg City Svc 17.9 13.6 9.8 8.8 17.9 10.4 18.3 10.9
• Avg PERS Svc 18.0 14.5 11.7 9.9 18.9 11.1 18.8 11.9
• Avg Salary $151,335 $97,392 $115,469 $106,732 $178,663 $73,049 $125,547 $90,739
• Total Salary45 $757 $8,084 $24,248 $8,005 $1,429 $39,447 $5,775 $87,745
Retirees46:
• Count 5 139 290 103 5 408 9 959
• Avg Age 61.8 69.7 69.6 65.1 53.5 69.7 59.1 68.9
• Avg Service
Ret Age 56.4 54.5 57.9 52.4 50.4 59.0 56.3 57.7
• Avg Disab Ret
Age 50.1 48.6 50.4 40.9 n/a 48.0 n/a 45.9
45 Pay is annualized. Amount in 000’s.
46 Includes retirees under age 65 who have waived coverage.
March 12, 2020 E-6
DATA SUMMARY
Participant Statistics by CalPERS Pension Category
June 30, 2019
47 Actual 2018/19 PERSable compensations.
48 Excludes retirees who have waived coverage.
Miscellaneous Police Fire Total
Actives
• Count 761 76 93 930
• Average Age 45.5 41.2 42.5 44.8
• Average City Service 10.6 10.8 12.8 10.8
• Average PERS Service 11.5 12.1 13.3 11.7
• Average Salary $104,652 $153,105 $128,224 $110,969
• Total Salary (000’s)47 $79,640 $11,636 $11,925 $103,201
Retirees48:
• Count 707 107 160 974
• Average Age 70.7 65.8 70.1 70.0
• Avg Service Ret Age 59.1 51.8 54.5 58.0
• Avg Disability Ret Age 48.2 41.5 48.5 46.1
March 12, 2020 E-7
DATA SUMMARY
Participant Statistics by CalPERS Pension Category
June 30, 2017
49 Pay is annualized.
50 Includes retirees under age 65who have waived coverage.
Miscellaneous Police Fire Total
Actives
• Count 795 80 92 967
• Average Age 46.4 39.8 43.9 45.6
• Average City Service 10.6 10.0 13.9 10.9
• Average PERS Service 11.6 11.2 14.7 11.9
• Average Salary $86,643 $116,012 $104,155 $90,739
• Total Salary (000’s)49 $68,881 $9,281 $9,582 $87,745
Retirees50:
• Count 686 118 155 959
• Average Age 69.6 64.4 69.5 68.9
• Avg Service Ret Age 58.7 51.9 54.4 57.7
• Avg Disability Ret Age 48.0 41.0 48.7 45.9
March 12, 2020 E-8
DATA SUMMARY
Medical Plan Participation – June 30, 2019
All Retirees
Medical Plan Actives < 65 ≥ 65 Total
Miscellaneous/Safety M S M S M S M S
Anthem Select 6% 4% 5% 1% 1% 1% 2% 1%
Anthem Traditional 9% 1% 16% 13% 3% 2% 7% 7%
Blue Shield 1% 1% 3% 6% 0% 0% 1% 3%
Health Net SmartCare 2% 1% 1% 0% 0% 0% 1% 0%
Kaiser 62% 50% 33% 20% 29% 25% 30% 23%
UnitedHealthcare 0% 0% 0% 2% 20% 12% 14% 7%
Western Health Advantage 0% 1% 0% 0% 0% 0% 0% 0%
PERS Choice 17% 2% 31% 5% 19% 15% 23% 11%
PERS Select 2% 0% 1% 0% 0% 0% 1% 0%
PERSCare 1% 1% 7% 12% 26% 36% 21% 25%
PORAC 0% 40% 1% 42% 1% 8% 1% 23%
Total 100% 100% 100% 100% 100% 100% 100% 100%
March 12, 2020 E-9
DATA SUMMARY
Medical Plan Participation – June 30, 2019
Recent Retirees51
Medical Plan Actives < 65 ≥ 65 Total
Miscellaneous/Safety M S M S M S M S
Anthem Select 6% 4% 5% 3% 2% 2% 3% 2%
Anthem Traditional 9% 1% 13% 13% 6% 4% 8% 8%
Blue Shield 1% 1% 2% 5% 1% 0% 1% 2%
Health Net SmartCare 2% 1% 2% 0% 0% 0% 1% 0%
Kaiser 62% 50% 37% 33% 33% 22% 34% 27%
UnitedHealthcare 0% 0% 0% 0% 16% 4% 10% 2%
Western Health Advantage 0% 1% 0% 0% 0% 0% 0% 0%
PERS Choice 17% 2% 30% 0% 24% 7% 26% 3%
PERS Select 2% 0% 2% 0% 1% 0% 1% 0%
PERSCare 1% 1% 8% 3% 18% 43% 14% 24%
PORAC 0% 40% 1% 45% 1% 17% 1% 30%
Total 100% 100% 100% 100% 100% 100% 100% 100%
51 Under 65 only includes employees who retired on or after June 30, 2012; over 65 only includes retirees up to age 72. See
page E-8 for participation percentages for all retirees.
March 12, 2020 E-10
DATA SUMMARY
Medical Plan Participation – June 30, 2017
Recent Retirees52
Medical Plan53 Actives < 65 ≥ 65 Total
Miscellaneous/Safety M S M S M S M S
Anthem Select 7% 3% 1% 0% 0% 0% 0% 0%
Anthem Traditional 14% 4% 12% 12% 0% 0% 6% 7%
Anthem EPO 0% 0% 1% 0% 0% 0% 0% 0%
Blue Shield 4% 2% 14% 8% 1% 0% 0% 5%
Health Net SmartCare 2% 0% 0% 0% 0% 0% 0% 0%
Kaiser 56% 44% 26% 23% 35% 25% 31% 24%
UnitedHealthcare 1% 3% 7% 4% 28% 12% 18% 7%
PERS Choice 13% 1% 29% 1% 22% 5% 26% 3%
PERS Select 1% 0% 2% 0% 0% 0% 1% 0%
PERSCare 2% 1% 7% 3% 13% 39% 10% 16%
PORAC 0% 42% 1% 49% 1% 19% 1% 38%
Total 100% 100% 100% 100% 100% 100% 100% 100%
52 Under 65 only includes employees who retired on or after June 30, 2008; over 65 only includes retirees up to age 72.
53 All Blue Shield pre-Medicare retirees are assumed to switch to UnitedHealthcare when they are eligible for Medicare.
March 12, 2020 E-11
DATA SUMMARY
Active Medical Coverage – Miscellaneous
Medical Plan Single 2-Party Family Waived Total
Anthem Select 14 6 19 - 39
Anthem Traditional 25 12 24 - 61
Blue Shield 1 2 2 - 5
Health Net SmartCare 3 3 4 - 10
Kaiser 140 103 171 - 414
UnitedHealthcare - - - - -
Western Health Advantage - - 1 - 1
PERS Choice 25 33 58 - 116
PERS Select 4 4 2 - 10
PERSCare 1 2 3 - 6
PORAC - 1 - - 1
Waived - - - 98 98
Total 213 166 284 98 761
% as of June 30, 2019 28% 22% 37% 13% 100%
% as of June 30, 2017 27% 22% 39% 12% 100%
March 12, 2020 E-12
DATA SUMMARY
Active Medical Coverage – Safety
Medical Plan Single 2-Party Family Waived Total
Anthem Select 1 2 3 - 6
Anthem Traditional 1 1 - - 2
Blue Shield - - 1 - 1
Health Net SmartCare - - 2 - 2
Kaiser 21 11 48 - 80
UnitedHealthCare - - - - -
Western Health Advantage - - 1 - 1
PERS Choice 1 1 1 - 3
PERS Select - - - - -
PERSCare - - 1 - 1
PORAC 10 8 45 - 63
Waived - - - 10 10
Total 34 23 102 10 169
% as of June 30, 2019 20% 14% 60% 6% 100%
% as of June 30, 2017 21% 13% 60% 6% 100%
March 12, 2020 E-13
DATA SUMMARY
Retiree Medical Coverage54 - Miscellaneous
Medical Plan
Single 2-Party Family Total
<65 65+ <65 65+ <65 65+
Anthem Select 4 3 3 2 3 - 15
Anthem Traditional 14 3 14 8 5 5 49
Blue Shield 3 - 3 1 1 - 8
Health Net SmartCare 1 2 2 - - - 5
Kaiser 25 80 31 61 12 6 215
UnitedHealthcare - 64 - 34 - - 98
PERS Choice 30 51 23 42 11 3 160
PERS Select 3 - - 1 - - 4
PERSCare 8 74 6 58 1 1 148
PORAC 1 1 1 2 - - 5
Total 89 278 83 209 33 15 707
% as of June 30, 2019 13% 39% 12% 30% 5% 2% 100%
% as of June 30, 2017 13% 37% 12% 27% 4% 2% 100%
54 Approximately 68% of retirees have coverage in a Bay Area region plan. The rest are in other state regions or out of state.
March 12, 2020 E-14
DATA SUMMARY
Retiree Medical Coverage55 - Safety
Medical Plan
Single 2-Party Family Total
<65 65+ <65 65+ <65 65+
Anthem Select - 1 - 1 1 - 3
Anthem Traditional 2 - 6 2 7 1 18
Blue Shield 1 - 2 - 4 - 7
Health Net SmartCare - - - - - - 0
Kaiser 2 15 7 21 15 1 61
UnitedHealthcare - 12 1 6 1 - 20
PERS Choice 2 8 2 15 2 - 29
PERS Select - - - - - - 0
PERSCare 7 29 2 23 5 2 68
PORAC 7 3 17 9 25 - 61
Total 21 68 37 77 60 4 267
% as of June 30, 2019 8% 25% 14% 29% 22% 1% 100%
% as of June 30, 2017 11% 25% 13% 26% 21% 2% 100%
55 Approximately 69% of retirees have coverage in a Bay Area region plan. The rest are in other state regions or out of state.
March 12, 2020 E-15
DATA SUMMARY
Retirees Medical Coverage by Age – Miscellaneous
Age Single 2-Party Family Total
Under 50 - - 1 1
50-54 5 4 1 10
55-59 33 25 13 71
60-64 51 54 18 123
65-69 76 61 7 144
70-74 67 65 7 139
75-79 70 38 1 109
80-84 38 24 - 62
85 & Over 27 21 - 48
Total 367 292 48 707
Average Age 71.7 70.6 62.8 70.7
March 12, 2020 E-16
DATA SUMMARY
Retirees Medical Coverage by Age – Police
Age Single 2-Party Family Total
Under 50 2 1 3 6
50-54 1 1 7 9
55-59 4 5 9 18
60-64 7 9 7 23
65-69 9 8 1 18
70-74 4 8 - 12
75-79 5 4 - 9
80-84 4 1 - 5
85 & Over 5 2 - 7
Total 41 39 27 107
Average Age 70.0 67.7 56.8 65.8
March 12, 2020 E-17
DATA SUMMARY
Retirees Medical Coverage by Age – Fire
Age Single 2-Party Family Total
Under 50 - 1 2 3
50-54 2 2 6 10
55-59 2 8 15 25
60-64 3 10 11 24
65-69 4 9 1 14
70-74 5 13 - 18
75-79 12 15 2 29
80-84 13 11 - 24
85 & Over 7 6 - 13
Total 48 75 37 160
Average Age 76.1 71.8 58.6 70.1
March 12, 2020 E-18
DATA SUMMARY
Retirees Medical Coverage by Age – Total
Age Single 2-Party Family Total
Under 50 2 2 6 10
50-54 8 7 14 29
55-59 39 38 37 114
60-64 61 73 36 170
65-69 89 78 9 176
70-74 76 86 7 169
75-79 87 57 3 147
80-84 55 36 - 91
85 & Over 39 29 - 68
Total 456 406 112 974
Average Age 72.0 70.5 60.0 70.0
March 12, 2020 E-19
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
6/30/17 Valuation
6/30/19 Valuation
March 12, 2020 E-20
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 4 3 - - - - - 7
25-29 23 42 6 - - - - 71
30-34 19 50 22 1 - - - 92
35-39 10 31 27 23 5 1 - 97
40-44 1 31 21 19 27 5 - 104
45-49 1 20 18 17 23 13 3 95
50-54 2 14 21 15 26 19 12 109
55-59 3 15 11 25 19 20 23 116
60-64 1 5 8 17 4 8 7 50
≥ 65 - 1 2 2 4 3 8 20
Total 64 212 136 119 108 69 53 761
March 12, 2020 E-21
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 - - - - - - - -
25-29 - 7 - - - - - 7
30-34 - 6 1 1 - - - 8
35-39 1 2 7 11 - - - 21
40-44 - 2 5 4 4 3 - 18
45-49 - - 1 3 2 2 1 9
50-54 - 1 1 - 2 1 2 7
55-59 - 2 - - 1 1 - 4
60-64 - - - 1 1 - - 2
≥ 65 - - - - - - - -
Total 1 20 15 20 10 7 3 76
March 12, 2020 E-22
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 3 - - - - - - 3
25-29 2 2 2 - - - - 6
30-34 3 6 7 1 - - - 17
35-39 - 1 5 5 - - - 11
40-44 - 2 3 4 2 - - 11
45-49 - 1 2 4 6 8 - 21
50-54 - - - 1 6 8 3 18
55-59 - - - - 3 2 - 5
60-64 - - - - - - - -
≥ 65 - - - - - - 1 1
Total 8 12 19 15 17 18 4 93
March 12, 2020 E-23
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 3 - - - - - 10
25-29 25 51 8 - - - - 84
30-34 22 62 30 3 - - - 117
35-39 11 34 39 39 5 1 - 129
40-44 1 35 29 27 33 8 - 133
45-49 1 21 21 24 31 23 4 125
50-54 2 15 22 16 34 28 17 134
55-59 3 17 11 25 23 23 23 125
60-64 1 5 8 18 5 8 7 52
≥ 65 - 1 2 2 4 3 9 21
Total 73 244 170 154 135 94 60 930
March 12, 2020 E-24
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
Total
6/30/17 Valuation
6/30/19 Valuation
March 12, 2020 E-25
DATA SUMMARY
0
50
100
150
200
250
300
350
0-4 5-9 10-14 15-19 20-24 >25
Nu
m
b
e
r
Service
Active Service Distribution
Total
6/30/17 Valuation
6/30/19 Valuation
March 12, 2020 E-26
ACTUARIAL ASSUMPTIONS
June 30, 2017 Valuation June 30, 2019 Valuation
Valuation Date June 30, 2017
ADC56 for Fiscal Years
2018/19 & 2019/20.
(end of year)
1 year lag
June 30, 2019
ADC for Fiscal Years
2020/21 & 2021/22.
(end of year)
1 year lag
Funding Policy Full Pre-funding through
CalPERS trust (CERBT)
Strategy #1
Same
General Inflation 2.75% Same
Discount Rate 6.75%, net of expenses,
based on CERBT Strategy #1
Same
Payroll Increases Aggregate Increases – 3.00%
Merit Increases – CalPERS
1997-2015 Experience Study
Same
56 Actuarially Determined Contribution
March 12, 2020 E-27
ACTUARIAL ASSUMPTIONS
June 30, 2017 Valuation June 30, 2019 Valuation
Increase to
Group 3 Flat
Dollar Caps
½ of Medical Trend, not less
than assumed inflation
(2.75%)57
Same
ACA Excise Tax Estimate by 2% load on cash
subsidy
Remove load due to
December 2019 repeal of
Excise Tax58
Mortality,
Termination,
Disability
CalPERS 1997-2015
Experience Study
Mortality: CalPERS 1997-
2011 Experience Study
Mortality improvement
Society of Actuaries Scale
MP-17
Same
Mortality: CalPERS 1997-
2015 Experience Study
Mortality improvement
Society of Actuaries Scale
MP-19
57 Increase is for purposes of financial projection only and does not imply any obligation to increase the cap in the future.
58 Note for GASBS 75 purposes, the Total OPEB Liability as of Measurement Date (MD) 6/30/19 will include a 2% load, as
legislation passed after the MD may not be taken into account.
March 12, 2020 E-28
ACTUARIAL ASSUMPTIONS
June 30, 2017 Valuation June 30, 2019 Valuation
Retirement CalPERS 1997-2015
Experience Study
Misc Fire & Police
Tier 1 2.7%@55 3%@50
Exp. RA 60.4 54.4 & 56.3
Tier 2 2%@60 3%@55
Exp. RA 60.8 56.0 & 57.3
PEPRA 2.5%@67 2.7%@57
Exp. RA 62.6 56.8 & 57.1
CalPERS 1997-2015
Experience Study
Misc Fire & Police
Tier 1 2.7%@55 3%@50
Exp. RA 60.3 56.4 & 55.2
Tier 2 2%@60 3%@55
Exp. RA 60.7 57.4 & 56.6
PEPRA 2.5%@67 2.7%@57
Exp. RA 62.4 57.3 & 57.0
March 12, 2020 E-29
ACTUARIAL ASSUMPTIONS
June 30, 2017 Valuation June 30, 2019 Valuation
Medical Trend Increase from Prior Year Year Non-Medicare Medicare
2017-18 Actual Premiums/Claims
2019 7.50% 6.50%
2020 7.50% 6.50%
2021 7.25% 6.30%
2022 7.00% 6.10%
2023 6.75% 5.90%
2024 6.50% 5.70%
2025 6.25% 5.50%
2026 6.00% 5.30%
2027 5.80% 5.15%
2028 5.60% 5.00%
2029 5.40% 4.85%
2030 5.20% 4.70%
2031-35 5.05% 4.60%
2036-45 4.90% 4.50%
2046-55 4.75% 4.45%
2056-65 4.60% 4.40%
2066-75 4.30% 4.20%
2076+ 4.00% 4.00%
Increase from Prior Year Year Non-Medicare Medicare
2019-20 Actual Premiums/Claims
2021 7.25% 6.30%
2022 7.00% 6.10%
2023 6.75% 5.90%
2024 6.50% 5.70%
2025 6.25% 5.50%
2026 6.00% 5.30%
2027 5.80% 5.15%
2028 5.60% 5.00%
2029 5.40% 4.85%
2030 5.20% 4.70%
2031-35 5.05% 4.60%
2036-45 4.90% 4.50%
2046-55 4.75% 4.45%
2056-65 4.60% 4.40%
2066-75 4.30% 4.20%
2076+ 4.00% 4.00%
March 12, 2020 E-30
ACTUARIAL ASSUMPTIONS
June 30, 2017 Valuation June 30, 2019 Valuation
Medical Plan at
Retirement &
Retirees Attaining
age 65
Miscellaneous: <65 65+
Anthem Tradition 10% 0%
Blue Shield 15% 0%
Kaiser 30% 35%
PERS Choice 30% 20%
PERSCare 5% 15%
United HC 10% 30%
Safety: <65 65+
Anthem Tradition 15% 0%
Blue Shield 10% 0%
Kaiser 20% 25%
PERS Choice 0% 5%
PERSCare 0% 40%
PORAC 50% 20%
United HC 5% 10%
Based on Plan experience
Miscellaneous: <65 65+
Anthem Tradition 20% 10%
Blue Shield 0% 0%
Kaiser 40% 35%
PERS Choice 30% 25%
PERSCare 10% 15%
United HC 0% 15%
Safety: <65 65+
Anthem Tradition 15% 5%
Blue Shield 5% 0%
Kaiser 35% 25%
PERS Choice 0% 5%
PERSCare 0% 45%
PORAC 45% 15%
United HC 0% 5%
Based on Plan experience
March 12, 2020 E-31
ACTUARIAL ASSUMPTIONS
June 30, 2017 Valuation June 30, 2019 Valuation
Participation at
Retirement
Groups 3 & 4: 90%
Based on Plan experience
Group 3: 98%
Group 4: if eligible for City
contribution: 95%; if not:
0%
Based on Plan experience59
Spousal
Coverage at
Retirement
Currently covered: based on
current elections
Currently waived: 80%
70% assumed to cover
spouses
Based on Plan experience
59 Actual participation percentage for Group 3 since 6/30/17 is 100% Miscellaneous. Note there are no active Safety members
in Group 3. Actual participation percentages for Group 4 since 6/30/17 are 83% Miscellaneous and 92% Safety, or 84%
overall. Actual participation for Group 3 and Group 4 since 6/30/17 is 88% overall. Group 4 still has limited actual
experience. We recommend continued monitoring for Group 4.
March 12, 2020 E-32
ACTUARIAL ASSUMPTIONS
June 30, 2017 Valuation June 30, 2019 Valuation
Family Coverage
at Retirement
Actives
• Misc : 15% until age 65
• Safety : 40% until age 65
Retirees: based on current
elections until age 65
Actives
• Misc: 15% until age 65
5% age 65-75
• Safety: 50% until age 65
5% age 65-80
Based on Plan experience
Waived Retiree
Re-election
0% Same
Surviving Spouse
Participation
100% Same
CalPERS Service Actual data Same
Spouse Age Actives – Males 3 years older
than females
Retirees – Males 3 years
older than females if spouse
birth date not available
Same
March 12, 2020 E-33
ACTUARIAL ASSUMPTIONS
June 30, 2017 Valuation June 30, 2019 Valuation
Medicare
Eligible Rate
Actives and retirees hired <
4/1/86:
• Miscellaneous – 80%
• Safety – 90%
Actives and retirees hired >
4/1/86: 100%
Retirees < 65 with unknown
hire date: 90%
Everyone eligible for
Medicare will elect Part B
coverage
Same
March 12, 2020 E-34
ACTUARIAL ASSUMPTIONS
June 30, 2017 Valuation June 30, 2019 Valuation
Retirees Missing
Fund
Assumed to have the same
fund as the prior valuation
In the prior valuation,
assumed to be based on
(then) current active
percentages: 75% GF, 15%
Elec, and 10% UTL60
Same
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 or
Fire60
Actual bargaining units
provided by the City for all
covered retirees
60 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.
March 12, 2020 E-35
ACTUARIAL ASSUMPTIONS
June 30, 2017 Valuation June 30, 2019 Valuation
Retirees Missing
Department
Assumed to have the same
department as the prior
valuation
In prior valuation, liability
for retirees assumed to be
75% GF allocated
proportionately across all
Departments
Same
Future New
Participants
None – Closed Group Same
March 12, 2020 E-36
ACTUARIAL ASSUMPTIONS
June 30, 2017 Valuation June 30, 2019 Valuation
Sample Medical
Claims Costs
2020
Sample estimated monthly claims costs:
Bay Area – Non-Medicare Eligible
Kaiser (HMO) PERS Choice (PPO) PORAC
Age M F M F M F
55 $849 $988 $861 $1,001 $987 $1,154
60 1,071 1,122 1,105 1,149 1,256 1,317
65 1,214 1,215 1,264 1,254 1,429 1,431
70 1,292 1,287 1,351 1,334 1,525 1,519
75 1,358 1,353 1,423 1,405 1,605 1,599
80 1,427 1,422 1,499 1,480 1,689 1,682
85 1,560 1,554 1,645 1,624 1,851 1,843
Bay Area – Medicare Eligible
Kaiser (HMO) PERS Choice (PPO) PORAC
Age M F M F M F
65 $308 $309 $282 $344 $404 $489
70 328 327 307 376 439 533
75 345 344 322 394 461 560
80 362 361 337 413 483 588
85 396 395 368 451 527 642
March 12, 2020 E-37
RESULTS BY FUND
Actuarial Obligations – June 30, 2019
(Amounts in 000’s)
FUND AAL Assets61 UAAL
Airport $ 565 $ 277 $ 288
CIP 3,686 1,809 1,877
Elec62 27,327 13,411 13,916
Gas62 10,274 5,042 5,232
GF 162,240 79,616 82,624
ISF – Technology 4,231 2,076 2,155
ISF – Vehicle 1,900 932 968
ISF – Printing & Mailing 90 44 46
ISF – Workers Comp 110 54 56
PARKING 433 212 221
Refuse 4,591 2,253 2,338
Storm Drain 1,992 978 1,014
Water62 8,279 4,063 4,216
WWC62 3,629 1,781 1,848
WWT 12,122 5,949 6,173
Total 241,469 118,497 122,972
61 Assets allocated in proportion to AAL.
62 AAL for UTL employees allocated to Elec, Gas, Water, and WWC in proportion to each Fund’s AAL
March 12, 2020 E-38
RESULTS BY FUND
Actuarially Determined Contribution (ADC)
(Amounts in 000’s)
FUND 2020/21 2021/22
Airport $ 46 $ 48
CIP 292 302
Elec62 1,549 1,593
Gas62 662 700
GF 9,621 9,902
ISF – Technology 360 368
ISF – Vehicle 160 165
ISF – Printing & Mailing 3 3
ISF – Workers Comp 15 15
PARKING 59 60
Refuse 217 223
Storm Drain 124 132
Water62 493 508
WWC62 269 277
WWT 696 717
Total 14,566 15,013
March 12, 2020 E-39
RESULTS BY GF DEPARTMENT
Actuarial Obligations – June 30, 2019
(Amounts in 000’s)
GF Department AAL Assets63 UAAL
ASD $ 8,892 $ 4,363 $ 4,529
ATT 2,429 1,192 1,237
AUD 422 207 215
CLK 774 380 394
COU 1,208 593 615
CSD 16,209 7,955 8,254
DSD 2,431 1,193 1,238
FIR 48,185 23,647 24,538
HRD 2,803 1,375 1,428
LIB 6,224 3,054 3,170
MGR 2,431 1,193 1,238
PLA 6,537 3,208 3,329
POL 46,778 22,955 23,823
PWD 16,917 8,301 8,616
Total 162,240 79,616 82,624
63 Assets allocated in proportion to AAL.
March 12, 2020 E-40
RESULTS BY GF DEPARTMENT
Actuarially Determined Contribution (ADC)
(Amounts in 000’s)
GF Department 2020/21 2021/22
ASD $ 572 $ 589
ATT 147 152
AUD 35 36
CLK 45 46
COU 67 69
CSD 967 995
DSD 218 224
FIR 2,505 2,580
HRD 186 192
LIB 498 513
MGR 166 170
PLA 373 384
POL 2,881 2,964
PWD 961 988
Total 9,621 9,902
March 12, 2020 E-41
DEFINITIONS
Present Value of Benefits
March 12, 2020 E-42
DEFINITIONS
Actuarially
Determined
Contribution
(ADC)
Contribution for the current period including:
• Normal Cost
• Administrative expenses
• Amortization of:
Initial Unfunded AAL
AAL for plan, assumption, and method changes
Experience gains/losses (difference between expected and actual)
Contribution gains/losses (difference between ADC and actual)