BICKMORE & ASSOCIATES, INC. 2-2016

Home Browse Search

Proposal to Provide Actuarial Valuation of OPEB Liabilities For the City of Santa Ana May 2016 Report Contents: Bickmore is prepared to provide all services specifically requested by the City as described in the RFP. In particular, our reports will include calculation of projected benefits expected to be paid, the development of the GASB 45 annual required contribution (ARC), annual OPEB expense, Net OPEB Obligation (NOO), and other information required for disclosure under GASB 45. Costs will ,be shown for the City in total and separately for active and retired participants and, as needed, for various employee groups (i.e., fire, police, miscellaneous). We will include sufficient documentation and detail to enable the City to evaluate the actuarial methodology we used to develop the financial information described above. The report will begin with an executive summary, followed by text outlining the requirements, general sources of liabilities, our valuation process and options regarding funding policy. Our exhibits follow, presenting the valuation results, calculation of the ARC and illustration of the required GASB 45 disclosure information. Separate tables summarize employee and retiree census information; relevant plan provisions; actuarial methods and assumptions; presentation of projected cash flow and glossary of terms used, We have attached a sample OPEB valuation report as Attachment C. Please note, however, that while similar in many respects, we customize the content and exhibits in each report to address the information requested by each agency for which we prepare a valuation. r Comment: As in the 2014 actuarial valuation, we anticipate dovetailing the "demographic" assumptions (rates of retirement, disability, terminations and mortality) to match the current assumptions used by CaIPERS in the various retirement plans in which the agency's employees participate, unless there is historical information to suggest other assumptions may be more appropriate. There have been modest changes to those assumptions since 2014. Where the agency participates in the CaIPERS healthcare program, we look closely at the assumptions for healthcare trend used in the State valuation. Other assumptions, such as discount rate, age-related healthcare costs, retiree and spouse participation rates, amortization methodology, etc., are unique to each agency. The assumptions and procedures used will comply with any that may be required for the City's participation in the California Employers' Retiree Benefits Trust (CERBT). We recognize that most public agencies have undergone many changes over time with regard to the level of OPEB they provide, eligibility to qualify for benefits and how long those benefits will be paid. An important part of the data gathering process is for us to ask and understand the nuances of exactly who gets what, when they get it, and for how long. Bickmore has been called upon in many instances over the past 5 years to assist agencies in the implementation of GASB 45, to prepare analysis of OPEB funding strategies and to work with agencies and their employee bargaining units regarding possible plan redesigns, Bickmore prepares its actuarial analysis using two distinct and independent actuarial valuation software programs. (1) We utilize "ProVal" valuation software provided by WInTech. This firm, focused on pension and OPEB valuation software, is the dominant independent provider of such software in the United States. (2) We also use customized actuarial software developed and maintained fully in-house. This additional software gives us the ability to create completely flexible models for unique projects without limitation of a purchased software program. The two software operations provide virtually unlimited capability for developing actuarial models to suit particular project circumstances. Bickmore