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Home My WebLink AboutMinutes - April 29, 2003 SSCITY OF LODI INFORMAL INFORMATIONAL MEETING "SHIRTSLEEVE" SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, APRIL 29, 2003 An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, April 29, 2003, commencing at 7:00 a.m. A. ROLL CALL Present: Council Members — Beckman, Hansen, Howard, Land, and Mayor Hitchcock Absent: Council Members — None Also Present: City Manager Flynn, City Attorney Hays, and City Clerk Blackston B. CITY COUNCIL CALENDAR UPDATE City Clerk Blackston reviewed the weekly calendar (filed). C. TOPIC(S C-1 "Discussion of CaIPERS retirement plan funding and future actuarial projections" City Manager Flynn noted that this topic was also discussed at the Shirtsleeve Session on March 18, 2003. Referencing the report entitled "City of Lodi, Miscellaneous, Fire Safety and Police Safety Plans, CalPERS Actuarial Issues — June 30, 2001 Valuation" (filed) Mr. Flynn pointed out the following: ➢ Page 7 — In 1996 there were 317 active employees and by 2001 there were 340. Those receiving retirement payments increased from 248 in 1996 to 303 in 2001. ➢ Page 8 — The average age for Miscellaneous was 43.1 years in 1996 and 43.8 years in 2001. ➢ Page 9 — The average pay for Miscellaneous in 1996 was 34,600 and by 2001 was 44,000. ➢ Pages 23, 24 — The number of active employees in Fire Safety in 1996 was 44 and in 2001 was 48. The average age rose from 38.7 years in 1996 to 40.6 years in 2001. ➢ Page 25 — The average "PERSable" pay increased from $43,000 in 1996 to $60,900 in 2001. ➢ Pages 39, 40 —The number of police officers in the system in 1996 was 71 and in 2001 it was 78. The average age increased from 38.1 years in 1996 to 38.6 years in 2001. ➢ Page 41 — The average pay for Police Safety in 1996 was $49,300 and in 2001 it was $58,300. Mr. Flynn stated that the statistics indicate in the long run that the City has an aging workforce, which will mean an increase in the number of retirees in the next five to ten years that will add to a draw down of the CalPERS (California Public Employees' Retirement System) account. Referencing page 11, Council Member Land pointed out that return on investment in 1997 was 15.9% and in 2001 it was 4.8%. He noted that when consideration was being made to increase benefits for employees to 3% at 50 years the City was super funded, and according to the standards that PERS presented, this status was to continue through 2027. Mr. Flynn stated that in the long run the estimated 8.25% return on investment is a conservative number compared to experts who say 9% can be expected. Mr. Flynn commented that there are a lot of questions about the policies being made by the 1 Continued April 29, 2003 CalPERS Board and by the democratic legislature that tends to increase benefits without the recognition of what it costs to pay for them. In reply to Council Member Hansen's concern regarding stretching out the Miscellaneous payment from 13 to 20 years, Mr. Flynn explained that the City has a set responsibility to meet its CalPERS obligations. He contended that if the City's obligation is long term, its payments should match the long-term assumptions. He believed that shortening up the payments would, in essence, drive up the cost because it would mean that Miscellaneous would be super funded that much sooner. Mayor Hitchcock recalled that she had expressed concerns that the double digit rates were not going to continue and the City would be in trouble when the market adjusted itself. She also recalled that when increased benefits were being considered, the City Manager termed it to be a "free benefit," as it would not cost the City any money because of its super funded status. Mr. Flynn responded that 70% of the agencies in California have the 3% at 50 years benefit for public safety. He explained that if an impasse resulted during labor negotiations, an arbitrator would consider what was "normal and usual" in the market. Mr. Flynn stated that the problem started when the state provided the enhanced benefit. He also clarified that the City has always contributed the employee's share of CalPERS. In reply to Council Member Beckman, Mr. Flynn acknowledged that the arbitration issue he referred to was declared unconstitutional last Monday, so it no longer applied. Referencing page 3, Council Member Beckman noted that it appeared during 1997 through 2000 that the City made no contribution to Fire Safety and on page 17 it appears that no contribution was made during 1997 through 2001. John Bartel, representing Aon Consulting, replied that page 33 shows the employer contribution. The employer rate was zero during some years for Fire Safety, but the 9% that the City pays on behalf of employees was paid during that period of time. Miscellaneous was the plan that was fully super funded, i.e. the employer and employee rate was zero. Page 20 shows both the combination of the employee and employer rate for the current fiscal year and for the future fiscal years. In 2002-03 the employee and employer rate are both zero for the current fiscal year because the plan in the June 30, 2000 valuation was super funded. He emphasized that when CalPERS prepares a valuation it is a point in time. The City's 2002-03 contribution rates are based on information that is three years old (at June 30, 2000), which is before CaIPERS's investments decreased. Mr. Flynn confirmed that the City did contribute during 1997 through 2001. CalPERS was supposed to pay the City back $700,000 for Miscellaneous; however, it has not done so. In response to Mayor Hitchcock, Finance Director McAthie acknowledged that the City did receive $356,000 from CalPERS last year, which went into the General Fund reserve. No other reimbursements were received. In answer to Council Member Hansen's previous comments regarding stretching out the payment from 13 to 20 years, Mr. Bartel explained that the City does not have a fixed debt at CalPERS. It is a debt that changes because CalPERS cannot possibly know when the City's employees are going to retire and what pay raises will take place. Mr. Bartel stated that CalPERS makes a guess as to what is going to happen each year. He referenced page 50, Police Safety June 30, 2001 valuation, which shows a total contribution rate of 17.4% with an amortization component of 1.3%. It is designed to be a level percentage of pay over a 20 -year period if all assumptions were met after June 30, 2001. When the City gets its June 30, 2002 valuation (when assumptions are not met) the difference between expected and actual will be an additional layer on top of the 20 -year period. The investment loss will be paid off over a 13 -year period. The 20 years will drop to 19 and there will be an additional component that will be 13 years. The re -amortization would 2 Continued April 29, 2003 occur if the City wanted to extend the 13 -year period out to 20 years, which would mitigate the rate slightly. Page 52 shows the 2003-04 rate of 26.4%, which is the 17.4% (shown on page 50) plus the 9% employee contribution rate. The estimated rate of 35.8% is the addition of a 13 -year amortization for the investment loss during that period of time. The automatic process is an amortization base, and each year a new base is added on. When the base is a gain, it reduces the rate. Mayor Hitchcock theorized that if the Council determined it would pay the employees' contribution and the City's contribution based upon an 8.5% return, it should come out even in the long run. Mr. Bartel implied that it would have been difficult to convince anyone three years ago that the CaIPERS investment return would be negative for three years in a row. Mr. Flynn noted that variables such as sudden retirements and increased disability retirements also affect costs. In response to Mayor Hitchcock's theory, he asked whether the City should assume a lower return on investment in the long run and then factor that in as its reserve for the long term. To further illustrate the difficulty, Mr. Bartel referenced page 50, Police Safety, which shows the June 30, 2001 valuation with a contribution rate of 17.4% for the employer rate. The $7.4 million on page 48 represents the investment loss (through June 30, 2002) that has not yet been factored into the contribution. If the City contributed or set aside an additional $7.4 million then it could keep its rate at 17.4%. In response to Council Member Beckman, Mr. Bartel reported that the City's aggregate base payroll for Police Safety is $5 million. The City would have had to set aside 30% of pay every year for the last five years to get to the $7.4 million figure. Mr. Flynn stated that questions for the Council to consider are: 1) what would be given up in exchange for setting aside money strictly for compensation of employees; and 2) should there be a fund set up in the long run that helps mitigate the downturns. Mr. Bartel outlined the following options: ➢ Mitigate rates somewhat by extending the amortization period; ➢ A pension obligation bond; ➢ Having a two-tiered system with different benefits given to people hired after a certain date; ➢ Borrowing money at 6% to pay CalPERS. He pointed out that if CalPERS earned more than 6%, the City would be at an advantage and if it earned less than 6% the City would end up with a larger debt than before. Mayor Hitchcock reiterated her belief that if the City gave an even contribution to CalPERS, it would protect the plan and help to stabilize variances. Mr. Bartel commented that he had noticed more of his clients were doing long-term budgets and projecting out five years. Referencing page 49, he noted that if the City paid off its unfunded liability then the contribution would be the normal cost rate, which from the most recent information shows at 16.1 % plus the 9% employee contribution rate. For Police Safety the City is at approximately 25% of pay. Any amount required above the 25% would be to pay down the $7.4 million liability. He cautioned that the $7.4 million is only through June 30, 2002. CaIPERS rate of return as of February 28, 2003 is negative 7.2%. Council Member Land asked whether there has been a change in the CalPERS investment policy over the last three years. Mr. Bartel reported that the investment mix for the last four to five years was approximately 65% equities, 25% fixed-income investments, 8% in real estate, and 2% in 3 Continued April 29, 2003 short-term money market. Fifteen years ago CalPERS equity investment was 30% and bonds at 60%. Ten years ago CalPERS invested 60% in equities. Mr. Bartel stated that the only opportunity for the City to influence a decision about policy is to talk to the CalPERS Board. Mayor Pro Tempore Howard stated that a larger issue needs to be considered and noted that there is little competition for city employee retirement programs. She supported the idea of increasing communication with CalPERS. Mr. Bartel noted that cities have only one representative on the CalPERS Board, which is Willie Brown, Jr., Mayor of the City and County of San Francisco. Consequently, the makeup of the Board is not designed to hear input from cities. He stated that an individual city would not be listened to; however, if cities communicated in a unified voice they could expect some reaction. D. COMMENTS BY THE PUBLIC ON NON -AGENDA ITEMS None. E. ADJOURNMENT No action was taken by the City Council. The meeting was adjourned at 8:25 a.m. ATTEST: Susan J. Blackston City Clerk 4 CITY OF LODI MISCELLANEOUS, FIRE SAFETY & POLICE SAFETY PLANS CalPERS Actuarial Issues — 6/30/01 Valuation JOHN E. BARTEL, Aon Consulting March IS, 2003 Miscellaneous Topic Paye Definitions 1 Miscellaneous Plan Funded Status 5 Demographic Information 7 Plan Assets & Actuarial Obligations 11 Contribution Rates 17 Fire Safety Plan Funded Status 21 Demographic Information 23 Plan Assets & Actuarial Obligations 27 Contribution Rates 33 Police Safety Plan Funded Status 37 Demographic Information 39 Plan Assets & Actuarial Obligations 43 • Contribution Rates 49 Am O: CLIENTSCiIr ul L xb Ca1PERS 6.' 0411 LA%fi.gl Definitions P_x C.I- •f H. rn. ' )•nr w. zan nmd ■ PVB - Present Value of all Projected Benefits: • Discounted value (at valuation date - 6/30/01), of all future expected benefit payments based on various (actuarial) assumptions ■ Actuarial Liability: • Discounted value (at valuation date) of benefits earned through valuation date [value of past service benefit] • Portion of PVB "earned" at measurement ■ Current Normal Cost: • Portion of PVB allocated to (or "earned" during) current year • Value of employee and employer current service benefit 2 ■ Target- Have money in the bank to cover Actuarial Liability (past service) ■ Unfunded Liability - Money short of target at valuation date ■ Excess Assets / Surplus: • Money over and above target at that point in time. • Doesn't mean you're done contributing. ■ Super Funded: • Assets cover whole pie (PVB) • If everything goes exactly like PERS calculated, you'll never have to put another (employer or employee) dime in. Am 2 4 • • • Definitions • PrasaM Valun of BeM01a Arsem Ydu• of tl..m�fn. June 111. 21X11 I 1'.+ed.drvX ' "- ruax�NwnY 1 Au VnhMM •cYMYl1YMH A..w.W ■ Contribution = • Normal Cost • + Unfunded Liability Amortization or • - Excess Asset Amortization 3 I Future Rate Fluctuations ■ Asset Gains/Losses: I COMAS H1.w kal Marhet Value Rates of Return -Jane 30Year Ends Actuarial Assumed 1—niment Rewe = &25% I__.__. ..........._.._ . ._....._....- . _.............. ................. .................,. zsx I 2yx � I tsw 10%1 — - - --- I sx! ------ .----- -5%-k .---sx ! — ...... ._.. -- .....__.... - - ._._.._.. . - - J I -tux' TIM' ':IYYr' IVIS_ IVXY% lmY m, 197' Int,IYN 19l5'I7Y6'In> IYYI:; IYN-`V. 2- m3 wa.f•_LS µ!3--im'x.Rd1,4!,el' ■ Actuarial Assumption changes: i ■ Experience Gains/Losses ■ Pooling • ■ Benefit Improvements Am 4 _._ . Plan Funded Status Miscellaneous Pre:,n'Jce of Benrfi.. P-1 'Jnr o(Bmrfna Junr 3P. NXBI JuwNI, ]qll =♦, 1 June 30, 2000 June 30, 2001 { $ (1,700,000) (Super Excess) / Unfunded PVB $ 5,000,000 18,900,000 Excess Assets 14,600,000 57,600,000 Actuarial Liability 64,000,000 74,900,000 PVB 83,600,000 A 5 Plan Funded Status Miscellaneous j ■ What happened between 6/30/00 and 6/30/01? i • Asset gain/(loss): = (2.7) million • Actuarial gain/(loss): = (2.3) million ❑ Number of Actives 312 340 ❑ Number of Inactives 192 —> 178 ❑ Number of Retirees 288 --► 303 350 300 250 200 150 too 50 Members Included in Valuation Miscellaneous 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 7 Average Age/Service Miscellaneous 1996 1997 1998 1999 2000 2001 0 A—mge Age 43.1 43.1 43.5 43.8 44.2 43.8 1 _1ZAye age Service 8.6 92 9.5 9.6 1073 9.9 1996 1997 1998 1999 2000 2001 OAcrive 317 306 303 315 312 340 OTmnsfers 103 96 91 102 103 97 ®Vested Term itiations 62 67 79 74 89 81 .A Receiving -Payments . 248 2162 277 289 288 303 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 7 Average Age/Service Miscellaneous 1996 1997 1998 1999 2000 2001 0 A—mge Age 43.1 43.1 43.5 43.8 44.2 43.8 1 _1ZAye age Service 8.6 92 9.5 9.6 1073 9.9 Average PayMiscellaneous v ^ 0 0 0 • Actuarial Investment Return Miscellaneous 20.0%Ix 18.0% `_--- 16.01/* 14.::% ` 12.0q 10.0% i 6.Ok - i 4.0% 2.09 0.0% - 1997 1998 1199 2000 2001 .OInvestment Return 15.9% 19h9f 12.0% 11.2% 4.8% ` 1m 11 Actuarial Investment Return Miscellaneous ■ Above assumes contributions, payments, etc. received evenly throughout year. ■ 6/30/01: • Market Value return (7.23)% • Actuarial Value return = 4.8% ■ 6/30/02: ♦ Market Value return = (5.97)% • Actuarial Value return z (3.7)% ■ 6/30/03: • Market Value return through 1/31/03 (6.8)% Aw 12 Asset Values (Millions) Miscellaneous Am 13 Asset Values Miscellaneous ■ 6/30/00 Actuarial Value = 95% Market ■ 6/30/01 Actuarial Value = 107% Market ■ 6/30/02 Actuarial Value will be = 110% Market • • .. . ... ..... Funded Status (Millions) Miscellaneous Am 15 Funded Status Miscellaneous ■ 6/30/97 actuarial assumption changes: • Interest rate 6/30/96 6/30/97 ❑ General inflation 4.50% 3.50% ❑ Real rate of return 4.00 4.75 ❑ Total 8.50 8.25 • Payroll growth 4.50% 3.75% ■ Investment losses — Impact on funded status: • 6/30/02 [-5.97% compared to +8.25%] -14.3% • Actuarial asset "reserve" -7.3% • Total estimated % loss -21.6% • Total estimated $ loss $ 17.0 million [21.6% x $78.6] • Am 16 i Contribution Rates II Miscellaneous 6% Contribution Rates Miscellaneous 4% i 6/30/01 2002/2003 2003/2004 ■ Normal cost 7.2% 7.3% ■ Amortization bases: • Fresh Start 6/30/00 -7.2% 0.0% i 0.0% -7.3% Sub -total -7.2% -7.3% • Total: { 0.0% • Amortization period 39 years 17 years 7 f xsc � 1996 1997 - 1998 1 1999 2000 - 2001 ONormalCosr. 7.36 5.39F 5.3;7 _ 7.1% 72% 7.39 _ 17 UAL Amort 6.0% -5.3;F -5.3k 7.19 7.2k 7.3 Moral 1.3% 0.09 0.0%0.0% 0.05E 0.IFX 17 ■ 6/30/02: • Significant asset loss • Actuarial gains or losses? • • Contribution Rates Miscellaneous 6/30/00 6/30/01 2002/2003 2003/2004 ■ Normal cost 7.2% 7.3% ■ Amortization bases: • Fresh Start 6/30/00 -7.2% 0.0% • Fresh Start 6/30/01 0.0% -7.3% Sub -total -7.2% -7.3% • Total: 0.0% 0.0% • Amortization period 39 years 17 years ■ 6/30/02: • Significant asset loss • Actuarial gains or losses? • • • CJ • Contribution Projection Miscellaneous ■ Market Value Investment Return: • June 30, 2002 • Expected June 30, 2003 • Expected June 30, 2004 and subsequent ■ Fresh Starts: • No Fresh Starts ■ No Other: • Gains or Losses • Method or Assumption Changes • Benefit Improvements AM 19 Contribution Projection Miscellaneous -5.97% 8.25% 0.00% -5.00% 8.25% 6/30/03 Market Value Return Varies Includes City and Employee Contribution Rates 25% 20% 15% 10% 5% 0% 11G/V] VJ/V9 Vi/V] lq/VO �/ai// vnve �a/Vy E, -5.00% 0.0% 7.0% L 1,1.6% 20.0% 20.8% 21-0% _; 20.9% i+ 0.00% 0.0% 7.0% 1 13.6% 17.4% 18.4% 18.9% 18.9% 0 8.25% 0.0% 7.0% 13.6% 14.9% 15.6% 15.9% 15.9% Am 20 Plan Funded Status Fire Safety Ye..enL \'alw of Bemf V..�n. \'aloe of Oenu{iL, fumy {D. jDnn June M1n. ZIIDI • MMnn /— --------- June _June 30, 2000 June 30, 2001 $ 2,900,000 Unfunded PVB $ 6,200,000 2,500,000 Excess Assets 500,000 24,900,000 Actuarial Liability 27,400,000 30,300,000 PVB 34,000,000 Am 21 Plan Funded Status Fire Safety ■ What happened between 6/30/00 and 6/30/01? • Asset gain/(loss): = (0.9) million • Actuarial gain/(loss): = (0.9) million ❑ Average Salary 53,600 —► 60,900 • Law Change: 0.1 million ❑ 85%-90% • 23 Average Age/Service Fire Safety 45 ' 40 35 30 25 20 15 10 5 - -- — 1996 1997 1998 1999 2000 2001 _ ... _ .. . _._.. _. _. _ - D Average Age 38.7 40.2 40.6 40.6 41.1 40.6 ®Average Service 12.2 12.6 12.8 12.9 13.3 12.9 0 MN 24 E"I Members Included in Valuation Fire Safety 50 45 j 40 3530 -- — - - i 25 20 i ]5 10 5 Y 1996 1997 1998 1999 2000 2001 OActive 44 44 42 44 46 48 OTransfers 7 9 10 11 10 11 ® Vested Terminations' 3 2 2 2 2 3 0. Receiving Payments 37 38 41 41 40 42 • 23 Average Age/Service Fire Safety 45 ' 40 35 30 25 20 15 10 5 - -- — 1996 1997 1998 1999 2000 2001 _ ... _ .. . _._.. _. _. _ - D Average Age 38.7 40.2 40.6 40.6 41.1 40.6 ®Average Service 12.2 12.6 12.8 12.9 13.3 12.9 0 MN 24 E"I FT-1�1 25 Total Annual Covered Payroll (Millions) Fire Safety Am 26 0 0 • • Average Pay Fire Safety 65,000 60,000 55,000 - 50,000 45,000 Z� 40,000 35,000 30,000 1996 1997 1998 1999 2000 2001 !E]Average Pay! 43,000 47,600 47,800 50,500 53,600 60,900 FT-1�1 25 Total Annual Covered Payroll (Millions) Fire Safety Am 26 0 0 • • Actuarial Investment Return Fire Safety 27 Actuarial Investment Return Fire Safety I ■ Above assumes contributions, payments, etc. received evenly throughout year. ■ 6/30/01: • Market Value return = (7.23)% • Actuarial Value return = 4.7% ■ 6/30/02: • Market Value return = (5.97)% • Actuarial Value return = (3.6)% ■ 6/30/03: • Market Value return through 1/31/03 (6.8)% 0 Am 29 Asset Values Fire Safety ■ 6/30/00 Actuarial Value 95% Market ■ 6/30/01 Actuarial Value = 107% Market ■ 6/30/02 Actuarial Value will be = 110% Market Am 1�1 Asset Values (Millions) Fire Safety 30 25 20 10 5. 0 1996 1997 1998 1999 2000 2001 ------- - --- - OActuarial . — --- - ---------- 7- 16.8 193 j 22.4 25.5 27.4 27.9 OMarket 18.0 21.4 24.9 27.1 29.9 26.0 Am 29 Asset Values Fire Safety ■ 6/30/00 Actuarial Value 95% Market ■ 6/30/01 Actuarial Value = 107% Market ■ 6/30/02 Actuarial Value will be = 110% Market Am 1�1 Funded Status (Millions) Fire Safety Funded Status Fire Safety ■ 6/30/97 actuarial assumption changes: • Interest rate 6/30/96 6/30/97 ❑ General inflation 4.50% 3.50% ❑ Real rate of return 4.00 4.75 ❑ Total 8.50 8.25 • Payroll growth 4.50% 3.75% ■ Investment losses — Impact on funded status: • 6/30/02 [-5.97% compared to +8.25%] -14.3% • Actuarial asset "reserve" -7.3% • Total estimated % loss -21.6% • Total estimated $ loss $ 6.0 million [21.6% x $27.9] • �- 32 Kik 33 Contribution Rates Fire Safety Contribution Rates 20% Fire Safety . ........ ....... 15% 10% i 17.1% 16.2% i 0% . • Fresh Start 6/30/00 3 0.0% • Fresh Start 6/30/01 0.0% 1.2% Sub -total -17.1% 1.2% • Total: i -15% 17.4% • Amortization period 20% ONormal Cost'11.8% 1996 1997 1998 j 10.0% 11.7% 1999 2000 2001 16.6% 17.1% 16.2% ill Amort Bases -110% 10.0% -11.7% -16.6% 17.1% 1.2% 7 otal 0.9% 0.0% 0.0% 0.0% 0.0% 17.4% Kik 33 Contribution Rates Fire Safety 34 C • • 6/30/00 6/30/01 2002/2003 2003/2004 ■ Normal cost 17.1% 16.2% ■ Amortization bases: • Fresh Start 6/30/00 -17.1% 0.0% • Fresh Start 6/30/01 0.0% 1.2% Sub -total -17.1% 1.2% • Total: 0.0% 17.4% • Amortization period 5 years 20 years ■ 6/30/02: • Significant asset loss • Actuarial gains or losses? 34 C • • Contribution Projections Fire Safety ■ Market Value Investment Return: • June 30, 2002 -5.97% • Expected June 30, 2003 8.25% 0.00% -5.00% • Expected June 30, 2004 and subsequent 8.25% ■ Fresh Starts: • No Fresh Starts ■ No Other: • Gains or Losses • Method or Assumption Changes • Benefit Improvements Am 35 Contribution Projections Fire Safety 6/30/03 Market Value Return Varies Includes City and Employee Contribution Rates June 30, 2000 June 30, 2001 $ 7,900,000 Unfunded PVB $ 11,100,000 1,400,000 Excess Assets (Unfunded Liability) (400,000) 31,200,000 Actuarial Liability 34,400,000 40,600,000 PVB 45,100,000 awn 37 Plan Funded Status Police Safety ■ What happened between 6/30/00 and 6/30/01? • Asset gain/(loss): = (1.2) million • Actuarial gain/(loss): = (0.7) million 0 Number of Retirees 39 44 • Law Change: 0.2 million 13 85%-90% 0 0 • 0 =,. Members Included in Valuation Police Safety 80 f is 70 60 50 _..._.. , --....... -- ._... ._....._...__.. 40 30 20 10 ❑ Active 1996 71 1997 74 1998 74 1999 76 2000 77 2001 78 Transfers 11 12 ] 0 11 i 1 12 ® Vested Terminations 4 7 7 5 4 5 Receiving -Pa ments 37 38 39 39 39 44 39 Average Age/Service Police Safety 40 w ' Total Annual Covered Payroll Police Safety 0 9 !i' O 43 Actuarial Investment Return Police Safety ■ Above assumes contributions, payments, etc. received evenly throughout i year. ■ 6/30/01: • Market Value return = (7.23)% I • Actuarial Value return = 4.7% ■ 6/30/02: • Market Value return (5.97)% • Actuarial Value return (3.7)% ■ 6/30/03: • Market Value return through 1/31/03 (6.8)% • AM 44 Asset Values (Millions) Police Safety 35 • 30 25 20 15 10 — — 0 1996 1997 1998 1999 2000 2001 OActuarial 18.3 21.1 25.2 29.7 32.6 34.0 OMarket 19.6 23.5 28.0 31.7 34.3 31.7 AIL A 45 Asset Values Police Safety ■ u 6/30/00 Actuarial Value 95% Market ■ 6/30/01 Actuarial Value 107% Market i ■ 6/30/02 Actuarial Value will be 110% Market lr7 Funded Status (Millions) Police Safety 47 Funded Status Police Safety ■ 6/30/97 actuarial assumption changes: • Interest rate 6/30/96 6/30/97 ❑ General inflation 4.50% 3.50% ❑ Real rate of return 4.00 4.75 ❑ Total 8.50 8.25 • Payroll growth 4.50% 3.75% ■ Investment losses — Impact on funded status: • 6/30/02 [-5.97% compared to +8.25%] -14.3% • Actuarial asset "reserve" -7.4% • Total estimated % loss -21.7% • Total estimated $ loss $ 7.4 million [21.7% x $341 AQ111 Alk 48 i Contribution Rates Police Safety Police Safety 6/30/00 ....... - 20% 2002/2003 2003/2004 ■ Normal cost 16.4% 16.1% ■ Amortization bases: • Gain/Loss -13.0% - • Benefit Change 6/30/98 5.9% - I � 10% . ! i Benefit Change 6/30/00 1.4% - • Assumption Change 6/30/97 -2.0% - • Assumption Change 6/30/98 2.6% - • 5% 0.0% 1.3% Sub -total -5.1% 1.3% • Total: 11.4% 17.4% • Amortization period Multiple 20 years ■ 6/30/02: 0% . 3 , • Significant asset loss • Actuarial gains or losses? • AN 50 -10%- 1996 1997 1998 1999 2000 2001 O Nonnal Cost 11.6% 9-3% 10.7% 16.1% 16.4% 16.1% 0 Amort Bases -1.8% -8.7% -10.0% -3.9% -5.1% 1.3% ® Total 9.8% 0.6% 0.7% 12.2% 11.4% 17.4% Am 49 • Contribution Rates Police Safety 6/30/00 6/30/01 2002/2003 2003/2004 ■ Normal cost 16.4% 16.1% ■ Amortization bases: • Gain/Loss -13.0% - • Benefit Change 6/30/98 5.9% - • Benefit Change 6/30/00 1.4% - • Assumption Change 6/30/97 -2.0% - • Assumption Change 6/30/98 2.6% - • Fresh Start 6/30/01 0.0% 1.3% Sub -total -5.1% 1.3% • Total: 11.4% 17.4% • Amortization period Multiple 20 years ■ 6/30/02: • Significant asset loss • Actuarial gains or losses? • AN 50 • Contribution Projections Police Safety • ■ Market Value Investment Return: • June 30, 2002 -5.97% • Expected June 30, 2003 8.25% 0.00% -5.00% • Expected June 30, 2004 and subsequent 8.25% ■ Fresh Starts: • No Fresh Starts ■ No Other: • Gains or Losses 0 Method or Assumption Changes • Benefit Improvements A 51 Contribution Projections Police Safety ` 6/30/03 Market Value Return Varies Includes City and Employee Contribution Rates 40% . — ... _._.. 30% , i 10%------- 5% 0% 02/03 03/04 04/05 05/06 06/07 07/08 08/09 ® -5.00%! 20.4% 26.4% 35.8% 44.9% 46.0% 1 46.2% ---- - --46.3% 0.00% 204% 4.2% 42-6% 43-u .3% 43.4% • ® 8.25% 20.4% 26.4% 35.8% 37.6% 38.6% 39.0% 39.1% Am 52 Mayor's & Council Member's Weekly Calendar WEEK OF APRIL 29, 2003 Tuesday, April 29, 2003 7:00 a.m. Shirtsleeve Session Meeting. 1. Discussion of CalPERS retirement plan and future actuarial projections (HR) 5:30 - 7:00 p.m. Cutie Patootie Kids Grand Opening and Ribbon Cutting, 712 West Lodi Avenue. Wednesday, April 30, 2003 7:00 p.m. Special City Council Meeting 1. Review and discuss fiscal years 2003-05 financial plan and budget alternatives (CM) Thursday, May 1, 2003 Noon Hitchcock and Land. Lodi Partner's Appreciation Luncheon, Lodi Lake Park. 5:00 - 7:00 p.m. Hitchcock and Land. Loel Senior Center 27th Annual Volunteer Recognition Dinner, Loel Garden. 5:30- 7:00 p.m. Ribbon Cutting and Grand Openings for new businesses at Lodi Stadium 12 Complex, 109 North School Street. Friday, May 2, 2003 11:00 - 1:30 p.m. EI Concilio's 5th Annual Latina Luncheon in celebration of Cinco de Mayo, Brookeside Country Club, Stockton. Noon Land. Governmental Relations Committee Meeting, Lodi Chamber of Commerce, 35 South School Street. Saturday, May 3, 2003 Sunday, May 4, 2003 Reminder Chamber of Commerce Faire, Downtown Lodi. 7:00 - 8:00 p.m. Howard, Hansen, and Land. Peace Officer's Memorial Service, Temple Baptist Church, 801 Lower Sacramento Road. Monday, May 5, 2003 Disclaimer: This calendar contains only information that was provided to the City Clerk's office