55D - RESO JOINT POWERS AGMT - Laserfiche WebLink

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Fourth Amendment to OCFA Joint Powers Agreement February 5, 2019 Page 3 timeframe required for payment by the Orange County Employees Retirement System (OCERS), thereby saving future interest costs and improving the funding status of the OCFA's pension plan. Since the plan was adopted, the OCFA's unfunded pension liability has steadily declined from $473.8 million to $400.6 million, and the funding status has consistently improved from 65% to 79%. Per OCERS' actuary, OCFA is on track to achieve an 85% funding level by December 2020, and has achieved interest savings to date totaling $18.3 million. City of Irvine's June 13 Proposal and June 27 Notice of Withdrawal On June 13, 2018, the City of Irvine provided a proposal to the OCFA requesting, among other proposal elements, that OCFA commit to a pension pay down strategy. On June 21 and June 25, the OCFA responded to the City's proposal reiterating its commitment to OCFA's accelerated pension liability paydown plan, in addition to other commitments made by OCFA regarding proposed service enhancements. On June 27, 2018, the City provided OCFA with a Notice of Withdrawal seeking the initiation of good faith negotiations. OCFA desires to retain Irvine as a member agency, and OCFA staff will continue to negotiate in good faith, as requested by Irvine. At the same time, OCFA desires to continue progress on the commitments made in its June 21 and June 25 responses to the City. The OCFA is hopeful that, with these continued actions honoring its commitments, the City will elect to rescind its Notice of Withdrawal. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #1 — Community Safety, Objective #5 (Provide high quality Police and Fire/Emergency Medical Services response within the City of Santa Ana). FISCAL IMPACT There is no fiscal impact associated with this action. The proposed fourth amendment to the JPA to accelerate payment of its unfunded pension liability will not affect the total costs for fire services charged to the City of Santa Ana by OCFA. The total charges for Fiscal Year 2018/19 includes a base service charge, vehicle replacement and station maintenance costs. The base cash contract service charge calculation excludes accelerated payments for OCFA's unfunded liabilities, which accrued prior to Santa Ana becoming a member of OCFA. In the event of termination or expiration of the agreement with OCFA, the City is required to pay OCFA the amount of the unfunded pension liability that had accrued during the term of the Agreement. This would be payable upon separation. The City would be required to pay 50% of the cost to calculate such an amount would have 15 years to make the necessary payments with interest assuming a rate of return assumed by OCERS as its return of investment. This provision survives termination or expiration of the Agreement. An actuary study will be required in order to determine the value of the unfunded liability associated with the former Santa Ana Fire Department employees. The unfunded liability may fluctuate over time based on market conditions, benefit changes and disability retirements. Exhibits: 1. Fourth Amendment to the Amended Orange County Fire Authority Joint Powers Agreement 2. Resolution 55D-3