CalPERS Actuarial Issues – 6/30/15 Valuation

CITY OF PACIFICA MISCELLANEOUS AND SAFETY PLANS

CalPERS Actuarial Issues – 6/30/15 Valuation

Presented by Doug Pryor, Vice President Prepared by Bianca Lin, Assistant Vice President Matthew Childs, Actuarial Analyst Bartel Associates, LLC

September 18, 2017

September 18, 2017 1

CALPERS CHANGES

Contribution policy changes:

No asset smoothing

No rolling amortization

5-year ramp up

Included in 6/30/13 valuation (first impact 15/16 rates; full impact 19/20)

Assumption changes:

Anticipate future mortality improvement

Other, less significant, changes

Included in 6/30/14 valuation (first impact 16/17 rates; full impact 20/21)

Risk Pool changes

All Risk Pools combined into one Miscellaneous & one Safety

Collect payment on UAL as dollar amount, not as % of pay

Payments allocated to agencies based on liability & assets rather than payroll

Included in 6/30/13 valuation (impacts 15/16 rates)


CALPERS CHANGES

CalPERS Board will change their discount rate: Rate Initial Full 6/30/16 valuation 7.375% 18/19 22/23 6/30/17 valuation 7.25% 19/20 23/24 6/30/18 valuation 7.00% 20/21 24/25 Risk mitigation suspended until 6/30/18 valuation

CalPERS Board reviewing their Capital Market Assumptions next summer/fall, Likelynofurtherchangestodiscountrate

Risk Mitigation Strategy

Move to more conservative investments over time Only when investment return is better than expected Lower discount rate in concert

Essentially use ≈50% of investment gains to pay for cost increases

Likely get to 6.0% over 20+ years


CALPERS CHANGES

5.75%

6.00%

6.25%

6.50%

6.75%

7.00%

7.25%

7.50%Discount Rate used as of Actuarial Valuation Date

5th percentile 25th percentile 50th percentile 75th percentile 95th Percentile


EMPLOYEE COST SHARE

Employee groups pick up a percentage of the City’s contribution rates

Cost share rate differs by Employee Group:

Unrepresented Management/Confidential: 2.5% Teamsters Local 350 Directors: 2.5% Teamsters Local 350 Management Employees: 2.5% Teamsters Local 856 Miscellaneous Employees: 2.5% Teamsters Local 856 Wastewater Treatment Plant: 2.5% IAFF Local 2400 Firefighters: 3.0% Teamsters Local 856 Fire Battalion Chiefs: 5.0% Pacifica Police Management Association: 5.0% Pacifica Police Supervisor Association: 5.0% Pacifica Police Officer Association: 4.0%


INVESTMENT RETURN

Above assumes contributions, payments, etc. received evenly throughout year. Averages (geometric): 7.8% for all years, 7.0% last 20 years, 5.0% last 10 years (excludes 16/17)

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Est.

2017

MVA 2.0% 16.3%15.3%20.1%19.5%12.5%10.5%-7.2% -6.0% 3.7% 16.6%12.3%11.9%18.8%-5.1% -24.0 13.3%21.7% 0.1% 13.2%18.4% 2.4% 0.6% 9.4%

-30.00%

-22.50%

-15.00%

-7.50%

0.00%

7.50%

15.00%

22.50%

30.00%MVA


SUMMARY OF DEMOGRAPHIC INFORMATION - MISCELLANEOUS

1993 2005 2014 2015 Actives Counts 129 125 110 116 Average

Age 41 46 48 48 City Service 7 10 12 11 PERSable Wages $37,700 $57,600 $71,900 $71,800

Total PERSable Wages (millions) 4.9 7.2 7.9 8.3 Receiving Payments Counts

Service 109 141 146 Disablity 7 7 7 Beneficiaries 20 19 18 Total 84 136 167 171

Average Annual City Provided Benefit1 Service $12,000 $23,000 $23,900 Disability 6,700 10,000 10,100 Service Retirements in last 5 years 19,900 27,500 28,900

1 Average City provided pensions are based on City service & City benefit formula, and are not

representative of benefits for long service employees.


PLAN FUNDED STATUS - MISCELLANEOUS

June 30, 2014 June 30, 2015

30,800,000$ Active AAL 29,700,000$

44,900,000 Retiree AAL 47,500,000

7,000,000 Inactive AAL 8,500,000

82,700,000 Total AAL 85,700,000

74,700,000 Market Asset Value 74,200,000

(8,000,000) (Unfunded Liability) (11,500,000)


CONTRIBUTION PROJECTIONS - MISCELLANEOUS

16.7% 17.9%20.9%

23.9%26.8%

29.6%31.9%

33.2% 34.4% 35.2% 35.9% 36.3%

10.2% 10.2% 10.6% 11.0% 11.9% 11.7% 11.7% 11.9% 11.8% 11.8% 11.7% 11.6%

6.5% 7.7%10.2%

12.8%14.9%

17.8%20.2% 21.3% 22.6% 23.4% 24.2% 24.6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28

Discount Rate Reduced from 7.5% to 7% over 3 YearsExcluding EE Cost Share

Total Normal Cost UAL Payment



$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28

Discount Rate Reduced from 7.5% to 7% over 3 Years Excluding EE Cost Share ($000s)




0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%


25th Percentile 50th Percentile 75th Percentile







0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

Discount Rate Reduced from 7.5% to 7% over 3 YearsIncluding EE Cost Share



FUNDED STATUS - MISCELLANEOUS

25%

50%

75%

100%

125%

150%

175%

Funded StatusDiscount Rate Reduced from 7.5% to 7% over 3 Years



SUMMARY OF DEMOGRAPHIC INFORMATION – POLICE SAFETY

2001 2008 2014 2015

Actives

Counts 39 38 31 30

Average PERSable Wages $70,400 $106,600 $118,300 $117,800

Total PERSable Wages (millions) 3.1 4.1 7.5 3.5

Inactive Counts

Transferred 38 49 43 46

Separated 10 8 17 15

Retired 43 68 86 91


PLAN FUNDED STATUS - POLICE SAFETY

June 30, 2014 June 30, 2015

14,400,000 Active AAL 13,500,000

38,700,000 Retiree AAL 42,100,000

7,900,000 Inactive AAL 8,500,000

61,000,000 Total AAL 64,100,000




CONTRIBUTION PROJECTIONS - POLICE SAFETY

38.0%43.1%

50.2%

56.9%62.5%

67.7%71.9% 74.4% 76.8% 77.7% 79.2% 80.0%

18.8% 18.5% 19.8% 20.4% 21.8% 21.4% 21.4% 21.7% 21.5% 21.4% 21.2% 21.0%19.2%24.6%

30.4%36.5%

40.7%46.2%

50.5% 52.7% 55.2% 56.4% 58.0% 59.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28





1,394 1,524

1,827

2,135

2,414

2,692

2,946 3,139

3,337 3,481

3,654 3,802

690 655 719 764 841 853 878 914 936 957 978 999

704 869

1,107

1,370 1,573

1,839 2,068

2,225 2,401

2,524 2,676

2,802

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28





0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%





0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%




FUNDED STATUS - POLICE SAFETY

50%

75%

100%

125%

150%




SUMMARY OF DEMOGRAPHIC INFORMATION – FIRE SAFETY

2001 2008 2014 2015

Actives

Counts 31 27 25 25

Average PERSable Wages $70,200 $115,900 $116,500 $114,800

Total PERSable Wages (millions) 2.4 3.1 2.9 2.9

Inactive Counts

Transferred 12 12 11 11

Separated 4 3 2 2

Retired 34 42 51 54


FUNDED RATIO - FIRE SAFETY

June 30, 2014 June 30, 2015

15,500,000 Active AAL 14,900,000

21,900,000 Retiree AAL 22,200,000

700,000 Inactive AAL 2,000,000

38,100,000 Total AAL 39,100,000




CONTRIBUTION PROJECTIONS - FIRE SAFETY

30.3%33.9%

39.0%44.1%

48.6%52.4%

55.6% 57.4% 59.3% 60.1% 61.1% 61.8%

17.5% 17.5% 18.3% 19.0% 20.3% 20.0% 20.1% 20.3% 20.2% 20.1% 20.0% 19.9%

12.8%16.4%

20.7%25.2%

28.3%32.4%

35.5% 37.1% 39.0% 39.9% 41.1% 41.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28





882 972

1,153

1,343

1,523 1,693

1,848 1,967

2,091 2,183

2,289 2,384

508 502 542 577 637 647 667 696 714 732 749 767

374 469

611 766

886 1,046

1,181 1,271

1,376 1,452

1,539 1,617

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28





0%

10%

20%

30%

40%

50%

60%

70%

80%

90%






FUNDED STATUS - FIRE SAFETY

50%

75%

100%

125%

150%




IRREVOCABLE SUPPLEMENTAL (§115) PENSION TRUST

> 40 trusts established

PARS, PFM and Keenan

Investments significantly less restricted than City investment funds Designed for long term returns Likely much higher (5% - 7%) investment return

Assets could not be used by the Council for other purposes

Can only be used to Reimburse City for CalPERS contributions Make payments directly to CalPERS

GASB will almost certainly weigh in on certain accounting issues Can Supplemental Pension Trust assets be included in Fiduciary Net

Position? If assets can be included would inclusion impact discount rate?



Parameters: Initial seed money? Additional amount contributed in future years? Target budget rate? Year target budget rate kicks in?

Before or after CalPERS rate exceeds budgeted rate?



CalPERS Actuarial Issues – 6/30/15 Valuation

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