HomeMy WebLinkAbout2/27/2002 - STAFF REPORTS (2) Date: February 27, 2002
To: City Council
From: Director of Human Resources via City Manager
SUBJECT: CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM
MISCELLANEOUS EMPLOYEES
RECOMMENDATION:
It is recommended that City Council give notice of its intention to approve an Amendment to
the Contract between the Board of Administration of the California Public Employees'
Retirement System (CaIPERS) and the City Council of the City of Palm Springs.
SUMMARY:
City Council adopted Resolution 20245 on December 19, 2001, which approved a
Memorandum of Understanding with the General Unit employees. Article 4.8 of this
Memorandum of Understanding agrees to contract with CaIPERS for the 2.7% @ 55 Full
and Modified Formula for Local Miscellaneous Members_
BACKGROUND:
On December 19, 2001, the City Council adopted Resolution 20245 approving a
Memorandum of Understanding, which agreed to amend the formula for the California
Public Employees' Retirement System (CaIPERS)to 2.7% @ 55 Full and Modified Formula
for Local Miscellaneous Members.
The Resolution of Intent and the Ordinance amending the CaIPERS contract are actions
that must be certified by City Council to comply with CaIPERS contract amendment
procedures.
Pursuant to Government Code Section 7507, attached is the contract amendment cost
analysis prepared by CaIPERS, reflecting:
1) Change in the Present Value of Benefits(page 2) $11,467,794
2) Increase in Actuarial Value of Assets (page 2) $ 6,709,121
3) Change in the Unfunded Accrued Liability(page3) $ 1,974,517
4) Change in the Total Employer Rate(page 4) 0.000%
Additionally, the contract amendment cost analysis reflects a 2.533% increase in the normal
cost for local miscellaneous members as well as a 1%increase in the employee contribution
(which the City currently pays). Due to the super funded value of the actuarial assets of$8.6
million in the City's pension account, no employer contribution will be required as of the
effective date of the contract amendment or for fiscal year 02/03. The future annual post
amendment rate will remain at zero percent until the asset surplus is exhausted.
t�
SUSAN E. MILLS
Director of Human Resources
APPROVED:
City Manager
ATTACHMENTS: CalPERS Contract Amendment Cost Analysis
Resolution of Intention to Approve an Amendment to Contract
Ordinance Authorizing an Amendment to the Contract
CaIPERS Actuarial Valuation 2000
REVIEWED BY DEn OF FINANCE
4eM4)441l0
CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2000
MISCELLANEOUS PLAN FOR CITY OF PALM SPRINGS
EMPLOYER NUMBER 355
Benefit Description: Section 21354.5,2.7% @ 55 Full and Modified Formula(Includes All Non-Retired Local
Miscellaneous Members)
New CalPERS' Board Resolution Concerning Value of Assets
On June 20, 2001,the CalPERS' Board adopted a new resolution concerning the value of assets to be
used in determining the employer contribution rate due to benefit increases for amendments to public
agency contracts. This new resolution applies to all contract amendments based upon the June 30, 2000
annual actuarial valuation and for which a Resolution of Intention to amend is filed with CalPERS by
June 30, 2002.
This new resolution provides an increase in the actuarial value of assets in the amount of two times the
increase in the Present Value of Benefits. Under the new resolution,the employer has the option of
taking no increase in the actuarial value of assets and allowing the regular asset smoothing method to
operate as it normally would. In addition, the employer may limit the actuarial value of assets used for
rate setting purposes to 100%of market value if normal application of the resolution would otherwise
exceed this limit. Under no circumstances will an actuarial value of assets in excess of 110% of market
value be utilized. Further, the new resolution will apply to agencies whether or not they utilized the 95%
asset value offered in the previous resolution.
The available rate choices are offered under three different Alternatives:
• Alternative I —No increase in Actuarial Value of Assets
• Alternative 2—Actuarial Value of Assets increased by twice the increase in the Present Value of
Benefits due to the amendment, limited to 100% of Market Value of Assets
• Alternative 3—Actuarial Value of Assets increased by twice the increase in the Present Value of
Benefits due to the amendment, limited to 110% of Market Value of Assets
The employer should carefully consider its choices in choosing its new rate under the options made
available by the new resolution. The recent stock market volatility and the choices created under this
new board resolution can complicate your plan's future financial position. For many plans at CalPERS,
the financial soundness of the plan will not be jeopardized regardless of the choice made by the employer.
However, it is possible that, for some plans, some choices under the resolution would represent poor
financial decisions. You are strongly encouraged to have in-depth discussions with your CalPERS
actuary about the financial consequences of any amendment.
Present Value of Projected Benefits
The table below shows the change in the total present value of benefits for the proposed plan amendment!
The present value of benefits represents the total dollars needed today to fund all future benefits for
current members of the plan, i.e. without regard to future employees. The difference between this amount
and current plan assets must be paid by future employee and employer contributions. As such,the change
in the present value of benefits due to the plan amendment represents the "cost" of the plan amendment.
However, for plans with excess assets some or all of this"cost"may already be covered by current excess
assets.
In this analysis, the increase in the present value of benefits due to the amendment is $11,467,794. Two
times this increase is $22,935,588, or 24.6% of market value of assets. Therefore, under alternative 2,the
December S,2001 Page 1_ao
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CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:NNE 30,2000
MISCELLANEOUS PLAN FOR CITY OF PALM SPRINGS
EMPLOYER NUMBER 355
Benefit Description: Section 21354.5,2.7% @ 55 Full and Modified Formula(Includes All Non-Retired Local
Miscellaneous Members)
actuarial value of assets will be increased to 100 0%of the market value of assets. Under alternative 3,
the actuarial value of assets will be increased to 110.0%of the market value of assets.
As of June 30,2000 Current Plan Post-Amendment Post-Amendment Post-Amendment
Alternative I Alternative 2 Alternative 3
Total Assets at Market Value S 93,165,785 S 93,165,785 S 93,165,785 S 93,165,785
(MVA)
Actuarial Value of Assets(AVA) 86,456,664 86,456,664 93,165,785 102,492,364
Increase in AVA 0 6,709,121 16,025,700
AVA IMVA 92.80,19 92.8% 100.0% 110.0%
Present Value of Projected 5 77,837,227 5 89,305,021 S 89,305,021 S 89,305,021
Benclits(PVB)
Actuarial Value of Assets(AVA) 86,456,664 86,456,664 93.165,785 102.482.364
Present Value of Future Employer
and Employee Contributions S (8,619,437) S 2,848,357 S (3,860,764) 8 (13,177,343)
(PVB—AVA)
Change to PVB 11,467,794 11,467,794 11,467,794
Accrued Liability
It is not required,nor necessarily desirable,to have accumulated assets sufficient to cover the total present
value of benefits until every member has left employment. Instead, the actuarial funding process
calculates a regular contribution schedule of employee contributions and employer contributions(called
normal costs)which are designed to accumulate with interest to equal the total present value of benefits
by the time every member has left employment. As of each June 30,the actuary calculates the
"desirable"level of plan assets as of that point in time by subtracting the present value of scheduled future
employee contributions and future employer normal costs from the total present value of benefits. The
resulting"desirable"level of assets is called the accrued liability.
A plan with assets exactly equal to the plan's accrued liability is simply"on schedule"in funding that
plan,and only future employee contributions and future employer normal costs are needed. A plan with
assets below the accrued liability is"behind schedule", or is said to have an unfunded liability,and must
temporarily increase contributions to get back on schedule. A plan with assets in excess of the plan's
accrued liability is "ahead of schedule", or is said to have excess assets,and can temporarily reduce future
contributions. A plan with assets in excess of the total present value of benefits is called super funded,
and neither future employer nor employee contributions are required. Of course, events such as plan
amendments and investment or demographic gains or losses can change a plan's condition from year to
year. For example,a plan amendment could cause a plan to move all the way from being super-funded to
being in an unfunded position.
December 5,2001 Page 2 of 9
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CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2000
MISCELLANEOUS PLAN FOR CITY OF PALM SPRINGS
EMPLOYER NUMBER 355
Benefit Description: Section 21354.5,2.7% @ 55 Full and Modified Formula(Includes All Non-Retired Local
Miscellaneous Members)
The changes in your plan's accrued liability,unfunded accrued liability, and the funded ratio as of June
30, 2000 due to the plan amendment are shown in the table below,
As of June 30,2000 Current Plan Post-Amendment Post-Amendment Post-Amendment
Alternative 1 Alternative 2 Alternative 3
Entry Age Normal Accrued $ 62,686,840 S 71,370,478 S 71,370,478 5 71,370,478
Liability(AL)
Actuarial Value of Assets(AVA) 86,456,664 86,456,664 93.165,785 102,482,364
Unfunded Liability/(Excess s (23,7(,9,824) S (15,086,186) S (21,795,307) 8 (31,111,886)
Assets)(UAL=AL-AVA)
Funded Ratio(AVA/AL) 137.9% 121.1% 130.59/4 143.6%
Change to AL 8,683,638 8,683,638 8,683,638
Change to UAL 8,683,638 1,974,517 (7,342,062)
Total Employer Contribution Rate
While the tables above give the changes in the "cost"and funded status of the plan due to the amendment,
there remains the question of what will happen to the employer contribution rate because of the change in
plan provisions_
CalP) RS policy is to implement rate changes due to plan amendments immediately on the effective date
of the change in plan benefits. In general,the policy also provides that the change in unfunded liability
due to the plan amendment will be separately amortized over a period of 20 years from the effective date
of the amendment and all other components of the plan's unfunded liability/excess assets will continue to
be amortized separately.
However, special administrative rules have been applied to plans with a current employer contribution
rate of zero. The pre-amendment excess assets in these plans were sufficient to cover the employer's
normal cost for one or more years into the future. A plan amendment will use up some or all of the pre-
amendment excess assets. If there were still excess assets(i.e. if the plan is still ahead of schedule) after
the plan amendment, the remaining excess assets were spread over the greater of 10 years or the number
of years for which the excess assets would keep the employer rate equal to zero. If the amendment uses
up all excess assets and creates an unfunded liability(i.e. from being ahead of schedule to behind
schedule), the post-amendment unfunded liability was amortized over 20 years.
One aspect of the Board's June 20,2001 Resolution is that, generally, if an agency elects an alternative
which increases the actuarial value of assets (alternative 2 or 3), the result will be a lower shbrt-term
contribution and a higher longer-term contribution. To illustrate this we have estimated what the impact
might be when the June 30, 2001 valuation is prepared_ Please be aware this estimate assumes there are
no changes to actuarial assumptions or methods, there are no actuarial gains or losses, and there are no
plan changes such as work force changes and employer paid member contributions converted to pay.
However,we have taken into account CalPERS' June 30, 2001 year-end market value rate of return,
December 5,2001 Page 3 of 9
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CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS: DUNE 30,2000
MISCELLANEOUS PLAN FOR CITY OF PALM SPRINGS
EMPLOYER NUMBER 355
Benefit Description:Section 21354.5,2.7% Q 55 Full and Modified Formula(Includes All Non-Retired Local
Miscellaneous Members)
-72%/ The actual employer rate from July 1, 2003 to June 30, 2004 will be set by the June 30, 2001
annual valuation and will likely deviate from this estimate_
The table below shows the change in your plan's employer contribution rate due to the plan amendment.
As of June 30,2000 Current Plan Post-Amendment Post-Amendment Post-Amendment
Alternative I Alternative 2 Alternative 3
2002-2003
Payment for Normal Cost 7.906°/ 10.439% 10,439% 10.439%
Payment on Amortization Bases -7.906% -10.439% -10.439% -10.439°/
Payment for 1959 Survivor 0.000% 0.000% 0.000% 0.000%
Benefit Program
Total Employer Rate 0.000% 0,000% 0.000% 0 000%
Change to Normal Cost 2.533% 2,533% 2.533%
Change to Total Employer Rate 0.000% 0.000% 0.000%
Current Amortization Base' 9999-year
Amendment Amortization Base
-fresh Start' 15-year 30-year 9999-year
-Multiple Base a N/A N/A N/A
2003-2004
Estimated Total Employer Rate 0.0% 2.1% 0.0% 0.0%
(recognizing—7.2%investment
return for 2000-2001)
Projection Amortization Base 80-ycar Multiple Base 16-year 16-year
1—Details of the current amortization base arc shown on page 7 of June 30,2000 annual valuation report. If you have adopted any ocher
subsequent amendments,the current amortization base is the schedule after these adopted amendments.
2- Ifa fixed number ofyears is shown,it means that the current unfunded actuarial liability Is projected and amortized over this fired number of
years. This amortization replaces the amortization schedule shown in your June 30,2000 annual valuation and any other subsequent
amendments you have adopted
3- It20-year is shown,it means that changes in liability due to plan amendments and changes in actuarial value of assets are amortized
separately over a 20-year period. This amortization schedule is in addition to the amortization schedule shown in the June 30.2000 annual
valuation and any other 5ubscquent amendments you have adopted.
In the above table,the information shown in the 2002-2003 box represents the actual initial contribution
rate that will apply during fiscal 2002-2003 if you adopt the amendment by June 30,2002. However,
these figures do not incorporate the—7.2% investment return in 2000-2001. The estimated employer rates
shown in the 2003-2004 box do take the negative return into consideration and will give you a better
estimate of what to expect in 2003-2004.
Note that the change in normal cost in the table above may be much more indicative of the long term
change in the employer contribution rate due to the plan amendment. The plan's unfunded
December 5,2001 Page 4- c )NO
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CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:DUNE 30,2000
MISCELLANEOUS PLAN FOR CITY OF PALM SPRINGS
EMPLOYER NUMBER 355
Benefit Description:Section 2I354.5,2.7% r@r 55 Full and Modified Formula(Includes All Non-Retired Local
Miscellaneous Members)
liability/excess asset cost shown in the table above is a temporary adjustment to the employer contribution
to"get the plan back on schedule". This temporary adjustment to the employer rate varies in duration
from plan to plan. For example, a plan with initial excess assets being amortized over a short period of
time will typically experience a large rate increase when excess assets are fully amortized. While a plan
amendment for such a plan may produce little or no increase in the employer contribution rate now, the
change in normal cost due to the plan amendment will became fully reflected in the employer
contribution rate as soon as initial excess assets are fully amortized.
Disclosure
If your agency is requesting cost information for two or more benefit changes,the cost of adopting more
than one of these changes may not be obtained by adding the individual costs_ Instead, a separate
valuation must be done to provide a cost analysis for the combination of benefit changes. If the proposed
plan amendment applies to only some of the employees in the plan,the rate change due to the plan
amendment still applies to the entire plan, and is still based on the total plan payroll.
Any mandated benefit improvements not included in the June 30, 2000 annual valuation(such as the
change to the 90% cap for safety plans)have not been incorporated into this cost analysis.
Please note that the cost analysis provided in this document may not be relied upon once the CaIPERS
actuarial staff have completed the next annual valuation,that is, the annual valuation as of June 30,2001_
If you have not taken action to amend your contract, and we have already mailed the June 30, 2001
annual valuation report, you must contact our office for an updated cost analysis,based on the new annual
valuation.
Descriptions of the actuarial methodologies, actuarial assumptions, and plan benefit provisions may be
found in the appendices of the June 30, 2000 annual report. Please note that the results shown here are
subject to change if any of the data or plan provisions change from what was used in this study.
Certification
This actuarial valuation for the proposed plan amendment is based on the participant,benefits, and asset
data used in the June 30,2000 annual valuation, with the benefits modified if necessary to reflect what is
currently provided under your contract with CalPERS,and further modified to reflect the proposed plan
amendment. The valuation has been performed in accordance with standards of practice prescribed by the
Actuarial Standards Board, and the assumptions and methods are internally consistent and reasonable for
this plan, as prescribed by the CaIPERS Board of Administration according to provisions set forth in the
California Public Employees' Retirement Law. The valuation has been prepared in accordance with
generally accepted actuarial practice except that,under a CaIPERS Board resolution, an increased
actuarial value of assets may be substituted for the actuarial value of assets that would have been
produced by the current and generally accepted actuarial asset smoothing method described in the annual
report. If your agency elects not to increase the actuarial value of assets permitted by the Board
resolution,then no exception exists-
7
December 5,2001 Page 5 of 9
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CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:TUNE 30,2000
MISCELLANEOUS PLAN FOR CITY OF PALM SPRINGS
EMPLOYER NUMBER 355
Benefit Description: Section 21354,5,2.7% Q 55 Full and Modified Formula(Includes All Non-Retired Local
Miscellaneous Members)
oa"'4 Q 60-6
David Du Bois,F.S.A.
Associate Pension Actuary, CaIPERS
Fin Process Ids: Annual-67846 Basc-80118 Altl-80119 Alt2-80120 AIc3-80121
a&f3
December 5, 2001 Page 6 of
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CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2000
MISCELLANEOUS PLAN FOR CITY OF PALM SPRINGS
EMPLOYER NUMBER 355
Benefit Description:Section 21354.5,2.7% @ 55 Full and Modified Formula(Includes All Non-Retired Local
Miscellaneous Members)
Summary of Plan Amendments Valued
COVERAGE GROUP 70001
Pre-Amendment
• The monthly benefit at retirement for Miscellaneous members is calculated by
multiplying 1) the number of service credit years,2)the final average compensation
and 3) a benefit factor. The benefit factor for this group of employees comes from
the 2% at 55 benefit factor table. The factor depends on the member's age at
retirement. Listed below are the factors for retirement at whole year ages:
Retirement 2%at 55 Retirement 2%at 55
Age Factor Acme Factor
50 1.426% 57 2.104%
51 1.522% 58 2.156%
52 1.628% 59 2.210%
53 1.742% 60 2.262%
54 1.866% 61 2.314%
55 2.000% 62 2.366%
56 2.052% 63 2.418%
• The employee contribution rate associated with this benefit factor table is 7%.
Post-Amendment
• The monthly benefit at retirement for miscellaneous members is calculated by
multiplying 1)the number of service credit years,2)the final average compensation
and 3)a benefit factor. The benefit factor for this group of employees comes from
the 2.7%at 55 benefit factor table_ The factor depends on the member's age at
retirement, Listed below are the factors for retirement at whole year ages. This
benefit applies to all non-retired local miscellaneous members.
Retirement 2.7% at 55
Acme Factor
50 2,000%
51 2,100%
52 2.300%
53 2.400%
54 2,600%
55 and older 2.700%
• The employee contribution rate associated with this benefit factor table is 8%.
a Fil
December 5,2001 Page 7 of 9
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CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:TUNE 30,2000
MISCELLANEOUS PLAN FOR CITY OF PALM SPRINGS
EMPLOYER NUMBER 355
Benefit Description: Section 2I354.5,2.7% @ 55 Full and Modified Formula(Includes All Non-Retired Local
Miscellaneous Members)
COVERAGE GROUP 70002
Pre-Amendment
• The monthly benefit at retirement for Miscellaneous members is calculated by
multiplying 1)the number of service credit years, 2) the final average compensation
and 3)a benefit factor. The benefit factor for this group of employees comes from
the 2% at 55 benefit factor table. The factor depends on the member's age at
retirement. Listed below are the factors for retirement at whole year ages:
Retirement 20/.at 55 Retirement 2%at 55
Acme Factor Acme Factor
50 1.426% 57 2.104%
51 1.522% 58 2.156%
52 1.628% 59 2.210%
53 1.742% 60 2.262%
54 1.866% 61 2.314%
55 2.000% 62 2.366%
56 2.052% 63 2.418%
• The employee contribution rate associated with this benefit factor table is 7%.
Post-Amendment
• The monthly benefit at retirement for miscellaneous members is calculated by
multiplying 1) the number of service credit years,2)the final average compensation
and 3)a benefit factor. The benefit factor for this group of employees comes from
the 2.7% at 55 benefit factor table. The factor depends on the member's age at
retirement. Listed below are the factors for retirement at whole year ages. This
benefit applies to all non-retired local miscellaneous members.
Retirement 2.7%at 55
Aae Factor
50 2.000%
51 2.100%
52 2.300%
53 2.400%
54 2.600%
55 and older 2.700%
• The employee contribution rate associated with this benefit factor table is 8%,
4CIA /V
December 5,2001 Page 8 of 9
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CONTRACT AMENDMENT COST ANALYSIS-VALUATION BASIS:JUNE 30,2000
MISCELLANEOUS PLAN FOR CITY OF PALM SPRINGS
EMPLOYER NUMBER 355
Benefit Description: Section 21354.5,2.7% @ 55 Full and Modified Formula(Includes All Non-Retired Local
Miscellaneous Members)
Probability of Retirement for New Miscellaneous Benefit Formulas
The introduction of the three new miscellaneous formulas will affect future retirement behavior. As a
result, we developed 3 sets of probability of retirements to reflect the estimated changes in retirement
pattern. At this point, we cannot know the exact impact the new formulas will have. As we perform
experience studies in the future, we will modify our retirement assumptions accordingly. The table below
contains the new probability of retirement.
2,5% 55 2.7% 55 3% 60
Retirement Age Male Female Male Female Male Female
50 5% 7% 5% 7% 5% 7%
51 2% 5% 2% 5% 2% 5%
52 3% 5% 3% 5% 3% 5%
53 3% 5% 3% 6% 3% 5%
54 4% 5% 4% 6% 4% 5%
55 8% 9% 9% 10% 8% 9%
56 6% 7% 7% 8% 7% 8%
57 7% 6% 8% 7% 8% 7%
58 8% 10% 8% 10% 9% 11%
59 9% 9% 10% 9% 1 11% 10%
60 16% 12% 170/6 13% 19% 15%
61 15% 10% 16% 11% 17% 12%
62 26% 21% 28% 23% 31% 25%
63 22% 18% 230/, 20% 26% 22%
64 15% 13% 16% 14% 18% 16%
65 25% 25% 27% 27% 30% 30%
66 14% 15% 15% 16% 17% 18%
67 12% 14% 13% 16% 14% 17%
68 12% 11% 13°/a 12% 15% 13%
69 9% 13% 10% 14% 11% 15%
70 100% 100% 100% 100% 100% 100%
December 5, 2001 Page 9 of 9
1:50 PM
CalPERS
Actuarial&Employer Services Division
P.O.Box 942709
Sacramento,CA 94229-2709
Telecommunications Device for the Deaf-(916)326-3240
(916)326-3420 FAX (916)326-3005
September 18,2001
MISCELLANEOUS PLAN OF THE CITY OF PALM SPRINGS(EMPLOYER#355)
Dear Employer,
Enclosed please find a copy of the June 30,2000,actuarial valuation of your pension plan(a separate report is
included for each plan). This valuation report contains important actuarial information about your pension plan at
CalPERS. Ca1PERS staff actuaries are available to discuss the actuarial report with you.
Included on page 2 of the report is the funded status of your plan as of June 30,2000. The liability shown is the
Entry Age Normal Accrued Liability,based on the method used to fund your plan. The calculation of this liability is
based on the participants in your plan on June 30,2000,the actuarial assumptions adopted by the CalPERS Board
for your plan,the benefits for which you have contracted with Ca1PERS as of the date dais valuation was performed.,
and other supplemental information as appropriate.The unfunded liability is equal to this liability less the assets of
your plan on June 30,2000. A three year historic trend of this funded status is provided on the same page for those
agencies for whom the last three annual valuations have been performed.
Your new contribution rate for the MISCELLANEOUS PLAN is 0.000%. Unless there is an amendment to your
plan between now and June 30,2003,this rate will be in effect from July 1,2002 through June 30,2003. Please
provide a copy of this report to all relevant personnel in your agency and your auditor. If any plan within your
agency becomes inactive during the year(that is,there are no longer any active employees),please notify your
actuary immediately. A reconciliation from your current 2001-2002 rate to your new 2002-2003 rate,broken down
by reason for the change, is provided on page 8 of the report.
Also,please note that Governmental Accounting Standards Board(GASB)Statement Number 27 entitled
"Accounting for Pensions by State and Local Governmental Employers"applied to you beginning with the July 1,
1997 through June 30, 1998 fiscal year. In August of 1998, Ca1PERS issued a comprehensive GASB 27 package
that provided guidance with regard to this new accounting standard. Supplemental information to this 1998 package
is generally issued in August each year. These GASB 27 packages are available by going to the CalPERS web site
at http://www.calpers.ca-gov/employer/cirliTs/cirlist.hinr and then searching for"GASB". You should be aware
that,each year, items in previous valuation reports will be needed in the preparation of the disclosures and
accounting information required by GASB 27. This valuation report contains GASB 27 information in Appendix C,
which can be used in your 2001-2002 financial statements. However,the Annual Required Contribution(ARC)
reported in Appendix C will not be used until your year 2002-2003 financial statements.
If you have questions,please call your assigned actuary,David Du Bois at(916)326-3427.
Sincerely,``
Ron Seeling,Chief Actuary
CalPERS
California Public Employees' Retirement System
LincolnnPlaza-400 P Street-Sacramento,CA 95814
CALPERS ACTUAWAI:VALUATION;J•UNE 30,2000 � ••
MISCELLANEOUS PLAN OF THE CITY OF PALM SPRINGS -
EMPLOYER NUMBER 355 -
Development of Accrued and Unfunded Liabilities for the Retirement Program
as of,tune 30,2000
1.Present Value of Projected Benefits
a)Active Members S 42,551,794
b)Transferred Members 6,080,528
c) Separated Members 3,995,182
d)Members and Beneficiaries Receiving Payments 25,209,723
e)Total S 77,837,227
2.Present Value of Future Employer Normal Costs $ 7,729,752
3.Present Value of Future Employee Contributions 7,421,635
4. Entry Age Normal Accrued Liability $ 62,686,840
[(le)-(2)-(3)]
S.Actuarial Value of Assets
a)Employer Reserves $ 71,531,011
b)Active Employee Account Balances 14,925,653
c)Total Valuation Assets $ $6,456,664
6.Unflurded Accrued Liability/(Excess Assets) S (23,769,824)
1(4)-(5c)]
Determination of Superfunded Status for the Fiscal Year Ending June 30, 2003
1"Present Value of Projected Benefits $ 77,837,227
2.Actuarial_Value of Assets _ 86,456,664
3" Superfunded Amount[(2)—(1)1 J� �— $ 8,619,437
4"Is the plan Super ndedT ZY'es if(3)is greater than 0, Yes
No if(3)is less than or equal to 01
$cc Appendix A For a definition of supnrfundcd,
I
September 18,2001 Page 5
CITY OF PALM SPRINGS
RESOLUTION NO. 20285
q OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS,CALIFORNIA,DECLARING ITS
l-v'91 INTENTION TO APPROVE AN AMENDMENT TO
CONTRACT BETWEEN THE BOARD OF AD-
MINISTRATION OF THE CALIFORNIA PUBLIC
EMPLOYEES'RETIREMENT SYSTEM AND THE
CITY COUNCIL OF THE CITY OF PALM
A SPRINGS
----- WHEREAS the Public Employees' Retirement Law
Per"
is the participation of public agencies and
their employees in the Public Employees Retire-
ment System by the execution of a contract, and
sets forth the procedure by which said public
, encres may elect to subject themselves and
PROOF OF PUBLICATION
UBT I! A TION their employees to amendments to said Law;and
PROOF 1� WHEREAS one of the steps in the procedures to
J amend this contract is the adoption by the gov-
erning bo tic of the public agency c a resolution
giving notice of its intention to approve an
` 4, amendment to said contract, which rpro oil
S
1 y.�k-k1 i;` ,m shall d cunt e summary of the change proposed
F � fl'a ��-" 0 rf •"`- in said contract, and
i WHEREAS the following Is a statement of the
d "j/1' --1 proposed change
E 'o
To provide Section r local
(2.7%055 Full and
Modified formula) for local miscellaneous mem-
bers
STATE OF CALIFORNIA NOW, THEREFORE, BE IT HESOLVFD that the
governing body of the above agency does hereby
County of Riverside give no Ice of its intention to approve an amend
meat to the contract between said public agency
and the Board of Administration of the Public
Em-ployees' Retirement System, a copy of said
amendment being attached hereto, as an "Exhlb-
7 and by this reference made apart hereof, as
on file in the office of the City Clerk.
ADOPTED this 27th day of February 2002.
AYES: Members Mills, Open, Roller-Spurgin and
Mayor Kleindienst
NOES: None
ABSENT: None
I am a citizen of the United States and a resident of
ATTEST: CITY OF PALM SPRINGS H.CALIFORNIA
the County aforesaid;I am over the age of eighteen By/s/Patricia A.Sanders /s/David md H.Ready
years,and not a party to or interested in the CITY CLERK CITY MANAGER
above-entitled matter.I am the principal clerk of a REVIEWED &APPROVED.
printer of the,DESERT SUN PUBLISHING c EXHIBIT
COMPANY a newspaper of general circulation, Public Employees' Retirement System
printed and published in the city of Palm Springs, AMENDMENT TO CONTRACT
County of Riverside,and which newspaper has been Between the
Board of Administration
adjudged a newspaper of general circulation by the CaliforniaRetirement System
Emblic ployees'
Superior Court of the County of Riverside,State of and the
City Council
California under the date of March 24,1988.Case City of Palm Springs
Number 191236;that the notice,of which the The Board of Administration, California Public
annexed is a printed copy(set in type not smaller Employees'
nad to as Retirement th gqovernihereinafter the
than non ariel,has been published in each regular above public agpency, hereinafter referred to as
P P g Public Agency, Navinq entered into a contract ef-
and entire issue of said newspaper and not in an fective January 1, 1957, and witnessed December
y 3, 1956,and as amended effective July 14, 1965,
supplement thereof on the following dates,to wit: January 14, 1973,January 1, 1975, September 5,
1976, July 10, 1977, October 15, 197 , April 29, '
March 5th 1979, February 27, 1983, July 1, 1984, June 29,
--- ----_ _-- 1986, April 18, 1998, Ararat 23, 1998, April'18,
------------------------------------------------ - 1999 and August 19, 201 which provides for
participatwn of Public Agency in said System,
Board and Public Agency herebyagree as-fol-
-----------------------------____--------_-- -------
lows:
---_-
All in the year 2002 A Paragraphs 1 through 13 are hereby stricken
from said contract as executed effective August
I certify(or declare)under penalty of perjury that the 19, 2001, and hereby replaced by the following
foregoing is true and correct. paragraphs numbered 1 through 13 inclusive
5th 1.All words and terms used herein which are de-
fined in the Public Employees' Retirement Law
Dated at Palm Springs,California this--------------day shall have the meaning as defined therein unless
otherwise specifically provided. "Normal retire-
March ment age" shall mean aqe 55 for local miscella-
neous members, age 50 for local fire members
Of---------------------------------------2002 and age 55 for local police members.
2. Public Agency shall participate in the Public
Employees' Retirement System from and after
/ January 1, 1957 making its employees as herein-
after provided, members of said System subject
-------- C__r__�_-_-_ __________ ______________ to all previsions of the Public Employees' Retire-
ment Law except such as apply only on election
Signature of a contracting agency and are not provided for
herein and to all amendments to said Law hereaf-
ter enacted except those,which by express piom-
sons thereof,apply only on the election of a con-
tracting agency
3 Employees of Public Agency in the following
classes shall become members of said Retire-
ment System except such in each such class as
are excluded by law or this agreement.
a Local Fire R liters (herein referred to as local
be safety memrs;
b.Local Police fficers(herein referred to as local
safety members);
c Employees other than local safety members
(herein referred to as local miscellaneous mem-
bers)
exclud-
ed In adtl e be the classes of employees aw,th from membership by said Retirement Law,the
following classes of employees shall not become
I'C :C cf`I O:'l,f. _cC,t1Sd"4;
5 The psicentage of hnel compensatou to be
provided for each year of credited prior and cur-
rent service for local miscellaneous members shall
be determined in accordance with Section
21354 5 of said Retirement Law, subject to the
reduction pprovided therein for service prior to De-
cember 31, 1974, termination of Social Security,
for members whose service has been included in
Federal Social Security (27% at age 55 Full and
Modified).
_ [Note that legislation has been proposed that
could amend Government Code Section
21354.5 to make the 2.7% at 55 benefit fordi
to applicable to both active members and inac-
jfive members who have yet retired.If enacted,
this amendment could have an effect on your
agencys ac[unal valuation and employer con-
tlbution rates in future years.]
6, The percentage of final compensation to be
provided for each year of credited prior and cur-
rent service as a local fire member shall be deter-
mined In accordance with Section 21362 of said
Retirement Law (2o at age 50 Full)
7. The percentage of final compensation to be
provided for each year of credited prior and cm-
rent service as a local police member shall be de-
feral in accordance with Section 21363.1 of
said Retirement Law (39v at age 55 Full)
8.Public Agency elected and elects to be subject
to the following optional provisions
a.Sections 21624,21626 and 21628(Poet-Retire-
ment Survivor Allowance).
Is Section 21024(Mtlitarryy Service Credit as Public
Service), Statutes of 1974.
c. Section 20042 (One-Year Final Compensation).
d. Section 20965 (Credit for Unused Sick Leave).
e Section 21574 (Fourth Level of 1959 Survived
Benefits) _
9. Public Agencyy in accordance wrthl Government
Code Section 20'790, ceased to be an "employyer"
for purposes of Section 20834 effective on Sep-
tember 5, 1976 Accumulated contributions of
Public Agency shall be fixed and determined as
provided In Govemment Code Section 20834,
and accumulated contributions thereafter shall be
held by the Board as provided in Government
Code Section 20834.
10 Public Agency shall also contribute to said
Retirement System as follows
a Contnbutions reVred per covered member on
account of the 1959 Survivor Benefits provided
under Section 21574 of said Retirement Law.
(Subject of annual change) In addition, all assets
and iabilities of Public Agency and its employees
shall be pooled in a single account, based on
term insurance rates, for survivors of all local mis-
cellaneous members and local safety members.
b. A reasonable amount, as fixed by the Board,
payable in one installment within 60 days of date
of contract to cover the costs of administering
said System as it affects the employees of Public
Agency, not including the costs of special valua-
tions or of the periodic investigation and valua-
tions required by law.
c A reasonable amount, as fixed by The Board,
ppayable in one installment as the occasions arise,
to cover the costs of sp ecral valuations on ac-
count of employees of Public Agency, and costs
of the pperiodic investigation and valuations re-
quired by law.
12 Contributions required of Public Agency and
its employees shall be subject to adjustment by
Board on account of amendments to the Public
Employees' Retirement Law, and on account of
the experience under the Retirement System as
determined by the periodic investigation and valu-
ation require by said Retirement Law.
13. Contributions required of Public Agency and
its employesss shall retired
paid by Public Agency to
the Retirement System within fifteen days after
the end of the period to which said contributions
refer or as may be prescribed by Board regula-
from If more or less than the caned amount of
contributions is paid for any pence, proper ad-
justment shall be made in connection with subse-
quent remittances.Adjustments on account of er-
rors in contributions required of any employee
may be made by direct payments between the
employee and the Board.
B.This amendment shall be effect on the_day
of
BOARD OF ADMINISTRATION CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMENT CITY OF
PALM SPRINGS
SYSTEM
BY KENNETH W.MARZION,CHIEF
BY
ACTURIAL&EMPLOYER SERVICES PRESIDING
OFFICER
DIVISION PUBLIC EMPLOYEE
RETIREMENT SYSTEM
W?nesc Date
Attes,.
Clerk
PUB March 5, 2002 __
RESOLUTION NO. 20285
OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA,
DECLARING ITS INTENTION TO APPROVE
AN AMENDMENT TO CONTRACT
BETWEEN THE BOARD OF
ADMINISTRATION OF THE CALIFORNIA
PUBLIC EMPLOYEES' RETIREMENT
SYSTEM AND THE CITY COUNCIL OF THE
CITY OF PALM SPRINGS.
WHEREAS the Public Employees' Retirement Law permits the participation of public
agencies and their employees in the Public Employees' Retirement System by the
execution of a contract, and sets forth the procedure by which said public agencies may
elect to subject themselves and their employees to amendments to said Law; and
WHEREAS one of the steps in the procedures to amend this contract is the adoption by the
governing body of the public agency of a resolution giving notice of its intention to approve
an amendment to said contract, which resolution shall contain a summary of the change
proposed in said contract; and
WHEREAS the following is a statement of the proposed change:
To provide Section 21354.5(2.7%@ 55 Full and Modified fonnula)for local
miscellaneous members.
NOW, THEREFORE, BE IT RESOLVED that the governing body of the above agency does
hereby give notice of its intention to approve an amendment to the contract between said
public agency and the Board of Administration of the Public Employees' Retirement System,
a copy of said amendment being attached hereto, as an "Exhibit' and by this reference
made a part hereof, as on file in the office of the City Clerk.
ADOPTED this 27th day of February 2002.
AYES: Members Mills, Oden, Heller-Spurgin and Mayor Kleindieust
NOES: Noue
ABSENT: None
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
By
CITY CLERK CITY MANAGER
REVIEWED&APPROVED:
Resolution 20285
Page 2
CAPERS
EXHIBIT
California
Public Employees' Retirement System
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement Systems
and the
City Council
City of]Palm Springs
The Board of Administration, California Public Employees' Retirement System,
hereinafter referred to as Board, and the governing body of the above public agency,
hereinafter referred to as Public Agency, having entered into a contract effective
January 1, 1957, and witnessed December 3, 1956, and as amended effective July 14,
1965, January 14, 1973, January 1, 1975, September 5, 1976, July 10, 1977, October
15, 1978, April 29, 1979, February 27, 1983, July 1, 1984, June 29, 1986, April 18,
1998, August 23, 1998, April 18, 1999 and August 19, 2001 which provides for
participation of Public Agency in said System, Board and Public Agency hereby agree
as follows:
A. Paragraphs 1 through 13 are hereby stricken from said contract as executed
effective August 19, 2001, and hereby replaced by the following paragraphs
numbered 1 through 13 inclusive:
1. All words and terms used herein which are defined in the Public
Employees' Retirement Law shall have the meaning as defined therein
unless otherwise specifically provided. "Normal retirement age" shall
mean age 55 for local miscellaneous members, age 50 for local fire
members and age 55 for local police members.
Resolution 20285
Page 3 PLEASE DO NOT SIGN "EXHIBIT ONLY"
2. Public Agency shall participate in the Public Employees' Retirement
System from and after January 1, 1957 making its employees as
hereinafter provided, members of said System subject to all provisions of
the Public Employees' Retirement Law except such as apply only on
election of a contracting agency and are not provided for herein and to all
amendments to said Law hereafter enacted except those, which by
express provisions thereof, apply only on the election of a contracting
agency. -
3- Employees of Public Agency in the following classes shall become
members of said Retirement System except such in each such class as
are excluded by law or this agreement:
a. Local Fire Fighters (herein referred to as local safety members);
b. Local Police Officers (herein referred to as local safety members);
c- Employees other than local safety members (herein referred to as
local miscellaneous members)-
4. In addition to the classes of employees excluded from membership by
said Retirement Law, the following classes of employees shall not become
members of said Retirement System:
NO ADDITIONAL EXCLUSIONS
5. The percentage of final compensation to be provided for each year of
credited prior and current service for local miscellaneous members shall
be determined in accordance with Section 21354.5 of said Retirement
Law, subject to the reduction provided therein for service prior to
December 31, 1974, termination of Social Security, for members whose
service has been included in Federal Social Security (2.7% at age 55 Full
and Modified).
[Note that legislation has been proposed that could amend
Government Code Section 21354.5 to make the 2.7% at 55 benefit
formula applicable to both active members and inactive members
who have not yet retired. If enacted, this amendment could have an
effect on your agency's actuarial valuation and employer
contribution rates in future years.]
6- The percentage of final compensation to be provided for each year of
credited prior and current service as a local fire member shall be
determined in accordance with Section 21362 of said Retirement Law (2%
at age 50 Full).
Resolution 20285 PLEASE DO NOT SIGN "EXHIBIT ONLY"
Page 4
7. The percentage of final compensation to be provided for each year of
credited prior and current service as a local police member shall be
determined in accordance with Section 21363.1 of said Retirement Law
(3% at age 55 Full).
8. Public Agency elected and elects to be subject to the following optional
provisions:
a. Sections 21624, 21626 and 21628 (Post-Retirement Survivor
Allowance).
b. Section 21024 (Military Service Credit as Public Service), Statutes
of 1974.
c. Section 20042 (One-Year Final Compensation).
d. Section 20965 (Credit for Unused Sick Leave).
e. Section 21574 (Fourth Level of 1959 Survivor Benefits).
9. Public Agency, in accordance with Government Code Section 20790,
ceased to be an "employer" for purposes of Section 20834 effective on
September 5, 1976. Accumulated contributions of Public Agency shall be
fixed and determined as provided in Government Code Section 20834,
and accumulated contributions thereafter shall be held by the Board as
provided in Government Code Section 20834.
10. Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of prior and future service liability with
respect to local miscellaneous members and local safety members of said
Retirement System.
11. Public Agency shall also contribute to said Retirement System as follows:
a, Contributions required per covered member on account of the 1959
Survivor Benefits provided under Section 21574 of said Retirement
Law. (Subject to annual change.) In addition, all assets and
liabilities of Public Agency and its employees shall be pooled in a
single account, based on term insurance rates, for survivors of all
local miscellaneous members and local safety members.
b. A reasonable amount, as fixed by the Board, payable in one
installment within 60 days of date of contract to cover the costs of
administering said System as it affects the employees of Public
Agency, not including the costs of special valuations or of the
periodic investigation and valuations required by law.
Resolutiau 20285
Page 5
c. A reasonable amount, as fixed by the Board, payable in one
installment as the occasions arise, to cover the costs of special
valuations on account of employees of Public Agency, and costs of
the periodic investigation and valuations required by law.
12. Contributions required of Public Agency and its employees shall be
subject to adjustment by Board on account of amendments to the Public
Employees' Retirement Law, and on account of the experience under the
Retirement System as determined by the periodic investigation and
valuation required by said Retirement Law.
13. Contributions required of Public Agency and its employees shall be paid
by Public Agency to the Retirement System within fifteen days after the
end of the period to which said contributions refer or as may be prescribed
by Board regulation. If more or less than the correct amount of
contributions is paid for any period, proper adjustment shall be made in
connection with subsequent remittances. Adjustments on account of
errors in contributions required of any employee may be made by direct
payments between the employee and the Board.
B. This amendment shall be effective on the day of
BOARD OF ADMINISTRATION CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMO SYSTEM CITY OF PALM SPRINGS
BY `�b� BY
KENNETH W. MARZION IEF PRESIDING OFFICER
ACTUARIAL & EMPLCXER SERVICES DIVISION
PUBLIC EMPLOYERETIREMENT SYSTEM
�Q Witness Date �cb\
,C3 Attest:
Q �5�
Clerk Q
�O
vwP�
4
AMENDMENT
PERS-CON-702A(Rev.8196)
I
ORDINANCE NO.
I
AN ORDINANCE OF THE CITY OF PALM
SPRINGS, CALIFORNIA, AUTHORIZING AN
AMENDMENT TO CONTRACT BETWEEN
THE BOARD OF ADMINISTRATION OF
THE CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM AND THE CITY
COUNCIL OF THE CITY OF PALM
SPRINGS.
THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, DOES ORDAIN
AS FOLLOWS:
SECTION 1. That an amendment to the contract between the City Council of the City of
Palm Springs and the Board of Administration of the California Public Employees'
Retirement System is hereby authorized, a copy of said amendment being attached hereto,
marked Exhibit, and by such reference made a part hereof as though herein set out in full,
as on file in the office of the City Clerk.
SECTION 2. The Mayor of the City of Palm Springs is hereby authorized, empowered, and
directed to execute said amendment for and on behalf of said Agency.
SECTION 3. This Ordinance shall be in full force and effect thirty(30)days after passage.
SECTION 4. The City Clerk is hereby ordered and directed to certify to the passage of this
Ordinance, and to cause the same or a summary thereof or a display advertisement, duly
prepared according to the law,to be published in accordance with law.
ADOPTED this day of 2002.
AYES:
NOES:
ABSENT:
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
By
CITY CLERK MAYOR
REVIEWED&APPROVED:
oc