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HomeMy WebLinkAboutBICKMORE & ASSOCIATES, INC.-2014INSURANCF ON FELL WORK MAY PROGEEID UNTIL INSURANCE LXPIR N- 2014 -09$ %at'- /S 'f/f CLERK OF COUNC DATA M � t�1 AGREEMENT FOR PROVISION OF ACTUARIAL VALUATION SERVICES ( FOR OTHER POSTEMPLOYMENT BENEFITS (OPEB) ab THIS AGREEMENT, made and entered into this 3`1 day of June, 2014 by and between Bickmore & Associates, Inc. (hereinafter "Consultant'), and the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California (hereinafter "City "). RECITALS A. The City desires to retain a consultant having special skill and knowledge in the field of actuarial valuation of other post - employment (OPEB) liabilities under GASB 45. B. Consultant represents that Consultant is able and willing to provide such services to the City. C. In undertaking the performance of this Agreement, Consultant represents that it is knowledgeable in its field and that any services performed by Consultant under this Agreement will be performed in compliance with such standards as may reasonably be expected from a professional consulting firm in the field. NOW THEREFORE, in consideration of the mutual and respective promises, and subject to the terms and conditions hereinafter set forth, the parties agree as follows: I. SCOPE OF SERVICES Consultant shall provide an actuarial valuation of other post-employment (OPEB) liabilities under GASB 45 for the City of Santa Ana as set forth in the Consultant's Proposal dated April 17, 2014, attached hereto as Exhibit "A" and incorporated by reference. 2. REPRESENTATIVES For purposes of implementing this Agreement, the representative of City shall be the Executive Director of the Finance and Management Services Agency, or his designated representative, and the representative of the Consultant shall be Catherine MacLeod or her designated representative. Except as may be otherwise stated herein, such representatives shall have the authority to act on behalf of their respective parties in carrying out the terms of this Agreement. 3. DELIVERY OF WORK PRODUCT - OWNERSHIP Consultant warrants and represents that it has the absolute right to enter into and perform this Agreement and will perform its obligations hereunder in accordance with standards and practices prevailing in the industry. Consultant's contribution to the Project, including works to be produced by Consultant hereunder, will not infringe or misappropriate the proprietary or personal rights of any third person or party. Consultant shall deliver to City any work product which results from the services provided. Said work product shall be submitted in hard copy and produced in a form compatible with City's information systems, as agreed between the Project Manager and Consultant. In regard to all material produced as a deliverable under this Agreement, including but not limited to records, papers, drawings, specifications, programs, systems and other materials prepared by Consultant, Consultant agrees, for itself and its affected officers, employees, agents, contractors, and volunteer workers, that (a) other such material shall be the property of the City, and may not be copyrighted without prior review from the City, and (b) the authors of all such material, whether copyrighted or not, award to the City, and to its officers, agents and employees acting within the scope of their official duties, as a condition of payment to the Consultant, a royalty -free, nonexclusive, irrevocable license throughout the world for governmental purposes to disclose, publish, translate, reproduce, and use such materials. 4. COMPENSATION a. City agrees to pay, and Consultant agrees to accept as total payment for its services, a sum not to exceed $15,600 ($14,800 for Actuarial Valuation Report plus $800 for one optional in- person meeting) during the term of this Agreement. b. Payment by City shall be made within thirty (30) days following receipt of proper invoice evidencing work performed, subject to City accounting procedures. Payment need not be made for work which fails to meet the standards of performance set forth in the Recitals which may reasonably be expected by City. 5. TERM This Agreement shall commence on the date first written above and terminate on June 2, 2015, The Term of this Agreement may be extended for two (2) additional one -year terms on the same terms and conditions by a writing executed by the City Manager and the City Attorney. 6. INDEPENDENT CONTRACTOR Consultant shall, during the entire term of this Agreement, be construed to be an independent contractor and not an employee of the City. This Agreement is not intended nor shall it be construed to create an employer - employee relationship, a joint venture relationship, or to allow the City to exercise discretion or control over the professional manner in which Consultant performs the services which are the subject matter of this Agreement; however, the services to be provided by Consultant shall be provided in a manner consistent with all applicable standards and regulations governing such services. Consultant shall pay all salaries and wages, employer's social security taxes, unemployment insurance and similar taxes relating to employees and shall be responsible for all applicable withholding taxes. 7. INSURANCE Consultant shall obtain and maintain for the entire term of this Agreement comprehensive general liability insurance, with companies acceptable to the City, authorized to issue such insurance in the State of California. Said insurance shall consist of the following: a. Worker's Compensation Insurance. In accordance with the provisions of Section 3300 of the Labor Code, Consultant, if Consultant has any employees, is required to be insured against liability for worker's compensation or to undertake self - insurance. Prior to coinmencing the performance of the work under this Agreement, Consultant agrees to obtain and maintain any employer's liability insurance with limits not less than $1,000,000 per accident. 2 b. Professional Liability (Errors and Omissions) insurance with a combined single limit of not less than $1,000,000.00 per claim. c. The following requirements apply to the insurance to be provided by Consultant pursuant to this section: (i) Consultant shall maintain all insurance required above in full force and effect for the entire period covered by this Agreement. (ii) Certificates of insurance shall be furnished to the City upon execution of this Agreement and shall be approved as to form by the City Attorney. (iii) Certificates and policies shall state that the policies shall not be canceled or reduced in coverage or changed in any other material aspect without thirty (30) days prior written notice to the City. 8. INDEMNIFICATION Consultant agrees to and shall indemnify and hold harmless the City, its officers, agents, employees, consultants, special counsel, and representatives from liability for personal injury, damages, just compensation, restitution, judicial or equitable relief arising out of claims for personal injury, including health, and claims for property damage, which may arise from the negligence, recklessness or willful misconduct of the Consultant or its contractors, subcontractors, agents, employees, or other persons acting on their behalf which relates to the services described in section 1 of this Agreement. The Consultant further agrees to indemnify, hold harmless, and pay all costs for the defense of the City, including fees and costs for special counsel to be selected by the City, regarding any action by a third party asserting that personal injury, damages, just compensation, restitution, judicial or equitable relief due to personal or property rights arises by reason of the terms of, or effects arising from this Agreement. City may make all reasonable decisions with respect to its representation in any legal proceeding. 9. CONFIDENTIALITY If Consultant receives from the City information which due to the nature of such information is reasonably understood to be confidential and/or proprietary, Consultant agrees that it shall not use or disclose such information except in the performance of this Agreement, and further agrees to exercise the same degree of care it uses to protect its own information of like importance, but in no event less than reasonable care. "Confidential Information" shall include all nonpublic information. Confidential information includes not only written information, but also information transferred orally, visually, electronically, or by other means. Confidential information disclosed to either party by any subsidiary and/or agent of the other party is covered by this Agreement. The foregoing obligations of non -use and nondisclosure shall not apply to any information that (a) has been disclosed in publicly available sources; (b) is, through no fault of the Consultant disclosed in a publicly available source; (c) is in rightful possession of the Consultant without an obligation of confidentiality; (d) is required to be disclosed by operation of law; or (e) is independently developed by the Consultant without reference to information disclosed by the City. 10. CONFLICT OF INTEREST CLAUSE Consultant covenants that it presently has no interests and shall not have interests, direct or indirect, which would conflict in any manner with performance of services specified under this Agreement. 3 11. NOTICE Any notice, tender, demand, delivery, or other communication pursuant to this Agreement shall be in writing and shall be deemed to be properly given if delivered in person or mailed by first class or certified mail, postage prepaid, or sent by facsimile or other telegraphic communication in the manner provided in this Section, to the following persons: To City: Clerk of the City Council City of Santa Ana 20 Civic Center Plaza (M -30) P.O. Box 1988 Santa Ana, CA 92702 -1988 Fax (714) 647 -6956 With courtesy copy to: Finance and Management Services Agency — Accounting Division City of Santa Ana 20 Civic Center Plaza (M -17) P.O. Box 1988 Santa Ana, California 92702 Fax (714) 647 -5414 To Consultant: Bickmore & Associates, Inc. Attn: John Alltop 1750 Creekside Oaks Drive, Suite 200 Sacramento, CA 95833 Fax (855)242 -8919 A party may change its address by giving notice in writing to the other party. Thereafter, any communication shall be addressed and transmitted to the new address. If sent by mail, communication shall be effective or deemed to have been given three (3) days after it has been deposited in the United States mail, duly registered or certified, with postage prepaid, and addressed as set forth above. If sent by facsimile, communication shall be effective or deemed to have been given twenty -four (24) hours after the time set forth on the transmission report issued by the transmitting facsimile machine, addressed as set forth above. For purposes of calculating these time frames, weekends, federal, state, County or City holidays shall be excluded. 12. EXCLUSIVITY AND AMENDMENT This Agreement represents the complete and exclusive statement between the City and Consultant, and supersedes any and all other agreements, oral or written, between the parties. In the event of a conflict between the terms of this Agreement and any attachments hereto, the terms of this Agreement shall prevail. This Agreement may not be modified except by written instrument signed by the City and by an authorized representative of Consultant. The parties agree that any terms or conditions of any purchase order or other instrument that are inconsistent with, or in addition to, the terms and conditions hereof, shall not bind or obligate Consultant nor the City. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by any parry, or anyone acting on behalf of any party, which are not embodied herein. 4 13. ASSIGNMENT Inasmuch as this Agreement is intended to secure the specialized services of Consultant, Consultant may not assign, transfer, delegate, or subcontract any interest herein without the prior written consent of the City and any such assignment, transfer, delegation or subcontract without the City's prior written consent shall be considered null and void. Nothing in this Agreement shall be construed to limit the City's ability to have any of the services which are the subject to this Agreement performed by City personnel or by other consultants retained by City. 14. TERMINATION This Agreement may be terminated by the City upon thirty (30) days written notice of termination. In such event, Consultant shall be entitled to receive and the City shall pay Consultant compensation for all services performed by Consultant prior to receipt of such notice of termination, subject to the following conditions: a. As a condition of such payment, the Executive Director may require Consultant to deliver to the City all work product completed as of such date, and in such case such work product shall be the property of the City unless prohibited by law, and Consultant consents to the City's use thereof for such purposes as the City deems appropriate. However, any use of unfinished work product shall be at City's sole risk. b. Payment need not be made for work which fails to meet the standard of performance specified in the Recitals of this Agreement. 15. DISCRIMINATION Consultant shall not discriminate because of race, color, creed, religion, sex, marital status, sexual orientation, age, national origin, ancestry, or disability, as defined and prohibited by applicable law, in the recruitment, selection, training, utilization, promotion, termination or other employment related activities. Consultant affirms that it is an equal opportunity employer and shall comply with all applicable federal, state and local laws and regulations. 16. JURISDICTION - VENUE This Agreement has been executed and delivered in the State of California and the validity, interpretation, performance, and enforcement of any of the clauses of this Agreement shall be determined and governed by the laws of the State of California. Both parties further agree that Orange County, California, shall be the venue for any action or proceeding that may be brought or arise out of, in connection with or by reason of this Agreement. 17. PROFESSIONAL LICENSES Consultant shall, throughout the term of this Agreement, maintain all necessary licenses, permits, approvals, waivers, and exemptions necessary for the provision of the services hereunder and required by the laws and regulations of the United States, the State of California, the City of Santa Ana and all other governmental agencies. Consultant shall notify the City immediately and in writing of her inability to obtain or maintain such permits, licenses, approvals, waivers, and exemptions. Said inability shall be cause for termination of this Agreement. 18. NUSCELLANEOUS PROVISIONS a. Each undersigned represents and warrants that its signature herein below has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnify City fully, including reasonable costs and attorney's fees, for any injuries or damages to City in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. b. Captions and headings in this Agreement, including the title of this Agreement, are for convenience only and are not to be considered in construing this Agreement. c. All Exhibits referenced herein and attached hereto shall be incorporated as if fully set forth in the body of this Agreement. /// Signatures on next page IN WITNESS WHEREOF, the parties hereto have executed this Agreement the date and year first above written. ATTEST: MARIA D. HUI7,AR Clerk of the Council APPROVED AS TO FORM: City Attorney By: : s Str a Z ssistant City Attorney RECOMMENDED FOR APPROVAL: 1C\6itR4 1\r ai Jk y FRANCISCO GUTIERREZ Executive Director — FMSA CITY OF SANTA ANA DAVID CAVAZOS City Manager CONSULTANT Bickmore & Associates, Inc. r- Min e: Title:P231a1P Tax ID# (6�S' c�I1N�y3 EXHIBIT A CONSULTANT'S PROPOSAL APRIL 17, 2014 m3n Tm 71971 Proposal Provide Actuarial • OPEB Liabilities M.TiifrT It1Tiili► ,K Proposal to Provide Actuarial Valuation of OPEB Liabilities For the City of Santa Ana April 17, 2014 kinif M-0 s 1. Detailed Project Approach ................................................................ ............................... 1 2. Company Profile: About Bickmore .................................................... ............................... 3 3. Project Team .................................................................................... ............................... 4 4. Project Schedule .............................................................................. ............................... 0 5. City Staff Estimate ............................................................................ ............................... 0 6. References ....................................................................................... ............................... 0 7. Miscellaneous Warranties ................................................................ ............................... 0 8. OPEB Provided by the City .............................................................. ............................... 0 9. Cost Information ............................................................................. ............................... 20 10. Sample Data Request Part I ............................................ ............................... Appendix A 11. Sample Data Request Part II ........................................... ............................... Appendix B 12. Sample OPEB Valuation Report ............... ............................... .......................Appendix C 13. Certificate of Insurance ................................................... ............................... Appendix D Proposal to Provide Actuarial Valuation of OPEB Liabilities For the City of Santa Ana April 17, 2014 1. Detailed project Approach General Background: The City is seeking professional services for the preparation of updated actuarial valuation of the City's postemployment healthcare costs. For purposes of this Proposal, we have assumed the valuation will be as of June 30, 2014, with results developed for the City's fiscal years ending June 30, 2014 and June 30, 2015. Process Overview: Our approach to providing services to the City will be for the consultant to collect and review preliminary information with appropriate City representatives to obtain their specific directions and needs regarding the upcoming valuation ,_including any issues relating to prior valuations that the City would like to bring to our attention to address or resolve. At this time, a tentative schedule will be developed concerning: (1) Review of actuarial assumptions and the recommended actuarial funding method; (2) Data preparation and delivery for the annual valuation; (3) A telephonic meeting or meetings to discuss preliminary results; (4) Delivery of the final report; and (5) Presentation by the lead consultant of the results contained in the final report either by telephone or in person to the appropriate City personnel, Finance Committee and /or City Council, as desired. Our intent is to make senior consultants and analysts readily available to the City. We are also available by telephone or email at any time. Required information includes census data on covered active employees, retirees and their dependents, and plan documents, MOUs or bargaining agreements, resolutions or employee communications detailing the substantive plan provided by the City. We will also request copies of all PEMHCA resolutions executed and on file with CalPERS, OPEB information reported in the City's financial statements (already received) and confirmation of actual contributions made each year to pay retiree benefits. A sample of our Data Request Part I and Data Request Part II have been attached as Appendix A and B respectively. ➢ Comment: Where an agency participates in both the CaIPERS retirement and CalPERS healthcare programs, we find that it often saves significant agency staff time to request a CalPERS OPEB data extract reports for both its active and retired employees. There is no charge from CalPERS for the extracts. When this is provided to us, we are able to send an abridged employee data request (Part II) for the remaining information. The process for requesting this data extract can be found on the CalPERS website at this link: http:// www .calpers.ca.gov /index.isp ?bc= /employer /retiree- ben- trust/data- extract xml. If interested, the City may want to initiate the extract process immediately, in order to shorten any waiting time for receiving the data. Report Contents: Bickmore is prepared to provide all services specifically requested by the City as described in the RFP. In particular, our reports will include calculation of projected benefits expected to be paid, the development of the GASB 45 annual required contribution (ARC), annual OPEB expense, Net OPEB Obligation (NOO), and other information required for disclosure under Bjckmore Proposal to Provide Actuarial Valuation of OPEB Liabilities For the City of Santa Ana April 17, 2014 GASB 45. Costs will be shown for the City in total and separately for active and retired participants and, as needed, for various employee groups (i.e., fire, police, miscellaneous). The report will include the results for the City's fiscal year ending June 30, 2015. We will include sufficient documentation and detail to enable the City to evaluate the actuarial methodology we used to develop the financial information described above. The report will begin with an executive summary, followed by text outlining the requirements, general sources of liabilities, our valuation process and options regarding funding policy. Our exhibits follow, presenting the valuation results, calculation of the ARC and illustration of the required GASB 45 disclosure information. Separate tables summarize employee and retiree census information; relevant plan provisions; actuarial methods and assumptions; presentation of projected cash flow and glossary of terms used. We have attached a sample OPEB valuation report as Appendix C.; Please note, however, that while similar in many respects, we customize the content and exhibits in each report to address the information requested by each agencyforwhich we prepare a valuation. > Comment: When an agency participates in the CalPERS retirement system, we often dovetail the "demographic" assumptions (rates of retirement, disability, terminations and mortality) to match those used in the various plans in which the agency's employees participate, unless there is historical information to suggest other assumptions may be more appropriate. Where the agency participates in the CalPERS healthcare program, we look closely at the assumptions for healthcare trend used in the State valuation. Other assumptions, such as discount rate, participation rates, amortization methodology, etc., are unique to each agency. We recognize that most public agencies have undergone many changes over time with regard to the level of OPEB they provide, eligibility to qualify for benefits and how long those benefits will be paid. An important part of the data gathering process is for us to ask and understand the nuances of exactly who gets what, when they get it, and for how long. Bickmore has been called upon in many instances over the past 5 years to assist agencies in the implementation of GASB 45, to prepare analysis of OPEB funding strategies and to work with agencies and their employee bargaining units regarding possible plan redesigns. Bickmore utilizes valuation software provided by WinTech. Focused on pension and OPEB valuation software, Wintech is the dominant independent provider of such software in the United States. Use of this software assures our clients of the combination of our senior actuarial experience with independently developed and regularly improved software. Strengths: We are regularly complimented for the clarity of our actuarial reports and our ability to translate the often confusing terms into understandable and meaningful results. We communicate with each client about what they need to see in the report and customize the exhibits accordingly. Our clients appreciate our assistance in preparing and reviewing the OPEB disclosure information to be presented in financial statements to help avoid any misunderstanding of how report results are intended to be used in the disclosures. We also have an extensive understanding of PEMHCA requirements and the impact on retiree healthcare coverage (eligibility and benefits) for agencies participating in the CalPERS healthcare program. Many of our clients participate in the California Employers' Retiree Benefit Trust (CERBT). The procedures, actuarial methods and assumptions we use will comply with requirements for participation in CERBT and we are very familiar with the filing requirements for agency participation in that trust. Bici£ITIOPe '' Proposal to Provide Actuarial Valuation of OPEB Liabilities For the City of Santa Ana April 17, 2014 2. Company Profile. About Bickmore Bickmore is a leading independent risk management, insurance, and actuarial consulting firm with clients in 33 states. Formed in 1984, Bickmore is headquartered in Sacramento, California and has a staff of more than 100. Over 60% of our staff holds advanced degrees and professional designations in risk management, law, workers' compensation, accounting, actuarial, and loss and risk control. Our professionals work together to provide clients with traditional risk management services such as coverage reviews, self - insured retention analysis, and claims consulting and non - traditional services such as data collection, self - insured group administration, program structure evaluation, and underwriting. The Health and Benefits Actuarial Unit is focused almost exclusively on providing GASB 45 valuation services for public agencies. Bickmore provides OPEB related actuarial services on behalf of about 200 clients, predominantly in California and Nevada We offer experienced co- managers for this project, each of whom has over 25 years of senior -level consulting experience. We work with many clients of similar size and complexity to the City. Commitment to Service Bickmore performs more than 250 consulting assignments annually. Our greatest mark of client satisfaction is repeat business, with 95% of clients engaging us for additional projects after completion of initial assignments. Independence Bickmore does not sell insurance, nor are we affiliated with any such organization. This independence allows us to perform consulting activities free from actual or perceived conflicts of interest. Bickmore. Proposal to Provide Actuarial Valuation of OPEB Liabilities For the City of Santa Ana April 17, 2014 3. Project Team Catherine (Cathy) MacLeod and Francis (Mike) Schauer are both senior actuaries and consultants who will be responsible for preparing the City's valuation. Both Ms. MacLeod and Mr. Schauer are Fellows of the Society of Actuaries, Members of the American Academy of Actuaries, and Enrolled Actuaries. Ms. MacLeod is also a Member of the American Society of Pension Professionals & Actuaries and Mr. Schauer is also a Fellow of the Conference of Consulting Actuaries. Cathy and Mike will serve as co- managers for this assignment, Both provide outstanding service to their clients and are highly qualified to provide the type of actuarial support requested by the City, focusing their current practice on GASB 45 consulting for public entities. Each has extensive experience providing services on pension, medical, and other employee benefit plans to corporate, public and non - profit organizations. Support staff, including one or more of our 3 actuarial analysts who are devoted entirely to GASB 45 work, will be assigned based on the City's needs. The primary office locations where work will be performed are: Sacramento Office: 1750 Creekside Drive, Suite 200 Sacramento, CA 95833 Tel: (9 16) 244 -1100 Fax: (855) 242 -8919 Portland Office: 5200 SW Macadam Avenue, Suite 310 Portland, OR 97239 Tel: (503) 429 -0462 Fax: (855) 242 -8919 Resumes for Mr. Schauer and Ms. MacLeod are on the following two pages. Bickmore Proposal to Provide Actuarial Valuation of QPEB Liabilities For the City of Santa Ana April 17, 2014 Francis M. Schauer, Jr., FSA, FCA, EA, MAAA Manager, Actuarial Consulting HE Mike Schauer joined Bickmore in 2008 and has over 40 years of actuarial experience, strong management and consulting in qualified retirement plans for public, non - profit and private organizations. Mr. Schauer is currently focusing his practice on public entities and compliance with GASB 43/45, accounting standards for "other post - employment benefits" (QPEB). EXPERIENCE Mr. Schauer began his consulting actuarial career with The Wyatt Company, specializing in retirement plan consulting and valuation work, and over time moved to overall employee benefits consulting. Work included completion of FAS 106 disclosures of post - retirement benefits for major U.S. corporations. Prior to joining Bickmore, Mr. Schauer directed the day -to -day operations of the retirement program at American Red Cross, which covered 25,000 employees. With Tyco International, Inc. he helped direct the actuarial and investment aspects of 350 pension programs worldwide. EDUCATION Bachelor of the Arts — Mathematics — University of Michigan Masters of Actuarial Science — University of Michigan PROFESSIONAL AFFILIATIONS Fellow of the Society of Actuaries (FSA) Fellow of the Conference of Consulting Actuaries (FCA) Enrolled Actuary (EA) Member of the American Academy of Actuaries (MAAA) Bickmore 5. Proposal to Provide Actuarial Valuation of GPEB Liabilities For the City of Santa Ana April 17, 2014 Catherine Macleod, FSA, EA, MAAA Director, Health & Benefits Actuarial Services GTC:. Catherine MacLeod joined Bickmore in November 2008. She brings over 30 years of actuarial experience, strong management and consulting in qualified retirement plans and defined benefit plan actuarial services for public, non - profit and private organizations. In her role as Director, Health and Actuarial Services, Cathy is focused on public entity compliance with GASB 43/45 retiree health care plan accounting standards. She is also highly knowledgeable in charitable gift annuity valuations, 401(k) and profit sharing plans. EXPERIENCE Prior to joining Bickmore, Catherine was a consulting actuary with Independent Actuaries, Inc. She was regularly called upon for the design, actuarial valuation and compliance testing for complex qualified plan arrangements for a variety of businesses. From 1990 through 1995, while at Howard Johnson & Company, Cathy was the client manager and lead consultant supporting the retirement programs for several large, publicly traded companies. Her responsibilities included coordinating the actuarial valuations, reporting, compliance and communication of plan benefits to employees. She began her actuarial career with Standard Insurance Company in 1979 and later became Actuary and Retirement Plans Manager prior to leaving the company in 1990. While there, Cathy managed the administrative services teams supporting the insurer's IRAs, 403(b) annuities, life insurance contracts and pension actuarial services for retirement programs utilizing those contracts. EDUCATION Masters, Actuarial Science — Ball State University Bachelor of Science, Actuarial Science — Ball State University PROFESSIONAL AFFILIATIONS Fellow of the Society of Actuaries (FSA) Enrolled Actuary with the U.S. Departments of Labor and Treasury (EA) Member of the American Academy of Actuaries (MAAA) Member of the American Society of Pension Professionals and Actuaries (ASPPA) Western Pension & Benefits Conference — Portland Chapter Bickmore 6 Proposal to Provide Actuarial Valuation of OPEB Liabilities For the City of Santa Ana April 17, 2014 4. Project: Schedule The following table provides a general outline of Bickmore's approximate timeline for completing each task. To the extent that the City requires time to review and respond to any issues we raise, that would potentially Impact the overall time between the start and finish of each valuation. We can provide a more specific timeline suitable to the City's needs once the contract has been awarded. Maximum , Time for - Elapsed Bickmore Time Description of Tasks Day 1 Week 1 Contract is signed by the City and Bickmore Week 1 1 week Lead actuary, analyst and City representatives discuss project overview /issues Data request materials are sent to the City from actuarial analyst 1 Data request materials are returned to Bickmore analyst City plan details and employee data is organized by analyst and follow up questions asked Varies - City's timing 2 weeks 3 weeks 1 week 4 weeks City data is coded by analyst and checked by senior actuary 1 week 5 weeks Coding is checked by a second senior actuary and (if needed) subsequent questions asked 1 week 6 weeks Numbers from coding output are used by analyst to create report exhibits 1 week 7 weeks Report exhibits are checked by both senior actuaries 1 day Report exhibits are entered into report draft by analyst 2 days Report draft is reviewed and edited by both senior actuaries 1 day Final touch -ups to report draft are made by analyst 1 day 8 weeks Report draft is issued to the City Lead actuary reviews draft report with City staff Once the City approves the report draft, Bickmore will issue the final report Varies - City's timing Varies - City's timin A complete and accurate data submission and responsiveness to our questions (although tedious, we know) can greatly improve our ability to turn our report out more quickly, should that be Important to the City for its particular circumstances. S. City Staff Estimate We recognize that significant employee and plan information must be communicated between the City and the actuary and respect the effort that is required from our clients to provide the data necessary for Bickmore to produce a credible product. Likewise, we commit significant time beyond the report itself to identify issues worthy of discussion, the ramifications of various results and decisions and to assist in the disclosure of results for financial reporting. The time required for each agency to gather the data varies based on the complexity of benefits and the agency's existing records and ability to select the fields required to prepare the calculations. We've included samples of our typical Data Request Parts I and II as Appendices A and B, respectively. In some cases, we have had clients able to complete these requests in about 4 hours (especially when a CaIPERS OPEB data extract is used). Others may require 8 -12 hours if retrieval of information is less automated. In addition, we anticipate 1 -4 hours of finance staff time to answer occasional questions or to discuss the draft report prior to it being finalized. Proposal to Provide Actuarial Valuation of OPEB Liabilities For the City of Santa Ana April 17, 2014 In Exhibit B, we provided the names and contact information for 5 significant recent engagements for GASB 45 services which we believe are similar in size, scope and or complexity to this project for the City. We are happy to provide a complete listing of OPEB projects for current clients on request. No Conflict of Interest: Bickmore is not affiliated with the City of Santa Ana in any way and is aware of no actual, apparent, direct or indirect, or potential conflicts of interest that may exist with respect to the firm, management or employees of the firm or other person relative to the services to be provided under the Agreement for services to be awarded pursuant to this RFP Ownership: There have been no prior changes in ownership. Bickmore is currently investigating a sell -side option, but nothing that can be disclosed at this time, and nothing that would materially change the scope or function of our current business operations Qualifications: Bickmore is qualified to issue a Public Statement of Actuarial Opinion (PSAO) in accordance with the Qualification Standards of the American Academy of Actuaries and to undertake this project according to Precept 2 of the Code of Professional Conduct of the AAA. All aspects of the valuation process, from data reconciliation, to actuarial coding and analysis to preparation of the report are fully peer reviewed. A minimum of two fully credential actuaries, 1 -2 actuarial analysts and administrative support staff will be assigned to work on this project team. E &O Coverage: Bickmore maintains a prudent amount of erros and omissions coverage on all credentialed professional staff members which covers negligent acts. Including those that would be applicable to the project work requested in the City's RFP for GASB 45 services. Limits on Liability: See Appendix D Contractually Binding: Bickmore acknowledges that the individual officers who signed the cover letter, Proposer's Statement (exhibit C) and Non- collusion Agreement (Exhibit D) are authorized to contractually bind the firm. No Legal Actions: There have been no Federal, state or local reviews or field reviews of any of the valuations prepared by Bickmore during the past 3 years. There has been no disciplinary action taken, nor is any pending, against the firm or any members of the firm during the past 3 years with Federal, state or local regulatory bodies or professional organizations. There have been no lawsuits, nor is any pending, against Bickmore with respect to the quality of the work product provided to any of our clients. Proposal to Provide Actuarial Valuation of OPEB Liabilities For the City of Santa Ana April 17, 2014 In preparing our response to this Request for Proposals, we carefully reviewed: • The most recently completed actuarial valuation of other postemployment benefits prepared for the City (Issued September 2012) • The information reported in the OPEB footnote of the City's June 30, 2013 financial statements. • The statements outlining retiree healthcare benefits as provided in the Request for Proposals and the Addendum. We are confident that we understand the benefits provided and have extensive experience working with other California agencies of similar size and with similar benefit provisions. Bickmore Proposal to Provide Actuarial Valuation of OPEB Liabilities For the City of Santa Ana April 17, 2014 9. Cost Informatiion Bickmore offers the following actuarial services relating to the calculation of OPEB liabilities: June 2014 Actuarial Valuation Report $ 14,800 - Results will be presented based on the City's current funding policy for the fiscal years ending June 30, 2014 and 2015. - An illustration of prefunding results will be provided for one year to highlight potential benefits of prefunding. - The fee above also includes an in- person presentation of results to the City plus a telephone conference to review the draft report (or alternatively, two telephone conferences in lieu of an in- person presentation of results, at the City's option). The chart below provides an estimate of approximate hours of each staff member for this project: Optional services: Additional cost for sub -group analysis $ 300 per group Additional in- person meetings 800 each Preliminary results at various discount rates 300 for each additional rate illustrated Actuarial forms required for CERBT filings 750 (if the City elects to join this trust) We believe the services described above will meet the City's objectives for this project. We do not anticipate any other work related to the valuation which could result in additional charges, with the possible exception of the following: Data: The basic valuation fee above includes up to 24 hours for analysis, consolidation and organization of employee and plan data to prepare it for our actuarial coding. This generally requires that data be provided to us in the requested format (or other equally suitable format) with one line per employee. If multiple worksheets are provided, a unique field should be present to allow us to match records efficiently. Should the data require additional time to organize before we can begin our valuation, we reserve the right to charge for this time at the hourly rates shown below. If benefits are significantly different than described to us. • Consulting or actuarial projections relating to possible plan redesign. Biickmore 2 Estimated Consultant_ Hourly Rate Hours Senior Actuarial Consultants $ 300 24 Actuarial Analysts 160 45 Administrative Staff 80 4 Optional services: Additional cost for sub -group analysis $ 300 per group Additional in- person meetings 800 each Preliminary results at various discount rates 300 for each additional rate illustrated Actuarial forms required for CERBT filings 750 (if the City elects to join this trust) We believe the services described above will meet the City's objectives for this project. We do not anticipate any other work related to the valuation which could result in additional charges, with the possible exception of the following: Data: The basic valuation fee above includes up to 24 hours for analysis, consolidation and organization of employee and plan data to prepare it for our actuarial coding. This generally requires that data be provided to us in the requested format (or other equally suitable format) with one line per employee. If multiple worksheets are provided, a unique field should be present to allow us to match records efficiently. Should the data require additional time to organize before we can begin our valuation, we reserve the right to charge for this time at the hourly rates shown below. If benefits are significantly different than described to us. • Consulting or actuarial projections relating to possible plan redesign. Biickmore 2 Appendix A — Sample Data Request Part I Actuarial Valuation Data Request AGENCY July 1, 2013 Actuarial Valuation Bickmore requests detailed information in an effort to ensure the accuracy of our analytical results. Please note that each of the following questions and requests are required before Bickmore will be able to issue the AGENCY's report. Therefore, this process can be greatly simplified and shortened by providing a complete data request. If any assistance is needed with this process please feel free to call or email. [an se address the re ort to: Name: Title: Entity: Address: City, State / Zip: Phone: Fax: Email: If the address above is a PO Box, would you please provide your street address as well for mailing report? We will automatically send a signed electronic copy of our report. In an effort to be more ecologically friendly, we prefer to ask: Would you like to receive hard copies as well? If yes, our default is 3 bound, 1 unbound hard copy, double -sided reports. Please let us know if the AGENCY has a different preference. Are there any deadlines we should be aware of while compiling the results? The following data request is organized into sections as follows: L Confirm or correct information we have already learned regarding the AGENCY's OPEB II. Questions that have not been discussed for this valuation III. Requests for documentation IV. Discussion of discount rate V. Review and confirmation of Table 3A from the AGENCY's previous OPEB valuation Please return this form to: Bickmore Attn: Bickmore Employee Email: bickmoreee @bickmore.net Phone: 503. 419 -04xx OPEB Actuarial Valuation — Data Request We have listed information we already know regarding the AGENCY's other post employment benefits in an effort to save time while also giving Bickmore the necessary confirmation. I. Please confirm or correct the following: 1. The AGENCY intends to use the July 1, 2011 report to disclose OPEB liabilities for the fiscal years ending 6/30/2013 and 2014. Therefore, the AGENCY intends to use this July 1, 2013 GASB 45 / CERBT compliant valuation for disclosures on June 30, 2015 and 16. 2. The CaIPERS retirement formula is 2% at 55. The new CaIPERS formula for PEPRA employees is 1 The AGENCY allows retirees to continue medical, dental, vision and life coverage in retirement. 4. The AGENCY provides medical coverage through CaIPERS. Please review attached summary of benefits. II. Please answer the following., 5. Would the AGENCY like the results for any groups broken out separately? If so, please provide a list of the desired groups below and be sure to designate each employee (including retirees) to one of the groups in the data request part II excel worksheet. NOTE: Additional fees may apply; see engagement letter. 6. If not in CalPERS, are the AGENCY's medical plans: a. _ fully insured or b. _ self- insured. If self- insured, I. Does the agency have stop loss coverage? H. Does the Agency administer claims internally or externally? iii. Please provide a summary of the per employee or per insured fixed costs (excluding claims). c. Please provide a name, number and email address for someone we could contact regarding how retirees are rated. 7. If the AGENCY's contribution toward retiree medical (dental, vision, etc) coverage is a fixed cap please provide details regarding the historical cap amounts and at what dates it changed. Also, does the AGENCY intend to change the cap in the next year (what might it look like in ten years ?) 8. If the AGENCY offers dental coverage as an OPEB benefit, please provide the annual maximum benefit. a. In addition, it would be helpful to have per capita dental claims (retirees vs. actives) for the past 2 -3 years. It is possible to obtain this information through the AGENCY's broker. This information may lower the AGENCY's OPEB liabilities. OPEB Actuarial Valuation — Data Request 9. If the AGENCY offers life coverage as an OPEB benefit, please provide information on the AGENCY's basic group life insurance coverage. a. What is the face amount for an employee /retiree? I. Does this face amount decrease after a certain age(s)? ii. What is the premium rate per $1,000 of coverage per retiree? iii. Does the premium decrease after a certain age(s)? b. What is the face amount for dependents? I. Does this face amount decrease after a certain age(s)? ii. What is the premium rate per $1,000 of coverage per dependent? iii. Does the premium decrease after a certain age(s)? 10. If the Client pays benefits in addition to PEMHCA (or if they have benefits outside of PEMHCA) are the benefits provided to disabled retirees? If so, what are the minimum age /years of service required to receive the benefit? 11. What is the total amount of benefits paid to retirees for the 7/1/2012 to 6/30/2013 fiscal year and the 7/1/2013 to 6/30/2014 fiscal year? (If there is documentation of these values please provide a copy) 12. For the individual employee data that will be requested in the excel document: a. What date is the data as of? b. Where there any changes in the employee group or compensation that occurred after the date the data is as of? If so please explain the changes. c. Is there any point during the year where there is a definite increase or decrease in the number of employees or retirees we should be aware of? 13. Are there any benefits extended to surviving dependents upon the retiree's death? 14. The AGENCY previously disclosed OPEB liabilities on a Pay -As- You -Go basis. Does the AGENCY have any intention to prefund liabilities within the next two years? 16. Are any employees covered by supplemental defined benefit plans (in addition to the CaIPERS plans)? 16. Are there any early retirement incentive plans currently open or planned for the next 12 months? III. Please provide a copy of the following documentation: 17. If applicable, any updated documentation with PEMHCA or any changes to the personnel policy. 18. Any updated MOU's or employee agreements (relating to OPEB). 19. The AGENCY's previous OPEB valuation. (if not done by Bickmore) OPEB Actuarial Valuation — Data Request 20. The AGENCY's previous CERBT filing. (if not done by Bickmore) 21. A premium rates sheet for all coverage available to retirees (medical, dental, vision, life, etc.). Include active premiums and pre /post Medicare premiums for retirees. (except CalPERS medical) 22. The OPEB notes to financials for the fiscal years ending 6/30/2011 and 6130/2012. 23. The annual CERBT statements between July 1, 2011 and 6/30/2013. IV. Choosing an appropriate discount rate The Agency is ultimately responsible for choosing an appropriate discount rate to be used in the OPEB valuation. As you know, the actuarial calculations effectively involve projecting the amount and timing of expected future retiree benefits, then discounting them back to the present to establish a current value. The selection of the rate for the discounting is an important component in establishing the amount of the OPEB liability and annual OPEB cost. Selection of the discount rate is made by the employer providing the benefits and, per GASB 45, should be based on the long term expected return on assets from which benefits are likely to be paid. Higher discount rates are typically used where an agency is prefunding the liability through an irrevocable trust and lower rates used where not (i.e., where benefits are simply paid to retirees as they come due; this is typically referred to as "pay -as- you -go" funding). The 2011 valuation was prepared using a 4.0% discount rate for the unfunded or pay -as- you-go approach and a 7.5% discount rate used to illustrate a prefunding approach. We would like to confirm whether the Agency is comfortable having the valuation results calculated using the same discount rates used in the prior valuation or if the Agency believes a change would be appropriate at this time. If the Agency continues on a pay -as- you -go basis, benefits are effectively being paid (funded) through Agency assets and /or cash flow which would be invested with the restrictions of government funds (e.g., through the federal LGIP or LGIF in California). While those rates are certainly depressed relative to recent years, GASB 45 calculations are based on long term expected returns for those funds. • Does the Agency believe that the 4.0% used previously continues to represent a reasonable long term rate of return for such funds? • If not, what rate does the Agency believe would be more appropriate going forward? If prefunding, the discount rate would reflect the expected long term rate of return for the trust, based on the specific investment policy, assets selected and the overall allocation of assets in different market sectors. Since the Agency is not currently prefunding, we tentatively selected 7.0% as a reasonable proxy for what the Agency might expect to return if it established an OPEB trust (or joined the CaIPERS trust). Recently, CaIPERS revised its strategy and expected returns based on 3 possible allocations (now roughly OPEB Actuarial Valuation — Data Request 7.6% for the more aggressive, 7.0% for the moderate and 6.4% for the more conservative strategy). o Would the Agency like to have us illustrate prefunding results at a different discount rate than 7.0 %? o If so, what rate? Again feel free to email or call if you have any questions or would like to discuss this further, VI. Please review our understanding of the Agency's benefits, as described in table 3A of our previous report, and correct any misunderstandings or updates. [Summary of Benefits from last report is inserted here] 5 Appendix B — Sample Data Request Part II Preferred Data Format Kew; EE Type - M = Miscellaneous, P - Policeft.aw, Enforcement; F = Firefighter Current Status (as of the current valuation date) - Active, Temporary, Part-Time, Retired, Surviving Spouse, Retired Disabled Previous Valuation Status (as of the previous OPEB valuation) - Active, Temporary, Part-Time, Retired, Surviving Spouse, Retired Disabled Group- use this column if the agency would like the results broken out Into groups (e.g., Collective Bargaining Units, Management, Board, etc.) DOB - Date of Birth DOH - Date of Hire DOT - Date of Termination DOR - Date of Retirement Total PERS Service - please provide either the employees total PERS service or their original PERS hire date Retirement Formula - ax. 2% at 55 Retiree Benefit % - only fill out if vesting Marital Status - Please mark either 1 (If marred) or 0 (if single) Cov Sp - Please mark if the employee's spouse lakes medical coverage (1 - covered, 0 = not covered) Sp DOB - Spouse Date of Birth Cov Codes - (EE only = 1, EE+ Spouse = 2, EE + Chlld(ren) but no spouse= 3, EE +Spouse +children - 4) Plan - Name of Insurance Provider (e.g. Kaiser HMO, Blue Shield etc. - if employee has waived coverage please mark "Waived ") Ee Paid - the employee paid portion of the medical premium Er Paid - the employer paid portion of the medical premium Note: please fill In columns for benefits retirees can Participate in (even 100% at retiree expense). O Z W W T > c t� > Y>o N o p m O x O aO , G LL ZY t E d NW y 'N TC . N W W C N yy 0 O W 9 U N yy tl a g T a d 9 � 1O 5 a O ry T 0.Y 9 9 > G O � = > ? _f d G a WO '0 O d IWC B S wW. J O xa p W- W w V W LL Bickmore February 7, 2013 Ms. Jane Doe Director of Finance City of Sample City 123 ABC St. Anywhere, CA 95628 Re: April 1, 2012 Actuarial Report on GASB 45 Retiree Benefit Valuation Dear Jane: We are pleased to enclose our report providing the results of the April 1, 2012 actuarial valuation of other post - employment benefit (OPEB) liabilities for the City of Sample City (the City). The report's text describes our analysis and assumptions in detail. This valuation was prepared with the understanding that: ➢ The results of this valuation will be applied to determine the annual OPEB expense for the City's fiscal years ending June 30, 2012 and June 30, 2013. ➢ The City does not have plans to contribute any funds to the irrevocable trust account with the Public Agency Retirement Services (PARS) for the two years two which this report applies and has no specific long term plans about if or when contributions to the trust will resume. ➢ The discount rates used in this valuation are lower than the rates used in the prior valuation, in part, due to the change in City funding policy described above. ➢ The City will continue to follow its existing PEMHCA resolutions on file with CalPERS (most recently executed in 2007 and 2008). ➢ The City has in place a Flexible Benefit Plan to provide benefits for active employees in excess of the amounts in the PEMHCA resolutions. We appreciate the opportunity to work on this analysis and acknowledge the efforts of the City's staff, who provided valuable information and assistance to enable us to perform this valuation. Please let us know if we can be of further assistance. Sincerely, Catherine L. MacLeod, FSA, EA, MAAA Director, Health and Benefit Actuarial Services Enclosure 5200 SW Macadam Ave, Suite 310, Portland, OR 97239 - 800.541.4591 - f. 855.242.8919 - www.bicl<more.net Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the Citv of Sample Citv Table of Contents A. Executive Summary ........................................................................ ............................... 1 B. Requirements of GASB 45 ............................................................. ........................„...... 3 C. Sources of OPEB Liabilities ............................................................ ............................... 4 OPEB Obligations of the City ..................................................... ............................... 4 D. Valuation Process ........................................................................... ............................... 5 E. Basic Valuation Results .................................................................. ............................... 6 Changes Since the Prior Valuation ............................................. ............................... 6 F. Funding Policy ................................................................................ ............................... 8 Determinationof the ARC .......................................................... ............................... 8 Decisions Affecting the Amortization Payment ........................... ............................... 8 Funding Policy Illustrated in This Report...........„ ........................ ............................... 8 G. Choice of Actuarial Funding Method and Assumptions., ................................................ 9 Factors Impacting the Selection of Funding Method... ................ .............................. 9 Factors Affecting the Selection of Assumptions ......................... ............................... 9 H. Certification .................................................................................. ............................... 10 Table 1A Summary of Valuation Results Partially Prefunding Basis .... ............................... 11 Table 1 B Calculation of the Annual Required Contribution. ................................................ 12 Table 1C Expected OPEB Disclosures ................................................ ............................... 12 Table 2 Summary of Employee Data ................................................... ............................... 14 Table 3A Summary of Retiree Benefit Provisions ................................ ............................... 16 Table 3B General CalPERS Annuitant Eligibility Provisions ................ ............................... 17 Table 4 OPEB Valuation Actuarial Methods and Assumptions ........... ............................... 18 Table 5 Projected Benefit Payments ................................................... ............................... 24 Appendix 1 Determination of Blended Discount Rate ................ ............ ......... .................... 25 Appendix 2 Breakout of the City Plan Results by Group ...................... ........................... „... 26 Appendix 3 OPEB Disclosure Information ........................................... ............................... 28 Appendix 4 Prefunding Results for FYE 2013 ..................................... ............................... 29 Glossary.............................................................................................. ............................... 30 Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City A. Executive Summary This report presents the results of the April 1, 2012 actuarial valuation of the City of Sample City (the City) other post - employment benefit (OPEB) programs. Briefly, benefits include subsidized medical coverage for eligible retirees. The purpose of this valuation is to assess the OPEB liabilities and provide disclosure information as required by Statement No. 45 of the Governmental Accounting Standards Board (GASB 45). In recent prior years, the City has been prefunding its OPEB obligations by consistently making contributions greater than or equal to the Annual Required Contribution (ARC) each year. However, budgetary constraints have required that the City at least temporarily discontinue making contributions to the OPEB trust. A change in level of OPEB funding generally affects the discount rate used to develop the OPEB liability and ARC. The 4.47% discount rate used in this valuation was calculated by blending expected long term rates of return for the portion of future benefits expected to be funded by existing trust assets, with benefits expected to be paid from other sources. The expected long term rate of return on trust assets was reduced from 7.6% to 7.0% reflecting changes in future market returns for the asset allocation strategy selected by the City for the assets invested in PARS. The remaining plan benefits are assumed to be paid from sources with a long term future rate of return of 4 %. Additional discussion of funding policy, including discount rates, is found on page 8 and determination of the blended discount rate is provided in Appendix 1 on page 25. None of the rates used should be considered a guarantee of future investment performance, but rather assumptions about the expected long term rate of return for assets used to pay future retiree benefits. Exhibits presented in this report are based on the assumption that results of this April 1, 2012 valuation will be applied in determining the annual OPEB expense for the fiscal years ending June 30, 2012 and 2013. We calculate the GASB 45 actuarial accrued liability (AAL) to be $42,581,526 and the normal cost to be $1,428,449 on the valuation date. The City reported OPEB trust assets in PARS as of April 1, 2012 of $5,761,456 to offset these liabilities. Thus, the unfunded actuarial accrued liability (UAAL) as of this date is $36,820,071, and the funded ratio is 13.5 %. The following summarizes the results for the fiscal year ending June 30, 2012: • We calculate the annual required contribution (ARC) to be $3,043,152. • The City contributed $1,242,576 during the period, equal to retiree premiums paid. • Based on the calculations and contributions described above, we project a net OPEB obligation of $2,187,501 on June 30, 2012. These results are shown in tables beginning on page 11. Projected results for the fiscal year ending June 30, 2013 are also shown in these tables. To illustrate the difference in the ARC due to the change in funding policy (i.e., the reduction in City contributions to the OPEB trust), Appendix 4 shows prefunding results for the fiscal year ending June 30, 2013. Had the City continued contributing 100% of the ARC each year, the UAAL would be $24.3 million, instead of $36.8 million, the ARC would be $2.2 million instead of $3.0 million and the funded ratio would be 19.2% instead of 13.5 %. Btckmore Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City Executive Summary (Concluded) The liabilities shown in the report reflect assumptions regarding continued future employment, rates of retirement and survival, and elections by future retirees to retain coverage for themselves and their dependents. To the extent that actual experience is not what we assumed, future results will be different. We also note that this valuation has been prepared on a closed group basis; no provision is made for new employees. Details of our valuation process and the various disclosures required by GASB 45 are provided on the succeeding pages. Appendix 2 shows valuation results by group, and Appendix 3 provides information that may be useful in preparing the City's financial statement disclosures. The date of the next valuation should not be later than April 1, 2014. If there are any significant changes in the employee data, benefits provided or the funding policy, please contact us to discuss whether an earlier valuation is appropriate. Bickmore . 2 Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City The Governmental Accounting Standards Board (GASB) issued GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. This Statement establishes standards for the measurement, recognition, and display of OPEB expense /expenditures and related liabilities (assets), note disclosures, and, if applicable, required supplementary information (RSI) in the financial reports of state and local governmental employers. We understand that the City implemented GASB 45 for the fiscal year ended June 30, 2009. GASB 45 disclosures include the determination of an annual OPEB cost. For the first year, the annual OPEB cost is equal to the annual required contribution (ARC) as determined by the actuary. • If the City's OPEB contributions equal the ARC each year, the net OPEB obligation will equal $0. 4 • If the City's actual contribution is less than (greater than) the ARC, then a net OPEB obligation (asset) amount is established. In subsequent years, the annual OPEB expense will reflect adjustments made to the net OPEB obligation, in addition to the ARC (see Table 1 C). The decision whether or not to prefund, and at what level, is at the discretion of the City, as are the manner and term for paying down the unfunded actuarial accrued liability. Once a funding policy has been established, however, the City's auditor may have an opinion as to the timing and manner of any change to such policy in future years. The level of prefunding also affects the selection of the discount rate used for valuing the liabilities. We note that various issues in this report may involve legal analysis of applicable law or regulations. The City should consult counsel on these matters; Bickmore does not practice law and does not intend anything in this report to constitute legal advice, In addition, we recommend the City consult with their internal accounting staff or external auditor or accounting firm about the accounting treatment of OPEB liabilities. B ckmore 3 Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample Citv C. Sources of OPEB Liabilities Post- employment benefits other than pensions (OPEB) comprise a part of compensation that employers offer for services received. The most common OPEB are: • Medical • Dental Prescription drug • Vision Life insurance Other possible post - employment benefits may include outside group legal, long -term care, or disability benefits outside of a pension plan. OPEB does not generally include vacation, sick leave or COBRA benefits, which fall under other GASB accounting statements. A direct employer payment toward the cost of OPEB is referred to as an "explicit" subsidy and these are included in the determination of OPEB liabilities. In addition, if claims experience of employees and retirees are pooled when determining premiums, the retirees pay a premium based on a pool of members that, on average, are younger and healthier. For certain types of coverage, such as medical, payment of the same premium rate results in an "implicit subsidy" of retiree claims by active employee premiums since the retiree premiums are lower than they would have been if the retirees were insured separately. Paragraph 13.a. of GASB 45 generally requires an implicit subsidy of retiree premium rates be valued as an OPEB liability. Exceptions may exist when the plan is part of a "community- rated" program. GASB guidance indicates that an agency whose membership is a small portion (in the neighborhood of 1 %) of the total coverage of a multiple employer plan, may reasonably conclude that any change in their group's mix of retirees and active employees would not affect the premium rates for the plan. In those circumstances, while an implicit subsidy may exist, it is not required to be disclosed. OPEB Obligations of the City The City provides continuation of medical coverage to its retiring employees. For retirees and their dependent(s) who have chosen to retain this coverage: • The City contributes directly to the cost of retiree medical coverage. These benefits are described in Table 3 and liabilities have been included in this valuation. • Employees are covered by the CalPERS medical program. The experience of public agency employer membership in this program is community -rated ( "OPEB Assumption Model ", April 2010) and the City's membership in this program is incidental relative to the total number of members covered. This report, therefore, does not make age - related premium adjustments or compute an implicit rate subsidy for employees covered under this program. ' When a terminating employee's unused sick leave credits are converted to provide or enhance a defined benefit OPEB, e.g., healthcare benefits, such converted sick leave credits should be valued under GASB 45. Bekmore 4 i Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample Citv D. Valuation Process The valuation has been based on employee census data initially submitted to us by the City in December 2012 and clarified in various related communications. Summaries of that data are provided in Table 2. While the individual employee records have been reviewed to verify that it is reasonable in various respects, the data has not been audited and we have otherwise relied on the City as to its accuracy. A summary of the benefits provided under the Plan is provided in Table 3, based on information supplied to Bickmore by the City. The valuation described below has been performed in accordance with the actuarial methods and assumptions described in Table 4. In the specific development of the projected benefit values and liabilities, we first determine an expected premium or benefit stream over the employee's future retirement. We then calculate a present value of these benefits as of the valuation date. • These present value determinations discount the value of each future expected benefit payment back to the valuation date, using the discount rate. The present value calculations also reflect assumptions for the likelihood that an employee may not continue in service with the City to receive benefits. • For those that do, appropriate assumptions are made to reflect the probability of retirement at various ages. • After reduction for the probability an employee may not receive a benefit, for the remaining probability he or she does, those benefits reflect assumptions as to whether they will elect coverage for themselves and /or dependents. • The cost of benefits payable, once they begin for each employee, reflect expected trends in the cost of those benefits and the assumptions as to the expected date(s) those benefits will cease. • These benefit projections and liabilities have a very long time horizon. The final payments for currently active employees may not be made for 70 years or more. The resulting present value for each employee is allocated as a level percent of payroll each year over the employee's career using the entry age normal cost method. This creates a cost expected to increase each year as payroll increases. Amounts attributed to prior fiscal years form the "actuarial accrued liability" (AAL). The amount of future OPEB cost allocated to the current year is referred to as the "normal cost ". The remaining cost to be assigned to future years is called the "present value of future normal costs ". In summary: Actuarial Accrued Liability Past Years' Costs plus Normal Cost Current Year's Cost plus Present Value of Future Normal Costs Future Years' Costs equals Present Value of Future Benefits Total Benefit Costs Where contributions have been made to an irrevocable OPEB trust, the accumulated value of trust assets is applied to offset the AAL. The value of assets invested in the City's PARS account on April 1, 2012 was reported to be $5,761,456. The portion of the AAL not covered by assets is referred to as the unfunded actuarial accrued liability (UAAL). Bickmore _ Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City E. Basic Valuation Results The following chart compares the results of the April 1, 2012 valuation of OPEB liabilities (Column 2) to the results of the April 1, 2010 valuation (Columns 1). Valuation date Prefunding Basis Partial Prefunding' Basis 4/1/2010 4/112012 Discount rate 7.60% 4.47% Number of Covered Employees Actives 351 296 Retirees 209 214 Total Participants 560 510 Actuarial Present Value of Projected Benefits (APVPB) Actives $ 19,138,321 $ 29,543,894 Retirees 17,961,466 28,112,423 Total APVPB 37,099,787 57,656,317 Actuarial Accrued Liability (AAL) Actives 10,569,224 14,469,103 Retirees 17,961,466 28,112,423 Total AAL 28,530,690 42,581,526 Actuarial Value of Assets 2,176,473 5,761,456 Unfunded AAL (UAAL) 26,354,217 36,820,071 Normal Cost 880,343 1,428,449 Benefit Payments Actives (in retirement) - - Retirees 950,553 1,242,576 Total 1 950,553 1 1,242, 576 The funded ratio (the ratio of the Actuarial Value of Assets divided by the Actuarial Accrued Liability) is 13.5% as of April 1, 2012. Covered payroll as of July 1, 2012 was reported to be $22,837,200. The Unfunded Actuarial Accrued Liability, expressed as a percentage of payroll, is 161.2% as of this date. Changes Since the Prior Valuation Even if all of our previous assumptions were met exactly as projected, liabilities generally increase over time as active employees get closer to the date their benefits are expected to begin. Of course, our prior assumptions were not exactly realized. Employee terminations and retirements were much higher than average in 2011. Current healthcare premiums are slightly lower than what we had projected, particularly for retirees covered by Medicare. Bickmore Actuarial Valuation of Other Post- Employment Benefit Programs as of April 1, 2012 for the City of Sample City Basic Valuation Results (Concluded) In comparing results shown in the exhibit on the prior page, we can see that the Actuarial Accrued Liability (AAL) increased by approximately $14,051,000 over the two year period between April 1, 2010 and April 1, 2012. We expected the AAL to increase by $4,414,000 from new costs accrued and the passage of time, reduced by benefits expected to be paid to retirees during that two year period. The additional liability of $9,637,000 Is attributable to plan experience other than expected and the assumption changes described below: • Updates in employee and premium data, i.e., actual plan experience relative to prior assumptions: ($5,360,000 decrease in AAL); • Change in discount rates used to develop the OPEB liability, from 7.6% to 4.47 %, reflecting both a slight decrease in the expected level of future trust earnings as well as a change in the level of OPEB funding ($15,164,000 increase in AAL); • A change in how we evaluated the potential cost of dependent benefits for retirees, reflecting the extension of healthcare coverage of children until age 26 ($1,003,000 increase in AAL); • More direct recognition of the cost associated with disability retirement ($1,025,000 Increase in AAL); • Revised assumptions about the likelihood that a retiree will retain medical plan coverage for themselves in retirement, based on the City's recent experience ($1,228,000 decrease in AAL); • Revised assumptions about the likelihood that a retiree will be married and continue medical plan coverage for their spouse in retirement, based on the City's recent experience ($980,000 decrease in AAL); • Revised assumptions for mortality, termination and retirement, based on the most recent CalPERS retirement plan experience study covering City employees ($54,000 decrease in AAL); and • An increase in assumed future increase in medical premium levels between 2013 and 2019 ($67,000 increase in AAL). ffickmore Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample Citv F. Funding Policy The specific calculation of the ARC and annual OPEB expense for an agency depends on how it elects to fund these benefits. The funding levels are generally categorized as follows: 1. Prefunding — contributing an amount greater than or equal to the ARC each year. Prefunding generally allows the employer to have the liability calculated using a higher discount rate, such as 7.0% used in this valuation, which lowers the liability. In addition, following a prefunding policy does not build up a net OPEB obligation because the contribution equals or exceeds the annual OPEB cost each year. 2. Pay -As- You -Go funding — contributing only the amounts needed to pay retiree benefits in the current year; generally requires a lower discount rate, such as the 4.0% rate used in this valuation. 3. Partial prefunding — contributing more than the current year's retiree payments but less than 100% of the ARC; requires that liabilities be developed using a discount rate that "blends" the relative portions of benefits that are prefunded and those which are not. See Appendix 1 for details on the development of the rate for this valuation. Determination of the ARC The Annual Required Contribution (ARC) consists of two basic components, which have been adjusted with interest to the City's fiscal year end: • The amounts attributed to service performed in the current fiscal year (the normal cost) and • Amortization of the unfunded actuarial accrued liability (UAAL). The ARCs for the fiscal years ending June 30, 2012 and June 30, 2013 are developed in Table 1 B. Decisions Affecting the Amortization Payment The period and method for amortizing the AAL can significantly affect the ARC. GASB 45: Prescribes a maximum amortization period of 30 years and requires no minimum amortization period (except 10 years for certain actuarial gains). Immediate full funding of the liability is also permitted. • Allows amortization payments to be determined (a) as a level percentage of payroll, designed to increase over time as payroll increases, or (b) as a level dollar amount much like a conventional mortgage, so that this component of the ARC does not increase over time. Where a plan is closed and has no ongoing payroll base, a level percent of payroll basis is not permitted. Allows the amortization period to decrease annually by one year (closed basis) or to be maintained at the same number of years (open basis). Funding Policy Illustrated in This Report It is our understanding that the City's OPEB funding policy includes amortization of the unfunded AAL over a closed 30 -year period initially effective April 1, 2009; the remaining period applicable in determining the ARC for the fiscal year ending June 30, 2012 is 27 years. Amortization payments are determined on a level percent of pay basis. Bckmore Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample Citv G. Choice of Actuarial Funding Method and Assumptions The ultimate real cost of an employee benefit plan is the value of all benefits and other expenses of the plan over its lifetime. These expenditures are dependent only on the terms of the plan and the administrative arrangements adopted, and as such are not affected by the actuarial funding method. The actuarial funding method attempts to spread recognition of these expected costs on a level basis over the life of the plan, and as such sets the "incidence of cost ". Methods that produce higher initial annual (prefunding) costs will produce lower annual costs later. Conversely, methods that produce lower initial costs will produce higher annual costs later relative to the other methods. GASB 45 allows the use of any of six actuarial funding methods; a brief description of each is in the glossary. Factors impacting the Selection of Funding Method While the goal of GASB 45 is to match recognition of retiree medical expense with the periods during which the benefit is earned, the funding methods differ because they focus on different financial measures in attempting to level the incidence of cost, Appropriate selection of a funding method contributes to creating intergenerationai equity between generations of taxpayers. The impact of potential new employees entering the plan may also affect selection of a funding method, though this is not a factor in this plan. We believe it is most appropriate for the plan sponsor to adopt a theory of funding and consistently apply the funding method representing that theory. This valuation was prepared using the entry age normal cost method with normal cost determined on a level percent of pay basis. The entry age normal cost method often produces initial contributions between those of the other more common methods and is generally regarded by pension actuaries as the most stable of the funding methods and is one of the most commonly used methods for GASB 45 compliance. Factors Affecting the Selection of Assumptions In general, we have based the actuarial assumptions used for this valuation on the assumptions used for the actuarial valuations of the respective CalPERS' retirement plans covering City employees. The 7.0% discount rate used for valuing the portion of liabilities expected to be funded with OPEB trust assets was selected following discussion with the City and with PARS. Other assumptions, such as trend of medical costs or the percent of employees who will cover dependents in retirement, were selected based on review of recent plan data and our general experience. Where the funding policy provides that only a portion of benefit liabilities will be prefunded through a trust with the remainder funded on a pay -as- you -go basis, GASB 45 requires the discount rate reflect an appropriate blend between the prefunding and pay -as- you -go discount rates. We assumed a 4.0% expected return for pay -as- you -go funding; Appendix 1 provides details on how the blended discount rate was developed. B ckmore 9 e Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the Citv of Sample City H. Certification We certify that this report has been prepared in accordance with our understanding of GASB 45, and that the results shown in Section E and in Tables 1A, 1B and 1C accurately present our analysis of the actuarial calculations for this plan required by GASB 45. Each signing individual is a Manager In the Health & Benefits Actuarial Unit at Bickmore and a Member of the American Academy of Actuaries who satisfies the qualification requirements for rendering this opinion. Signed: February 7, 2013 Catherine L. MacLeod, FSA, EA, MAAA Francis M. Schauer Jr., FSA; FCA, EA, MAAA Bekmore ro Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City Table 1A Summary of Valuation Results — Partial Prefunding Basis The following summarizes the `results of our valuation of OPEB liabilities for the City calculated in accordance with GASB 45 for the fiscal year ending June 30, 2012 as well as projected amounts for the fiscal year ending June 30, 2013. The results shown below and on the following two pages reflect our understanding that the City intends to contribute only the pay -as- you -go (retiree premiums) portion of the ARC; no contributions to the OPEB trust are planned for the foreseeable future. If actual contributions are materially different, some results in this report will need to be revised, Valuation date Partial Prefunding Basis 4/1/2012 For fiscal year beginning 7/11/20111 711/2012 For fiscal year ending 6/30/2012 6/30/2013 Discount rate 4.47% 4.47 % Expected return on assets 7.00% 7.00% Number of Covered Employees* Actives 296 296 Retirees 214 214 Total Participants 510 510 Actuarial Present Value of Projected Benefits (APVPB) Actives $ 29,543,894 $ 30,864,506 Retirees 28,112,423 28,126,473 Total APVPB 57,656,317 58,990,979 Actuarial Accrued Liability (AAL) Actives 14,469,103 16,608,173 Retirees 28,112,423 28,126,473 Total AAL 42,581,526 44,734,646 Actuarial Value of Assets 5,761,456 6,164,758 Unfunded AAL (UAAL) 36,820,071 38,569,888 Normal Cost 1,428,449 1,474,874 Benefit Payments Actives (in retirement) - 53,778 Retirees 1,242,576 1,313,061 Total 1,242,576 1,366,839 * The number of active employees and retirees shown above are as of the valuation date and are not necessarily the number expected in each category in the future year shown. In addition, because this valuation has been prepared on a closed group basis, no potential future employees are included. In reality, based on assumptions outlined in Table 4, we recognize the possibility that active employees will leave employment and that some may retire and elect benefits. We also reflect the likelihood that coverage for some of the retired employees may cease. Thus, it is likely that the actual number of employees and retirees in the future year will be different from those shown above. B ckmore �; Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample Citv Table 16 Calculation of the Annual Required Contribution The following exhibit calculates the amortization payments and the annual required contribution (ARC) on a partial prefunding basis for the fiscal years ending June 30, 2012 and June 30, 2013. Fiscal Year End Partial Prefunding Basis 6/30/2012 6/30/2013 Funding Policy Projected covered payroll $ 22,837,200 Discount rate 4.47% 4.47% Amortization method Level % of Pay Level % of Pay Initial amortization period (in years) 30 30 Remaining period (in years) 27 26 Determination of Amortization Payment UAAL $ 36,820,071 $ 38,569,888 Factor 23,2734 22.5366 Payment 1,582,066 1,711,434 Annual Required Contribution (ARC) Normal Cost 1,428,449 1,474,874 Amortization of UAAL 1,582,066 1,711,434 Interest to 06/30 32,637 34,543 Total ARC at fiscal year end 3,043,152 3,220,851 While the following is not intended to be used to determine the normal cost or ARC in future years, this information may be of value for planning purposes: Valuation date 4/1/2012 Fiscal Year End 6/30/2012 6/30/2013 Projected covered payroll $ 22,837,200 $ 23,579,409 Normal Cost as a percent of payroll 6.3% 6.3% ARC as a percent of payroll 13.3% 13.7% ARC per active ee 10,281 10,881 Bickmore )2' _. Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City Table 1C Expected OPEB Disclosures The exhibit below develops the annual OPES expense, estimates the expected OPEB contributions and projects the net OPEB obligation for the fiscal years ending June 30, 2012 and June 30, 2013. The calculations assume the City follows the partial prefunding policy outlined in this report. Fiscal Year End Partial Prefunding Basis 6/30/2012 ti/30/2013 1. Calculation of the Annual OPEB Expense a. ARC for current fiscal year $ 3,043,152 $ 3,220,851 b. Interest on Net OPEB Obligation (Asset) at beginning of year 17,299 97,781 c. Adjustment to the ARC (17,372) (101,403) d. Annual OPEB Expense (a. + b. + c.) 3,043,079 3,217,229 2. Calculation of Expected Contribution a. Estimated payments on behalf of retirees 1,242,576 1,366,839 b. Estimated contribution to OPEB trust - - c. Total Expected Employer Contribution 1,242,576 1,366,839 3. Change in Net OPEB Obligation ( ?.d. minus 2.c.) 1,800,503 1,850,390 Net OPEB Obligation (Asset), beginning of fiscal year 386,998 2,187,501 Net OPEB Obligation (Asset) at fiscal year end 2,187,501 41037,891 Please note that the expected payments to retirees for the fiscal year ending June 30, 2013 shown above are projections and should be replaced with the actual payments for financial reporting purposes. Dickmore t� . Actuarial Valuation of Other Post- Employment Benefit Programs as of April 1, 2012 for the Citv of Sample Citv Table 2 Summary of Employee Data The City reported 296 active employees; of these, 198 are currently participating in the medical program while 98 employees were waiving coverage as of the valuation date. Age and service information for the reported individuals is provided below: Distribution of BenefitsEtigible Active Employees Current Years'of Service` Age Number Age Under l ` 1 to 4 5 to 9 10 to 14 15 to 19 20 & Up Total Percent Under 25 1 4 23% 65 to 69 23 11% 5 2% 25 to 29 7 19 12 80 & up 14 7% 38 13% 30 to 34 Average Attained Age 8 26 5 39 13% 35 to 39 1 7 14 8 4 34 11% 40 to 44 1 6 23 23 10 3 66 22% 45 to 49 1 4 8 8 7 14 42 14% 50 to 54 2 10 11 7 16 46 16% 55 to 59 1 5 6 3 6 21 7% 60 to 64 1 1 1 3 1% 65 to 69 1 1 2 1 % 70 & Up 0 0% Total 11 52 98 63 32 40 296 100% Percent 4% 18 °l0 33% 21% 11% 14% 100% (Percentages adjusted to total 100 %) Annual Covered Payroll $22,837,200 Average Attained Age for Actives 42.0 Average Years of Service 10.8 There are also 214 retirees or their beneficiaries receiving benefits. The chart below summarizes their ages. Retirees by Age Current Actives Retired Age Number Percent Below 50 16 7% 50 to 54 28 13% 55 to 59 41 19% 60 to 64 49 23% 65 to 69 23 11% 70 to 74 28 13% 75 to 79 15 7% 80 & up 14 7% Total 214 100% Average Attained Age for Retirees: 63.5 Active employees (covered and /or waiving) and currently covered retirees or their survivors are shown by group in the following chart: a Participants by Group Group Actives Retired Total City Management 11 16 27 Mid- Management 29 23 52 General 81 63 144 Police 124 70 194 Fire 51 42 93 Total 296 1 214 510 Bickmore 14 i Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City Table 2 (concluded) The following chart traces employee and retiree status changes between the date of the prior actuarial valuation (April 1, 2010) and the date of this valuation (April 1, 2012): Reconciliation of Covered Members from April 2010 to April 2012 Status/Change Covered Actives Actives- Waiving Covered Retirees. Covered Survivors Imminent Retirees Total As of April 1, 2010 Data Corrections New hires Terminations Active to Active Waiving* Expected to retire but did not New retiree, joined plan New retiree, waiving plan Deaths 246 105 143 17 49 560 0 1 3 1 0 5 11 6 0 0 0 17 37 13 0 0 2 52 3 3 0 0 0 0 4 2 0 0 6 0 19 2 57 0 36 0 4 4 0 0 5 13 0 0 8 1* 0 7 As of April 1, 2012: 198 98 195 19 0 510 * Net change. The following charts summarize the number of active employees, pre -65 retirees and post - 65 retirees by current coverage level: City Management Employees (Includes Police Chiefs) Coverage Level Actives Pre -65 Retirees Post -65 Retirees Total Employee Only 2 1 3 6 Employee + Sp 1 4 5 10 Employee + Child(ren) 0 1 0 1 Employee + Family 5 2 0 7 Waiving Coverage 3 0 0 3 Total 1 11 8 8 27 All Other Employees Coverage Level Actives Pre -65 Retirees Post -65 Retirees Total Employee Only 51 34 42 127 Employee + Sp 25 50 28 103 Employee + Child(ren) 22 6 0 28 Employee + Family 92 36 2 130 Waiving Coverage 1 95 0 0 1 95 Total 285 126 72 1 483 Bickmore 5 Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City JM Table 3A Summary of Retiree Benefit Provisions OPEB provided: The City has indicated that the only OPEB provided is medical coverage. Access to coverage: Medical coverage is currently provided through CalPERS as permitted under the Public Employees' Medical and Hospital and Care Act (PEMHCA). ➢ This coverage requires the employee to satisfy the requirements for retirement under CaIPERS, which requires attainment of age 50 with 5 years of State or public agency service or approved disability retirement. > If an eligible employee is not already enrolled in the medical plan, he or she may enroll within 60 days of retirement or during any future open enrollment period. A Coverage may be continued at the retiree's option for his or her lifetime. A surviving spouse and other eligible dependents may also continue coverage. > The employee must commence his or her retirement warrant within 120 days of terminating employment with the City to be eligible to continue medical coverage through the City and be entitled to the employer subsidy described below. Benefits provided: As a PEMHCA employer, the City is obligated to contribute toward the cost of retiree medical coverage for the retiree's lifetime or until coverage is discontinued. Benefits continue to dependents so long as they remain eligible for coverage. The City's contribution toward the cost of medical plan premiums for active and retired employees and their dependents are defined by two resolutions with CalPERS, which apply based on employment group: For active and retired employees in the City Management group, the City contributes 100% of the medical plan premium for the employee and any covered dependents. o For active and retired employees in all other employment groups, the City contributes toward medical plan premiums not to exceed the monthly maximum amounts shown in the table below: Employee only Employee + 11 Family $ 279.25 1 $ 555,49 1 $ 726.04 Current premium rates: The 2012 CalPERS monthly medical plan rates in the Los Angeles Area rate group are shown in the table below. If different rates apply where the member resides outside of this area, those rates are reflected in the valuation, but are not shown below. Los An eles Area 2012 Health Plan Rates Actives and Pre -M Retirees 11 Medicare 'Eli ible Plan Ee Only Ee & 1 Ee & 2 +' _ Ee Only Ee & 1 Ee & 2+ Blue Shield HMO $510.72 $1,021.44 $1,327.87 $337.99 $675.98 $982.41 Blue Shield NetValue HMO 439.25 878.50 1142.05 337.99 675.98 939.53 Kaiser HMO 465.63 931.26 1210.64 277.81 555.62 835.00 PERS Choice PPO 505.63 1011.26 1314.64 383.44 766.88 1070.26 PERS Select PPO 429.22 858.44 1115.97 383.44 766.88 1024.41 PERS Care PPO 906.39 1812.78 2356.61 432.43 864.86 1408.69 PORAC Association Plan 556.00 1041.00 1323.00 418.00 833,00 1115.00 Note that the additional CalPERS administration fee is not included in this valuation. B ckmore A6 Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample Citv Table 313 General CalPERS Annuitant Eligibility Provisions The content of this section has been drawn from Section C, Summary of Plan Provisions, of the State of California OPEB Valuation as of June 30, 2011, issued February 2012, to the State Controller from Gabriel Roeder & Smith. It is provided here as a brief summary of general annuitant and survivor coverage, Health Care Coverage Retired Employees A member is eligible to enroll in a CaIPERS health plan if he or she retires within 120 days of separation from employment and receives a monthly retirement allowance. If the member meets this requirement, he or she may continue his or her enrollment at retirement, enroll within 60 days of retirement, or enroll during any Open Enrollment period. If a member is currently enrolled in a CaIPERS health plan and wants to continue enrollment into retirement, the employee will notify CaIPERS and the member's coverage will continue into retirement. Eligibility Exceptions: Certain family members are not eligible for CaIPERS health benefits: • Children age 26 or older • Children's spouses • Former spouses • Never enrolled or disabled children over age 26 Coordination with Medicare • Grandparents • Parents • Children of former spouses • Other relatives CalPERS retired members who qualify for premium -free Part A, either on their own or through a spouse (current, former, or deceased), must sign up for Part B as soon as they qualify for Part A. A member must then enroll in a CaIPERS sponsored Medicare plan. The CaIPERS- sponsored Medicare plan will pay for costs not paid by Medicare, by coordinating benefits. Survivors of an Annuitant If a CaIPERS annuitant satisfied the requirement to retire within 120 days of separation, the survivor may be eligible to enroll within 60 days of the annuitant's death or during any future Open Enrollment period. Note; A survivor cannot add any new dependents; only dependents that were enrolled or eligible to enroll at the time of the member's death qualify for benefits. Surviving registered domestic partners who are receiving a monthly annuity as a surviving beneficiary of a deceased employee or annuitant on or after January 1, 2002, are eligible to continue coverage if currently enrolled, enroll within 60 days of the domestic partner's death, or enroll during any future Open Enrollment period. Surviving enrolled family members who do not qualify to continue their current coverage are eligible for continuation coverage under COBRA. Bickmore» Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City Table 4 OPEB Valuation Actuarial Methods and Assumptions Valuation Date April 1, 2012 Funding Method Entry Age Normal Cost, level percent of pay2 Asset Valuation Method Market value of assets Expected Return on Assets 7.0% Discount Rate 4.77% (blended rate; see Appendix 1) Participants Valued Only current active employees and retired participants and covered dependents are valued. No future entrants are considered in this valuation, Salary Increase 3.25% per year, used only to allocate the cost of benefits between service years Assumed Increase for 3.25% per year where determined on a Amortization Payments percent of pay basis Inflation Rate 3.25% per year The demographic actuarial assumptions used in this valuation are based on the (demographic) experience study of the California Public Employees Retirement System using data from 1997 to 2007. Rates for selected age and service are shown below and on the following pages. Mortality Before Retirement Illustrative rates: CalPERS ublic Agency Miscellaneous Non - Industrial Deaths only Projected to 2015 CaIP RS Pu Iic Agency Fire & Police Combined Industrial & Non - Industrial Deaths Projected to 2015 Age I Male Female Age Male Female 15 0.00041 0.00006 15 0.00041 0.00006 20 0.00043 0.00015 20 0.00045 0,00018 30 0.00052 0.00034 30 0.00061 0.00044 40 0.00084 0.00060 40 0,00096 0.00072 50 0.00161 0.00116 50 0.00174 0.00129 60 0.00364 0.00259 60 0,00380 0.00276 70 0.00848 0.00633 70 0.00865 0,00652 80 0.01452 0.01070 80 0.01472 0.01090 z The level percent of pay aspect of the funding method refers to how the normal cost is determined. Use of level percent of pay cost allocations in the funding method is separate from and has no effect on a decision regarding use of a level percent of pay or level dollar basis for determining amortization payments. Bickmore re Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the Citv of Samole Citv Table 4 - Actuarial Methods and Assumptions (Continued) Mortality After Retirement Illustrative rates: Healthy Lives CalPERS'Public Agency Miscellaneous; Police & Fire Post Retirement Mortality Projected to 2015 Age Male Female 40 0.00089 0.00058 50 0.00218 0.00115 60 0.00664 0.00420 70 0.01553 0.01213 80 0.05012 0.03620 90 0.16415 012219 100 0.34379 0.31717 110 1 1.000001 1.00000 Disabled Lives (continued) CaIPERS Public Agency Fire Disability Post Retirement Mortality Projected to 2015 Age Male female 40 0.00347 0.00235 50 0.00508 0.00404 60 0.00827 0,00842 70 0.02176 0.01760 80 0.06671 0.04432 90 0.16543 0.13640 100 0.41015 0.35141 110 1 1.00000 1 1.00000 Disabled Lives CaIPERS Public Agency Miscellaneous Disability Post Retirement Mortality Projected to 2015 Age I Male I Female 40 0.01600 0.00625 50 0.01490 0.01143 60 0.02115 0.01588 70 0.03588 0.02944 80 0.07977 0.05363 90 0.21126 0.14726 100 0.45676 0.37474 110 1 1.000001 1.00000 CaIPERS Public Agency Police Disability Post Retirement Mortality Projected to 2015 Age Male Female 40 0.00261 0.00208 50 0.00459 0.00368 60 0.00780 0.00814 70 0.02136 0.01727 80 0.06642 0.04411 90 0.16441 0.13616 100 0.40912 0.35089 110 1,00000 1 1.00000 Termination Rates For miscellaneous employees: sum of CaIPERS Terminated Refund and Terminated Vested rates for miscellaneous employees - Illustrative rates Attained Age Years of Service 0- 3 5 10 15 ` 20 15 0.1812 0.0000 0.0000 0.0000 0.0000 0.0000 20 0.1742 0.1193 0.0946 0.0000 0.0000 0.0000 25 0.1674 0.1125 0.0868 0.0749 0.0000 0.0000 30 0.1606 0.1055 0.0790 0.0668 0.0581 0.0000 35 0.1537 0.0987 0.0711 0.0587 0.0503 0.0450 40 0.1468 0.0919 0.0632 0.0507 0.0424 0.0370 45 1 0.1400 1 0.0849 0.0554 0.0427 0.0347 1 0.0290 Bckmore Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the Citv of Sample Citv Table 4 - Actuarial Methods and Assumptions (Continued) Termination Rates (continued) Service Retirement Rates For safety employees: sum of CaIPERS Terminated Refund and Terminated Vested rates for police officers - Illustrative rates Attained Age Years of Service 0 3 5 10 15 20 15 01013 0.0000 0.0000 0.0000 0.0000 0.0000 20 0.1013 0.0258 0.0249 0.0000 0.0000 0.0000 25 0.1013 0.0258 0.0249 0.0179 0.0000 0.0000 30 0.1013 0.0258 0.0249 0.0179 0.0109 0.0000 35 0.1013 0.0258 0.0249 0.0179 0.0109 0.0082 40 0.1013 0.0258 0.0249 0.0179 0.0109 0.0082 45 1 0.1013 1 0.0258 1 0.0249 1 0.0179 0.0109 0.0082 For safety employees: sum of CaIPERS Terminated Refund and Terminated Vested rates for firefighters - Illustrative rates Attained Age ; Years of Service 0 3 5 10 15 20 15 0.0947 0.0000 0.0000 0.0000 0.0000 0.0000 20 0.0947 0.0323 0.0257 0.0000 0.0000 0.0000 25 0.0947 0.0323 0.0257 0.0090 0.0000 O.U000 30 0.0947 0.0323 0.0257 0.0090 0.0079 0.0000 35 0.0947 0.0323 0.0257 0.0090 0.0079 0.0069 40 0.0947 0.0323 0.0257 0.0090 0.0079 0.0069 45 0.0947 0.0323 0.0257 0,0090 1 0.0079 0.0069 For miscellaneous employees CaIPERS Public Agency 2.7% @ 55 - Illustrative rates Attained Age Years of Service 5 10 15 1 20 25 30 50 0.0275 0.0350 0.0425 0.0500 0.0575 0.0650 55 0.0908 0,1155 0.1403 0.1650 0.1898 0.2145 60 0.0880 0.1120 0.1360 0.1600 0.1840 0.2080 65 0.1458 0.1855 0.2253 0.2650 03048 03445 70 0.1288 0.1638 0.1990 0.2340 0.2692 0.3042 75 & over 1.0000 1 1.0000 1.0000 1 1.0000 1.0000 1.0000 Bickmore za Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City Table 4 - Actuarial Methods and Assumptions (Continued) Service Retirement Rates (concluded) For safety employees CalPERS Public Agency 3% @ 50 for Police officers - Illustrative rates Attained Age Years of Service 5 10 15.' 20 25 30 50 0.0700 0.0700 0.0700 0.1310 0.1930 0.2490 52 0.0610 0.0610 0.0610 0.1160 0.1710 0.2200 55 0.0900 0.0900 0.0900 0.1700 0.2500 0.3220 57 0.0800 0.0800 0.0800 0.1520 0.2230 0.2880 60 0.1350 0.1350 0.1350 0.2550 0.3765 0.4845 62 0.1125 0.1125 0.1125 0.2125 0.3138 0.4038 65 & over, 1.0000 1 1.0000 1 1.0000 1.0000 1.0000 1 1.0000 For safety employees CalPERS Public Agency 3% @ 50 for Firefighters - Illustrative rates Attained Age Years of Service 5 10 15 20 25 30 50 0.0340 0.0340 0.0340 0.0480 0.0680 0.0800 52 0.0690 0.0690 0.0690 0.0970 0.1380 0.1630 55 0.1270 0.1270 0.1270 0.1770 0.2520 0.2980 57 0.1010 0.1010 0.1010 0.1410 0.2010 0.2380 60 0.1500 0.1500 0.1500 0.2100 0.2985 0.3540 62 0.1250 0.1250 0.1250 0.1750 0.2488 0.2950 65 & over, 1.0000 1 1.0000 1 1.0000 1 1.0000 1.0000 1 1.0000 Disability Retirement Rates Illustrative rates: CalPERS Public Agency Miscellaneous Disability Age Male Female 25 0.00010 0.00010 30 0.00021 0.00020 35 0.00063 0.00088 40 0.00145 0.00164 45 0.00252 0.00243 50 0.00331 0.00311 55 0.00366 0.00306 60 0.00377 0,00253 Bckmere 21 Actuarial Valuation of Other Post - Employment Benefit Programs as of And 1. 2012 for the Citv of Sample Citv Table 4 - Actuarial Methods and Assumptions (Continued) Disability Retirement Rates (continued) CaIPERS Public Agency Fire Combined Disability CalPERS Public Agency Police Combined Disability Age Unisex Age r Unisex 20 0.00034 20 0.00079 25 0.00130 25 0.00332 30 0.00262 30 0.00664 35 0.00382 35 0.00996 40 0.00502 40 0.01327 45 0.00632 45 0.01659 50 0.00794 50 0.01999 55 0.07305 55 0.06803 60 0.07351 60 0.06869 Healthcare Trend Rate Medical plan premiums are assumed to Increase once each year. The increases over the prior year's levels are assumed to be effective on the dates shown below: Effective: Premium Effective- - Premium April 1 ` increase April 1 Increase 2013 * 2017 6.50% 2014 8.00% 2018 5.50% 2015 7.50% 2019 4.50% 2016 7.00% & later * Actual premium increases were used for 2013 for pre - Medicare premiums; for post - Medicare premiums, no increase was assumed for 2013. Employer Cost Sharing Where the City contribution is defined as a fixed dollar amount(s), we have assumed these benefits will increase by a constant rate of 4% per year. Medicare Eligibility Absent contrary data, all individuals are assumed to be eligible for Medicare Parts A and B at age 65. Participation Rate Active employees: 100% of employees in the City Management group and 85% of all other employees are assumed to continue their current medical plan election in retirement. Those employees currently waiving coverage are assumed to elect coverage in the Kaiser Los Angeles area plan at a later date, thus gaining access to medical plan benefits in retirement. Retired participants: Existing medical plan elections are assumed to be continued until the retiree's death. Bickmore Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City Table 4 - Actuarial Methods and Assumptions AM (Concluded) Spouse Coverage Active employees: 85% are assumed to be married and 80% of married employees are assumed to elect medical plan coverage for their spouse in retirement. Surviving spouses are assumed to retain medical plan coverage until their death. Husbands are assumed to be 3 years older than their wives. Retired participants: Existing elections for spouse medical plan coverage are assumed to continue until the spouse's death. Actual spouse ages are used, where known; if not, husbands are assumed to be 3 years older than their wives. Dependent Coverage Active employees: 30% are assumed to cover eligible dependents other than a spouse at retirement; eligibility for medical plan coverage for non - spouse dependents is assumed to end at the retiree's age 62. Retired participants covering dependent children are assumed to end such coverage when the youngest currently covered dependent reaches age 26. Changes Since the Prior Valuation: Discount rates Funded rate: decreased from 7.6% to 7.0% Unfunded rate: decreased from 4.5% to 4.0% Demographic assumptions Rates of assumed mortality, termination, disability and retirement rates were updated from those provided in the CalPERS 2002 experience study to those developed from the CalPERS 2007 experience study. Explicit costs for potential disability benefits were included. Healthcare trend Medical plan premiums are assumed to increase at slightly higher rates than were assumed in the prior valuation. Dependent coverage Due to more favorable and longer eligibility for dependent children, this valuation includes projected OPEB costs for dependents of current (and future) retirees. Participation Rate The percentage of non -City Management employees assumed to elect medical plan coverage in retirement was lowered to 85 %, from 100 %. Spouse Coverage The percentage of employees who are assumed to elect medical plan coverage for a spouse in retirement was lowered to 68% (85% times 80 %), from 85 %. Bckmoro 2B Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the Citv of Sample Citv Table 5 Projected Benefit Payments The following is an estimate of other post - employment benefits to be paid on behalf of current retirees and current employees expected to retire from the City. + No benefits expected to be paid on behalf of current active employees prior to retirement are considered in this projection. + No benefits for potential future employees have been included. Expected annual benefits have been projected on the basis of the actuarial assumptions outlined in Table 4. Pro'ected Annual Benefit Payments - Fiscal Year Ending Current Future Ending June 30 Retirees Retirees Total 2012 $1,242,576 $ $1,242,576 2013 1,313,061 53,778 1,366,839 2014 1,331,312 111,234 1,442,546 2015 1,375,262 178,890 1,554,152 2016 1,413,044 252,847 1,665,891 2017 1,435,251 332,572 1,767,823 2018 1,447,173 418,809 1,865,982 2019 1,474,551 507,584 1,982,135 2020 1,491,552 599,012 2,090,564 2021 1 1,508,005 1 693,226 1 2,201,231 The following chart summarizes these same projected benefits viewed by employment group rather than by status: Projected Annual Benefit; Payments By Group Fiscal Year Ending City M mt Mid M mt General Police Fire Total 2012 $ 173,459 $ 124,795 $ 318,086 $ 379,053 $ 247,183 $1,242,576 2013 196,944 137,790 348,769 414,873 268,464 1,366,840 2014 203,964 147,282 369,498 439,394 282,409 1,442,547 2015 229,958 159,991 395,013 469,740 299,450 1,554,152 2016 257,368 171,824 418,270 500,322 318,107 1,665,891 2017 268,594 182,522 446,339 534,818 335,551 1,767,824 2018 271,160 192,411 475,677 573,189 353,545 1,865,982 2019 288,041 204,999 503,194 612,690 373,211 1,982,135 2020 289,271 218,795 532,521 655,734 394,242 2,090,563 2021 293,638 231,530 557,846 704,320 413,896 2,201,230 Bickmore < 24 Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City Appendix 1 Determination of Blended Discount Rate The following outlines the methodology used to determine a "blended" discount rate for determining the value of the City's OPEB obligations and Annual Required Contribution for City employees. The calculation takes into account the value of funds already accumulated in an irrevocable OPEB trust account assumed to earn an average of 7.0% per year. The portion of benefits not funded through the trust is assumed to be funded by local agency investments earning a long term average rate of return of 4.0% per year. The City has no current plans to contribute to the OPEB trust in future years. Calculation of Blended Discount Rate Based on Funded Ratio Trust assets, April 1, 2012 5,761,456 Assumed pay -as- you -go discount rate 4.00% Assumed prefunding discount rate 7.00% APVPB on 4/1/12 determined using pre - funding rate 37,088,907 Assets as % of prefunding APVPB 15.53% Blended discount rate based on funded ratio: a. 7.0% times 15.53% 1.09% b. (100% - 15.53 %) times 4.00% 3.38% c. Sum of a. plus b. 4.47% Bckmore _ Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City Appendix 2 Breakout of the City Plan Results by Group The tables beginning on this page break out the results for each group on a partially prefunded basis. All results reflect amortization of the unfunded actuarial liability as described in Table 1 B of the report. Bckmore 2 6 City Mid- Management I Management FGeneral Approach Partial Prefunding Basis Discount Rate 4.47 % Amortization Method Level Percent of Pay Remaining amortization period in ears 27 Number of Covered Employees Actives 11 29 81 Retirees 16 23 63 Total Participants 27 52 144 Actuarial Present Value of Projected Benefits ( APVPB) Actives $ 2,083,524 $ 2,645,113 $ 6,939,881 Retirees 3,214,072 2,583,001 6,750,752 Total APVPB 5,297,596 5,228,114 13,690,633 Actuarial Accrued Liability (AAL) Actives 995,873 1,448,551 3,812,178 Retirees 3,214,072 2,583,001 6,750,752 Total AAL 4,209,945 4,031,552 10,562,930 Actuarial Value of Assets 569,623 545,486 1,429,208 Unfunded Actuarial Accrued Liability (UAAL) 3,640,322 3,486,067 9,133,722 Amortization Factor 23.2734 23.2734 212734 Annual Required Contribution (ARC) Normal Cost $ 151,416 $ 133,587 $ 316,632 Amortization of UAAL 156,415 149,788 392,453 Interest to 6/30/2012 3,337 3,072 7,687 ARC for Fiscal Year End 6/3012012 311,169 286,447 716,771 1. Calculation of the Annual OPEB Expense a. ARC for current fiscal year $ 311,169 $ 286,447 $ 716,771 b. Interest on Net OPEB Obligation (Asset) at beginning of year (20) 1,466 3,033 c. Adjustment to the ARC 20 (1,472) (3,046) d, Annual OPEB Expense (a. + b. + c.) 311,169 286,441 716,758 2. Calculation of Expected Contribution a. Estimated payments on behalf of retirees 85,523 124,398 327,382 b. Estimated contribution to OPEB trust - - - c. Total Expected Employer Contribution 85,523 124,398 327,382 3. Change in Net OPEB Obligation (f.d, minus 2.c.) 225,646 162,042 389,377 Net OPEB Obligation (Asset), beginning of fiscal year (454) 32,797 67,854 Net OPEB Obligation (Asset) at fiscal year and 225,192 194,839 457,230 Bckmore 2 6 Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City Appendix 2 — Breakout of Results by Group (Concluded) In both of the tables above, the actuarial value of assets for each group is derived by allocating the total assets in proportion to the total AAL. Additionally, the allocation of the net OPEB obligation at the beginning of the fiscal year for each group was derived from information provided in the report on the April 1, 2010 valuation and information provided in the City's financial statements for the fiscal years ending June 30, 2010 and June 30, 2011. Bckmore 27 Police Fire Total Approach Partial Prefunding Basis Discount Rate 4.47% Amortization Method Level Percent of Pay Remaining amortization period in ears) 27 Number of Covered Employees Actives 124 51 296 Retirees 70 42 214 Total Participants 194 93 510 Actuarial Present Value of Projected Benefits ( APVPB) Actives $ 12,704,841 $ 5,170,535 $ 29,543,894 Retirees 9,573,707 5,990,891 28,112,423 Total APVPB 22,278,548 11,161,426 57,656,317 Actuarial Accrued Liability (AAL) Actives 5,402,665 2,809,836 14,469,104 Retirees 9,573,707 5,990,891 28,112,423 Total AAL 14,976,372 8,800,727 42,581,527 Actuarial Value of Assets 2,026,365 1,190,775 5,761,456 Unfunded Actuarial Accrued Liability (UAAL) 12,950,008 7,609,953 36,820,071 Amortization Factor 23.2734 23.2734 23.2734 Annual Required Contribution (ARC) Normal Cost $ 609,736 $ 217,078 $ 1,428,449 Amortization of UAAL 556,429 326,981 1,582,066 Interest to 6/30/2012 12,642 5,898 32,637 ARC for Fiscal Year End 6/30/2012 1,178,808 549,957 3,043,152 1. Calculation of the Annual OPEB Expense a. ARC for current fiscal year $ 1,178,808 $ 549,957 $ 3,043,152 b. Interest on Net OPEB Obligation (Asset) at beginning of year 11,438 1,382 17,299 c. Adjustment to the ARC (11,486) (1,388) (17,372) d. Annual OPEB Expense (a. + b, + c,) 1,178,760 549,951 3,043,079 2. Calculation of Expected Contribution a. Estimated payments on behalf of retirees 463,969 241,303 1,242,576 b. Estimated contribution to OPEB trust - - 0 c. Total Expected Employer Contribution 463,969 241,303 1,242,576 3. Change in Net OPEB Obligation (1.d. minus 2.c.) 714,791 308,648 1,800,503 Net OPEB Obligation (Asset), beginning of fiscal year 255,881 30,920 386,998 Net OPEB Obligation (Asset) at fiscal year end 970,671 339,569 2,187,501 In both of the tables above, the actuarial value of assets for each group is derived by allocating the total assets in proportion to the total AAL. Additionally, the allocation of the net OPEB obligation at the beginning of the fiscal year for each group was derived from information provided in the report on the April 1, 2010 valuation and information provided in the City's financial statements for the fiscal years ending June 30, 2010 and June 30, 2011. Bckmore 27 Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the Citv of Sample Citv Appendix 3 OPEB Disclosure Information The Information necessary to complete the OPEB footnote in the City's financial reports is summarized below, or we note the location of the information contained elsewhere in this report: Summary of Plan Provisions: OPEB Funding Policy: Annual OPEB Cost and Net OPEB Obligation: See Section F; details are provided also at the top of the exhibit in Table 1B See Table 1 C OPEB Cost Contributed Percentage of Net OPEB Fiscal Year Annual OPEB Annual OPEB Obligation Ended Cost Cost Contributed (Asset) 6/30/2010 $ 2,451,005 100.0% $ - 6/30/2011 2,504,816 70.0% 386,998 6/30/2012 3,043,079 56.8% 2,187,501 Actuarial Methods and Assumptions: See Table 4. Funding Status and Percentage of Funding Progress: See Section E — Basic Valuation Results Actuarial accrued liability (AAL) $ 42,581,526 Actuarial value of plan assets 5,761,456 Unfunded actuarial accrued liability (UAAL) 36,820,071 Funded ratio (actuarial valu of plan assets /AAL) 13.53% Covered payroll (active Plan members) 22,837,200 UAAL as a percentage of covered payroll 161.23% Required Supplementary Information: Three Year History of Amounts Funded See chart below: 4/1/2010 Schedule of Funding Progress Unfunded UAAL as a Actuarial Value Actuarial Accrued Actuarial Percentage of Actuarial of Assets Liability Accrued Liability Funded Ratio Covered Payroll Covered Payroll Valuation Date (a) (b) (b -a) (a /b) (c) ((b -a) /c) 4/1/2010 $ 2,176,473 $ 28,530,690 $ 26,354,217 7.63% $ 28,339,068 93.00% 4/1/2010 $ 4,418,696 $ 30,781,683 $ 26,362,987 14.35% $ 29,260,088 90.10% 4/1/2012 $ 5,761,456 $ 42,581,526 $ 36,820,071 13.53% $ 22,837,200 161.23% Bckmore 2B Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample Citv Appendix 4 Prefunding Results for FYE 2013 The following develops the results for the City's fiscal year ending June 30, 2013 that would be applicable were the City to resume contributing at least 100% of the ARC each year. These results compare to the partial prefunding results shown in Column 2 of Tables 1A, 1 B and 1 C found on pages 11 through 13. Bickmore 29, Contribute 100 %d of the ARC For fiscal year beginning 7/1/2012 For fiscal year ending 6/30/2013 Discount rate 7.00% Expected return on assets 7.00% Number of Covered Employees Actives 296 Retirees 214 Total Participants 510 Actuarial Present Value of Projected Benefits ( APVPB) Actives $ 17,385,568 Retirees 21,056, 987 Total APVPB 38,442,555 Actuarial Accrued Liability (AAL) Actives 10,730,117 Retirees 21,056,987 Total AAL 31,787,104 Actuarial Value of Assets 6,164,758 Unfunded AAL (UAAL) 25,622,346 Factor 172480 Annual Required Contribution (ARC) Normal Cost 812,932 Amortization of UAAL 1,485,529 Interest to 01/00 38,667 Total ARC at fiscal year end 2,337,128 1. Calculation of the Annual OPEB Expense a. ARC for current fiscal year $ 2,337,128 b. Interest on Net OPEB Obligation (Asset) at beginning of year 153,125 c, Adjustment to the ARC (135,704) d. Annual OPEB Expense (a. + b. + c.) 2,354,549 2. Calculation of Expected Contribution a. Estimated payments on behalf of retirees 1,366,839 b. Estimated contribution to OPEB trust 970,289 c. Total Expected Employer Contribution 2,337,128 3. Change in Net OPEB Obligation (1.d. minus 2.c.) 17,421 Net OPEB Obligation (Asset), beginning of fiscal year 2,187,501 Net OPEB Obligation (Asset) at fiscal year end 2,204,922 Bickmore 29, Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City Glossary Actuarial Accrued Liability (AAL) — Total dollars required to fund all plan benefits attributable to service rendered as of the valuation date for current plan members and vested prior plan members; see "Actuarial Present Value" Actuarial Funding Method — A procedure which calculates the actuarial present value of plan benefits and expenses, and allocates these expenses to time periods, typically as a normal cost and an actuarial accrued liability Actuarial Present Value (APV) — The amount presently required to fund a payment or series of payments in the future, it is determined by discounting the future payments by an appropriate interest rate and the probability of nonpayment. Aggregate — An actuarial funding method under which the excess of the actuarial present value of projected benefits over the actuarial accrued liability is levelly spread over the earnings or service of the group forward from the valuation date to the assumed exit date, based not on individual characteristics but rather on the characteristics of the group as a whole Annual Required Contribution (ARCS -- The amount the employer would contribute to a defined benefit OPEB plan for a given year, it is the sum of the normal cost and some amortization (typically 30 years) of the unfunded actuarial accrued liability Annual OPEB Expense — The OPEB expense reported in the Agency's financial statement, which is comprised of three elements: the ARC, interest on the net OPEB obligation at the beginning of the year and an ARC adjustment. Attained Age Normal Cost (AANC) — An actuarial funding method where, for each plan member, the excess of the actuarial present value of benefits over the actuarial accrued liability (determined under the unit credit method) is levelly spread over the individual's projected earnings or service forward from the valuation date to the assumed exit date CalPERS — Many state governments maintain a public employee retirement system; CalPERS is the California program, covering all eligible state government employees as well as other employees of other governments within California who have elected to join the system Defined Benefit DDB) — A pension or OPEB plan which defines the monthly income or other benefit which the plan member receives at or after separation from employment Defined Contribution (DC) — A pension or OPEB plan which establishes an individual account for each member and specifies how contributions to each active member's account are determined and the terms of distribution of the account after separation from employment B ckmore I ,- Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample City Glossary (Continued) Entry Age Normal Cost (EANC) — An actuarial funding method where, for each Individual, the actuarial present value of benefits is levelly spread over the individual's projected earnings or service from entry age to assumed exit age Frozen Attained Age Normal Cost (FAANC) — An actuarial funding method under which the excess of the actuarial present value of projected benefits over the actuarial accrued liability (determined under the unit credit method) is levelly spread over the earnings or service of the group forward from the valuation date to the assumed exit date, based not on individual characteristics but rather on the characteristics of the group as a whole Frozen Entry Age Normal Cost (FEANC) — An actuarial funding method under which the excess of the actuarial present value of projected benefits over the actuarial accrued liability (determined under the entry age normal cost method) is levelly spread over the earnings or service of the group forward from the valuation date to the assumed exit date, based not on individual characteristics but rather on the characteristics of the group as a whole Financial Accounting Standards Board (FASB) — A private, not - for - profit organization designated by the Securities and Exchange Commission (SEC) to develop generally accepted accounting principles (GAAP) for U.S. public corporations Government Accounting Standards Board (GASB) — A private, not - for - profit organization which develops generally accepted accounting principles (GAAP) for U.S. state and local governments; like FASB, it is part of the Financial Accounting Foundation (FAF), which funds each organization and selects the members of each board Net OPEB Obl cation (Asset) - The net OPEB obligation (NOO) represents the accumulated shortfall of OPEB funding since GASB 45 was implemented. If cumulative contributions have exceeded the sum of the prior years' annual OPEB expenses, then a net OPEB asset results. Non - Industrial Disability (NID) - Unless specifically contracted by the individual Agency, PAM employees are assumed to be subject to only non - industrial disabilities. Normal Cost - Total dollar value of benefits expected to be earned by plan members in the current year, as assigned by the chosen funding method; also called current service cost Other Post - Employment Benefits (OPEB) - Post - employment benefits other than pension benefits, most commonly healthcare benefits but also including life insurance if provided separately from a pension plan Pay -As- You -Go (PAYGO) - Contributions to the plan are made at about the same time and in about the same amount as benefit payments and expenses coming due Bick , ore 31 it Actuarial Valuation of Other Post- Employment Benefit Programs as of April 1, 2012 for the City of Sample City Glossary (Continued) PEMHCA — The Public Employees' Medical and Hospital Care Act, established by the California legislature in 1961, provides community -rated medical benefits to participating public employers. Among its extensive regulations are the requirements that medical insurance contributions for retired annuitants and paid for by a contracting Agency be equal to the medical insurance contributions paid for its active employees, and that a contracting Agency file a resolution, adopted by its governing body, with the CalPERS Board establishing any new contribution. Proolected Unit Credit (PUC) — An actuarial funding method where, for each individual, the projected plan benefit is allocated by a consistent formula from entry date to assumed exit date Public Agency Miscellaneous PAM) — Actuarial assumptions used by CalPERS for most non- safety public employees. Select and Ultimate — Actuarial assumptions which contemplate rates which differ by year initially (the select period) and then stabilize at a constant long -term rate (the ultimate rate) Trend — The healthcare cost trend rate, defined as the rate of change in per capita health claims costs over time as a result of factors such as medical inflation, utilization of healthcare services, plan design and technological developments Unfunded Actuarial Accrued Liability (UAAL) — The excess of the actuarial accrued liability over the actuarial value of plan assets Unit Credit (UC) -- An actuarial funding method where, for each individual, the unprojected plan benefit is allocated by a consistent formula from entry date to assumed exit date Vesting - As defined by the plan, requirements which when met make a plan benefit nonforfeitable on separation of service before retirement eligibility Bickmore� �� WHEN 1 01 4 tl A A, CERTIFICATE OF LIABILITY INSURANCE DAT06112/13YY' THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW, THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER, IMPORTANT: if the Certificate holder is an ADDITIONAL INSURED, the policyties) must be endorsed. if SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsements . PRODUCER 916 - 380. 5300 Warren G. Bender CO. 616 Gibson Drive Suite 246 916- 380 -6208 Roseville, CA 56678 Maggio Bender Johnson °O °T Warren G. Bender Co. PHONE PAX No. E,d1:916- 380 -63QQ INC. Not 916- 380 -9206 E -M.AR , certs w bender,com INSURER S AFPORQINO COVERAGE NAIC # INSURER A:Hartford Fire 1 ns. Co. 119682 INSURED Bickmore and Associates, Inc. - 1760 Creekside Drive #200 Sacramento, CA 96833 INSURER s:Harttord Ins. of the Midwest INSURER c:XL Specialty Ins. Co. INSURER D:Hartford Casualty Company 29424 INSURER E: 06/01/14 COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES, LIMITS SHOWN MAY HAVE BEEN REDUCED BY PA(D CLAIMS. INSR LTR TYPE OFINSURANCE SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE a THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN POLICY F PQUCYEXP LIMITS A GENERAL LIABILITY X COMMERCIAL GENERAL LIABILITY CLAIMS -MADE ❑ OCCUR q 57 UUN ATi464 05/01/111 06/01/14 EACH OCCURRENCE $ 1,000,00 P E IE Lu ryn� $ 500,00 MEO EXP (An yPro Person} _5 S,OO PERSONAL &ADV INJURY & 1,000,00 m GENERAL AGGREGATE E 2,000,00 GENT. AGGREGATELIMITAPPLIES X POLICY PR6 PER: ._.. LOD PRC=TS- CWROPAGG S 2,000,00 S A AUTOMOBILE LIABILITY ANYAUO ALLGWNED SCHEDIAED AlP'OB AUTOS X HIRED AU70S X NON-OWNED AUTOS 7UUN AT1464 06101115 05101114 E accident S 11000,00 SOOLY INJURY (P. Person) $ BODILY MJURY (Pw accidenN $ PROPER AMA, Pet a- Qcltlsne $ S D UMBRELLA LIAR EXCESS UAB X OCCUR CLAIMSMAOE 67 RHU AT0766 05/01)13 05/01)14 EACH OCCURRENCE Is 3,000,00 AGGREGATE $ 3,000,00 QED I X I RETENTION 10,000 S B WORKERSCOMPENSATION ANDEMPLOYERS'LIAEIUTY ANY PROPRIETORMARTNEWEXECUTIVE Y� OPPICERIMEMBER EXCLUDED? (Mandatory In NH) N es.dEM antler D ST,'i2 OPERATIONS NIA 67 WE DX7604 06/01/13 06101/14 X WCSTATU- OTN- E,L, EACH ACCIDENT $ 1, 000,00 E.L. DISEASE -EA EMPLOYEE S 1,000,00 E,L. DiSEAEE- ROLICY LiMrr 1,000,0 $ C Professional Liab. Deduct. $25,000 MPP0023655 07 05/D1fi3 06/01/14 Each Oce 6,000,0 Aggregate 6100010 DESCRIPTION OF OPERATIONS [LOCATIONS /VEHICLES (Ararat ACORD 101, Additional RoMarks SchodUle, (f more space to required) Evidence of Insurance CERTIFICATE HOLDER CANCELLATION EVIDEVI SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN Evidence of Insurance ACCORDANCE WITH THE POLICY PROVISIONS. AUTHORR2E�DREPRESENTATIVE q ©1988 -2010 ACORD CORPORATION. Alt rights reserved. ADDED 25 (2010105) The ACORD name and logo are registered marks of ACORD EXHIBIT B CITY OF SANTA ANA REQUEST FOR PROPOSALS FOR ACTUARIAL VALUATION SERVICES FOR OTHER POSTEMPLOYMENT BENEFITS (OPEB) List and describe fully the contracts performed by your firm which demonstrate your ability to provide the supplies, equipment or services included in the scope of the proposal specifications. Attach additional pages if required. The City reserves the right to contact each of the references listed for additional information regarding your firm's qualifications. Ildgrence Customer Name: Sacramento City USD Contact Individual: Ms. Gail Richardson Address: 5735 — 47th Avenue Sacramento CA 95824 Phone Number: (916) 643 -9421 Facsimile Number: (916)643-9457 ContractAmount: $13,500 Year: 2013 Description of supplies, equipment, or services provided: Actuarial Valuation of Other Postemplovment Benefits for GASB 45 reporting Reference Customer Name: City of Albuquerque Contact Individual: Ms. Pamela Fanelli Address: 400 Marquette NW Albuquerque NM 87102 Phone Number: (505) 768 -3426 Facsimile Number: (505) 768 -2264 ContractAmount: $15,000 Year: Description of supplies, equipment, or services provided: Actuarial Valuation of Other Postemployment Benefits for GASB 45 reporting Reference Customer Name: City and County of Denver Contact Individual: Ms. Kell! Bennett Address: 201 W. Colfax Ave.. Dept. 1109 Denver CO 80202 Phone Number: (720) 913 -5156 Facsimile Number: N/A Contract Amount: $22,000 Year: 2013 Description of supplies, equipment, or services provided: Actuarial Valuation of Other Postemplovment Benefits for GASB 45 reporting THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL, PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. EXHIBIT B CITY OF SANTA ANA REQUEST FOR PROPOSALS FOR ACTUARIAL VALUATION SERVICES FOR OTHER POSTEMPLOYMENT BENEFITS (OPEB) REFERENCES List and describe fully the contracts performed by your firm which demonstrate your ability to provide the supplies, equipment or services included in the scope of the proposal specifications. Attach additional Cages if required. The City reserves the right to contact each of the references listed for additional information regarding your firm's qualifications. Reference Customer Name: City of Palm Springs Contact Individual: Mr. Geoffrey (Jeff) S. Kiehl Address: 3200 East Tahquitz Canyon Way Palm Springs, CA 92263 -2743 Phone Number: (760) 323 -8221 Facsimile Number: (760) 323 -8238 Contract Amount: $8.000 Year: 2013 Description of supplies, equipment, or services provided: Actuarial Valuation of Other Postemployment Benefits for GASB 45 reporting Customer Name: Beverly Hills Unified School District Address: 255 S. Lasky Drive Beverly Hills CA 90212 Facsimile Number: 310 - 556 -4319 Contact Individual: Ms. Dianne Richard Phone Number: 310 - 551 -5100 ContractAmount: $10,000 Year: Description of supplies, equipment, or services provided: Actuarial Valuation of Other Postemplovment Benefits for GASB 45 reporting Customer Name: City of Mountain View Contact Individual: Ms. Melissa Stevenson Dile Address: 500 Castro Street 3rd Floor Mountain View CA 94041 Phone Number: (650) 903 -6610 Facsimile Number: N/A Contract Amount: $7500 Year: 2013 Description of supplies, equipment, or services provided: Actuarial Analysis & Consulting regarding the Impact on OPEB costs to join PEMHCA. THIS FORM MUST BE COLVIPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. EXHIBIT C CITY OF SANTA ANA REQUEST FOR PROPOSALS FOR ACTUARIAL VALUATION SERVICES FOR OTHER POSTEMPLOYMENT BENEFITS (OPEB) PROPOSER'S STATEMENT Proposer understands and agrees that this written RFP (or any part thereof specifically designated and accepted by the City of Santa Ana, hereinafter City) shall constitute the entire agreement between proposer and the City only after it has been accepted by the City Council, endorsed by the Clerk of the Council with her signature and official seal noting hereon the action of approval of the Council, signed by the Executive Director or his duly authorized agent, and signed by the City Attorney, denoting his approval of the form of this document, and its execution, and when it or an exact copy of it has been either delivered to proposer or deposited with the United States Postal Service properly addressed to the proposer with the correct postage affixed thereto. Proposer further agrees that upon delivery (as defined above) of the accepted agreement he /she will furnish City all required bonds and certificate of liability insurance within ten (10) days (excluding Saturdays, Sundays and City's legal holidays), or the funds, check, draft, or proposer's bond substituted in lieu thereof accompanying this proposal shall become the property of the City and shall be considered as payment of damages due to the delay and other causes suffered by City because of the failure to furnish the necessary bonds and because it is distinctly agreed that the proof of damages actually suffered by City is difficult to ascertain; otherwise said funds, check drafts, or proposer's bond substituted in lieu thereof shall be returned to the undersigned. Proposer understands that a proposal is required for the entire work, that the estimated quantities set forth in the RFP schedule are solely for the purpose of comparing proposals, and that final compensation under the contract will be based upon the actual quantities of work satisfactorily completed. All terms contained in the specifications, the certification of nondiscrimination by contractors, and the required insurance certificates are to be incorporated by reference into this agreement and are made specifically as part of this RFP. Signed and Printed N Title 0rD f M0 Date THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL, 1 PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. 16 CITY OF SANTA ANA REQUEST FOR PROPOSALS FOR ACTUARIAL VALUATION SERVICES FOR OTHER POSTEMPLOYMENT BENEFITS (OPEB) NONCOLLUSION AFFIDAVIT NON - COLLUSION AFFIDAVIT (Title 23 United States Code Section 112 and Public Contract Code Section 7106) To the CITY OF SANTA ANA In accordance with Title 23 United States Code Section 112 and Public Contract Code 7106 the proposer declares that the proposal is not made in the interest of, or on behalf of, any undisclosed person, partnership, company, association, organization, or corporation; that the proposal is genuine and not collusive or sham; that the proposer has not directly or indirectly induced or solicited any other proposer to put in a false or sham proposal, and has not directly or Indirectly colluded, conspired, connived or agreed with any proposer or anyone else to put in a sham proposal, or that anyone shall refrain from bidding; that the proposer has not in any manner, directly or indirectly, sought by agreement, communication, or conference with anyone to fix the proposal price of the proposer or any proposer, or to fix any overhead, profit, or cost element of the proposal price, or of that of any other proposer, or to secure any advantage against the public body awarding the contract of anyone interested in the proposed contract; that all statements contained in the proposal are true; and, further, that the proposer has not, directly or indirectly, submitted his or her proposal price or any breakdown thereof, or the contents thereof, or divulged information or data relative thereto, or paid, and will not pay, any fee to any corporation, partnership, company association, organization, bid depository, or to any member or agent thereof to effectuate a collusive or sham proposal. Note: The above noncollusion affidavit is part of the proposal. Signing this proposal on the signature portion thereof shall also constitute signature of this noncollusion affidavit. Proposers are cautioned that making a false certification may subject the certifier to criminal prosecution. Signed State of California, County of Sa C4,-A w eyc- Subscribed and s.w�7orn to (or affirmed) before me on this l6 day of v� l _, 201q—, by ' -C rG" C (7ruLJ's proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me. No ary P ablic Signature PBiX 1.0 - Commission # 2008040 .,M Notary Public • California .y - sacrameeto County M 'Comm. Ex Tres Jan,5, 2017 Notary Public Seal THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. 17 A � ds CERTIFICATE OF LI LIABILITY INSURANCE DATE (MMIDOfRHY) CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, G7t0812014 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER, THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER($), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. if SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder In lieu of such endorsoment(s). PRODUCER MARSH USA, INC, CONTACT AMA: .____ 445 SOUTH STREET PHONE-- xh:..__._.._.._ MORPoSTOWN, NJ 079606454 E- MAIL Alm Mra istawncenraquest@marshCom Fax 212 - 9469979 -- _d T— - - - - -- - - - - -- - �t 1 F7 PROT I X I INSURER(SLAFFORDINGCGVERAGE NAICK 123456 -GAW -1374 INSURER A; DrOn American Insurance Co '16586 INSURED York Insurance Acquisition, LLC INSURER B .__ and its Subsidiaries INSURER 0: 99 Cherry Hill Road, Suite 102 _ Company, NJ 07054 -1102 msuRSR o — NSURER E: UMBRELLA UAD OCCUR INSURER F ; CUVEKAGE5 CERTIFICATE NUMBER: NYC-006896682.01 RFVI.SInN NIIMHFR•Y THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INBR{ TYPE OF INSURANCE ,AOOLISIT9R_ POLICY NUMBER MMILDI6Y MMIDCY1 LIMITS A I GENERAL LIABILITY I jCP05820234-00 11211512018 1211512014 1 }-.- -I T 4,090,000 ` OCCURRENCE �S_ I X I COMMERCIAL GENERAL LIABILITY -PAGH _ DA A Y6k Y 0 1,900, AUTHORIZED REPRESENTATIVE EMISES IEa occurzared CLAIMS-MADE �X r OCCUR Ir ME-D EXP Any are person) ' $ 5,000 _ PERSONAL &AOV INJURY j g 1,000,000 II-- _____ I,bEN'L k GENERAL AGGREGATE j S 2,000,000 AGGREGATE LIMIT APPLIES PER `PRODUCTS - COMPIOP AGO 2,000,000 �t 1 F7 PROT I X I POLICY LOG 1 S _ A . AUTOMOBILE LIABILITY :BAP 5820233 -00 112I15F2013 t72}f5/20iq MINED SINGLE LIMIT 1,00 0,000_ aentl l - .....� X ANY AUTO Lp acs g ____ BODILY INJURY (Perperson) S lALLOWNCD 77 SCHEDULED AUTOS AUTOS -� _I BODILY INJURY (Per acgaent)_'S NON-ONMED OS I HRED.AUT ' '-; �IAUTO5 { R PEf2TY DAMA73E t(PeY aesiaenD `S t S UMBRELLA UAD OCCUR 'EAC{OCCURRENE,'E IS :EXCESS LIAR .m C LAMS.MADFI • AGGREGATE '; $ 1 DED RETENTIONS 6 A 1 WORKERS COMPENSATION WC 6820235-00 11211512013 12115 014 X I AID STATUL 1 0TH AND EMPLOYERS' LIABILITY YIN TOBY_r.JMLTSI ER ANY PROPRIETORIPARTNBRIEXECUTNE : -O FFICERM,EMBER[DtL I N/A EL.'eACHAGCIDEN 1S 1,000,090 (Mandatory In NH) DISEASE -EA EMPLOY E�F g 1,000,000 IA C, describe under ' D�SCRIPPON OF OPERATIONS below E— — I E1, DISEASE POLICY LIMIT I S 1,600,090 W II i I I i DESCRIPTION OF OPERATIONS LOCATIONS I VEHICLES (Attach ACORD 101, Additional Remarks Schedule, It more space Is mquiredl The City of Santa Ana, its OHoer$, employees, agents, and representatives am Included se additional Insured (except workers compensation) where required by writer Contract. ASS P©FtM APPROVED - L,L. sTORCK i E. , CERTIFICATE HOLDER CANCELLATION City Of Santa Ana SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE Alto: PUrchasing Department THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN 20 Civic Center Plaza, P.O. Box 19881M-16 ACCORDANCE WITH THE POLICY PROVISIONS. Santa Ana, CA 92702 AUTHORIZED REPRESENTATIVE of March USA Inn. Manashi Mukherjee .AvCman. sii r 4.w„Ltn,a..a.e:.. O 1988.2010 ACORD CORPORATION. All rights reserved. ACORD 25 (2010105) The ACORD name and logo are registered marks of ACORD �`� " CERTIFICATE OF LIABILITY INSURANCE DATE /2014 VW) 97117/20,4 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER, THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER MARSH USA, INC 445 SOUTH STREET CONTACT NAME: PHONE FAX No E -MAIL AOORESS: MORRISTOWN, NJ 07960 -6454 Attn: Morristown, cedrequest @marsh,com Fax 212- 948 -0979 INSURER (S) AFFORDING COVERAGE NAIC p INSURER A: National Union Fire Ins, Co. of Pittsburgh, Pa. $ 123456 -- PROFE -14 -15 INSURED York Insurance Acquisition, LLC INSURER B: INSURER C: and its Subsidiaries 99 Cherry HIII Road, Suite 102 Parsippany, NJ 07054 -1102 INSURER D CLAIMS -MADE F7 OCCUR INSURER E: INSURER F: MED EXP (Any one person) $ COVERAGES CERTIFICATE NUMBER: NYC-006901750 -01 REVISION NUMBER:1 THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSRR TYPE OF INSURANCE ADDL SUBR POLICY NUMBER MMIDDY MMIOOY� LIMITS GENERAL LIABILITY EACH OCCURRENCE $ COMMERCIAL GENERAL LIABILITY DAMA E 0 RENTED PREMISES Ea occurrence $ CLAIMS -MADE F7 OCCUR MED EXP (Any one person) $ PERSONAL &ADV INJURY $ GENERAL AGGREGATE $ GENT AGGREGATE LIMIT APPLIES PER: PRODUCTS- COMP/OP AGG $ POLICY PEo DOE $ AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT Ea accident Is BODILY INJURY (Per person) $ ANYAUTO H ALL OWNED SCHEDULED AUTOS AUTOS BODILY INJURY (Per accident) $ PROPERTY DAMAGE Per accident $ NON -OWNED HIRED AUTOS AUTOS $ 1 1 UMBRELLA LIAR H OCCUR EACH OCCURRENCE $ AGGREGATE $ EXCESS LIAS CLAIMS�MADE DED RETENTION$ 1 $ WORKERS COMPENSATION AND EMPLOYERS'LIABILITY YIN WC STATU- OTH- T T OFFICER/MEMBER EXCLUDE�I ECUTIVE FN NIA E.L. EACH ACCIDENT $ E.L. DISEASE -EA EMPLOYE $ (Mandatory In NH) If yes, describe under DE SCRIPTION OF OPERATIONS belew E.L. DISEASE - POLICY LIMIT $ A PROFESSIONAL 01- 357 -06-61 06/30/2014 06130/2015 LIMIT 10,000,000 LIABILITY RETENTION 500,000 DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (Attach AC ORD 101, Additional Remarks Schedule, if more space is required) s�( RGK ✓""� li�A �'c�ty Pttorney psslatan ,,� CERTIFICATE HOLDER CANCELLATION City Of Santa Ana SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE Attn: Purchasing Department THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN 20 Chic Center Plaza, P.O. Box 1988 M -16 ACCORDANCE WITH THE POLICY PROVISIONS. Santa Ana, CA 92702 AUTHORIZED REPRESENTATIVE of Marsh USA Inc. Manashi Mukherjee .- it.rMrt +aarsk nu,� -ex. ©1988.2010 ACORD CORPORATION. All rights reserved. ACORD 25 (2010105) The ACORD name and logo are registered marks of ACORD CERTIFICATE OF SECRETARY OF YORK RISK SERVICES GROUP, INC. 1, Peter E. Lind, the duty elected, qualified and incumbent Secretary of YORK RISK SERVICES GROUP. INC, a New York corporation (the "Corporation") do hereby certify that: The Corporation, in its capacity as sole shareholder of Bickmore, a California corporation ("Bickmore"), is the owner of Stock Certificate No. C-200 in the amount of six hundred thirty five thousand, three hundred ninety (635,390) shares of common stock, par value One Dollar ($ 1.00) per share, representing all of the issued and outstanding stock of Bickmore. I further certify that as Secretary as aforesaid, I have custody of the records of the Corporation, including without limitation the records of the ownership of the stock of the Corporation. IN WITNESS WHEREOF, I have hereunto affixed my signature and the seal of the Corporation this 5 day of June, 2014. Peter E. Lind Secretary [SEAL] 0.9'aOISD Ps TO w, ��r!,-T40�vt6t-olv, M�;%Stant CAV X11) "� °® CERTIFICATE OF LIABILITY INSURANCE DATE/2015 WY) 01/29/2015 THIS THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A COI r,6 d�,')$ETI EEA1p1THj�I"�11NG INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. 1UI7 I' NEI IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must endorsed. SUBROGATION IS WAIVED, subject to HYIf Cb�e the terms and conditions of the policy, certain policies may require an endorsem0t� I sltm;T�,i t'P'9' r:jj;4,ate does not confer rights to the certificate holder in lieu of such endorsement(s). VV PRODUCER MARSH USA, INC. 445 SOUTH STREET CONTACT NAME` PHONN AIS No: nooalLss: MORRISTOWN, NJ 07960 -6454 Attn: Morristown.cedrequest @marsh.com Fax 212 - 948-0979 CPO 5920234 -01 12/15/2014 INSURERS AFFORDING COVERAGE NAIC p INSURER A: Zurich American Insurance Cc 16535 123456-- GAW -14 -15 INSURED Onex York Holdings Corp. INSURERS: PERSONAL &ADV INJURY $ 1,000,000 and Its Subsidiaries INSURER C $ 2,000,000 99 Cherry HIII Road, Suite 102 Parsippany, NJ 07054 -1102 INSURER D PRODUCTS- COMP /OPAGG $ 2,000,000 �ry/� ,(� IV- Ul( q -0q - INSURER E: AUTOMOBILE INSURER F: COVERAGES CERTIFICATE NUMBER: NYC - 007004620 -01 REVISION NUMBER:1 THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS, ILSRR TYPE OF INSURANCE ADDLSUBR 20 Civic Center Plaza POLICY NUMBER POLICY EFF MMIDDIYYYY POLICY EXP MM/DDM'YY LIMITS A GENERAL LIABILITY X COMMERCIAL GENERAL LIABILITY CLAIMS -MADE � OCCUR of Marsh USA Inc. CPO 5920234 -01 12/15/2014 12/1512015 EACH OCCURRENCE $ 1,000,000 DAMAGES ( RENTED PREMISES Ea occurrence $ 1,000,000 MED EXP (Any one person) $ 5,000 PERSONAL &ADV INJURY $ 1,000,000 GENERAL AGGREGATE $ 2,000,000 GEN'L AGGREGATE POLICY LIMIT APPLIES PER PRO X LOC PRODUCTS- COMP /OPAGG $ 2,000,000 $ A AUTOMOBILE LIABILITY ANY AUTO ALL OWNED SCHEDULED AUTOS AUTOS NON -OWNED HIRED AUTOS AUTOS BAP 5820233 -01 12115/2014 12/15/2015 COMBINED SINGLE LIMIT Ea accident 1,000,000 X BODILY INJURY (Per person) $ 1 BODILY INJURY (Per accident) $ PROPERTY DAMAGE Per accident $ UMBRELLA LIAB EXCESS LIAB OCCUR CLAI MS-MADE EACH OCCURRENCE $ AGGREGATE $ DED RETENTION$ $ A WORKERS COMPENSATION AND EMPLOYERS' LIABILITY ANY PROPRIETOWPARTNEWEXECUTIVE 7 OFFICER/MEMBER EXCLUDED? (Mandatory in NH) If Yes, describe under DESCRIPTION OF OPERATIONS below NIA WC 5620235 -01 12/1512014 12115015 X WC STATU- OH- E.L. EACH ACCIDENT 1,000,000 $ E.L. DISEASE - EA EMPLOYE $ 1,000,000 E.L. DISEASE- POLICY LIMIT 1,000,000 $ DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space is required) CERTIFICATE HOLDER CANCELLATION City of Santa Ana SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE Attn: Sarah Ro /Sr. Accountant THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN 20 Civic Center Plaza ACCORDANCE WITH THE POLICY PROVISIONS. Santa Ana, CA 92701 AUTHORIZED REPRESENTATIVE of Marsh USA Inc. Manashi Mukherlee @'1988.2010 ACORD CORPORATION. ACORD 25 (2010/05) The ACORD name and logo are registered marks of ACORD All rights resery jJ3 ml� AGENCY CUSTOMER ID: 123456 LOC #: Morristown ADDITIONAL REMARKS SCHEDULE Page 2 of 3 AGENCY NAMED INSURED MARSH USA, INC. Onex York Holdings Corp. and Its Subsidiaries 99 Che" HIII Road, Suite 102 POLICY NUMBER JCODEE Parsippany, NJ 070541102 CARRIER NAIC EFFECTIVE DATE: ADDITIONAL REMARKS THIS ADDITIONAL REMARKS FORM IS A SCHEDULE TO ACORD FORM, FORM NUMBER: 25 FORM TITLE: Certificate of Liability Insurance NAMED INSUREDS, ADIN HEALTHCARE, INC. ALAMED HOLDINGS, INC. ARIC OF MISSISSIPPI, INC. ARROWOOD INVESTMENT GROUP, LLC ATLANTIC GATEWAY INTERNATIONAL (SAC) LTD. ATTENTA SERVICES, LLC AXIS (EASTERN CARIBBEAN) LIMITED AXIS (JAMAICA) LIMITED AXIS DE ARGENTINA S.A. AXIS INTERNATIONAL SERVICES LTD. BICKMORE BROWN REHABILITATION MANAGEMENT, INC. CAREWORKS LTD. CAREWORKS OF OHIO LTD. CAREWORKS TECHNOLOGIES LTD. CAREWORKS USA LTD CCI INVESTMENTS, LLC CCO, INC. CMI, AYORK RISK SERVICES COMPANY, INC. DONALD K. SAMS & ASSOCIATES, INC. F, A. RICHARD & ASSOCIATES, INC, FARA ADJUSTING SERVICES, INC. FARA BENEFIT SERVICES, INC. FARA BUSINESS SERVICES, INC. FARA GENERAL AGENCY, INC. FARA SECURITY SERVICES, INC. FOX HILL HOLDINGS, INC. FRANK GATES (BERMUDA) LTD. FRANK GATES ACCLAIM, INC, FRANK GATES ALTERNATIVE RISK, LLC FRANK GATES OF NEW YORK, INC. 32TECHNOLOGIES, INC. INTEGRATED RISK MANAGEMENT, INC. JI SPECIAL RISKS INSURANCE AGENCY, INC. JI SPECIALTY SERVICES, INC, JOSEPH IVY FINANCIAL GROUP, INC. NATIONAL EMPLOYERS NETWORK ALLIANCE, INC. NEXUS ASSET ACQUISITION CO. ONE, INC. OMAC AGENCY, INC, ONEX YORK FINANCE LED ONEX YORK FINANCE LP ONEX YORK MID CORP. PERSI, LLC PUBLIC ENTITY RISK SERVICES OF ILLINOIS, LLC PUBLIC ENTITY RISK SERVICES OF OHIO, INC. ACORD 101 (2008101) © 2008 ACORD CORPORATION. All rights reserved The ACORD name and logo are registered marks of ACORD �+ W� ACORO® AGENCY CUSTOMER ID: 123456 LOC #: Morristown ADDITIONAL REMARKS SCHEDULE Page 3 of 3 AGENCY NAMED INSURED MARSH USA, INC. Onex York Holdings Corp. and Its Subsidiaries 00 Cherry HIII Road, Suite 102 POLICY NUMBER Parsippany, NJ 07054 -1102 CARRIER NAIC CODE EFFECTIVE DATE: THIS ADDITIONAL REMARKS FORM IS A SCHEDULE TO ACORD FORM, FORM NUMBER: 25 FORM TITLE: Certificate of Liability Insurance RISK CONTROL 360, LLC RISK MANAGEMENT SOLUTIONS, INC. RISKCONTROL SERVICES, LLC RMS ACQUISITION, INC, ROCKPORT COMMUNITY NETWORK, INC. SAMS &ASSOCIATES, INC. SAMS INVESTIGATIONS UNLIMITED, INC, THE FRANK GATES COMPANIES, INC. THE FRANK GATES SERVICE COMPANY THE FRANK GATES SERVICE COMPANY INTEGRATED MANAGED CARE HEALTH PLAN, INC. VANTAGE HEALTH PLAN, INC. VISUAL RISK SOLUTIONS, INC, VOCWORKS LTD. WELLCOMP MANAGED CARE SERVICES, INC. YORK INSURANCE ACQUISITION, LLC YORK INSURANCE HOLDINGS, INC, YORK INSURANCE PARENT CORP, YORK INSURANCE SERVICES GROUP, INC, - CALIFORNIA YORK PRO, INC. YORK RISK CONTROL SERVICES, LLC YORK RISK POOLING SERVICES, INC. YORK RISK SERVICES GROUP INTERNATIONAL HOLDINGS, LTD. YORK RISK SERVICES GROUP, INC. YORK RISK SERVICES GROUP, INC. - FLORIDA YORK RISK SERVICES HOLDING CORP, YORK RISK SERVICES ORGANIZATION, INC. YORK RSG (INTL) COLOMBIA SAS YORK RSG (INTL) LTD, YORK RSG (INTL) MEXICO S. DE R.L. DE C.V. YORK SPECIAL INVESTIGATIONS, INC. YORK WMCS CORP. THE FOLLOWING ARE INCLUDED AS ADDITIONAL NAMED INSUREDS UNDER THE ONEX YORK PROGRAM EFFECTIVE 01/0512015: MCMC LLC MCMC INDEPENDENT EXAMS, LLC COMPEVAL DO EXAMS, LLC LITIGATION SOLUTIONS, LLC MANAGED CARE NETWORK SERVICES, LLC COMPPARTNERS INC, ACORD 101 (2008101) © 2008 The ACORD name and logo are registered marks of ACORD �'tvre'N 6-a- 1.3