Item 40 - Refinancing City’s Pension Obligations with California Public Employees Retirement System

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20 4826-7904-2280v7/200434-0005 of Carson prior to being appointed the City’s Executive Director of Finance and Management Services in 2018. Prior to that, Ms. Downs worked for the City of Rancho Palos Verdes for 15 years. Ms. Downs began her career as a financial statement auditor, and holds a California CPA license and Bachelor of Business Administration with a major in accounting and a minor in management from Eastern Michigan University. Development Activity in the City With a population of over 300,000, the City has a constant need for ongoing residential and commercial construction. Currently, the City is aware of at least 13 large-scale residential and/or commercial construction projects that are expected to be completed between September 2021 and June 2023. These projects include apartment buildings, malls and office buildings, and based on building permits that have been issued, have a total estimated construction value in excess of $1.5 billion. Risk Management The City is exposed to various risks of loss related to employee injury or illness; torts; theft of, damage to and destruction of assets; errors and omissions; employer liability; and natural disasters. In July 1975, the City established Self Insurance Internal Service Funds for the administration of the City’s self-insurance programs, workers’ compensation and general liability claims. The City’s General Liability and Workers’ Compensation programs by a contracted Third Party Administrator, AdminSure, Inc. (“AdminSure”) for all claims handling and administration. AdminSure claims adjusters estimate total losses for each claim and determines reserve requirements for the General Liability and Workers’ Compensation claims programs as well as maintaining required reporting and on-going communication with risk pool personnel, City Attorney’s staff, outside legal counsel and City Risk Management staff. The City is currently in transition of risk management pool membership regarding the general liability and workers’ compensation excess coverage. The City is currently managing the remainder of general liability claims with dates of incident prior to July 1, 2019 under Big Independent Cities Excess Pool (“BICEP”), a public entity risk pool established to pool resources, share risks, and purchase excess insurance. The City’s relationship with BICEP will continue until all claims in the relative period are resolved or otherwise transferred to another entity. Each BICEP member city assumes the first $1 million of each occurrence. All BICEP members share the risk for the first layer of claims between $1 million to $2 million. Reinsurance and excess insurance covers amounts from $2 million to $27 million maximum. The City is also currently managing the remainder of workers’ compensation claims with dates of incident prior to July 1, 2019 under California State Association of Counties – Excess Insurance Authority (“CSAC-EIA”) for excess workers’ compensation claims in excess of $1 million per occurrence. The City’s relationship with CSAC-EIA will continue until all claims in the relative period are resolved. Effective July 1, 2019, the City was accepted as a member of Independent Cities Risk Management Authority (“ICRMA”), a qualified risk pool, currently with 17 other Southern California cities, for both general liability and workers’ compensation excess coverage for all claims with dates of incident on or after July 1, 2019. Under these programs, the City is permissibly self-insured for workers’ compensation claims up to $2 million each occurrence with statutory coverage. All funds of the City participate in the program and make payments to the Self Insurance Fund based on actuarial estimates of the amounts needed to pay prior and current claims in the general liability and workers’ compensation programs. Claims expenses and liabilities are reported in accordance with the Memoranda of Coverage and associated reporting procedures with BICEP, CSAC-EIA and ICRMA, including, when it is probable that a loss has occurred and the amount of loss can be reasonably estimated. The losses include an estimate of claims that have been incurred but not reported. The effects of specific incremental claim adjustment expenditures/expenses, salvage, and subrogation, and other allocated and unallocated claim adjustment expenditures/expenses are included. At June 30, 2020, the outstanding losses for the workers’ compensation and general liability programs are reported at their discounted present value. The outstanding losses are discounted at a 2.0% annual interest rate to reflect future investment earnings. The present