Agenda

Return

D.6

To:	Board of Supervisors
From:	David Twa, County Administrator
Date:	November 10, 2015

Contra

Costa

County

Subject:

Government Code 7507 Compliance - Retirement Benefits - Safety Units of Probation Management, Fire Management, and AFSCME 512

APPROVE	OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR	RECOMMENDATION OF BOARD COMMITTEE

Action of Board On: 11/10/2015

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

John Gioia, District I Supervisor
Candace Andersen, 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:	Ann Elliott, Employee Benefits Manager Harjit S. Nahal, Assistant County Auditor

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: November 10, 2015
David Twa,

BY:	, Deputy

RECOMMENDATION(S):

ACCEPT actuarial valuation of future annual costs of potential changes to Retirement Benefits, changing the pension COLA for employees in specific units of Probation Management, Fire Management, and AFSCME 512 (Safety) who become members of the CCCERA on or after January 1, 2016, as provided by Buck Consultants, in letters dated October 12, 2015.

FISCAL IMPACT:

As shown in the valuations and the chart below, the result of the retirement changes described herein for employees would result in a savings of annual pensionable pay with the first hire in year one. Future valuation results will change with demographic and cost updates. These projections do accurately measure the direction of the proposed plan change costs. Over time, as more employees are hired into the new PEPRA tier at a 2% COLA, the savings will become more significant. It should be noted that the figures presented in this report represent the savings associated only with the negotiation of a 2% COLA. The actual savings from both the new State law and the negotiated change beginning January 1 is the savings between the new PEPRA tier with a 2% COLA and Tiers A and III with a 3% COLA.

FISCAL IMPACT: (CONT'D)

BACKGROUND:

Government Code, Section 7507 requires with regard to local legislative boards, that the future costs of changes in retirement benefits or other post employment benefits as determined by the actuary, shall be made public at a public meeting at least two weeks prior to the adoption of any changes in public retirement plan benefits or other post employment benefits. The code also requires that an actuary be present to provide information as needed at the public meeting at which the adoption of a benefit change shall be considered.

Assembly Bill 340 (AB340), known as the California Public Employees' Pension Reform Act of 2013 (PEPRA), took effect January 1, 2013. Generally, for employees who become miscellaneous members of the Contra Costa County Employees’ Retirement Association (CCCERA) on or after January 1, 2013, PEPRA requires a pension formula of 2% at age 62, 36 month final compensation averaging, and a maximum salary amount used for pension calculation of $110,100 (plus CPI). Under PEPRA the safety retirement benefit is generally 2.7% at age 57, 36 month final compensation averaging, and a maximum salary amount used for pension calculation of $132,000 (plus CPI). PEPRA does not address Cost of Living Adjustments (COLAs).

The County has completed all negotiations with all bargaining groups with respect to a proposed change in the COLA to the pension benefit. The Board of Supervisors is taking no action today other than accepting the attached reports. This report is a technical clean-up action. Both the Probation Management Unit and the AFSCME 512 Safety Unit were tied to the Probation Peace Officers negotiation and the Fire Management Unit is tied to the United Chief Officers Association. All three of these units have an effective date of January 1, 2016, for the two percent cost of living adjustment to the pension benefit.

Three 7507 compliance reports from Buck Consultants, dated October 12, 2015 are attached. The following summarizes existing provisions regarding pension COLAs:

Probation Management - Current Management Resolution, Section 44.11, Safety PEPRA Tier, "For employees who become Safety New Members of the Contra Costa County Employees Retirement Association (CCCERA) on or after January 1, 2013, retirement benefits are governed by the California Public Employees’ Pension Reform Act of 2013 (PEPRA) (Chapters 296 and 297, Statutes of 2012) and Safety Option Plan Two (2.7% @ 57) applies. To the extent that this resolution conflicts with any provision of PEPRA, PEPRA governs." Two percent cost of living language will be included in the next Management Resolution.
Fire Management - Current Fire Management Resolution, Section 4.13.b "For employees who become Safety New Members of the CCCERA on or after January 1, 2016, the cost of living adjustment to the retirement allowance will not exceed two percent (2%) per year, and the cost of living adjustment will be banked." No change is needed to implement the 2% pension COLA for this group.
AFSCME 512 Safety - Current MOU with AFSCME, Section 28.3, Subsection C.2 "PEPRA Safety Option Plan Two (2.7% @ 57) applies to employees who, under PEPRA, become Safety New Members of CCCERA. Future agreement reached with the Probation Peace Officers of Contra Costa County (PPOCCC) regarding the cost of living adjustment to the retirement allowance for PEPRA Safety Option Plan Two Safety members retirement will apply to Safety members of AFSCME, Local 512, effective on the same date." No change is needed to implement the 2% pension COLA for this group. The PPOCCC cost of living adjustment becomes effective January 1, 2016.

The reports explain that this change affects only future employees; it will have no effect on the unfunded actuarial accrued liabilities of CCCERA. The expressed savings are in annual dollar amounts and as percentages of covered payroll for calendar years 2016, 2017 and 2018. For calendar year 2016, the start date is assumed to be January 1, 2016. The cost impacts are shown based upon one hire per year (results are the average of one male and one female). The savings shown are combined employee and employer normal costs. The savings are equal to the excess of the normal cost for the PEPRA structure and a 3.00% COLA to the pension benefit over the normal cost of a PEPRA structure and a 2.00% pension COLA.

CONSEQUENCE OF NEGATIVE ACTION:

Possible delay in the implementation of the pension COLA reduction, resulting in loss of savings.