Loading...
HomeMy WebLinkAboutReso 1979-9503RESOLUTION NO. 9503 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING PROPOSAL OF COATES, HERFURTH, AND ENGLAND FOR ACTUARIAL EVALUATION, AND APPROPRIATING FUNDS THEREFOR res~ The City Council of the City of Chula Vista does hereby >lve as follows: NOW, THEREFORE, BE IT RESOLVED by the City Council of the Cit of Chula Vista that that certain proposal submitted by Coates, Her urth, and England, Actuaries and Consultants, for an actuarial eva uation of the PERS 1/2 at 55 and 2~ at 50 Local Safety Member Ret rement programs, as contained in their letter of February 9, 197 , a copy of which is attached hereto and by reference made a par hereof, the same as though fully set forth herein be, and the same is hereby accepted anal approved. BE IT FURTHER RESOLVED that the sum of $4,050 be, and the same is hereby appropriated from the unappropriated balance of he General Fund to be deposited in Account 100-0210-5201 from whi h the above said amount is then authorized to be expended for the above purpose. Pre ented by Approved as to form by ,~~-~~~ -~'~~/~ Lan F. Co e, City Man ager George D. indberg, City Attorne ADOPTED AND APPROVED by the CITY COUNCIL of the CITY OF CH A VISTA, CALIFORNI A, this 20th day of February , 1979 , by the following vote, to-wit: AY S: Councilmen Scott, Cqx, Egdahl, Hyde, Gillow NA ES: Councilmen None AB ENT: Councilmen None ~~ ' ~+ . ,~ Mayor of the City of Chula Vista AT ES L1 ~' i C erk ST TE OF CALIFORNIA) CO NTY OF SAN DIEGO) ss. CI Y OF CHULA VISTA) I, , City Clerk of the Ci y of Chula Vista, Cali orn a, DO HEREBY CERTIFY that the above is a ull, true and correct copy of Resolution No. and that the sa e has not been amended or repealed. DATED City Clerk 1-30-79 Request for Proposal City of Chula Vista Actuarial Evaluation 2 @ 55 versus 2% @ 50 Th~ City of Chula Vista is seeking an independent actuarial evaluation of the fi ancial and other impacts contingent to a change in pension benefits for its Fi e and Police personnels Specifically, the City desires a comparison of the Pu lic Employees' Retirement System, Local Safety Member 2 @ 55 and 2% @ 50 pro- gr mso Primary emphasis is to be placed upon both short and long range employer co t differentials. Ov rview Ch la Vista is a Charter City and the second largest municipality in San Diego Co nty. It has a population of approximately 80,000 and encompasses some 20 sq are miles. Th City operates under the Council-Manager Plan and is governed by afive-member Ci y Council, one of whom is a generally elected Mayor, Twelve (12) departments re ort to the City Manager. The total City budget for Fiscal 1978-79 is $17,317,480 an there are 458 total full-time positions. Th Fire Department mans four (4) stations and five (5) engine companies. A to al of 64 sworn employees is primarily under a three-platoon, 56 hour/week duty sc edule. There are 93 peace officers in the Police Department who work four 10}hour days. Al 12 safety employees in the City are under the PERS One-Half at age 55 Retire- ; Program (See Attachment I)o Currently, the Em to er Contribution Rate is X42% of an annual payroll base of approximately $3 million. Employee 503 -2- contributions are determined by the age of entry into the safety service and range between 5.64% and 12e02%. As of June 30, 1977, there were 158 Active, 13 Inactive and 32 Retired members. Scope of Work During the past two years both the local Firefighters Association and Peace Officers Association have pressed for an improvement in pension benefits. The primary objective has been to obtain the 2% @ 50 "CHP" Retirement Program. The City has resisted such a change for several reasons, mostly related to employer cost. Actuarial valuations have been requested from, and supplied by, PERS in Sacramento. However, only one (1) year contribution rate quotes were made available (See Attachment II). The City Council is concerned about both near and extended term expense obligations. As a result, it is desired that a consultant firm be retained which can per- form the following tasks: 1) Provide a professional assessment of the performance of the State Public Employees' Retirement System. a) Does it conform with relevant provisions of the Employee Retire- ment Income Security Act of 1974 even though this law does not as yet govern the public sector? b) Are reasonable actuarial. assumptions made (e.g., mortality rates, employee turnover, length of service before retirement, interest on investments)? c) Is there sufficient control over unfunded pension liabilities? 2) Project the long term employer expense associated with City participa- tion in either the PERS 2 @ 55 or 2% @ 50 pension plans, and indicate the differential between the two. so3 -3- a) Would the cost gap between plans remain constant? b) Are existing contribution rates realistic in light of salary and investment return trends? 3) Gauge the potential impact of special considerationso a) Passage of AB 1901 (1970 regarding employee sharing of the cost of optional benefits. b) Passage of AB 3618 (1978) permitting employers to reduce member contributions. c) Disability retirement experience under z @ 55 versus 2% @ 50. Criteria for Proposal Acceptance The prospective contractor must meet the following standards of technical com- petence and suitability: 1) Have adequate personnel and financial resources for performance, or have the ability to obtain Such resources as required during per- formance. 2. Have the necessary experience, organization, professional skills and facilities or have the ability to obtain them, 3. Demonstrate the qualifications of the proposed project leader and assure his or her principal involvement in the project. 4. Have a satisfactory record of performance in developing and imple- menting similar projects. 5. Be able to comply with the designated time schedule and cost guide- lines. 6. Be an Equal Opportunity Employer. 7. Have the requisite eligibility to receive an award under applicable laws and regulations. 5 -4- ntents of Proposal ubmitted proposals shall contain the following information: An introduction to the proposal, including a statement of the con- sultant's understanding of the project. ?) An overall work plan for achieving the objectives of the project and a description of the analytical steps involvedo 3) An explanation of the role of the contractor as related to City staff, including the division of wark between the contractor and City staff. 4) Project costs including a breakdown between billable expenses and direct consultant personnel costs. 5) Identification and background of consultant personnel contributing to the project. 6) A list of at least three (3) former clients (including addresses and telephone numbers) for whom the consultant has performed services similar to those described in this Request for Proposal. 7) The proposal shall be signed by an individual authorized to bind the contractor, and shall contain a statement to the effect that the proposal is a firm offer fora thirty (30) day (or more) period. It should include the name, title, address and telephone number of individuals with authority to negotiate, and contractually bind the firm. Time Schedule and Contract Pric 1) All contract work must be completed, and a final report submitted, by March 14, 1979. It is estimated that analysis can begin on or about February 21, 1979. -5- Final costs for consultant services are subject to negotiation but shall not exceed a maximum of X5,000. At the time of contract negotiation, a payment schedule will be agreed upon between the City of Chula Vista and the contractor. Complete payment will be tied to the successful completion of all work elements to the City's satisfaction. Limitations 1) This Request for Proposal daes not commit the City to award a contract nor reimburse the proposer for costs incurred in submitting a proposal. The City of Chula Vista reserves the right to accept or reject any or all proposals received as a result of this request, to negotiate with any qualified source, or to cancel in part or in its entirety, a Request for Proposal if it is in the best interest of the City to do so. The project director may require the proposer selected to participate in negotiations, and to submit such price, technical or other revisions to a proposal as may result from negotiationso 2) The City will not provide financial assistance to a contractor beyond the negotiated fee, but will collaborate with the contractor and give all reasonable assistance in the collection of information. 3) All proposals, reports and other pertinent data and materials are the sole property of the City of Chula Vistao As such, they may not be used or reproduced in any form without the written permission of the City Manager. S'O a -6- response to Request for Proposal our (4) copies of the completed proposal must be received by the City of :hula Uista by 5:00 p. m, on Monday, February 12, 1979, The Civic Center is located at 276 Fourth Avenue, Chula Vista, California 92010. Proposals should be directed to L. J. Wittenberg, Deputy City Manager, who will act ~s project director. Mr. Witten':berg may be contacted for further informa- tion at telephone number (714) 575-5031. It is anticipated that selection of the consultant will occur on or about February 14, 1979. A contract will then be negotiated before February 20, 1979. r~ PROPOSAL FOR CITY OF CHULA VISTA ACTUARIAL EVALUATION @ 55 versus 29'0 @ 50 February 9, 1979 By Coates, Herfurth and England COATES, HERFU RTH 8t ENGLAND. ACTUARIES AND CONSULTANTS COATES, HERFURTH & ENGLAND ACTUARIES AND CONSULTANTS 320 CALIFORNIA STREET SAN FRANCISCO 94104 TE~LE PHONE (415) 433-4440 February 9, 1979 Mr. L.J. ~C~'ittenberg, Deputy City Manager City of Chula Vista 276 Fourth Avenue Chula Vista, California 92010 Dear Mr. Wittenberg: \Ve are pleased to submit four copies of our proposal to provide an actuarial evaluation of the retirement program (present as well as proposed) of the Fire and Police members of the City of Chula Vista, as outlined in the request for proposal received by us on February 1. After review of our proposal, if you have any questions not completely covered would you please let us know. We thank you for the opportunity given us to submit our proposal for this assignment. Yours very truly, COATES, HERFURTH & ENGLAND Actuaries and Consultants Robert D. Drisl<o RDD:wpb Encl. . A DIVISION of COMPENSATION & CAPITAL INCORPORATED A TOTAL COMPENSATION CONSULTING FIRM CHICAGO LAKE FOREST. ILL. SAN FRANCISCO WEST CHESTER, PA. A. Purpose and Objectives of the Assignment Our understanding of the assignment is the following: 1. Provide a professional assessment of the performance of the State Public Employees' Retirement System relative to the Police and Fire Program of the City of Chula Vista to determine the following: a. Does the performance conform with relevant provisions of the Employment Retirement Income Security Act of 1974 even though this law does not as yet govern the public sector? b. Are reasonable actuarial assumptions made (e.g., mortality rates, employee turnover, length of service before retirement, interest on investments)? c. Is there sufficient control over unfunded pension liabilities? 2. Project the long term employer expense associated with City par- ticipation in either the PERS %z ~d 55 or 2°~ ~ 50 pension plans, and indicate the differential between the two. a. \Vould the cost gap between plans remain constant? b. Are existing contribution rates realistic in light of salary and investment return trends? 3. Gauge the potential impact of special considerations. a. Passage of AB 1901 (1978) regarding employee sharing of the cost of optional benefi s. b. Passage of AB 3618 (1978) permitting employers to reduce mem- ber contributions. c. Disability retirement experience under % ~cl 55 versus 2°S @ 50. COAT ES. HERFU RTH 8c ENGLAND. ACTUARIES AND CONSULTANTS -1- February 9, 1979 B. \C'ork Plan for Achieving the objectives of the Project The purpose and objective as stated in Section A above is a restatement of that covered in your "Request for Proposal." The words and descriptions used by the City appear to us to be clear as to meaning. We believe the actual carrying out of the assignment will require considerable cooperation from the City (as to specific data and other information needed) and from PERS (as to sufficient detail used by them) so that our review can be meaningful and be as complete as possible. An outline of the necessary steps of the assignment and some of the data needed is set forth below: 1. From the City: a. A membership listing of active members with enough information to use as a basis of judging the City contribution levels required under both of the Safety h-lember pension formulas. b. Details as to present inactive (deferred) and retired membership for purposes of comparing experience as to service retirement with disability retirement. c. Asset information (active and retired). d. Termination information of members over the past several years. e. Salary information (present as well as approximate past changes for the group). f. All of the above will be needed with sufficient detail to provide us a basis of making necessary comparisons. g. Copies of AB 1901 and AB 3618, along with the City's thoughts as to what it expects to do with its choices. COAT ES. HERFU RTH & ENGLAND, ACTUARIES AND CONSVLTANTS -2- February 9, 1979 2. From PERS: a. Sufficient detail as to all assumptions used in arriving at the required City contribution rates (withdrawal, death, disability, service, mortality after retirement, funding method, interest assumption, salary scales and any other items we will specifically need from them}. b. A copy of the 2°ro @ 50 plan so we can, in detail, make our comparisons. c. A statement as to the level of cost of living benefit adopted by the City of Chula Vista. The above items are set out here in somewhat general form but we will be most specific in what we need and from whom if we are selected to make the study. C. Possible Problems in Carrying Out the Assignment ~~/e are fully aware the City is interested in solutions and not in problems as to this assignment. However, we have made many actuarial studies of public pension plans and feel that the required timing of the assignment can only be met if the complete information needed from the City and from PERS is provided on a timely basis. Vi/e have worked with PERS before and are aware that while they cooperate to the fullest, it is still possible to use much of the three week period only trying to collect the necessary information. The assignment will require a solid two weeks on our part and with overtime and perseverance we feel we will be able to complete the assignment on time if we have the two week interval in which to work. COATES. HERFU RTM Q ENGLAND, ACTUARIES AND CONSULTANTS -3- February 9, 1979 D. Estimated Fees Our fees for the assignment will be as follows: Direct consultant persannel costs $3,850 Billable expenses 200 Total fees $4,050 E. Identification and Background of Personnel 1. Robert D. Drisko will be in charge of the project and will be involved in a good part of the assignment. He is a Fellow of the Society of Actuaries and a Member of the Academy of Actuaries. He has been with the firm since 1951 and has been in charge of public plan actuarial activities for the firm for the past seven years. Prior to that period (for another 10 years) the management of the public pension work was shared by him and another consultant. 2. The firm currently does regular actuarial investigations (experience analyses) and evaluations of 12 California County (1937 Act) plans. \C'e serve the cities of San Francisco, San Jose and Fresno. \C'e also serve as consultants the States of Utah and \YJyoming. We have served the City of Seattle since 1929 when the firm put in its retirement programs. 3. In addition to Mr. Drisko, a team of four members serves our public retirement clients. The team captain has several years of actuarial background and is extremely capable. Her name is 1<rys Upstill. She is an enrolled actuary and is extremely competent and conscientious. X03 COAT ES. HERFV RTH & ENGLAND, ACTUARIES AND CONSULTANTS _4_ Februar~~ 9, 1979 F. Criteria for Proposal Acceptance ~C~e anticipate no difficulty in being able to meet every one of the standards of technical competence and suitability as set forth in the City's request for proposal. Because we have made so many actuarial evaluations of public pension plans ourselves, we have had to go through all the steps PERS had to go through to actually make their own study of your retirement program. We are an Equal Opportunity Employer and the composition of the firm as to sex, national origin and generally any other breakdown more than meets those requirements. As a principal in our firm, Robert Drisko can sign contracts, negotiate fees or whatever else the City feels is required from their point of view. The above fee quotation is a firm offer for the next several months, providing the assignment itself does not change substantially. G. Present Public Clients (Representative List) The following is a partial list of some of our current clients who would be in a position to answer any questions or concern the City might have as to our ability to handle the assignment and to complete it on a timely basis. We would strongly urge you to contact any or all of them for their comments on our actuarial and consulting ability. 1. San Mateo County Ross Conti (415-364-5600 Ext. 23S 1) County Treasurer County of San Nlateo County Government Center Redwood City, California 94063 S b~ COAT ES, HERFU RTH ec ENGLAND. ACTUARIES AND CONSULTANTS -5- February 9, 1979 2. Fresno County James B. ~~1almstrom (209-488-3482) Treasurer -Tax Collector Fresno County Employees' Retirement Association Post Office Box 747 Fresno, California 93712 3. City and County of San Francisco Daniel 1\1attrocce (415-558-3991) San Francisco City and County J Employees' Retirement System 770 Golden Gate Avenue San Francisco, California 94102 4. Alameda County David L. Tobias (415-874-6757) Retirement Administrator County of Alameda Employees' Retirement Association 1221 Oak Street Oakland, California 94612 5. Sacramento County Jack L. Depew (916-440-6744) County Treasurer County of Sacramento Employees' Retirement Association P.O. Box 1703 Sacramento, California 95803 Itilany other current cases can be listed if you so desire. As one of the two main consultants to the 20 1937 Act County Retirement Plans, we would recommend that you contact either Richard Jarvis (San Diego County Retirement System) or Joseph Kase (long the counsel assigned to the San Diego County Retirement System). Either of these men should be able to support our contention that Robert Drisko is an acceptable project director for such an actuarial assignment and that the firm itself is fully capable of completing the assignment on time and properly and clearly explaining the results of the study. COATES, HERFU RTH 8t ENGLAND, ACTUARIES AND CONSULTANTS -6- February 9, 1979 H. Timing of Assignment \C~e realize the completion of the assignment has a very short deadline. Even so, we feel if the necessary information is quickly made available by the City and by PERS, we will complete the study and submit the report within the deadlines set. COATES, HERFU RTH f~ ENGLAND. ACTUARIES AND CONSVLTA NTS -7- February 9,1979 S a,3 Form No. F-229 12/73 CERTIFICATE OF CITY/DIRECTOR OF FINANCE Certification'of Unappropriated Balance 00 021015201 I HEREBY CERTIFY that the money required for the appropriation of funds fpr the purpose set forth in the attached resolution is available in the Treasury, or is anticipated to come into the Treasury, and is otherwise unappropriated. Amount S 4,050.00 Fund General Purpose Actuarial Evaluation - Bidder Coates, Herfurth and England Director of Finance The City of Chula Vista Date 2/19/79 By Certification of Unencumbered Balance I HEREBY CERTIFY that the indebtedness and obligation to be incurred by the contract or agreement authorized by the attached resolution can be incurred without the violation of any of the provisions of the Charter of the City of Chula Vista, or the Constitution or the ~.aws of the State of California, that sufficient monies have been appropriated for the purpose of said contract, that sufficient monies to meet the obligations of the contract are actually in the Treasury, or are anticipated to come into the Treasury to the credit of the appropriation from which the same are to be drawn., and that said monies now actually in the Treasury, together with the monies anticipated to come into the Treasury, to the credit of said appropriation are otherwise unencumbered. Amount Not to Exceed $ Director of Finance The City of Chula Vista Date By Fund Dept./Activity Purpose Bidder Certificate No. 59 S o3