Agenda

Return

D.3

To:	Board of Supervisors
From:	David Twa, County Administrator
Date:	February 25, 2014

Contra

Costa

County

Subject:

Government Code 7507 Compliance - Retirement Benefits - Various Bargaining Units

APPROVE	OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR	RECOMMENDATION OF BOARD COMMITTEE

Action of Board On: 02/25/2014

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

ABSENT:

Federal D. Glover, District V Supervisor

Contact:	Lisa Driscoll, County Finance Director, 335-1023
cc:	Robert Campbell, 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: February 25, 2014
David Twa,

BY:	, Deputy

RECOMMENDATION(S):

CONSIDER accepting actuarial valuation of future annual costs of potential changes to Retirement Benefits, changing the pension COLA for employees in various bargaining units who become members of the CCCERA on or after July 1, 2014, as provided by Buck Consultants.

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 July 1 is the savings between the new PEPRA tier with a 2% COLA and Tiers A and III with a 3% COLA. When considering the difference between these tiers the total savings is closer to 5.0%.

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).

In the future, the Board of Supervisors may consider and may take formal action 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 reports. Should an agreement be negotiated in regards to this and other bargaining issues, the Board of Supervisors will be able to more quickly adopt the resulting Memoranda of Understanding, without an additional two week delay for compliance with Government Code Section 7507.

Six 7507 reports from Buck Consultants are attached:

Professional and Technical Engineers IFPTE, Local 21 (dated February 12, 2014)
Public Employees Union Local One (dated February 13, 2014)
SEIU, Local 1021 (dated February 14, 2014)
District Attorney Investigators Association (dated February 17, 2014)
Western Council of Engineers (dated February 18, 2014)
Professional and Technical Engineers AFSCME 512 (dated February 19, 2014)

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 2014, 2015, 2016, and 2017. For calendar year 2014, the start date is assumed to be July 1, 2014; therefore the savings are shown for a six month period. 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 adoption of memoranda of understanding and in the future implementation of the pension COLA reduction, resulting in loss of savings.

CHILDREN'S IMPACT STATEMENT:

None.