Agenda

Return

SD. 9

To:	Board of Supervisors
From:	David Twa, County Administrator
Date:	March 1, 2011

Contra

Costa

County

Subject:

EMPLOYEE RETIREMENT PLAN CONTRIBUTION RATES FOR FISCAL YEAR 2011/2012

APPROVE	OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR	RECOMMENDATION OF BOARD COMMITTEE

Action of Board On: 03/01/2011

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

John Gioia, District I Supervisor
Gayle B. Uilkema, District II Supervisor
Mary N. Piepho, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V Supervisor

Contact:	Lisa Driscoll, County Finance Director 335-1023
cc:	Lisa Driscoll, County Finance Director Robert Campbell, County Auditor-Controller

I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown.
ATTESTED: March 1, 2011
David Twa,

BY:	, Deputy

RECOMMENDATION(S):

ADOPT the attached Resolution No. 2011/65 approved by the Retirement Board, which establishes the retirement plan contribution rates for employers and employees effective July 1, 2011 through June 30, 2012.

FISCAL IMPACT:

Significant fiscal impact - see 'Background' below.

BACKGROUND:

Each year, the Retirement Board establishes contribution rates for employee retirement plans based on an annual actuarial valuation study. On January 12, 2011, the Retirement Board adopted the attached resolution establishing employee and employer rates for Tier I, Tier II, Tier III and Safety retirement plans for the 2011-12 fiscal year. These rates have been included in the salary forecast and planning for the 2011-12 budget.

BACKGROUND: (CONT'D)

It should be noted that these rates include the second year impact of recent earning losses due to the economy. It is anticipated that rates will be significantly higher for FY 2012-13 and could continue for at least the next four years.
Retirement expense for the 2011-12 fiscal year are projected to be $29.2 million more than the current year. These rates include the following:

The interest rate assumption was reduced from 7.8% to 7.75% by Retirement Board action at its March 10, 2010 meeting.
The rates quoted in these schedules are the employer and employee required rates without taking into consideration any employer subvention of employee contributions. Contra Costa County will subvent approximately $17.7 million of employee contributions in FY 2011-12.
The rates quoted are before any employee-employer cost sharing. A provision in the law allows safety members to defray the employer's cost of the '3% at 50" enhanced benefit. Contra Costa County safety members defray a portion of this cost. These cost sharing agreements vary by bargaining unit.
The rates reflect the Retirement Board action to depool CCCERA's assets, liabilities and normal cost by employer.

Projected contributions, assuming at least 7.75% earnings annually are depicted in the chart below:

It is important enough to repeat that this projection is net of a 7.75% earning assumption.

CONSEQUENCE OF NEGATIVE ACTION:

Rates will not be properly applied to employees and the County which will cause an imbalance between what is owed to the Contra Costa county Employees Retirement Association and what is put aside for those payments.

CHILDREN'S IMPACT STATEMENT:

None.