Agenda

Return

D.4

To:	Contra Costa County Fire Protection District Board of Directors
From:	David Twa, County Administrator
Date:	September 15, 2015

Contra

Costa

County

Subject:

Government Code 7507 Compliance - Retirement Benefits - United Chief Officers' Association

APPROVE	OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR	RECOMMENDATION OF BOARD COMMITTEE

Action of Board On: 09/15/2015

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

Candace Andersen, Director
Mary N. Piepho, Director
Karen Mitchoff, Director

ABSENT:

John Gioia, Director
Federal D. Glover, Director

Contact:	Lisa Driscoll, County Finance Director, 335-1023
cc:	Ann Elliott, Employee Benefits Manager Jeff Carman, Chief CCCFPD

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: September 15, 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 United Chief Officers' Association who become members of the CCCERA on or after January 1, 2016 or alternatively July 1, 2016, as provided by the County's actuary in a report dated September 8, 2015 (attached).

FISCAL IMPACT:

As shown in the valuation, the combined result of the retirement changes described herein for Safety employees in the United Chief Officers' Association would result in a savings of 4.2% 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 savings described in the valuation report do not include the savings resulting from the implementation of PEPRA.

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 safety members of the Contra Costa County Employees’ Retirement Association (CCCERA) on or after January 1, 2013, PEPRA requires a pension formula of 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 District has negotiated a 2.00% COLA to the pension benefit for those United Chief Officers who become members of CCCERA on or after January 1, 2016. A 7507 report from Buck Consultants, dated September 8, 2015, is attached. The report explains that this proposed change would affect 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 either January 1, 2016 or alternatively July 1, 2016. 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.

After a two week window, on October 6, 2015, the CCC Fire District Board of Directors may consider and may take formal action with respect to a proposed change in the COLA to the pension benefit. The Board of Directors is taking no action today other than accepting the report. On October 6, 2015, an actuary will be present to answer any questions that the Board or public poses regarding the savings associated with the pension change.

CONSEQUENCE OF NEGATIVE ACTION:

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

VOTE OF SUPERVISORS

RECOMMENDATION(S):

FISCAL IMPACT:

BACKGROUND:

CONSEQUENCE OF NEGATIVE ACTION:

CLERK'S ADDENDUM