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Regular-General Government # 43.
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| Board of Supervisors |
Financial Services |
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| Subject |
| Receive Other Post Employment Benefits (OPEB) Actuarial Report for June 30, 2016 and presentation on options to address pension liability. (No general fund impact) (Newens) |
| Recommended Action |
- Receive Other Post Employment Benefits Actuarial Valuation for June 30, 2016.
- Receive staff presentation on options to stabilize pension funding.
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| Strategic Plan Goal(s) |
| Operational Excellence |
| Reason for Recommended Action/Background |
Two of the County's significant unfunded liabilities are pension and other post-employment benefits (OPEB). The Board has taken significant steps to reduce the unfunded liability for OPEB. Those steps were to cap the amount of premium paid by the County for retiree medical costs and to initiate a pre-funding plan. The 2016 biannual actuary performed by Bartel and Associates (Attachment A) demonstrates how the Board's action on these two items has significantly reduced this liability from the 2014 liability of $153,091,000 to the 2016 liability of $82,126,000. This 46% reduction is an impressive step toward eliminating the unfunded liability in 15 years.
With a successful plan in place to address OPEB, the next step is to initiate a plan to address the $243,511,563 unfunded pension liability. Options to address pension liability are more limited than those available for OPEB due to the local control decision-making that drives OPEB. The chart below highlights the differences between each aspect of the two benefits:
| Aspect |
Pension |
OPEB |
| Degree of obligation |
Established by state laws |
Established by county ordinance, bargaining unit agreements and practices |
| Benefits |
Defined by laws |
Controlled by governing board |
| Cost control |
Through plans established with CalPERS according to laws |
Through change to benefits as negotiated with employee groups |
| Administration |
Part of agent multiple employer plan administered by CalPERS |
Single employer plan administered by the county |
| Funding status |
County always paid full ADC* |
Still ramping up to pay full ADC* |
| Contributions |
County and employees contribute |
County contributes; not employees. |
| Assets |
Controlled and invested by CalPERS |
In the custody of and invested by trustee under direction of county |
| Risk control |
CalPERS |
Shared by county and PARS |
| Unfunded Accrued Actuarial Liability (UAAL) |
Due mostly to investment losses and CalPERS policy changes |
Due mostly to insufficient contribution below ADC |
| Cost recovery |
Cost budgeted and charged at FTE level; recoverable from external funding sources. |
Cost (including contribution up to ADC) budgeted and charged at FTE level; recoverable from external funding sources. |
ADC: actuarially determined contribution
Staff have prepared options available to stabilize the funding of the pension liability for Board consideration (Attachment B) |
| Collaborations (including Board advisory groups and external partner agencies) |
| County Administrator's Office |
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| Fiscal Impact |
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| Source of Funds for this Expenditure |
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