HomeMy WebLinkAboutAgenda Report - October 19, 2016 I-01cTM
CITY OF LODI
COUNCIL COMMUNICATION
AGENDA ITEM
Die
AGENDA TITLE: Adopt Resolution Authorizing City Manager to Execute All Documents Necessary
to Enter Other Post -Employment Benefits Irrevocable Trust with California
Employer's Retiree Benefit Trust Program (CERBT), Select Investment Strategy 2,
and Appropriating Funds ($1,000,000)
MEETING DATE: October 19, 2016
PREPARED BY: Deputy City Manager
RECOMMENDED ACTION:
Adopt resolution authorizing City Manager to execute all necessary
documents to enter Other Post -Employment Benefits Irrevocable
Trust with California Employer's Retiree Benefit Trust Program
(CERBT), select investment strategy 2, and appropriating funds
($1,000,000).
BACKGROUND INFORMATION: During the discussions regarding establishing budget and fiscal
policies, Council also discussed establishing a third -party
irrevocable trust to set aside funds to pay for Other Post -
Employment Benefits (OPEB).
OPEB costs represent post -employment benefits payable to retirees and their beneficiaries. Costs
generally fall into two categories: payment of health care premiums for retirees with sick leave conversion
benefits and statutory minimum required payments for all retirees/beneficiaries choosing health care
through CaIPERS. An actuarial valuation of the potential liability is performed every two years. The most
recent actuarial report, dated June 30, 2016, shows this liability at about $39 million. This actuarial
valuation determines the liability that the City must record and the annual OPEB cost. Historically, the
City has recorded the actuarially calculated liability and charged the departments for the actual cost paid
during the year, which is an amount lower than the actuarially calculated annual OPEB cost. As a result,
the City shows a growing unfunded liability because the charges out to departments are less than the
actuarially calculated annual cost. Pre -funding these costs is a best financial management practice.
Establishment of a third -party trust will allow funds to be invested in instruments that will match the long-
term nature of the liability. Investment returns within the trust should produce higher yields than are
available through the City's cash pool investments. Over the long-term, establishment of the trust should
result in lower total costs to the City for providing retiree benefits.
Staff evaluated the programs of the two primary vendors in this marketspace: CERBT, which is managed
by CaIPERS and Public Agency Retirement Services (PARS). Both programs are compliant with Internal
Revenue Code Section 115.
CERBT, which was established in 2007 solely for the purpose of receiving employer contributions that
will prefund OPEB costs, is a self-funded, not-for-profit trust fund in which participating agencies pay for
all administrative and investment expenses. The assets held in the CERBT are co -invested and
APPROVED: ` O--t--
Stephen Schwabauer, Cify Manager
managed by the same CaIPERS investment staff that manages the City's pension assets. While
managed by the same investment staff, CERBT investment strategies are different than those of the
retirement system. CERBT offers three investment strategies that have elements of both active and
passive components. Asset management fees have ranged from two basis points (0.02%) to 15 basis
points (0.15%) during the life of the trust. Currently, asset management fees are 10 basis points (0.10%)
of assets under management. The fee rate may vary from year to year and may be changed without
notice. CERBT is currently used by 497 agencies for OPEB trust services and has about $5.4 billion in
assets under management.
PARS is a for-profit entity which has been incorporated for 32 years and has been providing OPEB Trust
services for 20 years. PARS utilizes US Bank as a Trustee and High Mark Capital Management as an
Investment Manager. PARS offers five investment strategies, with a passive and active option within
each strategy. Administrative fees are a combination of trustee fees payable to US Bank and fees
payable to PARS. For a plan of our estimated size, the combination of fees would total 60 basis points
(0.60%) on assets under management.
When comparing the investment returns for both entities at June 30, 2016, using the most comparable
investment strategies, returns are fairly similar on a gross basis. When asset management fees are
included, CERBT slightly outperforms PARS.
While both vendors provide excellent OPEB Trust options for the City, staff recommends that Council
engage CERBT to provide these services. Primary drivers for this recommendation are the lower asset
management fees coupled with the size of the client base and assets under management with CERBT.
If Council approves the CERBT recommendation, the City must choose one of the CERBT's three
investment strategies. The long-term expected rate of return for the three strategies is shown in the table
below:
Investment
Strategy
Long -Term Expected Rate of Return
Strategy 1
Strategy 2
7.28%
6.73%
Strategy 3 6.12%
The lowest return/volatility strategy (Strategy 3) is considered most appropriate for a well -funded, mature
plan, while the highest return/volatility strategy (Strategy 1) is considered the most appropriate for a plan
that is not well -funded. The initial funding recommended by staff will provide a moderate level of funding
for the trust. Therefore, it is recommended that the City select Strategy 2, which would provide lower risk
than Strategy 1, but with the potential for higher returns than Strategy 3.
Staff recommends that Council approve engaging CERBT for OPEB Trust services, select Strategy 2 as
the investment strategy, and authorize the City Manager to execute all documents necessary to enter into
a post -employment benefits irrevocable trust with CERBT. Staff also recommends that the City Council
appropriate $1,000,000 for this program.
FISCAL IMPACT: The City had set aside $1,000,000 in the Benefits Fund (Fund 655) that is
earmarked for OPEB costs. These funds should be moved to the irrevocable trust
once it is established.
FUNDING AVAILABLE: Appropriation Needed:
655000000.72990 $1,000,000
JA/j a
c 1
Jordan Ayers
Deputy City Manager
CALIFORNIA EMPLOYERS' RETIREE BENEFIT TRUST PROGRAM ("CERBT")
AGREEMENT AND ELECTION
OF
City of Lodi
(NAME OF EMPLOYER)
TO PREFUND OTHER POST -EMPLOYMENT
BENEFITS THROUGH CaIPERS
WHEREAS (1) Government Code Section 22940 establishes in the State Treasury the
Annuitants' Health Care Coverage Fund for the prefunding of health care coverage for
annuitants (Prefunding Plan); and
WHEREAS (2) The California Public Employees' Retirement System (CaIPERS) Board
of Administration (Board) has sole and exclusive control and power over the
administration and investment of the Prefunding Plan (sometimes also referred to as
CERBT), the purposes of which include, but are not limited to (i) receiving contributions
from participating employers and establishing separate Employer Prefunding Accounts
in the Prefunding Plan for the performance of an essential governmental function (ii)
investing contributed amounts and income thereon, if any, in order to receive yield on
the funds and (iii) disbursing contributed amounts and income thereon, if any, to pay for
costs of administration of the Prefunding Plan and to pay for health care costs or other
post -employment benefits in accordance with the terms of participating employers'
plans; and
WHEREAS (3) City of Lodi
(NAME OF EMPLOYER)
(Employer) desires to participate in the Prefunding Plan upon the terms and conditions
set by the Board and as set forth herein; and
WHEREAS (4) Employer may participate in the Prefunding Plan upon (i) approval by
the Board and (ii) filing a duly adopted and executed Agreement and Election to Prefund
Other Post -Employment Benefits (Agreement) as provided in the terms and conditions
of the Agreement; and
WHEREAS (5) The Prefunding Plan is a trust fund that is intended to perform an
essential governmental function within the meaning of Section 115 of the Internal
Revenue Code as an agent multiple -employer defined benefit plan as defined in
Governmental Accounting Standards Board (GASB) Statements for Accounting and
Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans
(OPEB Standards) consisting of an aggregation of single -employer plans, with pooled
administrative and investment functions;
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CaIPERS
NOW, THEREFORE, BE IT RESOLVED THAT EMPLOYER HEREBY MAKES THE
FOLLOWING REPRESENTATION AND WARRANTY AND THAT THE BOARD AND
EMPLOYER AGREE TO THE FOLLOWING TERMS AND CONDITIONS:
A. Representation and Warranty
Employer represents and warrants that it is a political subdivision of the State of
California or an entity whose income is excluded from gross income under Section 115
(1) of the Internal Revenue Code.
B. Adoption and Approval of the Agreement; Effective Date; Amendment
(1) Employer's governing body shall elect to participate in the Prefunding Plan by
adopting this Agreement and filing with the CaIPERS Board a true and correct original
or certified copy of this Agreement as follows:
Filing by mail, send to: CaIPERS
CERBT (OPEB)
P.O. Box 1494
Sacramento, CA 95812-1494
Filing in person, deliver to:
CaIPERS Mailroom
CERBT (OPEB)
400 Q Street
Sacramento, CA 95811
(2) Upon receipt of the executed Agreement, and after approval by the Board, the
Board shall fix an effective date and shall promptly notify Employer of the effective date
of the Agreement.
(3) The terms of this Agreement may be amended only in writing upon the agreement
of both CaIPERS and Employer, except as otherwise provided herein. Any such
amendment or modification to this Agreement shall be adopted and executed in the
same manner as required for the Agreement. Upon receipt of the executed amendment
or modification, the Board shall fix the effective date of the amendment or modification.
(4) The Board shall institute such procedures and processes as it deems necessary to
administer the Prefunding Plan, to carry out the purposes of this Agreement, and to
maintain the tax exempt status of the Prefunding Plan. Employer agrees to follow such
procedures and processes.
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Page 2 of 10
C. Other Post -Employment Benefits (OPEB) Cost Reports and Employer Contributions
(1) Employer shall provide to the Board an OPEB cost report on the basis of the
actuarial assumptions and methods prescribed by the Board. Such report shall be for
the Board's use in financial reporting, and shall be prepared at least as often as the
minimum frequency required by applicable GASB OPEB Standards. This OPEB cost
report may be prepared as an actuarial valuation report or, if the employer is qualified
under GASB OPEB Standards, may be prepared as an Alternative Measurement
Method (AMM) report.
(a) Unless qualified under GASB OPEB Standards, to provide an AMM
report, Employer shall provide to the Board an actuarial valuation report.
Such report shall be for the Board's use in financial reporting, and shall be
prepared at least as often as the minimum frequency required by GASB
OPEB Standards, and shall be:
1) prepared and signed by a Fellow or Associate of the Society of
Actuaries who is also a Member of the American Academy of
Actuaries or a person with equivalent qualifications acceptable to the
Board;
2) prepared in accordance with generally accepted actuarial practice and
GASB OPEB Standards; and,
3) provided to the Board prior to the Board's acceptance of contributions
for the valuation period or as otherwise required by the Board.
(b) If qualified under GASB OPEB Standards, Employer may provide to the
Board an AMM report. Such report shall be for the Board's use in
financial reporting, shall be prepared at least as often as the minimum
frequency required by GASB OPEB Standards, and shall be:
1) affirmed by Employer's external auditor, or by a Fellow or
Associate of the Society of Actuaries who is also a Member of the
American Academy of Actuaries or a person with equivalent
qualifications acceptable to the Board, to be consistent with the
AMM process described in GASB OPEB Standards;
2) prepared in accordance with GASB OPEB Standards; and,
3) provided to the Board prior to the Board's acceptance of
contributions for the valuation period or as otherwise required by
the Board.
(2) The Board may reject any OPEB cost report for financial reporting purposes
submitted to it, but shall not unreasonably do so. In the event that the Board
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CaIPERS
determines, in its sole discretion, that the OPEB cost report is not suitable for use in the
Board's financial statements or if Employer fails to provide a required OPEB cost report,
the Board may obtain, at Employer's expense, an OPEB cost report that meets the
Board's financial reporting needs. The Board may recover from Employer the cost of
obtaining such OPEB cost report by billing and collecting from Employer or by deducting
the amount from Employer's account in the Prefunding Plan.
(3) Employer shall notify the Board of the amount and time of contributions which
contributions shall be made in the manner established by the Board.
(4) Employer contributions to the Prefunding Plan may be limited to the amount
necessary to fully fund Employer's actuarial present value of total projected benefits, as
supported by the OPEB cost report for financial reporting purposes acceptable to the
Board. As used throughout this document, the meaning of the term "actuarial present
value of total projected benefits" is as defined in GASB OPEB Standards. If Employer's
contribution causes its assets in the Prefunding Plan to exceed the amount required to
fully fund the actuarial present value of total projected benefits, the Board may refuse to
accept the contribution.
(5) No contributions are required. Contributions can be made at any time following the
effective date of the Agreement provided that Employer has first complied with the
requirements of Paragraph C.
D. Administration of Accounts, Investments, Allocation of Income
(1) The Board has established the Prefunding Plan as an agent plan consisting of an
aggregation of single -employer plans, with pooled administrative and investment
functions, under the terms of which separate accounts are maintained for each
employer so that the Employer's assets will provide benefits only under the Employer's
post -employment benefit plan(s).
(2) All Employer contributions and assets attributable to Employer contributions shall be
separately accounted for in the Prefunding Plan (Employer's Prefunding Account).
(3) Employer's Prefunding Account assets may be aggregated with prefunding account
assets of other employers and may be co -invested by the Board in any asset classes
appropriate for a Section 115 Trust.
(4) The Board may deduct the costs of administration of the Prefunding Plan from the
investment income or Employer's Prefunding Account in a manner determined by the
Board.
(5) Investment income shall be allocated among participating employers and posted to
Employer's Prefunding Account as determined by the Board but no less frequently than
annually.
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CalPERS
(6) If Employer's assets in the Prefunding Plan exceed the amount required to fully fund
the actuarial present value of total projected benefits, the Board, in compliance with
applicable accounting and legal requirements, may return such excess to Employer.
E. Reports and Statements
(1) Employer shall submit with each contribution a contribution report in the form and
containing the information prescribed by the Board.
(2) The Board shall prepare and provide a statement of Employer's Prefunding Account
at least annually reflecting the balance in Employer's Prefunding Account, contributions
made during the period and income allocated during the period, and such other
information as the Board determines.
F. Disbursements
(1) Employer may receive disbursements not to exceed the annual premium and other
costs of post -employment healthcare benefits and other post -employment benefits as
defined in GASB OPEB Standards.
(2) Employer shall notify CaIPERS in writing in the manner specified by CaIPERS of the
persons authorized to request disbursements from the Prefunding Plan on behalf of
Employer.
(3) Employer's request for disbursement shall be in writing signed by Employer's
authorized representative, in accordance with procedures established by the Board.
The Board may require that Employer certify or otherwise establish that the monies will
be used for the purposes of the Prefunding Plan.
(4) Requests for disbursements that satisfy the requirements of paragraphs (2) and (3)
will be processed monthly.
(5) CaIPERS shall not be liable for amounts disbursed in error if it has acted upon the
written instruction of an individual authorized by Employer to request disbursements. In
the event of any other erroneous disbursement, the extent of CaIPERS' liability shall be
the actual dollar amount of the disbursement, plus interest at the actual earnings rate
but not less than zero.
(6) No disbursement shall be made from the Prefunding Plan which exceeds the
balance in Employer's Prefunding Account.
G. Costs of Administration
Employer shall pay its share of the costs of administration of the Prefunding Pian, as
determined by the Board.
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Cain
H. Termination of Employer Participation in Prefunding Plan
(1) The Board may terminate Employer's participation in the Prefunding Plan if:
(a) Employer gives written notice to the Board of its election to terminate;
(b) The Board finds that Employer fails to satisfy the terms and conditions of
this Agreement or of the Board's rules or regulations.
(2) If Employer's participation in the Prefunding Plan terminates for any of the foregoing
reasons, all assets in Employer's Prefunding Account shall remain in the Prefunding
Plan, except as otherwise provided below, and shall continue to be invested and accrue
income as provided in Paragraph D.
(3) After Employer's participation in the Prefunding Plan terminates, Employer may not
make contributions to the Prefunding Plan.
(4) After Employer's participation in the Prefunding Plan terminates, disbursements
from Employer's Prefunding Account may continue upon Employer's instruction or
otherwise in accordance with the terms of this Agreement.
(5) After the Employer's participation in the Prefunding Plan terminates, the governing
body of the Employer may request either:
(a) A trustee to trustee transfer of the assets in Employer's Prefunding
Account; provided that the Board shall have no obligation to make such
transfer unless the Board determines that the transfer will satisfy
applicable requirements of the Internal Revenue Code, other law and
accounting standards, and the Board's fiduciary duties. If the Board
determines that the transfer will satisfy these requirements, the Board
shall then have one hundred fifty (150) days from the date of such
determination to effect the transfer. The amount to be transferred shall be
the amount in the Employer's Prefunding Account as of the date of the
transfer (the "transfer date") and shall include investment earnings up to
an investment earnings allocation date preceding the transfer date. In no
event shall the investment earnings allocation date precede the transfer
date by more than 150 days.
(b) A disbursement of the assets in Employer's Prefunding Account; provided
that the Board shall have no obligation to make such disbursement unless
the Board determines that, in compliance with the Internal Revenue Code,
other law and accounting standards, and the Board's fiduciary duties, all of
Employer's obligations for payment of post -employment health care
benefits and other post -employment benefits and reasonable
administrative costs of the Board have been satisfied. If the Board
determines that the disbursement will satisfy these requirements, the
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CaIPERS
Board shall then have one hundred fifty (150) days from the date of such
determination to effect the disbursement. The amount to be disbursed
shall be the amount in the Employer's Prefunding Account as of the date
of the disbursement (the "disbursement date") and shall include
investment earnings up to an investment earnings allocation date
preceding the disbursement date. In no event shall the investment
earnings allocation date precede the disbursement date by more than 150
days.
(6) After Employer's participation in the Prefunding Plan terminates and at such time
that no assets remain in Employer's Prefunding Account, this Agreement shall
terminate.
(7) If, for any reason, the Board terminates the Prefunding Plan, the assets in
Employer's Prefunding Account shall be paid to Employer after retention of (i) amounts
sufficient to pay post -employment health care benefits and other post -employment
benefits to annuitants for current and future annuitants described by the employer's
current substantive plan (as that term is used in GASB OPEB Standards), and (ii)
amounts sufficient to pay reasonable administrative costs of the Board.
(8) If Employer ceases to exist but Employer's Prefunding Plan continues to exist and if
no provision has been made by Employer for ongoing payments to pay post -
employment health care benefits and other post -employment benefits to annuitants for
current and future annuitants, the Board is authorized to and shall appoint a third party
administrator to carry out Employer's Prefunding Plan. Any and all costs associated
with such appointment shall be paid from the assets attributable to contributions by
Employer.
(9) If Employer should breach the representation and warranty set forth in Paragraph
A., the Board shall take whatever action it deems necessary to preserve the tax-exempt
status of the Prefunding Plan.
I. General Provisions
(1) Books and Records.
Employer shall keep accurate books and records connected with the performance of
this Agreement. Employer shall ensure that books and records of subcontractors,
suppliers, and other providers shall also be accurately maintained. Such books and
records shall be kept in a secure location at the Employer's office(s) and shall be
available for inspection and copying by CaIPERS and its representatives.
(2) Audit.
(a) During and for three years after the term of this Agreement, Employer
shall permit the Bureau of State Audits, CaIPERS, and its authorized
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CaIPERS
representatives, and such consultants and specialists as needed, at all
reasonable times during normal business hours to inspect and copy, at the
expense of CaIPERS, books and records of Employer relating to its
performance of this Agreement.
(b) Employer shall be subject to examination and audit by the Bureau of State
Audits, CaIPERS, and its authorized representatives, and such
consultants and specialists as needed, during the term of this Agreement
and for three years after final payment under this Agreement. Any
examination or audit shall be confined to those matters connected with the
performance of this Agreement, including, but not limited to, the costs of
administering this Agreement. Employer shall cooperate fully with the
Bureau of State Audits, CaIPERS, and its authorized representatives, and
such consultants and specialists as needed, in connection with any
examination or audit. All adjustments, payments, and/or reimbursements
determined to be necessary by any examination or audit shall be made
promptly by the appropriate party.
(3) Notice.
(a) Any notice, approval, or other communication required or permitted under
this Agreement will be given in the English language and will be deemed
received as follows:
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1. Personal delivery. When personally delivered to the recipient.
Notice is effective on delivery.
First Class Mail. When mailed first class to the last address of the
recipient known to the party giving notice. Notice is effective three
delivery days after deposit in a United States Postal Service office
or mailbox.
Certified mail. When mailed certified mail, return receipt requested.
Notice is effective on receipt, if delivery is confirmed by a return
receipt.
Overnight Delivery. When delivered by an overnight delivery
service, charges prepaid or charged to the sender's account, Notice
is effective on delivery, if delivery is confirmed by the delivery
service.
5. Telex or Facsimile Transmission. When sent by telex or fax to the
last telex or fax number of the recipient known to the party giving
notice. Notice is effective on receipt, provided that (i) a duplicate
copy of the notice is promptly given by first-class or certified mail or
by overnight delivery, or (ii) the receiving party delivers a written
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caIpEI
confirmation of receipt. Any notice given by telex or fax shall be
deemed received on the next business day if it is received after
5:00 p.m. (recipient's time) or on a nonbusiness day.
E-mail transmission. When sent by e-mail using software that
provides unmodifiable proof (i) that the message was sent, (ii) that
the message was delivered to the recipient's information processing
system, and (iii) of the time and date the message was delivered to
the recipient along with a verifiable electronic record of the exact
content of the message sent.
Addresses for the purpose of giving notice are as shown in Paragraph B.(1) of this
Agreement.
(b) Any correctly addressed notice that is refused, unclaimed, or
undeliverable because of an act or omission of the party to be notified
shall be deemed effective as of the first date that said notice was refused,
unclaimed, or deemed undeliverable by the postal authorities, messenger
or overnight delivery service.
(c) Any party may change its address, telex, fax number, or e-mail address by
giving the other party notice of the change in any manner permitted by this
Agreement.
(d) All notices, requests, demands, amendments, modifications or other
communications under this Agreement shall be in writing. Notice shall be
sufficient for all such purposes if personally delivered, sent by first class,
registered or certified mail, return receipt requested, delivery by courier
with receipt of delivery, facsimile transmission with written confirmation of
receipt by recipient, or e-mail delivery with verifiable and unmodifiable
proof of content and time and date of sending by sender and delivery to
recipient. Notice is effective on confirmed receipt by recipient or 3
business days after sending, whichever is sooner.
(4) Survival
All representations, warranties, and covenants contained in this Agreement, or in any
instrument, certificate, exhibit, or other writing intended by the parties to be a part of
their Agreement shall survive the termination of this Agreement until such time as all
amounts in Employer's Prefunding Account have been disbursed.
(5) Waiver
No waiver of a breach, failure of any condition, or any right or remedy contained in or
granted by the provisions of this Agreement shall be effective unless it is in writing and
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GOERS
signed by the party waiving the breach, failure, right, or remedy. No waiver of any
breach, failure, right, or remedy shall be deemed a waiver of any other breach, failure,
right, or remedy, whether or not similar, nor shall any waiver constitute a continuing
waiver unless the writing so specifies.
(6) Necessary Acts, Further Assurances
The parties shall at their own cost and expense execute and deliver such further
documents and instruments and shall take such other actions as may be reasonably
required or appropriate to evidence or carry out the intent and purposes of this
Agreement.
A majority vote of Employer's Governing Body at a public meeting held on the 1 9th
day of the month of October in the year 2016
into this Agreement.
authorized entering
Signature of the Presiding Officer:
Printed Name of the Presiding Officer: Mark Chandler
Name of Governing Body: City of Lodi
Name of Employer: City of Lodi
Date:
Approval as to farm
BOARD OF ADMINISTRATION
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
BY
JOHN SWEDENSKY
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
City Attorney
To be completed by CaIPERS
The effective date of this Agreement is:
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CODS
CERTIFICATION OF OPEB FUNDING POLICY &
�•
GASB 43/45 REPORTING COMPLIANCE
Ca1PERS
SECTION I: Asset Allocation Strategy Selection
As the employer, I certify that my agency chooses the following asset allocation
strategy
Select one Asset Allocation Strategy
SECTION II: ARC Funding
As the employer, I certify that our funding policy is to contribute consistently an
amount that is equal to (select one):
Full ARC Fundinq:
100 % of the ARC as determined in our OPEB valuation (or AMM) dated
20 , which used an actuarial Discount Rate of
Partial ARC Funding:
% of the ARC as determined in our OPEB valuation (or AMM if it applies)
dated , 20 which used a blended actuarial Discount Rate of
J
We will contribute to the trust using an approach not directly related to the ARC
(please describe your funding approach and how it relates to the discount rate
assumption in your OPEB valuation (or AMM) dated January 1 , 2016 which used
a blended actuarial Discount Rate of 3.5
City will annually evaluate the amount that can be put into the trust during budget
deliberations.
Rev 10/1/2014 Page 1 of 4
Asset Allocation
Long -Term Expected
Rate of Return
Strategy
7.28%
Strategy 1
6.73%
f
Strategy 2
6.12%
Strategy 3
SECTION II: ARC Funding
As the employer, I certify that our funding policy is to contribute consistently an
amount that is equal to (select one):
Full ARC Fundinq:
100 % of the ARC as determined in our OPEB valuation (or AMM) dated
20 , which used an actuarial Discount Rate of
Partial ARC Funding:
% of the ARC as determined in our OPEB valuation (or AMM if it applies)
dated , 20 which used a blended actuarial Discount Rate of
J
We will contribute to the trust using an approach not directly related to the ARC
(please describe your funding approach and how it relates to the discount rate
assumption in your OPEB valuation (or AMM) dated January 1 , 2016 which used
a blended actuarial Discount Rate of 3.5
City will annually evaluate the amount that can be put into the trust during budget
deliberations.
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CERTIFICATION OF OPEB FUNDING POLICY &
GASB 43/45 REPORTING COMPLIANCE
SECTION III: ARC Contribution Method
We plan to contribute toward the ARC in the following manner (select one):
Contribute our full ARC payments to the trust and seek reimbursements for Pay -go
costs
Contribute our ARC payments to the trust net of Pay -go costs and not seek
reimbursements (ARC minus Pay -go = Trust Contribution)
nOther (Please describe):
City will annually evaluate the amount that can be put into the trust during budget deliberations.
SECTION IV: Years of ARC Coverage
This OPEB valuation provides ARC amounts for the following periods:
(ARC dates should correspond with Item No. 10.0 in Summary of Actuarial Information)
First Year: From July 1 20 15 through June 30 , 2016
Second Year: From July 1 , 2016 through June 30 . 2017
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CERTIFICATION OF OPEB FUNDING POLICY &
GASB 43/45 REPORTING COMPLIANCE
We understand that we must obtain an actuarial valuation (or AMM if applicable) on at
least a biennial basis.
We understand that we will be asked to provide accounting information to CaIPERS as
required in order to facilitate CaIPERS compliance with GASB 43, 45 and 57 reporting
requirements and we agree to make any information requested available to CaIPERS
on a timely basis.
We understand that CaIPERS will provide us with our Statement of Plan Net Assets and
our Statement of Changes in Plan Net Assets, which can be used to prepare our GASB
45 reporting. CaIPERS will report aggregated GASB 43 information pertaining to the
Funded Status and Funding Progress.
January 1, 2016
Date of OPEB Valuation (or AMM if it applies)
City of Lodi
Name of Employer
Stephen Schwabauer, City Manager
Printed Name and Title of Person Signing the Form
Signature Date
Derrick Cotten
Designated Employer Contact Name for GASB Reporting
209-333-6700 dcotten@Iodi.gov
Phone # Email Address
Rev 10/1/2014 Page 3 of 4
CERTIFICATION OF OPEB FUNDING POLICY &
GASB 43/45 REPORTING COMPLIANCE
Instructions to complete the form
SECTION I: Asset allocation Strategy and Discount Rate Selection
Check the box next to the Asset Allocation Strategy on which you have based your
OPEB actuarial valuation or Alternative Measurement Method (AMM) cost report. Each
strategy has a different assumed Long Term Expected Rate of Return and risk profile.
Your CERBT assets will be invested using the Asset Allocation Strategy indicated here.
The choices you check off on this form should match those used by your actuary
in the OPEB valuation.
SECTION II: ARC Funding
A If you are fully funding, check the first box indicating the 100% funding, the
applicable Discount Rate, and the valuation date.
• If you are funding at Tess than 100%, check the second box to indicate the
percentage of funding [trust contributions plus paygo (and Implicit Rate Subsidy if
applicable) divided by ARC], the valuation date, and the Discount Rate.
• If you are funding at less than 100% and your contributions are not tied
specifically to the ARC, then indicate how you expect to contribute. For example, if you
intend to make unreimbursed pay -go payments plus a fixed dollar amount to the trust,
then describe this in the space provided.
SECTION III: ARC Contribution Method
Here we ask you to indicate how you expect to make contributions to the trust: Full ARC
with reimbursements, ARC net of paygo, or something else (please describe).
SECTION IV: Years of ARC Coverage
Generally, your OPEB valuation will provide two years of ARC coverage. Please identify
the specific periods to which the ARC applies.
Rev 10/1/2014 Page 4 of 4
AlkA,
CaIPERS
DELEGATION OF AUTHORITY
TO REQUEST DISBURSEMENTS
RESOLUTION
OF THE
City Council
(GOVERNING BODY)
OF THE
City of Lodi
(NAME OF EMPLOYER)
The city council delegates to the incumbents
(GOVERNING BODY)
in the positions of City Manager and
Deputy City Manager and/or
(TITLE)
(TITLE)
Finance Manager
authority to request on
(TITLE)
behalf of the Employer disbursements from the Other Post Employment Prefunding
Plan and to certify as to the purpose for which the disbursed funds will be used.
Witness
Title Mayor
Date
OPEB Delegation of Authority (1/13)
1. AA#
2. JV#
CITY OF LODI
APPROPRIATION ADJUSTMENT REQUEST
FUND #
TO:
Internal Services Dept. - Budget Division
ACCOUNT TITLE
AMOUNT
3. FROM:
Jordan Ayers 5. DATE:
V
!
10/19/16
4. DEPARTMENT/DIVISION: City Manager's Office
$ 1,000,000.00
6. REQUEST ADJUSTMENT OF APPROPRIATION AS LISTED BELOW
FUND #
ORG UNIT #
OBJECT #
ACCOUNT TITLE
AMOUNT
A.
SOURCE OF
FINANCING
655
32205
Fund Balance
$ 1,000,000.00
B.
USE OF
FINANCING
655
65500000
72990
Special Payments
$ 1,000,000.00
7. REQUEST IS MADE TO FUND THE FOLLOWING PROJECT NOT INCLUDED IN THE CURRENT BUDGET
Please provide a description of the project, the total cost of the project, as well as justification for the
requested adjustment. If you need more space, use an additional sheet and attach to this form.
To appropriate funds that will be sent to an irrevocable third party trust for pre -funding the unfunded liability associated with
Other Post -Employment Benefits (OPEB)
If Council has authorized the appropriation adjustment, complete the following:
Meeting Date: 10/19/16
Department Head Signature:
Res No:
Attach copy of resolution to this form.
8. APPROVAL SIGNATURES
Deputy City Manager/Internal Services Manager
Date
Submit completed form to the Budget Division with any required documentation
Final approval will be provided in electronic copy format.
RESOLUTION NO. 2016-191
A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE
CITY MANAGER TO EXECUTE ALL NECESSARY DOCUMENTS
TO ENTER OTHER POST -EMPLOYMENT BENEFITS
IRREVOCABLE TRUST WITH CALIFORNIA EMPLOYER'S
RETIREE BENEFIT TRUST PROGRAM; SELECTING INVESTMENT
STRATEGY 2; AND FURTHER APPROPRIATING FUNDS
WHEREAS, Council held Shirtsleeve meetings on February 2, February 9, and
September 13, 2016, to discuss a comprehensive set of budget and fiscal policies; and
WHEREAS, establishing an irrevocable trust to pre -fund the unfunded liability associated
with the City's Other Post -Employment Benefits (OPEB) costs is a prudent best practice for
local governmental agencies; and
WHEREAS, staff evaluated the offerings from the two primary providers of these
services, namely California Employer's Retirement Benefit Trust (CERBT) and Public Agency
Retirement Services (PARS); and
WHEREAS, staff recommends that Council approve entering an agreement with CERBT
and select Investment Strategy 2; and
WHEREAS, Council had previously set aside $1,000,000 in the Benefits Fund for pre -
funding OPEB liabilities; and
WHEREAS, staff recommends that Council approve initial funding of the trust with the
above -referenced funds and appropriate funds accordingly.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Lodi does
hereby authorize the City Manager to execute all necessary documents to enter an Other Post -
Employment Benefits Irrevocable Trust with California Employer's Retiree Benefit Trust
Program (CERBT), select Investment Strategy 2, and further appropriate funds in the amount of
$1,000,000 to fund the initial deposit to the trust.
Dated: October 19, 2016
I hereby certify that Resolution No. 2016-191 was passed and adopted by the City
Council of the City of Lodi in a regular meeting held October 19, 2016, by the following votes:
AYES: COUNCIL MEMBERS — Johnson, Kuehne, Mounce, Nakanishi, and
Mayor Chandler
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAIN: COUNCIL MEMBERS — None
NNIFE M. FERRAIOLO
ity Clerk
2016-191