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Bartel Associates A09-21AGREEMENT NO. A09 - FOR PROFESSIONAL SERVICES BETWEEN THE CITY OF CHINO HILLS AND BARTEL ASSOCIATES, LLC THIS AGREEMENT, made and entered into this 10u day of February, 2009, between the CITY OF CHINO HILLS, a municipal corporation, hereinafter referred to as "City" and BARTEL ASSOCIATES, LLC hereinafter referred to as "Consultant", In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. SCOPE OF SERVICES. Consultant agrees to perform the services set forth in Exhibit A "SCOPE OF SERVICES" attached hereto and made a part hereof. Consultant shall submit its work to the City for its review after completing each phase of the project as described in Exhibit A, or when otherwise requested by the City. Consultant shall, at its own cost, matte any revisions of its own work as required by the City and re -do, at its own cost, any work which the City finds unsatisfactory due to Consultant's or subcontractor's errors or omissions. Consultant represents and warrants that it has the qualifications, experience and facilities to properly perform said services in a thorough, competent and professional manner and shall, at all times during the term of this Agreement, have in full force and effect, all licenses required of it by law. Consultants shall begin its services under this Agreement on February 10, 2009. -1- C 2. STATUS OF CONSULTANT. Consultant is and shall at all times remain as to the City a wholly independent contractor. The personnel performing the services under this Agreement on behalf of Consultant shall at all times be under Consultant's exclusive direction and control. Neither City nor any of its officers, employees or agents shall have control over the conduct of Consultant or any of Consultant's officers, employees or agents, except as set forth in this Agreement. Consultant shall not at any time or in any manner represent that it or any of Its officers, employees or agents are in any manner officers, employees or agents of the City. Consultant shall not incur or have the power to incur any debt, obligation or liability whatever against City, or bind City in any manner. Consultant shall not disseminate any information or reports gathered or created pursuant to this Agreement without the prior written approval of City except information or reports required by government agencies to enable Consultant to perform its duties under this Agreement. 3. CONSULTANT'S KNOWLEDGE OF APPLICABLE LAWS. Consultant shall keep itself informed of applicable local, state and federal laws and regulations which may affect those employed by it or in any way affect the performance of its services pursuant to this Agreement. Consultant shall observe and comply with all such laws and regulations affecting its employees. City and its officers and employees, shall not be liable at law or in equity as a result of any failure of Consultant to comply with this section. 4. PERSONNEL. Consultant shall make every reasonable effort to maintain the stability and continuity of Consultant's staff assigned to perform the services hereunder and shall obtain the approval of the City Manager of all proposed staff members performing services under this Agreement prior to any such performance. 5. COMPENSATION AND METHOD OF PAYMENT. Compensation to the Consultant shall be as set forth in Exhibit B attached hereto and made a part hereof. Payments shall be made within thirty (30) days after receipt of each invoice as to all undisputed fees. If the City disputes any of consultant's fees it shall give written notice to Consultant within 30 days of receipt of a invoice of any disputed fees set forth on the Invoice. 6. ADDITIONAL SERVICES OF CONSULTANT. Consultant shall not be compensated for any services rendered in connection with its performance of this Agreement which are in addition to those set forth herein or listed in Exhibit A, unless such additional services are authorized in advance and in writing by the City Manager. Consultant shall be compensated for any additional services in the amounts and in the manner as agreed to by City Manager and Consultant at the time City's written authorization is given to Consultant for the performance of said services. 7. ASSIGNMENT. All services required hereunder shall be performed by Consultant, its employees or personnel under direct contract with Consultant. -3- Consultant shall not assign to any subcontractor the performance of this Agreement, nor any part thereof, nor any monies due hereunder, without the prior written consent of City Manager. 8. FACILITIES AND RECORDS. Consultant shall maintain complete and accurate records with respect to sales, costs, expenses, receipts and other such information required by City that relate to the performance of services under this Agreement. Consultant shall maintain adequate records of services provided in sufficient detail to permit an evaluation of services. All such records shall be maintained in accordance with generally accepted accounting principles and shall be clearly identified and readily accessible. Consultant shall provide free access to the representatives of City or its designees at reasonable times to such books and records, shall give City the right to examine and audit said books and records, shall permit City to make transcripts therefrom as necessary, and shall allow inspection of all work, data, documents, proceedings and activities related to this Agreement. Such records, together with supporting documents, shall be maintained for a period of three (3) years after receipt of final payment. 9. TERMINATION OF AGREEMENT. This Agreement may be renewed annually, but will terminate on June 30, 2010, unless otherwise extended in advance and in writing by the City Manager. This Agreement may be terminated with or without cause by either party upon 30 days written notice. In the event of such termination, Consultant shall be compensated for non -disputed fees under the terms of this Agreement up to the date of termination. 10. COOPERATION BY CITY. All public information, data, reports, records, and maps as are existing and available to City as public records, and which are necessary for carrying out the work as outlined In the Scope of Services, shall be furnished to Consultant in every reasonable way to facilitate, without undue delay, the work to be performed under this Agreement. 11, OWNERSHIP OF DOCUMENTS. Upon satisfactory completion of, or in the event of termination, suspension or abandonment of, this Agreement, all original data, notes, computer files, files and other documents provided to Bartel Associates by the City shall, remain the sole property of the City. With respect to computer files, Consultant shall provide to the City, upon reasonable written request by the City, the original information (data, notes, computer files, files and other documents) provided to Bartel Associates by the City, Upon satisfactory completion of, or in the event of termination, suspension or abandonment of, this Agreement, all final work product(s) (or, if final work product(s) are not available, draft work products) including studies, reports, data, notes, computer files, files and other documents prepared and intended as a final work product in the course of providing the services to be performed pursuant to this Agreement shall, become the sole property of the City. 12. RELEASE OF INFORMATION/CONFLICTS OF INTEREST. -5- (a) All information gained by Consultant in performance of this Agreement shall be considered confidential and shall not be released by Consultant without City's prior written authorization excepting that information which is a public record and subject to disclosure pursuant to the California Public Records Act, Government Code § 6250, at seg. Consultant, its officers, employees, agents or subcontractors, shall not without written authorization from the City Manager or unless requested by the City Attorney, voluntarily provide declarations, letters of support, testimony at depositions, response to Interrogatories or other information concerning the work performed under this Agreement or relating to any project or property located within the City, Response to a subpoena or court order shall not be considered "voluntary" provided Consultant gives City notice of such court order or subpoena. If Consultant or any of its officers, employees, consultants or subcontractors does voluntarily provide information in violation of this Agreement, City has the right to reimbursement and indemnity from Consultant for any damages caused by Consultant's conduct, including the City's attorney's fees. Consultant shall promptly notify City should Consultant, its officers, employees, agents or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions or other discovery request, court order or subpoena from any party regarding this Agreement and the work performed thereunder or with respect to any project or property located within the City. City retains the right, but has no obligation, to represent Consultant and/or be present at any deposition, hearing or similar proceeding. Consultant agrees to cooperate fully with City and to provide City with the opportunity to review any response to discovery requests provided by Consultant. However, City's right to review any such response does not imply or mean the right by City to control, direct, or rewrite said response. (b) Consultant covenants that neither they nor any officer or principal of their firm have any interest in, or shall they acquire any interest, directly or indirectly which will conflict in any manner or degree with the performance of their services hereunder. Consultant further covenants that in the performance of this Agreement, no person having such interest shall be employed by them as an officer, employee, agent, or subcontractor without the express written consent of the City Manager. Consultant further covenants that Consultant has not contracted with nor is performing any services directly or indirectly with any developer(s) and/or property owner(s) and/or firm(s) and/or partnerships owning property in the City or the study area and further covenants and agrees that Consultant and/or its subcontractors shall provide no service or enter into any agreement or agreements with any developer(s) and/or property owner(s) and/or firm(s) and/or partnerships owning property in the City or the study area prior to the completion of the work under this Agreement without the express written consent of the City Manager. _7_ 13. DEFAULT. in the event that Consultant is in default of any of the provisions of this Agreement, City shall have no obligation or duty to continue compensating Consultant for any work performed after the date of default and can terminate this Agreement immediately by written notice to the Consultant. 14. INDEMNIFICATION. (a) Consultant represents it is skilled in the professional calling necessary to perform the services and duties agreed to hereunder by Consultant, and City relies upon the skills and knowledge of Consultant. Consultant shall perform such services and duties consistent with the standards generally recognized as being employed by professionals performing similar service in the State of California. (b) Consultant is an independent contractor and shall have no authority to bind City nor to create or incur any obligation on behalf of or liability against City, whether by contract or otherwise, unless such authority Is expressly conferred under this agreement or is otherwise expressly conferred In writing by City. City, its elected and appointed officials, officers, agents, employees and volunteers (individually and collectively, "indemnitees") shall have no liability to Consultant or to any other person for, and Consultant shall indemnify, defend, protect and hold harmless the Indemnitees from and against, any and all liabilities, claims, actions, causes of action, proceedings, suits, damages, judgments, liens, levies, costs and expenses of whatever nature, including reasonable attorneys' fees and disbursements (collectively "Claims"), which the Indemnitees may suffer or incur or to which the Indemnitees may become subject by reason of or arising out of any injury to or death of any person(s), damage to property, loss of use of property, economic loss or otherwise occurring as a result of or allegedly caused by the performance or failure to perform by Consultant of Consultant's services under this agreement or the negligent or willful acts or omissions of Consultant, its agents, officers, directors or employees, in performing any of the services under this agreement. If any action or proceeding is brought against the Indemnitees by reason of any of the matters against which Consultant has agreed to indemnify the Indemnitees as above provided, Consultant, upon notice from the CITY, shall defend the Indemnitees at Consultant's expense by counsel acceptable to the City. The Indemnitees need not have first paid any of the matters as to which the Indemnitees are entitled in order to be so indemnified. The insurance required to be maintained by Consultant under paragraph 15 shall ensure Consultant's obligations under this paragraph 14(b), but the limits of such insurance shall not limit the liability of Consultant hereunder. The provisions of this paragraph 14(b) shall survive the expiration or earlier termination of this agreement. The Consultant's indemnification does not extend to Claims occurring as a result of the City's negligent or willful acts or omissions. 15. INSURANCE. -9- A. Insurance Reaulrements. Consultant shall provide and maintain insurance acceptable to the City Attorney in full force and effect throughout the term of this Agreement, against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by Consultant, its agents, representatives or employees. Insurance is to be placed with insurers with a current A.M. Bests rating of no less than ANIL Consultant shall provide the following scope and limits of insurance: least as broad as: (1) Minimum Scope of Insurance. Coverage shall be at (a) Insurance Services Office form Commercial General Liability coverage (Occurrence Form CG 0001). (b) Insurance Services Office form number CA 0001 (Ed. 1187) covering Automobile Liability, including code 1 "any auto" and endorsement CA 0025, or equivalent forms subject to the written approval of the City. (c) Workers' Compensation insurance as required by the Labor Code of State of California and Employer's Liability Insurance and covering all persons providing services on behalf of the Consultant and all risks to such persons under this Agreement. (d) Errors and omissions liability insurance appropriate to the Consultant's profession. -10- (2) Minimum Limits of Insurance. Consultant shall maintain limits of insurance no less than: (a) General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage, If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the activities related to this Agreement or the general aggregate limit shall be twice the required occurrence limit. (b) Automobile Liability: $1,000,000 per accident for bodily injury and property damage, (c) Workers' Compensation and Employer's Liability: Workers' Compensation as required by the Labor Code of the State of California and Employers Liability limits of $ 9,000,000 per accident. claim. (d) Errors and Omissions Liability: $1,000,000 per B Other Provisions. Insurance policies required by this Agreement shall contain the following provisions: (1) All Policies. Each insurance policy required by this paragraph 15 shall be endorsed and state the coverage shall not be suspended, voided, canceled by the insurer or either party to this Agreement, reduced in -11- coverage or in limits except after 30 days' prior written notice by Certified mail, return receipt requested, has been given to the City. (2) General Liabilitv and Automobile Liabilitv Coveraaes. (a) City, its officers, officials, and employees and volunteers are to be covered as additional insureds as respects: liability arising out of activities Consultant performs, products and completed operations of Consultant; premises owned, occupied or used by Consultant, or automobiles owned, leased or hired or borrowed by Consultant. The coverage shall contain no special limitations on the scope of protection afforded to City, its officers, officials, or employees. (b) Consultant's insurance coverage shall be primary insurance as respect to City, its officers, officials, employees and volunteers. Any insurance or self insurance maintained by City, its officers, officials, employees or volunteers shall apply in excess of, and not contribute with, Consultant's insurance. (c) Consultant's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. (d) Any failure to comply with the reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees or volunteers. -12- (3) Workers` Compensation and Emolover's Liabillty Coverage. Unless the City Manager otherwise agrees in writing, the insurer shall agree to waive all rights of subrogation against City, its officers, officials, employees and agents for losses arising from work performed by Consultant for City. C. Other Reauirements. Consultant agrees to deposit with City, at or before the effective date of this contract, certificates of insurance necessary to satisfy City that the insurance provisions of this contract have been complied with. The City Attorney may require that Consultant furnish City with copies of original endorsements effecting coverage required by this Section. The certificates and endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. City reserves the right to inspect complete, certified copies of all required insurance policies, at any time. (9) Consultant shalt furnish certificates and endorsements from each subcontractor identical to those Consultant provides. (2) Any deductibles or self-insured retentions must be declared to and approved by City. At the option of the City, either the Insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees and volunteers; or the Consultant shall procure a bond guaranteeing payment of losses and related investigations, claim administration, defense expenses and claims. -13- (3) The procuring of such required policy or policies of insurance shall not be construed to limit Consultant's liability hereunder nor to fulfill the indemnification provisions and requirements of this Agreement. 16. NONDISCRIMINATION/NONPREFERENTIAL TREATMENT STATEMENT. In performing this Agreement, the Parties shall not discriminate or grant preferential treatment on the basis of race, sex, color, age, religion, sexual orientation, disability, ethnicity, or national origin, and shall comply, to the fullest extent allowed by law, with all applicable local, state and federal laws relating to nondiscrimination. 17. UNAUTHORIZED ALIENS. Consultant hereby promises and agrees to comply with all of the provisions of the Federal Immigration and Nationality Act (8 U.S.C.A. & 1101, et seq.), as amended; and in connection therewith, shall not employ unauthorized aliens as defined therein. Should Consultant so employ such unauthorized aliens for the performance of work and/or services covered by this contract, and should the Federal Government impose sanctions against the City for such use of unauthorized aliens, Consultant hereby agrees to, and shall, reimburse City for the cost of all such sanctions imposed, together with any and all costs, including attorneys' fees, incurred by the City in connection therewith. 18. ENTIRE AGREEMENT. This Agreement is the complete, final, entire and exclusive expression of the Agreement between the parties hereto and supersedes any and all other agreements, either oral or in writing, between the parties with respect to the subject matter herein. Each party to this Agreement acknowledges that no representations by any party which are not embodied herein and that no other agreement, statement, or promise not contained in this Agreement shall be valid and binding. 19. GOVERNING LAW, The City and Consultant understand and agree that the laws of the State of California shall govern the rights, obligations, duties and liabilities of the parties to this Agreement and also govern the interpretation of this Agreement. Any litigation concerning this Agreement shall take place in the San Bernardino County Superior Court. 20. ASSIGNMENT OR SUBSTITUTION. City has an interest in the qualifications of and capability of the persons and entities who will fulfill the duties and obligations imposed upon Consultant by this Agreement. In recognition of that interest, neither any complete nor partial assignment of this Agreement may be made by Consultant nor changed, substituted for, deleted, or added to without the prior written consent of City. Any attempted assignment or substitution shall be ineffective, null, and void, and constitute a material breach of this Agreement entitling City to any and all remedies at law or in equity, including summary termination of this Agreement. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement. 21. MODIFICATION OF AGREEMENT. The terms of this Agreement can only be modified in writing approved by the City Council and the Consultant. -15- The parties agree that this requirement for written modifications cannot be waived and any attempted waiver shall be void. 22. AUTHORITY TO EXECUTE. The person or persons executing this Agreement on behalf of Consultant warrants and represents that he/she/they has/have the authority to execute this Agreement on behalf of his/her/their corporation and warrants and represents that he/she/they has/have the authority to bind Consultant to the performance of its obligations hereunder. 23. NOTICES. Notices shall be given pursuant to this Agreement by personal service on the party to be notified, or by written notice upon such party deposited in the custody of the United States Postal Service addressed as follows: City. Attention: City Clerk City of Chino Hills 2001 Grand Avenue Chino Hills, California 91709-4868 Consultant. Attention: John E. Bartel, President Bartel Associates, LLC 411 Borel Avenue, Suite 445 San Mateo, CA 94402 The notices shall be deemed to have been given as of the date of personal service, or three (3) days after the date of deposit of the same in the custody of the United States Postal Service. -16- 24. SEVERABILITY. The invalidity in whole or in part of any provision of this Agreement shall not void or affect the validity of the other provisions of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. BARTEL ASSOCIATES, LLC zy 9�Q' John E. f3artel Title President CITY OF CHINO HILLS By I�Ve:1 3augas N.Laity Manager -17- SECTION 4 WORK PLAN Project Approach F,416it A We believe that there are two levels to a GASB 45 actuarial valuation. The first level is technical compliance with GASB 45. Some public employers may hue an actuary to assist only with technical compliance with the standard, limiting the scope of services to preparing the required financial reporting and disclosure. The second level goes beyond reporting and disclosure issues, and includes assisting management with an understanding of GASB 45, the actuarial assumptions and methods, the valuation results, the financial statement impact, funding policies and options, and a review of the plan design. Our actuarial valuation process includes the following steps: r Data Collectibn - The City will provide documentation of plan provisions, healthcare providers, claim information for self-insured plans, and employee census information including individual plan and coverage elections. If there are apparent differences between the plan doeurnentation'and the substantive plan, we will work with the City to clarify its actual retiree healthcare obligations. GASB 45 requires that the actuarial valuation reflect the substantive plan. a Data Reconciliation - We will review the plan and participant data and provide a list of any questions. ® Methods & Asslunotions — We will recommend the actuarial assumptions and funding methods with the City's input. We generally present results using the Entry Age Normal Cost funding method. This method is used by CalPERS to fund their pension plans and produces an annual cost that is intended to be a level percentage of payroll. It is also one of two methods required by CaIPERS for agencies that prefund retiree medical benefits with CERBT. We also present results ushrg alternative amortization periods. We can review additional funding and amortization methods at the City's request. GASB 45 requires that actuarial assumptions be consistent with retirement plan assumptions. Due in part to our significant experience with 1937 Act Retirement Systems, we have the ability to clearly communicate the actuarial assumption selection process to our clients. The actuarial assumptions used for the valuation may include: discount rate, general inflation, payroll increases, healthcare trend, mortality, termination, disability, retirement, participation at retirement, healthcare plan at retirement, Medicare eligibility, marital status at retirement, spouse's age at retirement, and dependent coverage at retirement. Agencies that do not participate in C61PERS PEMHCA can fund their retiree healthcare plans with CaIPERS. Healthcare plans funded through CalPERS may be required to use certain methods and assumptions. For example, CalPERS currently requires a discount rate of 7.75% for liabilities funded through the CERBT. It is important that the City understand the methods and assumptions used and their impact on Bartel Associates, LLC 10 City of Chino Bills SECTION 4 WORK PLAN GASB 45 results as these are actually assumptions set by the City, subject to our actuarial guidance and standards of practice. ■ Valuation Processina - We will prepare the actuarial valuation using ProVal software, a comprehensive and widely used and respected retirement benefit valuation system developed by Winklevoss Technologies, LLC. Our procedures for quality control include the checking of computer programs and calculations by a second actuary and the review of results and presentation materials by senior actuaries. We keep client information secure by encrypting all files kept on our computers and by not accepting census data with Social Security numbers. ■ Preliminary Results Meetina - We will meet with the City to review the preliminary valuation results. Our preliminary results presentation will be in a discussion outline format and will include a benchmark survey comparing the City's GASB 45 information with other agency GASB 45 plan studies prepared by Bartel Associates. ■ ResuIts Meetina - We will meet with the City Director to review the valuation results. Our preliminary results presentation will be used. ■ Executive Summary - We provide the City with a written executive summary of the results.. r Valuation Renort - We can, at the City's request, prepare a formal valuation report including an actuarial certification. We can also prepare a draft GASB 45 financial statement footnote, if needed. ■ CalPERS Certification - If the City pre -funds its retiree healthcare benefits through CERBT, it will need to provide an actuarial certification, a funding policy certification, and an Excel spreadsheet containing valuation information to CaIPERS in addition to a formal valuation report. We can prepare this information at the City's request. We strongly believe that through our years of experience we have developed an efficient and effective process for preparing and presenting actuarial valuations. Actuarial Valuation Discussion Outline Our actuarial valuation discussion outlines are clear, concise and understandable to non - actuaries. Our outlines include: ■ Summary of plan provisions. ■ Summary of the data used for the valuation: • employee counts and average ages, service, pay, etc. by employee group • active and retiree coverage elections by healthcare plan • retiree coverage (single, 2 -party, family) statistic's by age • active age/service distributions ■ Summary of actuarial methods and assumptions. Bartel Associates, LLC 11 City of China Hills SECTION 4 WORKPLAN • GASB 45 accounting information, including benefit costs and obligations as outlined below. • Comparison of the City's costs and obligations with that of other agencies in our database. The discussion outline will include the following GASB 45 information: • Actuarial value of benefits, including: • Present Value of Future Benefits • Actuarial Accrued Liability (AAL), broken down by active and retired employees • Plan Assets • Unfunded Actuarial Accrued Liability (UAAL) • Normal Cost • Expected Benefit Payments • Annual Required Contribution (ARC), as a dollar amount and as a pereentage of payroll, identifying: • Normal Cost • Amortization of the UAAL • Annual OPEB Cost (AOC). • Net OPEB Obligation (NOO). • Sensitivity analysis, including: • 2 investment return scenarios (e.g., not funded and funded) • Alternative amortization periods for the UAAL (e.g., 20 and 30 years). ■ Projected contributions and AOC versus "pay-as-you-go" costs. Project Schedule We usually recommend an 8 -week project schedule for the actuarial valuation. For example, if the City provides census data and plan information on February 2 2009, a possible work schedule would be as follows: Project Steus 1) The City provides participant data and plan information to Bartel Associates. 2) Baitel Associates meets with the City to present preliminary valuation results. 3) Bartel Associates provides a final valuation discussion outline. Bartel Associates, LLC 12 Estimated Dates February 2, 2009 March 16, 2009 z 6 weeks after (1) March 30, 2009 z 2 weeks after (2) City of Chino ,Hills SECTION 4 WORKPLAN We can complete the valuation within this timeframe if all the information requested is provided quickly and accurately. The City has requested that the actuarial study be completed by July 31, 2009. We usually recomrnend at least 8 weeks from data collection to presenting preliminary results because our experience has shown that there may be points during the project when the City may desire to take sufficient time to consider method, assumptions, and study alternatives. City Staff The City's staff will be responsible for gathering the information outlined in Section 7. The amount of time needed to do this will depend on the availability of the data at the City. City staff should also be available for at least one meeting to present preliminary results. Our meetings generally take from 2 to 3 hours each, depending on the City's needs. Bartel Associates, LLC 13 City of Chino Hills C -x Ibif- b SECTION 6 FEES Our fees are a function of the hours worked by each professional on a project and their hourly billing rates. Our hourly rates are as follows: Team Member Hourly Rate Partner $250-$300 Assistant Vice President $200-$225 Senior Actuarial Analyst $150 Actuarial Analyst $125 Administrative Support $75 We have prepared a budget based on the City's retiree healthcare plan design and the number of employees and eligible retirees using the information provided in the RFP. We expect that our fees will be approximately $11,500 including two meetings with the City to present valuation results. The City should be certain that all responses to the RFP include the same project elements when comparing estimated fees. Our estimated fee will be lower if any of these items are not needed. Proiect Elements Estimated Fee GASB 45 Actuarial Valuation (no -funding and funding discount rates) $ 8,800 Preliminary Results Meeting 600 Executive Summary 1,500 Results Meeting with Director 600 Total $11,500 We expect our fees for the subsequent 2 valuations and inteivening roll -forward valuations to increase by no more than the rate of inflation for the Los Angeles area over the above amount. Note that our fee estimate assumes that: s The only retiree medical benefit is for employees electing coverage at retirement under PEMHCA. ® Post-retirement benefits for the valuation will include medical benefits, but no City -paid dental, vision, or life insurance benefits. in Employees are not permitted to continue their active raiser coverage into retirement based on blended activelretiree premiums ® Participant census data will be provided completely and accurately in an Excel spreadsheet with one record per participant. a GASB 45 costs and liabilities will be presented for the plan as a whole with no breakdowns for employee groups. Bartel Associates, LLC 15 City of Chino Hills SECTION 6 FEES ■ Costs and liabilities will be provided using one funding method and one set of assumptions including 2 discount rates: a "not funded" discount rate representative of the expected future long-term return of the City's investment fund and a "funded" discount rate representative of the expected future long-term return of a segregated investment fund. If the City is considering funding with CERBT, the funded discount rate will be 7.75% as required by CalPERS. ■ Costs and liabilities will be provided using one funding method and one set of asswnptions. r We will have two meetings with City to valuation results. We will provide a "Preliminary Resuhs" discussion outline for these meetings. ■ Our presentation outline and valuation'report will contain the information needed for the City's CAFR. However, we have included a fee estimate to prepare a draft financial statement footnote at the City's request. ■ There will be no additional charges for expenses (e.g., travel, telephone, copying, etc.). The hourly rates listed above include our costs for these items. ■ We based our estimated fee on our best guess of the amount of time required for the project. While this represents the likely cost of the study, it is possible that unexpected.work or complexities may arise that will require additional time. We understand the City's budgeting needs and agree not to bill more than $13,000 one meeting with the City unless the scope of the project changes as described below. ■ We will invoice the City monthly based on time incurred, subject to the above maximum fee. The above fees might be higher if the scope of the project changes from that described above, for example: r The retiree healthcare promise differs from the information provided in the RFP or if the City is not in compliance with CaIPERS PEMHCA rules. ■ Participant data is not relatively clean and free from internal inconsistencies or is not provided in the format requested. ■ Valuation results are needed for additional actuarial assumption sets, funding methods, contribution policies, or alternative plan designs. For example, if the City funds less than the ARC with CalPERS, the discount rate used for the valuation will be less than 7.75%. For example, a sensitivity analysis of the medical trend assumption might cost between $500 and $1,060. ■ The City requests additional meetings, such as a planning meeting, a meeting with the City's outside auditors, or a presentation to the City Council. We will base our fee for additional meetings on our billing rates and the time needed for the meetings and preparation. For example, a 2 -hour meeting where we can use our discussion outline with no additional preparation would cost about $600. Bartel Associates, LLC 16 City of Chino Hills SECTION 6 FEES Our presentation outline will contain the information needed for the City's CAFR. We can provide additional reports, such as a formal valuation report or a draft financial statement footnote, at the City's request. We estimate our fees will be $2,000 for a formal valuation report and $1,000 for a draft financial statement footnote. If the City pre -funds its retiree healthcare benefits through CERBT, it will need to provide CaIPERS a formal valuation report, an actuarial certification, a funding policy certification, and an Excel spreadsheet containing the valuation results and funding information. In lieu of a formal valuation report, CalPERS will accept our results discussion outline with a certification and cover letter surmmarizing the valuation results. Our estimated fees to prepare the information required by CaIPERS are $500 for the certifications and Excel spreadsheet and $750 for a certified discussion outline and cover letter. If the City prefers a formal valuation report rather than a certified discussion outline for CaIPERS or its auditors, our fee will be approximately $2,000 for a formal report. Additional studies, such as to explore potential benefit design changes, will be billed at our hourly rates. We will provide a fee estimate after the scope of the project is defined and before work is begun. Plan Design Study The City requested a study to help design the current retiree healthcare program. We recommend discussing the scope of the study at a GASB 45 planning meeting, or over the telephone. Furthermore, the City will be in the best position to help define benefit alternatives after we present our preliminary results showing the costs and obligations of the current retiree healthcare program. After we define the scope of the study we can estimate our fees, which will be based on our hourly rates and the estimated time needed for the study. For example, a simple study that maintains the basic design but increases the benefit levels may cost between $1,000 and $2,000. A more comprehensive study that significantly changes the structure of the current design might cost between $5,000 and $10,000. Bartel Associates, LLC 17 City of Chino Hills ORIGINAL BID DOCUMENTS RECEIVED BY -6L t CITY OF CHINO HILLS C, D BID SUBMITTAL/OPENING WORKSHEET PROJECT: C, A S B q5- O 6 E BID OPENING DATE: �y , �% T ME: DD p'f%'%. Y UU)c) W G 2 � zue z Li U Z Q WW mw W LL CONTRACTOR AMOUNT OF BID m Q j COMMENTS �"ofo l Co�sa�zoh S�s�ems q1362- /�/QSsoc�c�fc5 Lill �' rcl 14ve. San Mateo gyyo2 PAGE _ OF CITY OF CHINO HILLS Request for Proposals (RFP) for GASB 45 OPEB Actuarial Services Date: November 26, 2008 Department: Finance Department Proposal Due Date: January 14, 2009 Time: 4:00 P.M. Proposals must be submitted to the: City of Chino Hills City Clerk's Office 14000 City Center Drive Chino Hills, CA 91709 Proposal Information - Format Proposals will be received by the City of Chino Hills, hereinafter called the "City", at the office of the City Clerk, 14000 City Center Drive, Chino Hills, California, 91709, until 4:00 P.M., PDT January 14, 2009. Each Proposal must be submitted in a sealed envelope, addressed to the City at the above -referenced address. Each sealed envelope containing -a Proposal must be plainly marked on the outside as "Proposal for: GASB 45 OPEB Actuarial Services" and Proposer's name, address and his/her license number, if applicable. If forwarded by mail, the sealed envelope containing the Proposal, must be enclosed in another envelope addressed to the City of Chino Hills, c/o City Clerk, 14000 City Center Drive, Chino Hills, California 91709. Proposer must submit five (5) copies of the proposal. Proposals received after the above date and time will be considered late and will not be accepted.. Any late proposals will be returned unopened to the proposer. Copies of the Request for Proposals may be obtained in the Department of Finance of the City of Chino Hills, 14000 City Center Drive, Chino Hills, California 91709. Questions regarding the Request For Proposal should be directed in writing to: May Hsu, Accountant, 909-364-2667, Facsimile No.: (909) 364-2675, Email: mhsu(@chinohills.orq 1120/2008 9:40 AM -1- Background The City was incorporated on December 1, 1991, as a general law city and is staffed with 156 full-time employees. The City's current population is about 78,957 with the ultimate population at build -out projected to be about 87,000. The City is located in the Southwestern portion of San Bernardino County. The City's borders are contiguous with Los Angeles, Orange and Riverside Counties. The City is primarily a "contract city". The City contracts with the County of San Bernardino Sheriff's Department for law enforcement services; fire suppression and paramedic services are provided by an independent fire district (the district directly receives a portion of the one percent ad valorem property tax rate); some planning and engineering services are provided via contracted services. Most maintenance functions (streets, parks and landscape, drainage, and vehicles) are provided via contractual services. The City staff provides operations and maintenance for the City's water and sewer utilities and minor facility maintenance. Solid waste disposal services are handled by contract with a refuse disposal contractor. Retiree Healthcare Benefits The City has participated in the San Bernardino County Employees' Retirement Association (SBCERA) since the City was incorporated and in the CalPERS Health Plan since 1997. The City does not provide post employment benefits to retirees. The retirees may purchase health insurance from SBCERA directly or join CalPERS Health Plan before retirement. Currently, the City has 156 employees, only 38 active employees and 0 retirees are enrolled in CalPERS Health Plan. The rest of the employees either opted -out from medical insurance or enrolled in the City Kaiser Plans which is administered by the City. Attachment A is the Resolution No. 97R-31, a resolution of the City Council of the City of Chino Hills electing to be subject to Public Employees' Medical and Hospital Care Act and fixing the employer's contribution for employees and the employer's contribution for annuitants at different amounts. General Information 1. The City of Chino Hills (City) is requesting proposals from qualified firms of consultants and actuaries to prepare an actuarial valuation, with optional services for plan design and funding strategy for one year, plus two option years every two years after the first year. The valuation will be for Post Employment Health Benefits and must be performed in accordance with generally accepted actuarial standards of practice promulgated by the Actuarial Standards Board. 11/20/2008 9:40 AM -2- 2. The City reserves the right to retain all proposals submitted and to use any ideas in a proposal regardless of whether a proposal is selected. Submission of a proposal indicates acceptance by the proposing firm of all conditions contained in this request for proposal, unless clearly and specifically noted in the proposal submitted and confirmed in the contract between the City and the firm selected. 3. Currently the City does not have an actuarial valuation, plan design, or funding strategy for post employment health benefits. The City is seeking bids because actuarial valuation services are needed to comply with U.S. generally accepted accounting principles and the Governmental Accounting Standards Board (GASB) Statement Number 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. Proiect Scope The Governmental Accounting Standards Board approved Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions" in June 2004. GASB 45 established accounting standards for the measurement, recognition, and display of non -pension postemployment benefits in the financial reports of state and local governmental employers. The City is seeking an actuarial consultant to prepare a GASB 45 study of its retiree healthcare plan as of June 30, 2009. Since the City does not have an actuarial valuation, plan design, or funding strategy for post employment health benefits, if the City is considering funding the retiree healthcare plan, it might possibly be with the CalPERS California Employers Retirement Benefit Trust ("CERBT"). The respondent's project plan should include: ■ An initial discussion to review plan provisions, data, actuarial methods, and actuarial assumptions. ■ A meeting with staff to present preliminary valuation results. ■ An executive summary of the final results. ■ A meeting with the Director to present final results. The study results and presentation should include: ■ Actuarial Obligations as of June 30, 2009: • Present Value of Future Benefits • Actuarial Accrued Liability • Normal Cost • Assets • Unfunded Actuarial Accrued Liability • Expected Benefit Payments 11/20/2008 9:40 AM -3- ■ Annual Required Contribution, as a dollar amount and as a percentage of payroll: • Normal Cost • Amortization of the Unfunded Actuarial Accrued Liability ■ Annual OPEB Cost. ■ Net OPEB Obligation. ■ Sensitivity analysis: • Funded and not funded investment return scenarios • 20 and 30 year amortization periods for the Unfunded Actuarial Accrued Liability ■ Projected contributions, benefit payments, and Annual OPEB Cost for the next 10 years. ■ Summary of plan provisions and the data used for the valuation. ■ Summary of actuarial methods and assumptions. Proposal Proposals should include the following: ■ Transmittal Letter — The proposal should be signed by an officer authorized to bind the proposing firm. The offer should be open for a period of at least 90 days. Include contact information and whether the firm will be using any subcontractors. ■ Proiect Approach — Describe how your firm will approach the GASB 45 study, showing that you understand the objectives and requirements of the project. ■ Work Plan and Proiect Schedule — Provide a work plan and timeline for the project, including when information is needed from the City and the proposed meeting dates. The City would like the study completed and results presented to staff no later than July 31, 2009. ■ Proiect Team — Identify the personnel that will be assigned to the project, their credentials, and their experience with similar projects. Include biographies of the leading team members. ■ References — Provide the names, addresses, and phone numbers for at least 5 references for whom the firm has done similar projects. ■ Data Requirements — List the plan information, census data (including its format) that you will require from the City to complete the project. ■ Companv Profile — Provide background information about your firm, including the number of employees and credentialed actuaries, offices and their locations, and your experience with public agency retirement programs and GASB 45. ■ Conflicts of Interest — Describe any potential conflicts of interest that your firm may have regarding the project. l l/20nOM 9:40 AM -4- ■ Litigation — List any lawsuit or litigation and its outcome resulting from any public agency project undertaken by your firm within the last 5 years or any project where a claim or settlement was paid by your firm or its insurers within the last 5 years. ■ Fees — Provide your estimated fees for the project and a not -to -exceed fee estimate. Include an estimate of any additional potential expenses and the hourly rates for the staff assigned to the project. Clearly state what project elements are included in the fee estimate. Provide a separate fee estimate for the actuarial certification, funding policy certification, Excel spreadsheet, and valuation report required by CalPERS for participation in CERBT. Also list any items that you feel may arise or that you might recommend along with an estimate of their additional cost. The submission of a proposal shall be deemed a representation and certification that your firm: ■ Has carefully read and fully understands the information provided in the RFP and any subsequently issued addenda, including City responses to RFP questions posed by the respondents. ■ Has the capacity, ability, and experience to complete the project as specified in the RFP and your proposal. ■ Represents that all the information provided in the proposal is true and accurate. ■ Did not in any way collude, conspire to agree with any person, firm, corporation, or other proposer, directly or indirectly, in regard to the amount, terms, or conditions of the proposal. ■ Agrees that the City reserves the right to make any inquiry it deems appropriate to substantiate information provided in the proposal. Proposals may be withdrawn or modified before the due date of submission for proposals by delivering a written and signed request by the due date. A request for modification of the proposal after the due date will not be considered, including a representation that the proposer was not fully informed regarding any information pertinent to the proposal or the offer. The City shall not be responsible for or bound by any oral instructions, interpretations, or information provided by the City or its employees other than the RFP contact. The City reserves the right to reject any or all proposals submitted, correct any technical errors in the RFP process, waive any irregularities in any proposal, negotiate with any of the proposers, accept other than the lowest fee offer, or enter into a subsequent agreement with another proposer if the originally selected proposer fails to execute its agreement with the City. Any agreement shall not be binding unless it is executed by authorized representatives of the City and the selected proposer. Proposing firms are solely responsible for any expenses incurred in preparing their proposals in response to this RFP. 11/20/2008 9:40 AM -5- Proposal Evaluation A staff panel will review the proposals which will be evaluated based upon their relative ranking among the following criteria: ■ Proposers' qualifications and experience with similar projects for public agencies. ■ Proposed staff availability to complete the project within timeframe requested. ■ Quality and completeness of the proposal. ■ Project approach and work plan. ■ Proposed project fees. ■ Adherence to the City's standard contract language. Finalists may be asked to participate in an oral interview. The City of Chino Hills reserves the right to accept or reject any or all proposals or to waive any defects or irregularities in the proposals or selection process. The proposal shall include, as a minimum: 1. A statement that this RFP shall be incorporated in its entirety as a part of the Consultant's quote. 2. A Statement of Qualifications applicable to this project including the names, qualifications, and proposed duties of the Consultant's staff to be assigned to this project; a listing of recent similar projects completed including the names, titles, addresses, and telephone numbers of the appropriate persons which the City can contact. 3. A statement that all charges for services will be a "Not -To -Exceed" fee, as submitted with and made part of said Consultant's quote. 4. A copy of the Consultant's hourly rate schedule and a written statement that said hourly rate schedule is part of the Consultant's quote for use in invoicing for progress payments and for extra work incurred that is not part of this RFP. 5. A written statement by the Consultant that all federal laws and regulations shall be adhered to notwithstanding any state or local laws and regulations. In case of conflict between federal, state, or local laws or regulations, the strictest shall be adhered to. 6. A written statement by the Consultant shall allow all authorized federal, state, county, and the City of Chino Hills officials access to place of work, books, documents, papers, fiscal, payroll materials, and other relevant contract records pertinent to this project. All relevant records shall be retained for at least three years. 11/20/2008 9:40 nM 5§1 7. A written statement that the Consultant will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. 8. A written statement that the Consultant shall comply with the California Labor Code. Pursuant. to said regulations entitled: Federal Labor Standards provisions; Federal Prevailing Wage Decision; and State of California Prevailing Wage Rates, respectively. 9. A written statement that the Consultant shall comply with the Copeland Anti - kickback Act (18 USC 874 C) and the implementation regulation (29 CFR 3) issued pursuant thereto, and any amendments thereof. 10. A description of Consultant's approach to the work and a complete analysis of staff hours required of each individual to be assigned to the project. The estimated hours shall identify each task to be done and the assigned individual's level of effort. Professional Services Agreement The City has provided a copy of a sample Agreement for Professional Services. Please review this agreement (Attachment B) and provide the City with a written statement of your firm's willingness to accept the terms of the agreement. Please specifically identify terms of the agreement, which your firm is unable to accept, and the reason therefore. The City may or may not accept proposed changes for the final agreement. 11120/2008 9:40 AM -7- CITY OF CHINO HILLS JRTF L City of Chino Hills SS.00iAM. 1_1-C Proposal for Governmental Accounting Standards Board Statement No. 45 Actuarial Study January 13, 2009 Bartel Associates, LLC 411 Borel Avenue, Suite 445 San Mateo, California 94402 Phone: 650-377-1600 Fax: 650-345-8057 Email: jbartel@bar-tel-associates.com Contents Transmittal Letter Section 1 Introduction..................................................................... Section 2 Bartel Associates............................................................. Section 3 Qualifications and References ................. Section 4 WorkPlan ................................................ Section 5 Project Team Page ................................................. 1 .............. 3 ..................................................................... 5 ................................................................... 10 .......................................................................... Section 6 ................... 14 Fees.................................................................................................................................. 15 Section 7 Data.......................................................... Appendices A. Bartel Associates' Services B. Project Team Member Biographies C. GASB 45 Summary D. Certificate of Liability Insurance ............................................ 18 January 13, 2009 Judy R. Lancaster Finance Director City of Chino Hills City Clerk's Office 14000 City Center Drive Chino Hills, CA 91709 Re: Proposal for GASB 45 Actuarial Study Dear Ms. Lancaster: We are pleased to provide our response to the City of Chino Hills's Request for Proposal for Governmental Accounting Standards Board Statement No. 45 (GASB 45) actuarial consulting services. Our proposal includes our firm's background and qualifications, references, the project scope, our estimated fee, the personnel assigned to the project, and our proposed timetable. Bartel Associates is uniquely qualified to prepare the City's GASB 45 valuation: ■ Bartel Associates was established to provide quality and cost-effective services to California public agencies. Our services include retiree medical and other postemployment benefit actuarial valuations, pension plan valuations and administration, retiree medical plan and pension plan design, actuarial audits, and Ca1PERS retirement plan consulting. ■ As a member of the special task force which assisted GASB in drafting Statement No. 45, I have consulted with many counties, cities, districts, and other public agencies on GASB 45 issues. I also served as a consultant to the Governor's Public Employee Post -Employment Benefits Commission. With over 200 GASB 45 studies completed since 2004, including GASB 45 studies for approximately 100 California cities, we are experts in this field. ■ We regularly present the results of our actuarial studies to county boards of supervisors, city councils, and district boards of directors. Our presentations are clear, concise, and understandable to non -actuaries. ■ Our GASB 45 actuarial studies include a comparison of the costs and liabilities with other public sector GASB 45 actuarial studies that we have completed. We are prepared to work on the City's project immediately and can complete the GASB actuarial valuation within the timeframe presented in this proposal. Our proposal is valid for 90 days after the closing date for submission of proposals. As the president of Bartel Associates, I am authorized to represent the firm, submit this proposal including our fee estimate, and sign a contract with the City. Please contact me at 650-377-1601 411 Bore1,lve:nue, Suite. 445 •San Mateo, (;a]ifonil:t 9.4402 main: 650/377-1600 Ofae 650/3-15-8057 01veb: www.bartcl-associates.coni Judy R. Lancaster January 13, 2009 Page 2 obartel@bartel-associates.com) or my associate Doug Pryor at 650-377-1602 (dpryor@bartel- associates.com) if you have any questions regarding our proposal. We look forward to hearing from you. Sincerely, John E. Bartel President c: Doug Pryor Marilyn Oliver Joseph D'Onofrio O:\Prospeets\City of Chino Hills\BA ChiwHillsCi 09-01-13 GASB 45 OPEB proposal.doc =111 13orcl _Avenue, Suite 445 • San Mateo, California 94402 main: 650/377-1600 •fax. 650/3-15-8057 0 veh: wwm.bartrl-associatcs.corn SECTION I INTRODUCTION The City participates in the San Bernardino County Employees' Retirement Association (SBCERA) since the City was incorporated and in the CalPERS Health Plan (PEMHCA) since 1997. Active employees may elect medical coverage under PEMHCA or the City Kaiser plan. Retirees may purchase health insurance from SBCERA directly or join PEMHCA before retirement. The City provides the PEMHCA minimum contribution ($97.00 for 2008) using the unequal method for all employees who retire from the City with PEMHCA. Retirees pay the remainder of the premium. The City does not provide contributions for retiree dental, vision, or life insurance benefits. The City has approximately 156 employees, with 38 currently electing coverage under PEMHCA (there are no current PEMHCA retirees). The City currently accounts for retiree healthcare costs on a pay-as-you-go basis. The Governmental Accounting Standards Board (GASB) approved Statement No. 45 (GASB 45), "Accounting and Financial Reporting by Employers for Postemployment Benefits'Other Than Pensions" in 2004. GASB 45 provides accounting standards for non -pension postemployment benefits, primarily postretirement medical benefits. (GASB 43 covers reporting and disclosure requirements for "OPEB" plans.) Under GASB 45: ■ Obligations are measured on an accrual rather than on a pay-as-you-go basis. ■ The discount rate must be based on the source of funds used to pay benefits. For funded plans, this means the underlying expected long-term rate of return on plan assets. Since the source of funds for unfunded plans is usually an agency's investment fund, and because California and most other state laws restrict what investments agencies can have in their investment funds, unfunded plans will need to use a low (for example, 4.5%) discount rate. ■ "Implied subsidies" must be included in GASB 45 retiree costs and liabilities for non- community rated healthcare plans. Implied subsidies arise when retiree premiums do not represent the expected costs of the underlying retiree group, for example, when the same premium rates are charged for active employees and pre -Medicare eligible retirees. Retiree healthcare plans covered by the PEMHCA are generally considered community rated and not required to value this subsidy. ■ Assets can be recognized for GASB 45 only if they are set aside in an irrevocable trust set up exclusively to pay plan benefits. Accounting for OPEB under GASB 45 can have a significant impact on the City's financial statements. GASB 45's effective dates depend on when the City was required to implement GASB Statement No. 34: GASB 34 1998/99 Revenue Fiscal Year Effective Phase 1 >_ $100 million 2007/08 Phase 2 $10 to $100 million 2008/09 Phase 3 < $10 million 2009/10 Bartel Associates, LLC 1 City of Chino Hills SECTION 1 INTRODUCTION GASB requires that an actuarial valuation be performed at least biennially for retiree healthcare plans with 200 or more members and at least triennially for plans with less than 200 members. However, a new valuation must be done if any significant changes have occurred since the last valuation, for example, to plan membership, benefit provisions, or the basis of any long-term actuarial assumptions. CalPERS, however, requires that agencies participating in the California Employers' Retiree Benefit Trust (CERBT) perform actuarial valuations at least biennially in order for the trust to satisfy the requirements of GASB 43. The City must include GASB 45 disclosures in its financial statement for years when a new valuation is not required. GASB 45 allows the use of a valuation for a fiscal year if performed not more than 24 months before the beginning of the first fiscal year of the 2 or 3 year valuation cycle if there have been no significant changes. Therefore, the City may be able to use a single valuation for several years by performing "roll -forward valuations" rather than complete valuations for the intervening years. A summary of GASB 45 is provided in Appendix C. The City has requested proposals for an actuarial valuation study as of June 30, 2009 to determine the GASB 45 costs and liabilities for its retiree healthcare plan. Any questions regarding this proposal can be addressed to either: John E. Bartel President 650-377-1601 jbartel@bartel-associates.com Bartel Associates, LLC 2 Doug Pryor Vice President 650-366-1602 dpryor@bartel-associates.com City of Chino Hills SECTION 2 BARTEL ASSOCIATES Bartel Associates, LLC is an actuarial consulting firm specializing in providing California counties, cities, districts, and other public agencies with actuarial consulting services including retiree medical valuations, pension plan valuations, retirement plan design, actuarial audits, and CalPERS retirement consulting. The firm's founder, John Bartel, has over 30 years of experience as a retirement consultant and practice leader with major consulting firms. John founded Bartel Associates to provide public sector clients high quality actuarial services at reasonable fees, focusing on personal attention and clear results. Our services include: ■ OPEB Plans - We have prepared "Other Postemployment Benefit" actuarial studies and valuations for over 200 California counties, cities, districts, and agencies to assist with compliance with GASB Statements Nos. 43 and 45. We also prepare valuations for compensated absence plans, such as plans that allow the conversion of accumulated sick leave to retiree healthcare accounts, for compliance with GASB 16. ■ CalPERS Consulting - We provide Ca[PERS pension consulting services and have made presentations to county boards of supervisors, city councils, district boards of directors, employee bargaining groups, and agency staff on CalPERS contribution rates and benefit design issues. ■ Pension Plans - We prepare actuarial valuations and assist with the administration of defined benefit pension plans for California governments and agencies. ■ Plan Design - We assist public agencies redesign existing retirement plans and implement new retirement benefit programs including retiree medical plans and pension plans. ■ Retirement Sv_ stem Audits - We review actuarial valuations, experience studies, actuarial . assumptions, and actuarial methods for state, county, and other agency retirement systems. Bartel Associates was established in July 2003 and is organized as a Limited Liability Corporation. We currently have 18 employees including 8 credentialed actuaries, 8 actuarial analysts, and 2 administrative assistants. Seven of our actuaries are Fellows or Associates of the Society of Actuaries, 7 are Enrolled Actuaries, 8 are Members of the American Academy of Actuaries, and 4 are Fellows of the Conference of Consulting Actuaries. Our firm has been profitable each year since its founding in 2003. We do not have audited financial statements. Bartel Associates has never been involved in any lawsuit, arbitration, or mediation pertaining to any error and omission claim nor have we ever been subject to any Federal, state, or local reviews or field reviews of our valuations. We have lost one client since our firm's establishment when we were asked and declined to recommend and attest to a funding pattern that we felt was not in the best interests of the agency. Bartel Associates, LLC 3 City of Chino Hills SECTION 2 BARTEL ASSOCIATES Bartel Associates is independent of the City and is unaware of any potential conflicts of interest if selected to perform the GASB 45 actuarial study. Bartel Associates is licensed to do business in California. Our certificate of liability insurance in included in Appendix D. Our address and phone numbers are: Bartel Associates, LLC 411 Borel Avenue, Suite 445 San Mateo, CA 94402 phone: 650-377-1600 phone: 800-256-2090 fax: 650-345-8057 Bartel Associates, LLC 4 City of Chino Hills SECTION 3 QUALIFICATIONS AND REFERENCES John Bartel was a member of the special task force which assisted the Governmental Accounting Standards Board (GASB) in drafting Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions" (GASB 45). He was directly involved in the statement's development and has assisted numerous public agencies quantify and understand the impact of this new accounting standard. Bartel Associates also completed a review of proposed alternative financial reporting actuarial issues for GASB under the new statement. John also recently served as a consultant to the Governor's Public Employee Post - Employment Benefits Commission. Each GASB 45 study that we prepare includes a review of plan provisions, a summary of plan participants, the selection of actuarial methods and assumptions, the determination and communication of GASB 45's financial impact, and a projection of costs and funding alternatives. Many of these studies also include a discussion of plan design alternatives. We present results using plain, easily understood language. We will understand your objectives and you will understand the results of our work. Many agencies have considered plan design changes to mitigate or better predict retiree healthcare costs and obligations along with their GASB 45 actuarial valuation. Some of the alternatives we have studied include: ■ capping or freezing an agency's premium contribution, ■ coordinating the retiree healthcare promise with an active employee flexible benefits plan, and ■ providing a different level of benefits to new hires or future retirees, sometimes through a vesting schedule or individual defined contribution accounts. Along with the cost impact of any plan design changes, the City must also consider the legal, bargaining, and employee relations issues associated with any change in benefits. Following is a partial list of clients for whom we have prepared or are currently preparing GASB 45 actuarial valuations. Alameda Corridor Transportation Authority Alameda County Fire Department Alameda County Water District American Canyon Fire Protection District Aptos/La Selva Fire Protection District Association of Bay Area Governments Bay Area Air Quality Management District Calleguas Municipal Water District Ca10ptima Chino Valley Independent Fire District City of Santa Clarita City of Santa Cruz City of Santa Fe Springs City of Santa Rosa City of Solana Beach City of South Lake Tahoe City of South San Francisco City of Stanton City of Stockton City of Sunnyvale Bartel Associates, LLC 5 City of Chino Hills I SECTION 3 QUALIFICATIONS AND REFERENCES City of Alameda City of Torrance City of Antioch City of Union City City of Belmont I City of Upland City of Bishop I City of Vallejo City of Brea City of Victorville City of Brentwood City of West Sacramento City of Brisbane City of Westlake Village City of Buena Park City of Westminster City of Burbank City of Yuba City City of Burlingame I Coachella Valley Water District City of Campbell Community Redevelopment Agency of LA City of Cathedral City Contra Costa Transportation Authority City of Chula Vista I County of Madera City of Compton I County of Monterey City of Concord I County of Napa City of Corona County of Nevada City of Costa Mesa County of Orange City of Cupertino County of Placer City of Cypress County of Santa Cruz City of Daly City I County of Shasta City of Davis I County of Siskiyou City of Duarte I County of Solano City of Dublin County of Sutter City of El Centro County of Tulare City of El Segundo County of Tuolumne City of Encinitas , County of Yolo City of Fairfield I County of Yuba City of Fort Bragg I Cucamonga Valley Water District City of Foster City I Delta Diablo Sanitation District City of Fountain Valley I Dublin San Ramon Services District City of Fremont East Bay Regional Park District City of Glendale I Eastern Municipal Water District City of Glendora I Helix Water District City of Half Moon Bay I Ironhouse Sanitation District Bartel Associates, LLC 6 City of Chino Hills I SECTION 3 QUALIFICATIONS AND REFERENCES City of Hawaiian Gardens Irvine Ranch Water District City of Hercules Los Altos Unified School District j City of Hermosa Beach Los Angeles County Sanitation District jI City of Huntington Park Marin Municipal Water District City of Inglewood Menlo Park Fire Protection District City of La Puente Metropolitan Water District of Southern CA I City of Livermore Midpeninsula Regional Open Space District City of Lompoc Moraga-Orinda Fire District City of Long Beach Mt. Diablo Unified School District City of Madera North Coast County Water District North Orange County Community College City of Manteca District City of Menlo Park North Tahoe Fire Protection District j City of Merced Orange County Transportation Authority jI City of Mill Valley Otay Water District jl City of Mission Viejo Palo Alto Unified School District jI City of Monrovia Peralta Community College District jI City of Moorpark Placer County Water Authority I City of Moreno Valley Port of Stockton City of Napa Rancho Cucamonga Fire District City of Newark Redwood Empire Municipal Insurance Fund City of Newport Beach Riverside Comity Transportation Commission City of Norco Rodeo Hercules Fire Protection District } City of Ontario Ross Valley Sanitary District jI City of Petaluma Sacramento Metropolitan Fire Protection District I City of Pico Rivera San Bernardino Municipal Water Department City of Pinole San Diego County Water Authority 1 City of Pittsburg San Francisco County Transportation Authority 1 City of Pleasanton San Francisco Redevelopment Agency 1 City of Pomona San Mateo County Transit District jI City of Rancho Cucamonga San Ramon Valley Fire Protection District I Santa Cruz Consolidated Emergency 1 City of Redding Communications Center City of Redondo Beach Scotts Valley Fire Protection District City of Redwood City South Coast Water District jI City of Richmond South County Fire Protection Authority I Bartel Associates, LLC 7 City of Chino Hills SECTION 3 QUALIFICATIONS AND REFERENCES City of Riverside Southern California Association of Governments City of Rocklin Southern California Regional Rail Authority City of Rohnert Park Stanislaus County Housing Authority City of Roseville State of Maine City of Sacramento Stege Sanitary District City of Salinas Sweetwater Authority City of San Bernardino Tamalpais Union High School District City of San Carlos Town of Hillsborough City of San Gabriel Town of Los Altos Hills City of San Jose Town of Los Gatos City of San Leandro Town of Yountville City of San Luis Obispo Tuolumne Utilities District City of San Mateo Ventura County Transportation Commission City of San Rafael West & Central Basin Municipal Water District City of Santa Ana West Valley Sanitation District City of Santa Clara Bartel Associates, LLC 8 City of Chino Hills SECTION 3 QUALIFICATIONS AND REFERENCES We recommend that the City contact our references to understand the quality of our work. E.: Ghent Project: Contact City Ci of San Bernardino GASB 45 Actuarial Study Barbara Pachon Director of Finance 300 North "D" Street San Bernardino, CA 92418-0001 Phone: 909-384-5242 -< 4 z --. F.:._.. .-: .:.. Ci of Corona ty= '4.Y. --.'..;:k i�.4`� - (iAS>, 45 tic canal Study t� s Patricia L M.rieMer, CPA - ` l e-, an - 400 South �licenti 3rd Floor, a, . Corona} CA 92882.2 ....? Phone; 95i .736237 City of Ontario GASB 45 Actuarial Study Grant Yee City of Rivet KA GASB 45 l Stucjy r Ca1PERS Con§ultiMg, Tamara L. Layne Finance Officer 10500 Civic Center Drive P. O. Box 807 Rancho Cucamonga, CA 91729 Phone: 909-477-2700 x2430 �:Pay-1,'&- deie = Fuiance DirfiorlTt�asulrer 3900MW Streer-- Riverside; CA 92322- ' ., Phorle:_95..}86a 660 ' ?_ We consider specific information regarding each project to be confidential. However, the City should feel free to discuss any aspects of the projects with the reference contacts. We can provide additional references at the City's request. Bartel Associates, LLC 9 City of Chino Hills SECTION 4 WORK PLAN Project Approach We believe that there are two levels to a GASB 45 actuarial valuation. The first level is technical compliance with GASB 45. Some public employers may hire an actuary to assist only with technical compliance with the standard, limiting the scope of services to preparing the required financial reporting and disclosure. The second level goes beyond reporting and disclosure issues, and includes assisting management with an understanding of GASB 45, the actuarial assumptions and methods, the valuation results, the financial statement impact, funding policies and options, and a review of the plan design. Our actuarial valuation process includes the following steps: ■ Data Collection - The City will provide documentation of plan provisions, healthcare providers, claim information for self-insured plans, and employee census information including individual plan and coverage elections. If there are apparent differences between the plan documentation and the substantive plan, we will work with the City to clarify its actual retiree healthcare obligations. GASB 45 requires that the actuarial valuation reflect the substantive plan. ■ Data Reconciliation - We will review the plan and participant data and provide a list of any questions. ■ Methods & Assumotions — We will recommend the actuarial assumptions and funding methods with the City's input. We generally present results using the Entry Age Normal Cost funding method. This method is used by CalPERS to fund their pension plans and produces an annual cost that is intended to be a level percentage of payroll. It is also one of two methods required by CalPERS for agencies that prefund retiree medical benefits with CERBT. We also present results using alternative amortization periods. We can review additional funding and amortization methods at the City's request. GASB 45 requires that actuarial assumptions be consistent with retirement plan assumptions. Due in part to our significant experience with 1937 Act Retirement Systems, we have the ability to clearly communicate the actuarial assumption selection process to our clients. The actuarial assumptions used for the valuation may include: discount rate, general inflation, payroll increases, healthcare trend, mortality, termination, disability, retirement, participation at retirement, healthcare plan at retirement, Medicare eligibility, marital status at retirement, spouse's age at retirement, and dependent coverage at retirement. Agencies that do not participate in CalPERS PEMHCA can fund their retiree healthcare plans with CalPERS. Healthcare plans funded through CalPERS may be required to use certain methods and assumptions. For example, CalPERS currently requires a discount rate of 7.75% for liabilities funded through the CERBT. It is important that the City understand the methods and assumptions used and their impact on Bartel Associates, LLC 10 City of Chino Hills SECTION 4 WORK PLAN GASB 45 results as these are actually assumptions set by the City, subject to our actuarial guidance and standards of practice. ■ Valuation Processing- - We will prepare the actuarial valuation using ProVal software, a comprehensive and widely used and respected retirement benefit valuation system developed by Winklevoss Technologies, LLC. Our procedures for quality control include the checking of computer programs and calculations by a second actuary and the review of results and presentation materials by senior actuaries. We keep client information secure by encrypting all files kept on our computers and by not accepting census data with Social Security numbers. ■ Preliminary Results Meeting- - We will meet with the City to review the preliminary valuation results. Our preliminary results presentation will be in a discussion outline format and will include a benchmark survey comparing the City's GASB 45 information with other agency GASB 45 plan studies prepared by Bartel Associates. ■ Results Meeting- - We will meet with the City Director to review the valuation results. Our preliminary results presentation will be used. ■ Executive Summary - We provide the City with a written executive summary of the results.. ■ Valuation Renort - We can, at the City's request, prepare a formal valuation report including an actuarial certification. We can also prepare a draft GASB 45 financial statement footnote, if needed. ■ CalPERS Certification - If the City pre -funds its retiree healthcare benefits through CERBT, it will need to provide an actuarial certification, a funding policy certification, and an Excel spreadsheet containing valuation information to CalPERS in addition to a formal valuation report. We can prepare this information at the City's request. We strongly believe that through our years of experience we have developed an efficient and effective process for preparing and presenting actuarial valuations. Actuarial Valuation Discussion Outline Our actuarial valuation discussion outlines are clear, concise and understandable to non - actuaries. Our outlines include: ■ Summary of plan provisions. ■ Summary of the data used for the valuation: • employee counts and average ages, service, pay, etc, by employee group • active and retiree coverage elections by healthcare plan • retiree coverage (single, 2 -party, family) statistics by age • active age/service distributions ■ Summary of actuarial methods and assumptions. Bartel Associates, LLC 11 City of Chino Hills SECTION 4 WORKPLAN ■ GASB 45 accounting information, including benefit costs and obligations as outlined below. ■ Comparison of the City's costs and obligations with that of other agencies in our database. The discussion outline will include the following GASB 45 information: ■ Actuarial value of benefits, including: • Present Value of Future Benefits • Actuarial Accrued Liability (AAL), broken down by active and retired employees • Plan Assets • Unfunded Actuarial Accrued Liability (UAAL) • Normal Cost • Expected Benefit Payments ■ Annual Required Contribution (ARC), as a dollar amount and as a percentage of payroll, identifying: • Normal Cost • Amortization of the UAAL ■ Annual OPEB Cost (AOC). ■ Net OPEB Obligation (NOO). ■ Sensitivity analysis, including: • 2 investment return scenarios (e.g., not funded and funded) • Alternative amortization periods for the UAAL (e.g., 20 and 30 years). ■ Projected contributions and AOC versus "pay-as-you-go" costs. Project Schedule We usually recommend an 8 -week project schedule for the actuarial valuation. For example, if the City provides census data and plan information on February 2 2009, a possible work schedule would be as follows: Project Steps 1) The City provides participant data and plan information to Bartel Associates. 2) Bartel Associates meets with the City to present preliminary valuation results. 3) Bartel Associates provides a final valuation discussion outline. Estimated Dates February 2, 2009 March 16, 2009 6 weeks after (1) March 30, 2009 2 weeks after (2) Bartel Associates, LLC 12 City of Chino Hills SECTION 4 WORK PLAN We can complete the valuation within this timeframe if all the information requested is provided quickly and accurately. The City has requested that the actuarial study be completed by July 31, 2009. We usually recommend at least 8 weeks from data collection to presenting preliminary results because our experience has shown that there may be points during the project when the City may desire to take sufficient time to consider method, assumptions, and study alternatives. City Staff The City's staff will be responsible for gathering the information outlined in Section 7. The amount of time needed to do this will depend on the availability of the data at the City. City staff should also be available for at least one meeting to present preliminary results. Our meetings generally take from 2 to 3 hours each, depending on the City's needs. Bartel Associates, LLC 13 City of Chino Hills SECTION 5 PROJECT TEAM The project team that will be assigned to work with City will include: ■ John Bartel, President ■ Doug Pryor, Vice President ■ Bianca Lin, Assistant Vice President John Bartel will function as engagement manager and will be responsible for the relationship and day-to-day direction of the project. John is an Associate of the Society of Actuaries, an Enrolled Actuary, a Fellow of the Conference of Actuaries, and a Member of the American Academy of Actuaries. He has extensive public sector experience with GASB 45 and retirement consulting with over 200 public entities in California that are covered by the California Public Retirement System (CalPERS). He has appeared before county boards of supervisors, city councils, and public agency boards of directors and is known for his clarity. Doug Pryor and Bianca Lin will provide actuarial and technical support. Doug is an Associate of the Society of Actuaries, an Enrolled Actuary, and has a Masters Degree in Statistics. Bianca has is a Fellow of the Society of Actuaries, an Enrolled Actuary, and has a Masters Degree in Statistics. The project team will be assisted by our actuarial analyst staff. Biographies of project team members are included in Appendix B. Bartel Associates, LLC 14 City of Chino Hills SECTION 6 FEES Our fees are a function of the hours worked by each professional on a project and their hourly. billing rates. Our hourly rates are as follows: Team Member Hourly Rate Partner $250-$300 Assistant Vice President $200-$225 Senior Actuarial Analyst $150 Actuarial Analyst $125 Administrative Support $75 We have prepared a budget based on the City's retiree healthcare plan design and the number of employees and eligible retirees using the information provided in the RFP. We expect that our fees will be approximately $11,500 including two meetings with the City to present valuation results. The City should be certain that all responses to the RFP include the same project elements when comparing estimated fees. Our estimated fee will be lower if any of these items are not needed. Project Elements Estimated Fee GASB 45 Actuarial Valuation (no -funding and funding discount rates) $ 8,800 Preliminary Results Meeting 600 Executive Summary 1,500 Results Meeting with Director 600 Total $ 11,500 We expect our fees for the subsequent 2 valuations and intervening roll -forward valuations to increase by no more than the rate of inflation for the Los Angeles area over the above amount. Note that our fee estimate assumes that: ■ The only retiree medical benefit is for employees electing coverage at retirement under PEMHCA. ■ Post-retirement benefits for the valuation will include medical benefits, but no City -paid dental, vision, or life insurance benefits. ■ Employees are not permitted to continue their active Kaiser coverage into retirement based on blended active/retiree premiums ■ Participant census data will be provided completely and accurately in an Excel spreadsheet with one record per participant. ■ GASB 45 costs and liabilities will be presented for the plan as a whole with no breakdowns for employee groups. Bartel Associates, LLC 15 City of Chino Hills SECTION 6 FEES ■ Costs and liabilities will be provided using one funding method and one set of assumptions including 2 discount rates: a "not funded" discount rate representative of the expected future long-term return of the City's investment fund and a "funded" discount rate representative of the expected future long-term return of a segregated investment fund. If the City is considering funding with CERBT, the funded discount rate will be 7.75% as required by Ca1PERS. ■ Costs and liabilities will be provided using one funding method and one set of assumptions. ■ We will have two meetings with City to valuation results. We will provide a "Preliminary Results" discussion outline for these meetings. ■ Our presentation outline and valuation report will contain the information needed for the City's CAFR. However, we have included a fee estimate to prepare a draft financial statement footnote at the City's request. ■ There will be no additional charges for expenses (e.g., travel, telephone, copying, etc.). The hourly rates listed above include our costs for these items. ■ We based our estimated fee on our best guess of the amount of time required for the project. While this represents the likely cost of the study, it is possible that unexpected work -or complexities may arise that will require additional time. We understand the City's budgeting needs and agree not to bill more than $13,000 one meeting with the City unless the scope of the project changes as described below. ■ We will invoice the City monthly based on time incurred, subject to the above maximum fee. The above fees might be higher if the scope of the project changes from that described above, for example: ■ The retiree healthcare promise differs from the information provided in the RFP or if the City is not in compliance with CalPERS PEMHCA rules. ■ Participant data is not relatively clean and free from internal inconsistencies or is not provided in the format requested. ■ Valuation results are needed for additional actuarial assumption sets, funding methods, contribution policies, or alternative plan designs. For example, if the City funds less than the ARC with Ca1PERS, the discount rate used for the valuation will be less than 7.75%. For example, a sensitivity analysis of the medical trend assumption might cost between $500 and $1,000. ■ The City requests additional meetings, such as a planning meeting, a meeting with the City's outside auditors, or a presentation to the City Council. We will base our fee for additional meetings on our billing rates and the time needed for the meetings and preparation. For example, a 2 -hour meeting where we can use our discussion outline with no additional preparation would cost about $600. Bartel Associates, LLC 16 City of Chino Hills SECTION 6 FEES ■ Our presentation outline will contain the information needed for the City's CAFR. We can provide additional reports, such as a formal valuation report or a draft financial statement footnote, at the City's request. We estimate our fees will be $2,000 for a formal valuation report and $1,000 for a draft financial statement footnote. ■ If the City pre -funds its retiree healthcare benefits through CERBT, it will need to provide CalPERS a formal valuation report, an actuarial certification, a funding policy certification, and an Excel spreadsheet containing the valuation results and funding information. In lieu of a formal valuation report, CalPERS will accept our results discussion outline with a certification and cover letter summarizing the valuation results. Our estimated fees to prepare the information required by CalPERS are $500 for the certifications and Excel spreadsheet and $750 for a certified discussion outline and cover letter. If the City prefers a formal valuation report rather than a certified discussion outline for CalPERS or its auditors, our fee will be approximately $2,000 for a formal report. Additional studies, such as to explore potential benefit design changes, will be billed at our hourly rates. We will provide a fee estimate after the scope of the project is defined and before work is begun. Plan Design Study The City requested a study to help design the current retiree healthcare program. We recommend discussing the scope of the study at a GASB 45 planning meeting, or over the telephone. Furthermore, the City will be in the best position to help define benefit alternatives after we present our preliminary results showing the costs and obligations of the current retiree healthcare program. After we define the scope of the study we can estimate our fees, which will be based on our hourly rates and the estimated time needed for the study. For example, a simple study that maintains the basic design but increases the benefit levels may cost between $1,000 and $2,000. A more comprehensive study that significantly changes the structure of the current design might cost between $5,000 and $10,000. Bartel Associates, LLC 17 City of Chino Hills SECTION 7 DATA If the City accepts our proposal, we will need the following information: ■ Summary of plan provisions and copies of the most recent MOUS for bargained employee groups and agreements for unrepresented groups. ■ Total pay-as-you-go costs, if any, for the last 3 complete fiscal years (2005/06,,2006/07, 2007/08) and an estimate for the fiscal year ending June 30, 2009 for retirees only, separately for medical, dental, and vision, and life, if possible. ■ The City's OPEB financial statement footnotes, if any, for the last 3 fiscal years, including the draft footnote for the prior fiscal year if not final. ■ The City's last monthly individual participant Ca1PERS healthcare billing report. ■ Investment fund annual rates of return for the last 10 years or as many years as are available, if less (see the attachment below). Also, provide the percentage of the City's investment fund that is invested with LAIF and the types and percentages of other investments, if any. ■ Employee census information, in electronic format (Excel spreadsheet), including the information shown on the attachment below. Include any active employees who have waived coverage or elected the City Kaiser plan. Include retired employees who have waived coverage if they can join PEMHCA at a later time. In order to maintain confidentiality, do not provide Social Security numbers for Employee Number. We will not accept any files that contain Social Security Numbers. ■ Employee census information, in electronic format (Excel spreadsheet), including the information shown on the attachment below: • Include active employees who have waived coverage. • Include retirees and surviving spouses who have waived coverage if they receive a City contribution or can join the plan at a later time. • Include retirees (including surviving spouses) who have retired under SBCERA and participate in PEMHCA even if they are not eligible for a City contribution under the retiree healthcare plan. • The City may request a copy of its CalPERS PEMHCA database by calling the CalPERS Employer Contact Center at 888-225-7377 or by downloading and submitting the CalPERS "GASB 45 Data Extract Request, Disclaimer, and Non -Disclosure Agreement" from the CalPERS website. This data extract may be helpful to the City in assembling the requested employee census information. The City can: ➢ Prepare its own data file and use the CalPERS data to review and complete the data requested. ➢ Provide the CalPERS data file after reviewing and correcting the information in the CalPERS data extract. Note that the CalPERS data extract may not include some of the requested data, such as compensation, employee classification, and bargaining group. If the City needs GASB 45 results separately by additional employee groups, average pay amounts should be reported separately for each employee group. The Bartel Associates, LLC 18 City of Chino Hills SECTION 7 DATA City should also identify any retirees reported by CalPERS who did not retire directly from the City. • In order to maintain confidentiality, do not provide Social Security numbers for the employee number. We will not accept any files that contain Social Security Numbers. We may need additional data, depending on our review of the City's benefit promise. Bartel Associates, LLC 19 City of Chino Hills SECTION 7 DATA Tnestment Fund Annual4".Rates f gifiir Bartel Associates, LLC 20 City of Chino Hills LAIF Fiscal Year., city LAW Percentage 2007/2008 4.33% 2006/2007 5.12% 2005/2006 3.87% 2004/2005 2.26% 2003/2004 1.53% 2002/2003 2.15% 2001/2002 3.45% 2000/2001 6.10% 1999/2000 5.71% 1998/1999 5.34% Bartel Associates, LLC 20 City of Chino Hills SECTION 7 DATA GASB 45 Census Yriformta>�ign: Data Field Actives Retirees .. Name Yes Yes Employee Numberl Yes Yes I 1 Gender I Yes Yes Birth Date I Yes Yes Spouse's Birth Date Yes (if available) I Yes (if available) Hire Date I Yes I Yes (if available) Retirement Date I N/A I Yes Retirement Type N/A I Service, Disability, Survivor Employee Classification Full -Time / Part -Time I N/A Part -Time Employee Hours I < 20 hrs/wk, > 20 hrs/wk I N/A Bargaining Group I Yes I Yes Pension I Yes I Yes (Misc, Safety, Not Eligible) (Misc, Safety) Compensation2 I Yes (Base) I N/A Medical Plan I Yes I Yes Medical Coverage Yes I Yes l (Single, 2 -Party, Family) (Single, 2 -Party, Family) Medical Premium — City Paid N/A Yes Medical Premium — Retiree Paid N/A I Yes I Do not provide Social Security numbers. 2 Indicate the pay period reported, for example, current monthly pay, prior fiscal year pay, etc. Bartel Associates, LLC 21 City of Chino. Hills APPENDIX A BARTEL ASSOCIATES' SERVICES Following are the services Bartel Associates provides: OPEB (Other Post Employment Benefits) We provide OPEB actuarial services to many California agencies. This work helps agencies understand the impact of GASB 45 and includes: ■ review and determination of plan benefits per MOUs, bargaining agreements, plan summaries, etc.; ■ review of plan demographics and determination of actuarial methods and assumptions; ■ calculation of GASB 45 costs and liabilities; ■ review and analysis regarding funding alternatives; ■ preparation of draft financial statement reporting and disclosure information; ■ alternative plan design cost impact studies; ■ analysis of defined benefit and defined contribution plan designs; ■ open and closed group projections, including Annual OPEB Cost (AOC) cost and benefit payout projections; and ■ review and analysis of life insurance contracts. Ca1PERS Consulting We have worked with over 120 California public agencies consulting on issues related to the Ca1PERS retirement system. This work covers a broad spectrum of retirement benefits issues, and often includes presentations to city councils, boards of directors, employee bargaining groups, or agency staff. Additional detail of projects we have prepared are as follows: ■ benefit improvement analysis (e.g. 3%@50 and 3%@55 for safety and 2.5%@55, 2.7%@55, and 3%@60 for non -safety), including cost allocations for property tax issues; ■ Pension Obligation Bond (POB) issues including cash flow analysis and actuarial certifications for POB unfunded actuarial liabilities; ■ asset -liability analysis including modeling stochastic confidence ranges for various funding criteria such as asset returns, contribution rates, and plan funded status; • projections of Ca1PERS contribution rates and related stochastic modeling; ■ cost impact studies of actuarial assumption changes; and ■ plan review and design issues. APPENDIX A BARTEL ASSOCIATES' SERVICES Pension Plans We prepare actuarial valuations of defined benefit retirement plans for public agencies. This work includes consulting regarding various plan issues, including the following: ■ annual and biennial actuarial valuations; ■ financial statement reporting and disclosure information under Governmental Accounting Standards Board Statement No. 27 (GASB 27) for public agencies; ■ audits of actuarial valuations and experience studies; and ■ benefit calculations, plan design, and document review. Bartel Associates always presents results and prepares discussions using plain, easily understood language. We will understand your objectives and you will understand our work as well as our recommendations for your plans. ii APPENDIX B PROJECT TEAM MEMBER BIOGRAPHIES JOHN E. BARTEL, President Experience/Responsibilities With over 30 years in employee benefits, John focuses on pension consulting for a wide variety of public and private sector clients. He founded Bartel Associates to serve public sector agencies, emphasizing quality, personal attention, and clear results at reasonable fees. Clients rely on John's ability to apply complex regulations in understandable ways. John specializes in: ■ CalPERS public agendy consulting ■ Helping clients understand actuarial, accounting, and regulatory issues ■ Retiree healthcare plan valuation, study, and design ■ Retirement plan review, valuation, and design ■ Employee benefit merger and acquisition issues ■ Publications: ➢ 2003 California Public Retirement Journal "GASB: Other (Than Pensions) Post employment Benefits Plan Sponsor Reporting and Disclosure" (available soon online). ➢ June 2001 National Association of State Retirement Administrators (NASRA) "Is A DROP Plan Right for Your Organization?" with Chris Bone, Aon's Chief Actuary (www.nasra.org/current_topics.php?action=item&art=10). ➢ January 2001 Western City "Understanding the Impact of the New CalPERS Public Safety Benefits" with Harriet Commons, City of Fremont, (www.westemCity.com/JANOICalPERS13.htm). ➢ GASB 27 (pension disclosure) White Paper, California Committee on Municipal Accounting with Glenn Steinbrink, City of Fullerton, (www.calpers.org/employer/actuary/GASB27-1998-attl.pdf). ■ Speaking at numerous meetings for: ➢ California Society of CPA's ➢ California Public Employee Labor Relations Association ➢ California Society of Municipal Finance Officers ➢ Society of Actuaries Affiliations/Designations/Education ■ Associate of the Society of Actuaries ■ Enrolled Actuary ■ Fellow of the Conference of Consulting Actuaries ■ Member, American Academy of Actuaries ■ Member, GASB's OPEB task force ■ BS in mathematics, California State University, Chico iii APPENDIX B PROJECT TEAM MEMBER BIOGRAPHIES DOUG PRYOR, Vice President Experience/Responsibilities With over 18 years in employee benefits, Doug specializes in actuarial consulting and other projects. Clients appreciate Doug's ability to provide concise, pertinent, valuable information in a timely fashion. His experience includes: ■ Actuarial valuations of public, corporate, and multiemployer pension plans ■ Studies analyzing the cost of new benefits and changes to existing programs ■ Design and costing of supplemental retirement benefits for executives ■ Valuations of postretirement medical programs ■ Funding of health and welfare benefits under VEBAs ■ Plan amendments, summary plan descriptions, and other employee communications ■ Plan terminations, calculating benefits, annuity purchase, employee communications, and government filings ■ Benefit issues related to mergers and acquisitions as well as union negotiations Affiliations/Designations/Education ■ Associate of the Society of Actuaries ■ Enrolled Actuary ■ Member, American Academy of Actuaries ■ BS in mathematics, University of California, Davis ■ MA Statistics, University of California, Santa Barbara iv APPENDIX B PROJECT TEAM MEMBER BIOGRAPHIES BIANCA LIN. Assistant Vice President Experience/Responsibilities Bianca's 15 years of actuarial experience includes 11 in employee benefit consulting. Clients depend on Bianca's ability to coordinate projects with them and prepare results in an efficient, cost-effective manner. Bianca's work includes: ■ Pension and retiree healthcare actuarial valuations ■ Review and analysis of Ca1PERS valuations ■ Cost analysis and projections of various post employment benefit programs Affiliations/Designations/Ed ucation ■ Fellow of the Society of Actuaries ■ Enrolled Actuary ■ Member, American Academy of Actuaries ■ MS in Statistics, National Tsing Hwa University, Taiwan v APPENDIX C GASB 45 SUMMARY On June 21, 2004, the Governmental Accounting Standards Board approved Statement No. 45 (GASB 45), accounting standards for other (than pensions) postemployment henefits (OPEB). Accounting for these benefits — primarily postretirement medical — can have significant impact on state and local government financial statements. This article summarizes GASB 45 including the basics, some idea of the magnitude, and action steps you should be taking now. (GASB's Statement No. 43, which sets uniform financial reporting standards for OPEB plans, is not discussed in this article.) BACKGROUND Historically, most public sector entities have accounted for OPEB using a "pay-as-you-go" approach; very few have prefunded or even accrued for these benefits. This means OPEB costs are ignored while an employee renders service and recognized only after an employee retires. GASB argues this delayed recognition shifts "costs" from one taxpaying generation to another. The GASB position is that OPEB, like pension benefits, are a form of deferred compensation. Accordingly, GASB 45 requires recognizing OPEB (in the financial statement) as employees render service (and consequently earn the benefit), rather than when paid. EFFECTIVE DATES GASB 45 effective dates are phased in similar to GASB's Statement No. 34: ■ Fiscal years beginning after December 15, 2006 for GASB 34 phase 1 governments (total annual revenue of $100 million or more) ■ Fiscal years beginning after December 15, 2007 for GASB 34 phase 2 governments (total annual revenue of $10 million to $100 million) ■ Fiscal years beginning after December 15, 2008 for GASB 34 phase 3 governments (total annual revenue less than $10 million). While these dates seem far away, planning for transition to the new standards will take time. Many agencies will want to understand the implications on their financial statements and bond ratings well in advance of required implementation dates. WHAT BENEFITS ARE OPEB? OPEB includes most postemployment benefits, other than pensions, that employees are entitled to after leaving employment: retiree medical, dental, prescription drug, vision, life insurance, group legal, and long-term care benefits. OPEB also includes disability benefits when not provided in a pension plan. They do not include vacation, sick leave, COBRA, or ad hoc early retirement incentives, which fall under other GASB accounting statements. Here are a few OPEB examples: ■ Agency pays a retiree's healthcare premium after retirement if an employee works for the agency at least 10 years and retires directly from the agency. ■ City allows retirees to continue participating in the medical plan after retirement, but charges some retirees the plan's average per -capita cost (and others less), which is below the retiree's full cost. The following chart illustrates how a plan's medical costs might vary by age. $7,000 $6,000 55,000 $4,000 $3,000 $2,000 .$1,000 APPENDIX C GASB 45 SummARY -------------------------1-------------- % ----- 25 30 35 40 45 50 55 60 65 70 75 80 - - -Average Plan Cost —Cost by �I 85 90 95 100 ••l In this example, retirees charged the average ($3,300) plan cost are getting a benefit worth substantially more than they're paying. This difference is referred to as the "implied subsidy." ■ District participates in PEMHCA (Ca1PERS Healthcare Program), using a cafeteria plan to pay active employee premiums. The district, as generally required under PEMHCA law, pays the $97.00 minimum toward retiree's 2008 PEMHCA premiums. Action Steps 4 Examine your agency's benefits to identify OPEB and your degree of compliance concerns. Summarize your agency's benefit promise (by gathering information from MOUS, council or board resolutions, etc.) to greatly facilitate the valuation and implementation process. ACCOUNTING STANDARDS Under GASB 45, pay-as-you-go accounting is replaced with accrual accounting. This is virtually identical to GASB's approach under Statement No. 27, with the key financial statement components being an Annual Required Contribution, an Annual OPEB Cost, and a Net OPEB Obligation. (Before we describe these 3 terms you might want to refer to the Actuarial Definitions on page 9.) ■ Annual Required Contribution (ARC): GASB 45 doesn't require an agency to snake up any shortfall (unfunded Actuarial Liability) immediately, nor does it allow an intinediate credit for any excess Plan Assets. Instead, the difference is amortized over time. An agency's ARC is nothing more complicated than the employer current Normal Cost (value of benefits being "earned" during a year), plus the amortized unfunded Actuarial Liability (or less the amortized excess Plan Assets). Simply put, ARC is the value of benefits earned during the year plus (or minus) something to move the plan toward being on track for funding. GASB 45 allows actuaries to amortize the unfunded Actuarial Liability (or excess Plan Assets) on a level dollar or level percent of payroll basis. We believe most agencies will want to use a level percent of payroll amortization because it's more consistent with the budget process and how pension contributions are usually calculated. ■ ■ APPENDIX C GASB 45 SUMMARY ARC must be based on the underlying OPEB promise (as understood by the plan sponsor and employees). Annual OPEB Cost (AOC): The first year an agency complies with the new standards, the AOC equals the ARC. In subsequent years, the AOC will equal the ARC, adjusted for prior differences between the ARC and AOC. Net OPEB Obligation (NOO): An agency's NOO is the historical difference between actual contributions made and the ARC. If an agency has always contributed the ARC, the NOO equals zero. However, an agency has not "made" the contribution unless it has been set aside and cannot legally be used for any other purpose. Implementation Process The implementation process will be relatively straightforward: An agency will hire an actuary to calculate the ARC. The first time an agency does this, their AOC equals their ARC. The agency then decides whether to contribute all, none, or part of the ARC into a Trust that cannot legally be used for any purpose other than paying OPEB. If an agency always contributes the ARC, then each subsequent year's AOC equals their ARC — and the NOO is zero. The first year an agency does not contribute the ARC, they must establish an NOO equal to the difference between their actual contribution and the ARC. The subsequent year's AOC equals the ARC, adjusted for interest and amortization of the NOO. Action Step -� Gather participant data (your actuary should be able to tell you what you'll need once they review your underlying benefit promise). GASB 45 REQUIREMENTS Disclosure Requirements This may be the most important aspect of GASB 45. When disclosed, some agencies will show large OPEB unfunded liabilities, while others will show ft small or no unfunded liabilities. These differences may require an adjustment in an agency's bond rating. Plan sponsors must disclose in their financial statement footnotes: ■ Basic plan information: • Plan type • Benefits provided • Authority under which benefits were established ■ Plan funding/contribution policy information: • Required contribution rates for active members and employers shown in dollars or as a percent of payroll ■ Plan Funded Status information: • AOC and the dollar contributions actually made • If the employer has a NOO, also ➢ Components of the AOC ➢ NOO increase or decrease during the year ➢ End of year NOO • 3 -year history of ➢ AOC ➢ Percent of AOC contributed during the year ➢ End of year NOO • Most recent year's plan Funded Status • Actuarial methods and assumptions used to determine the ARC, AOC, and Funded Status. In addition, plan sponsors must provide 3 years of historical required supplementary information: ■ Valuation dates ■ Actuarial asset values ■ Actuarial Liability ■ Unfunded Actuarial Liability (excess Plan Assets) ■ Plan funded ratio ■ Annual covered payroll ■ Ratio of unfunded Actuarial Liability (excess Plan Assets) to annual covered payroll ■ Factors that significantly affect comparing the above information across the years. l APPENDIX C GASB 45 SUMMARY Defining the Plan GASB 45 refers to the substantive plan as the basis for accounting. It may differ from the written plan in that it reflects the employer's cost sharing policy based on: ■ Past practice or communication of intended changes to a plan's cost sharing provisions, or ■ Past practice of cost increases in monetary benefits. The substantive plan is the basis for requiring recognition of potential future plan changes. This approach requires entities to acknowledge the underlying promise, not just the written plan. What if retirees participate in the active healthcare plan, but are charged a rate based on composite active and retiree experience? (This was a contentious issue during the statement drafting, with one of the 7 board members dissenting from Board adoption of the final statement.) In general, GASB 45 requires recognition of the implied subsidy. However, if benefits are provided through a community rated plan (premium rates based on experience of multiple employers rather than a single employer), and the same premium is charged for active and retired participants, it may be appropriate to value unadjusted premiums. Actuarial Assumptions and Discount Rate Requirements Under GASB 45, the actuary must follow current actuarial standards of practice, which generally call for explicit assumptions — meaning each individual assumption represents the actuary's best estimate. GASB 45 also requires basing the discount rate on the source of funds used to pay the benefits. This means the underlying expected long-term rate of return on Plan Assets for funded plans. Since the source of funds for unfunded plans is usually an agency's investment fund, and California and most other state law restricts what investments agencies can have in their investment fund, unfunded plans ry will need to use a low (for example, 4% to 5%) discount rate. If an agency sets up a Trust and diversifies Trust Plan Assets, however, the discount rate might be much higher (such as 7%) depending on the Trust fund's expected long-term investment return. Action Step Meet with your actuary to discuss the underlying actuarial methods and assumptions. This important meeting can avoid problems down the road. Transition Issues Typically, new accounting standards allow transition from old to new requirements. Because historical ARC calculations will rarely be available, GASB 45 takes a prospective transition approach: there is no requirement for an initial transition obligation. But if AOCs, before transition, were calculated consistently with the standard, a NOO at transition can be established at an agency's discretion. Valuation Frequency Requirements and Small Plans GASB 45 requires an actuarial valuation at least every 2 years for plans with more than 200 (active, inactive, and retired) members. Plans with fewer than 200 members will need a valuation every 3 years. In a significant departure from prior standards, though, GASB 45 allows plans with fewer than 100 members to elect a simplified measurement method — not requiring an actuarial certification. HOW BIG IS THE PROBLEM? Public sector retiree healthcare promises vary considerably across agencies. and can be measured in several ways, for example: ■ ARC as a percent of payroll ■ Present Value of Benefits (PVB) as a percent of payroll or perhaps as a percent of investment fund budget APPENDIX C GASB 45 SUMMARY ■ Unfunded liability (in most cases, the unfunded liabilities in relation to payroll or budget Actuarial Liability — AL) as a percent of will become important for bond rating agencies. payroll or perhaps as a percent of investment The table below shows examples based on recent fund budget. actuarial studies we've prepared (although agency We believe the biggest issue is GASB 45 requiring demographics vary widely, all calculations were agencies to disclose unfunded OPEB liabilities in prepared in compliance with GASB 45). financial statement footnotes. Consequently, I' % Payroll Basic OPEB Promise I ARC PVB _ Ia. Full medical coverage for retiree and spouse 28% 369% — Plan Assets not diversified lb. Full medical coverage for retiree and spouse 17% — Plan Assets diversified 2a. Medical coverage, capped at I 9% $450/month with no increase in cap 2b. Medical coverage, capped at 12% $450/month with increase in cap 3. Minimum (2008 $97.00/month) 2% PEMHCA payment UT % Annual Investment fund Budget AL ARC PVB AL 192% 19% 258% 135% 208% 126% 12% 146% 89% 115% 85% 7% 92% I 68% 145% 107% 9% 116% I 86% 30% 20% 2% 23% I 15% APPENDIX C GASB 45 SUMMARY These examples lead to some interesting questions and conclusions, providing some insight on magnitude. For example: ■ 1a. and lb. show the significant impact of diversifying Plan Assets (in a Trust, separate from agency's investment fund that legally can be used only to pay OPEB) and not diversifying Plan Assets invested in agency's investment fund. While this difference is significant and prefunding may be fiscally prudent, we do not expect many agencies will do so. Prefunding will mean allocating cash and most agencies will find this challenging. ■ Agency 1's unfunded Actuarial Liability is quite significant, while Agency 3's is quite modest. Although we don't know how bond rating agencies will react to the added information, it's reasonable to assume that, with all other things the same, Agency 1 might experience more of an impact than Agency 3. ■ The addition of a COLA (cost -of -living adjustment) to Agency 2's promise increases their ARC and Actuarial Liability by approximately 1/3. Remember GASB 45 mentions the underlying promise. Consequently, even if there is no express agreement to increase the $450 cap in the future, if it's reasonable to believe it will increase, the calculations must assume it will. ■ An older agency (with a high ratio of retirees to actives) will have higher percents than vi shown in the table, while a younger agency (with very few retirees) would have lower percents. Action Step 4 Once you understand how significant your OPEB issue is, consider discussing these results with bond rating agencies, bargaining units, and city councils (or governing boards). Reviewing liabilities now gives you time to address the magnitude before GASB 45 is effective. GASB 45 SURVEY The following graphs compare the over 50 Miscellaneous and Safety GASB 45 studies prepared by Bartel Associates. The first graph provides sample percentiles for interpreting the information that follows. All graphs provide the Oa', 25", 50a', 75' and 100`x' percentiles (the Vh percentile is the level at which X percent of the data fall below the given level — for example 25% of the data falls below the 25a' percentile). As noted on this chart, the dark shaded area in the middle of the column includes results between the 25th and 75a' percentiles representing 50% of the agencies, with the line in the middle indicating the 50`1' percentile. The other graphs compare Non -nal Cost (NC), Annual Required Contribution (ARC) and Actuarial Liability (AL) as a percentage of payroll for Miscellaneous and Safety employees. GASB 45 Survey Sample Percentile Graph 50% -- 33.2% 42.0% 100th 45% — 50th Percentile Percuttile 40%-- 25th Percentile 35%-- — 75th 0th Percentile Percentile 30% — - 0 25% --- 50th c Percentile Cr 20%-- --- 15%------- —25th Percentile 10%-- 5%-- rOth Percentile 0% 25% 20%- 10% 0%-10% C� 0% IOOdi Percentile 75th Percentile 50th Percentile 25th Percentile Odh Percentile GASB 45 Survey Normal Cost (% of Payroll) Miscellaneous 16.2% 10.0% 7.5% 2.8% 0.7% APPENDIX C GASB 45 SummARY 50%of 100%of results results are are within within this this targe rage Safety 22.0% 11.4% 5.1% 2.4% 0.8% m GASB 45 Survey Annual Required Contribution (% of Payroll) 45"! 40%- 35% 30% a 0 35% u 1P/a 10% 01i Miscellaneous Safety 100d1 Percentile 33.2% 42.0% 75th Percentile 21.8% 24.4% 50th Percentile 17.4% 13.4% 25th Percentile 5.4% 5.1% 0th Percentile 1.5% 1.4% GASB 45 Survey Actuarial Liability (As % of Payroll) 6009: 500010- q 00%- T 4 400% - 0 300% u C. 200% 100% 0°/ Miscellaneous Safety 100di Percentile 3960/a 491% 75th Percentile 203% 261% 50diPercentile 147% 158% 25th Percentile 48% 51% Oth Percentile 11% 11% APPENDIX C GASB 45 SUMMARY The cost information shown represents primarily unfunded retiree medical plans since most of these agencies are in the process of deciding whether to fund their plans. When a significant number of our clients have made that decision, we will be able to separate the statistics by funded and unfunded plans. The reader should keep in mind the results are not a statistical sample of all California agencies and so results based on all California agencies will vary from our client base. viii CONCLUSION There's no doubt GASB 45 will cause major changes for plan sponsor disclosure. The way to soften the blow is not waiting for the effective date. Contact your actuary well in advance to understand the implications, get started on action steps, and establish a plan for compliance. John Bartel is President of Bartel Associates, LLC. For more details, contact John at 650/377-1601 or jbartel@bartel-associates. corn. You also can learn more about GASB and GASB 45 at www.gasb.org. Actuarial liab APPENDIX C GASB 45 SUMMARY ACTUARIAL DEFINITIONS Present Value of Benefits Future Normal Present Value of Benefits: An actuary preparing an actuarial valuation first gathers participant data (active employees, former employees not in payment status, participants and beneficiaries in payment status) at the valuation date (for example June 30, 2005). Using this data and some actuarial assumptions, the actuary projects future benefit payments. (The assumptions predict, among other things, when people will retire, terminate, die, or become disabled as well as what salary increases, general (and healthcare) inflation, and investment return might be.) Those future benefit payments are discounted, using expected future investment return, back to the valuation date. This discounted present value is the plan's Present Value of Benefits. It represents the amount the plan needs as of the valuation date to pay all future benefit payments — if all assumptions are met. Ix urrent Normal Cost Actuarial Liability: This represents the Present Value of Benefits portion participants have earned (on an actuarial, not actual, basis) through the valuation date. Funded Status: Once the above amounts are calculated, the actuary compares Plan Assets to the Actuarial Liability. When Plan Assets equal liabilities, a plan is considered on track for funding. When Plan Assets are greater than liabilities, the plan has excess Plan Assets. When Plan Assets are less than liabilities, the plan has an unfunded Actuarial Liability. Normal Cost: This represents the Present Value of Benefits expected to be earned (on an actuarial, not actual, basis) in the coming year. Plan Assets: GASB 45 requires that to consider an OPEB plan funded, assets must be set aside and cannot legally be used for any purpose other than to pay OPEB. Most OPEB plans are not funded. APPENDIX D CERTIFICATE OF LIABILITY INSURANCE ACDR�D,� CERTIFICATE OF LIABILITY INSURANCE 11/ 2""" o08' PROWDER (818)547-1975 FAX: (818)242-5288 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION AND CONFERS NO RIGHTS UPON THE CERTIFICATE JOHN SARGSANT INSURANCE AGENCY HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR HOLDER. I 750 FAIRMONT AVENUE, SUITS 100 ALTER THE COVERAGE AFFORDED BY THE IOLICIES BELOW. P. O. BOX 831 IGLENDALE CA 91209-0831 INSURERS AFFORDING COVERAGE NAIL 4 INSURED 145upy-R&FIRST NAT'L. IHS. CO/AMER BARTEL-ASSOCIATES, LLC NWRE3e:INDIAH HARBOR INS. CO. 411BOREL AVE STN 445 I1,IsuR.Ego AMERICAN STATES INS. CO. *=RE3 Cc SAN MATED CA 94402 I MUR.ER E: COVERAGES THE POLICIES OF INSURANCE LIST ED BELOW HAVE BEEN ISSUED 10 THE INSWC-1) NAA IEs7 ABOVE FOR TH£ POLICY PERIOD INDICATED. NOTWI HS AN NG ANY" RMUIREMEPM TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THiIS CERTIFICATE MAY BE ISSUED OR AMY PERTAIN, THE ftSURANCE AFFORDED BY THE POL1t:iES DESCRIBED HEREIN IS SUBJECT TO ALL THE TF_gM, EXCLUSIONS AND CONDITIONS Of SUCH POLICIES. AGGREGATE UMTS SHOWN MAY HANe BEEN REDUCED BY PAID CLUVS. TYPE DP INSURANCE POLICY NUIIBEii POSJCY EFFECTIVEPGLICY E7IPIRA DATE f1�BDD'Y1'1 DOTE [S�UDD'Y1fk LYT! OEIF_RAL UABLffY EACHODCURFENCE S 1,DDD,0DD I C4U/A3E nOR3F€ED i 1,DOD,40'0 X ODIALtERCULGE3:ERALLN9 A �CLA"M'kaE ®OCCUR 25CC12442930 9/1/2048 9/1/2049r FREIASF.a iES ae�nkercei a s 10,400 -14V i 1,000,000 tIHr=RI`t.Af3f36icdaAuE i 2,0G0,00G f3EANL At31:iRE^ICl1TE LIgqMpOT-hF1'ES PER. IFRw r-,S_COW?,AP Am i 2, 000,000 SIR, xcy I^P 7C I P! I LOC 1 rOYO81LE L1UMM 33N31NED SINGLE UFAT 1,000,000 i (EaecCAerdf hHY:V.uTi 7 _ A ALL OAANEDAUTOS 25CC12442930 9/1/2008 9/1/2G09 8OOLvr1UURY ¢ 4FerPeMX4 _ $CH-=DLILEOALrrO5 X HIRED AUTO$ 8OC(Ly'"JURY X NOKW71VtED NJTOE# FRCPERTY CAVASE GARAGE LIARL[TY AUTO ONLY • EAADGDENT i XWAUTO OTHER THIN _L!Lw^ L AUTO ONLY: Aad s EXCEiiN1�LELLA LIA8Si1TY D_n i CWWGUR D CLAIIt$IAAG3 AMRMATE i i RES'ENitk+7N s, k�,,g p77.�- S x I y7RY LI I I ER C WOES COMPENiATION AND EivLo" rLUABRTTY1,000,000 Ei1. EACH AA.C1DEd37 S ANY FROPRIETCRIP. n ER1EXS0JT E 0FFr—V4A0E1GER EXCLUDED' OIWC14518330 11/17/2008 11117/20091 E:L.asEASE-EAEmpLaYf--s 1.00G,000 If yes, dezabe waft E.L. LX55A8=_•FLYUCY UNR 1 S 1,400,000 'SPECIAL FRWM3N5 tre'k:w B G•THER M36C. P1iO3k'llSSIONAL MPPOO1715204 9/1/20G8 911/2049 $11dd0',001FBA CLAW LIABILITY 42,6DW,DI34/AW.AOG . GESGRIPTION OF OREIATIONWLOCATK*IZNEHIGLESIEXCLUSIONS AD0313Y ENDGRiEMENTASPBMAIL FWAIMS CERTIFICATE HOLDER ***Certificate issued for information purposes only.*** ACORD 25 (200 V08) INCII9'S s.��rar na. CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED PR BEFORE TSE EXPIRATIDN BATE THEREOF, THE BALING NIUR=R WILL ENDEAVOR TO NAR. 30 IIAYS waTTEN moTNE T4 TI63 cXTIFICATH RMER UPMC T4 THE LIEFT, BUT FAILURE TO 00 i0 SHALL SLL 4iE NO OBUGATION OR LABIUTY OF ARTY KM UPON THE INSURER, Ifi AGENTS OR REPREIENTATA'ES,. AMHOR-2M REPei_-I ENTATNE ,Toanne Saxgcant/0116 F_ aACORD CORPORATION 1988 P..—s0a CITY OF CHINO HILLS Request for Proposals (RFP) for GASB 45 OPEB Actuarial Services Date: November 26, 2008 Department: Finance Department Proposal Due Date: January 14, 2009 Time: 4:00 P.M. Proposals must be submitted to the: City of Chino Hills City Clerk's Office 14000 City Center Drive Chino Hills, CA 91709 Proposal Information - Format Proposals will be received by the City of Chino Hills, hereinafter called the "City", at the office of the City Clerk, 14000 City Center Drive, Chino Hills, California, 91709, until 4:00 P.M., PDT January 14, 2009. Each Proposal must be submitted in a sealed envelope, addressed to the City at the above -referenced address. Each sealed envelope containing ,a Proposal must be plainly marked on the outside as "Proposal for: GASB 45 OPEB Actuarial Services" and Proposer's name, address and his/her license number, if applicable. If forwarded by mail, the sealed envelope containing the Proposal, must be enclosed in another envelope addressed to the City of Chino Hills, c/o City Clerk, 14000 City Center Drive, Chino Hills, California 91709. Proposer must submit five (5) copies of the proposal. Proposals received after the above date and time will be considered late and will not be accepted., Any late proposals will be returned unopened to the proposer. Copies of the Request for Proposals may be obtained in the Department of Finance of the City of Chino Hills, 14000 City Center Drive, Chino Hills, California 91709. Questions regarding the Request For Proposal should be directed in writing to: May Hsu, Accountant, 909-364-2667, Facsimile No.: (909) 364-2675, Email: mhsuCa)chinohills.orq 11/20/2008 9;40 AM -1- Background The City was incorporated on December 1, 1991, as a general law city and is staffed with 156 full-time employees. The City's current population is about 78,957 with the ultimate population at build -out projected to be about 87,000. The City is located in the Southwestern portion of San Bernardino County. The City's borders are contiguous with Los Angeles, Orange and Riverside Counties. The City is primarily a "contract city". The City contracts with the County of San Bernardino Sheriff's Department for law enforcement services; fire suppression and paramedic services are provided by an independent fire district (the district directly receives a portion of the one percent ad valorem property tax rate); some planning and engineering services are provided via contracted services. Most maintenance functions (streets, parks and landscape, drainage, and vehicles) are provided via contractual services. The City staff provides operations and maintenance for the City's water and sewer utilities and minor facility maintenance. Solid waste disposal services are handled by contract with a refuse disposal contractor. Retiree Healthcare Benefits The City has participated in the San Bernardino County Employees' Retirement Association (SBCERA) since the City was incorporated and in the CalPERS Health Plan since 1997. The City does not provide post employment benefits to retirees. The retirees may purchase health insurance from SBCERA directly or join CalPERS Health Plan before retirement. Currently, the City has 156 employees, only 38 active employees and 0 retirees are enrolled in CalPERS Health Plan. The rest of the employees either opted -out from medical insurance or enrolled in the City Kaiser Plans which is administered by the City. Attachment A is the Resolution No. 97R-31, a resolution of the City Council of the City of Chino Hills electing to be subject to Public Employees' Medical and Hospital Care Act and fixing the employer's contribution for employees and the employer's contribution for annuitants at different amounts. General Information 1. The City of Chino Hills (City) is requesting proposals from qualified firms of consultants and actuaries to prepare an actuarial valuation, with optional services for plan design and funding strategy for one year, plus two option years every two years after the first year. The valuation will be for Post Employment Health Benefits and must be performed in accordance with generally accepted actuarial standards of practice promulgated by the Actuarial Standards Board. 11/20/2008 9:40 AM 2. The City reserves the right to retain all proposals submitted and to use any ideas in a proposal regardless of whether a proposal is selected. Submission of a proposal indicates acceptance by the proposing firm of all conditions contained in this request for proposal, unless clearly and specifically noted in the proposal submitted and confirmed in the contract between the City and the firm selected. 3. Currently the City does not have an actuarial valuation, plan design, or funding strategy for post employment health benefits. The City is seeking bids because actuarial valuation services are needed to comply with U.S. generally accepted accounting principles and the Governmental Accounting Standards Board (GASB) Statement Number 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. Proiect Scope The Governmental Accounting Standards Board approved Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions" in June 2004. GASB 45 established accounting standards for the measurement, recognition, and display of non -pension postemployment benefits in the financial reports of state and local governmental employers. The City is seeking an actuarial consultant to prepare a GASB 45 study of its retiree healthcare plan as of June 30, 2009. Since the City does not have an actuarial valuation, plan design, or funding strategy for post employment health benefits, if the City is considering funding the retiree healthcare plan, it might possibly be with the CalPERS California Employers Retirement Benefit Trust ("CERBT"). The respondent's project plan should include: ■ An initial discussion to review plan provisions, data, actuarial methods, and actuarial assumptions. ■ A meeting with staff to present preliminary valuation results. ■ An executive summary of the final results. ■ A meeting with the Director to present final results. The study results and presentation should include: ■ Actuarial Obligations as of June 30, 2009: • Present Value of Future Benefits • Actuarial Accrued Liability • Normal Cost • Assets • Unfunded Actuarial Accrued Liability • Expected Benefit Payments 11/2/2008 9:40 AM -3- ■ Annual Required Contribution, as a dollar amount and as a percentage of payroll: • Normal Cost • Amortization of the Unfunded Actuarial Accrued Liability ■ Annual OPEB Cost. ■ Net OPEB Obligation. ■ Sensitivity analysis: • Funded and not funded investment return scenarios • 20 and 30 year amortization periods for the Unfunded Actuarial Accrued Liability ■ Projected contributions, benefit payments, and Annual OPEB Cost for the next 10 years. ■ Summary of plan provisions and the data used for the valuation. ■ Summary of actuarial methods and assumptions. Proposal Proposals should include the following: ■ Transmittal Letter — The proposal should be signed by an officer authorized to bind the proposing firm. The offer should be open for a period of at least 90 days. Include contact information and whether the firm will be using any subcontractors. ■ Proiect Approach — Describe how your firm will approach the GASB 45 study, showing that you understand the objectives and requirements of the project. ■ Work Plan and Proiect Schedule — Provide a work plan and timeline for the project, including when information is needed from the City and the proposed meeting dates. The City would like the study completed and results presented to staff no later than July 31, 2009. ■ Proiect Team — Identify the personnel that will be assigned to the project, their credentials, and their experience with similar projects. Include biographies of the leading team members. ■ References — Provide the names, addresses, and phone numbers for at least 5 references for whom the firm has done similar projects. ■ Data Requirements — List the plan information, census data (including its format) that you will require from the City to complete the project. ■ Companv Profile — Provide background information about your firm, including the number of employees and credentialed actuaries, offices and their locations, and your experience with public agency retirement programs and GASB 45. ■ Conflicts of Interest — Describe any potential conflicts of interest that your firm may have regarding the project. 11120/2008 9:40 AM In ■ Litigation — List any lawsuit or litigation and its outcome resulting from any public agency project undertaken by your firm within the last 5 years or any project where a claim or settlement was paid by your firm or its insurers within the last 5 years. ■ Fees — Provide your estimated fees for the project and a not -to -exceed fee estimate. Include an estimate of any additional potential expenses and the hourly rates for the staff assigned to the project. Clearly state what project elements are included in the fee estimate. Provide a separate fee estimate for the actuarial certification, funding policy certification, Excel spreadsheet, and valuation report required by CalPERS for participation in CERBT. Also list any items that you feel may arise or that you might recommend along with an estimate of their additional cost. The submission of a proposal shall be deemed a representation and certification that your firm: ■ Has carefully read and fully understands the information provided in the RFP and any subsequently issued addenda, including City responses to RFP questions posed by the respondents. ■ Has the capacity, ability, and experience to complete the project as specified in the RFP and your proposal. ■ Represents that all the information provided in the proposal is true and accurate. ■ Did not in any way collude, conspire to agree with any person, firm, corporation, or other proposer, directly or indirectly, in regard to the amount, terms, or conditions of the proposal. ■ Agrees that the City reserves the right to make any inquiry it deems appropriate to substantiate information provided in the proposal. Proposals may be withdrawn or modified before the due date of submission for proposals by delivering a written and signed request by the due date. A request for modification of the proposal after the due date will not be considered, including a representation that the proposer was not fully informed regarding any information pertinent to the proposal or the offer. The City shall not be responsible for or bound by any oral instructions, interpretations, or information provided by the City or its employees other than the RFP contact. The City reserves the right to reject any or all proposals submitted, correct any technical errors in the RFP process, waive any irregularities in any proposal, negotiate with any of the proposers,accept other than the lowest fee offer, or enter into a subsequent agreement with another proposer if the originally selected proposer fails to execute its agreement with the City. Any agreement shall not be binding unless it is executed by authorized representatives of the City and the selected proposer. Proposing firms are solely responsible for any expenses incurred in preparing their proposals in response to this RFP. 11/20/2008 9:40 AM -5- Proposal Evaluation A staff panel will review the proposals which will be evaluated based upon their relative ranking among the following criteria: ■ Proposers' qualifications and experience with similar projects for public agencies. ■ Proposed staff availability to complete the project within timeframe requested. ■ Quality and completeness of the proposal. ■ Project approach and work plan. ■ Proposed project fees. ■ Adherence to the City's standard contract language. Finalists may be asked to participate in an oral interview. The City of Chino Hills reserves the right to accept or reject any or all proposals or to waive any defects or irregularities in the proposals or selection process. The proposal shall include, as a minimum: 1. A statement that this RFP shall be incorporated in its entirety as a part of the Consultant's quote. 2. A Statement of Qualifications applicable to this project including the names, qualifications, and proposed duties of the Consultant's staff to be assigned to this project; a listing of recent similar projects completed including the names, titles, addresses, and telephone numbers of the appropriate persons which the City can contact. 3. A statement that all charges for services will be a "Not -To -Exceed" fee, as submitted with and made part of said Consultant's quote. 4. A copy of the Consultant's hourly rate schedule and a written statement that said hourly rate schedule is part of the Consultant's quote for use in invoicing for progress payments and for extra work incurred that is not part of this RFP. 5. A written statement by the Consultant that all federal laws and regulations shall be adhered to notwithstanding any state or local laws and regulations. In case of conflict between federal, state, or local laws or regulations, the strictest shall be adhered to. 6. A written statement by the Consultant shall allow all authorized federal, state, county, and the City of Chino Hills officials access to place of work, books, documents, papers, fiscal, payroll materials, and other relevant contract records pertinent to this project. All relevant records shall be retained for at least three years. 11/20/2008 9:40 AM 7. A written statement that the Consultant will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. 8. A written statement that the Consultant shall comply with the California Labor Code. Pursuant to said regulations entitled: Federal Labor Standards provisions; Federal Prevailing Wage Decision; and State of California Prevailing Wage Rates, respectively. 9. A written statement that the Consultant shall comply with the Copeland Anti - kickback Act (18 USC 874 C) and the implementation regulation (29 CFR 3) issued pursuant thereto, and any amendments thereof. 10. A description of Consultant's approach to the work and a complete analysis of staff hours required of each individual to be assigned to the project. The estimated hours shall identify each task to be done and the assigned individual's level of effort. Professional Services Agreement The City has provided a copy of a sample Agreement for Professional Services. Please review this agreement (Attachment B) and provide the City with a written statement of your firm's willingness to accept the terms of the agreement. Please specifically identify terms of the agreement, which your firm is unable to accept, and the reason therefore. The City may or may not accept proposed changes for the final agreement. 11/20/2008 9:40 AM -7-