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HomeMy WebLinkAboutMay 18 Agenda Packet Staff: Committee Members: Chris Huot Councilmember, Ken Weir - Chair Assistant City Manager Councilmember, Patty Gray Councilmember, Bruce Freeman SPECIAL MEETING NOTICE PERSONNEL COMMITTEE of the City Council - City of Bakersfield Tuesday, May 18, 2021, 12:00 p.m. City Hall North – Conference Room A 1600 Truxtun Avenue, First Floor Bakersfield, California 93301 A G E N D A 1. ROLL CALL 2. PUBLIC STATEMENTS 3. ADOPT AUGUST 18, 2020 AGENDA SUMMARY REPORT 4. NEW BUSINESS A. CalPERS Cost Projection and Other Post Employment Benefit Status Update – Huot/McKeegan 5. COMMITTEE COMMENTS 6. ADJOURNMENT SPECIAL NOTICE Public Participation and Accessibility May 18, 2021 Personnel Committee On March 18, 2020, Governor Gavin Newsom issued Executive Order N-29-20, which includes a waiver of Brown Act provisions requiring physical presence of the Committee members or the public in light of the COVID-19 pandemic. Based on guidance from the California Governor’s Office and Department of Public Health, as well as the County Health Officer, in order to minimize the potential spread of the COVID-19 virus, the City of Bakersfield hereby provides notice that as a result of the declared federal, state, and local health emergencies, and in light of the Governor’s order, the following adjustments have been made: 1.The meeting scheduled for May 18, 2021 at 12:00 p.m. will have limited public access. 2.Consistent with the Executive Order, Committee members may elect to attend the meeting telephonically and to participate in the meeting to the same extent as if they were physically present. 3.The public may participate in each meeting and address the Committee as follows: If you wish to comment on a specific agenda item, submit your comment via email to the City Clerk at City_Clerk@bakersfieldcity.us no later than 5:00 p.m. the Monday prior to the Committee meeting. Please clearly indicate which agenda item number your comment pertains to. If you wish to make a general public comment not related to a specific agenda item, submit your comment via email to the City Clerk at City_Clerk@bakersfieldcity.us no later than 5:00 p.m. the Monday prior to the Committee meeting. Alternatively, you may comment by calling (661) 326-3100 and leaving a voicemail of no more than 3 minutes no later than 5:00 p.m. the Monday prior to the Committee meeting. Your message must clearly indicate whether your comment relates to a particular agenda item, or is a general public comment. If your comment meets the foregoing criteria, it will be transcribed as accurately as possible. If you wish to make a comment on a specific agenda item as it is being heard, please email your written comment to the City Clerk at City_Clerk@bakersfieldcity.us. All comments received during the meeting may not be read, but will be provided to the Committee and included as part of the permanent public record of the meeting. _______________________________________________________________ _ S:\Council Committees\2021\Personnel\August 18 ASR.docx Page 1 CH:mc Committee Members Staff: Chris Huot Councilmember, Ken Weir, Chair Assistant City Manager Councilmember, Bruce Freeman Councilmember, Chris Parlier SPECIAL MEETING OF THE PERSONNEL COMMITTEE Tuesday, August 18, 2020 12:00 p.m. City Hall North – Conference Room A 1600 Truxtun Avenue Bakersfield, CA 93301 AGENDA SUMMARY REPORT Meeting called to order at 12:00 p.m. 1.ROLL CALL Committee members Present: Councilmember, Ken Weir, Chair Councilmember, Bruce Freeman Councilmember, Chris Parlier City staff: Chris Huot, Assistant City Managers Brianna Carrier, Administrative Analyst Ginny Gennaro, City Attorney Christi Tenter, Human Resources Manager Mari Blowers, Benefits Supervisor Kim Gearheart, Benefits Technician Retired employees Florn Core and Margaret Ursin and BCARE: Others present: Johnny Wu and Garrett Moore, Segal Company 2.ADOPTION OF AUGUST 13, 2019 AGENDA SUMMARY REPORT A motion to receive and file the Personnel Committee’s August 13, 2019 Agenda Summary Report was approved. /s/ Chris Huot DRAFT 3.PUBLIC STATEMENTS There were no public statements. 4.NEW BUSINESS A.2021 Health Care Plan Renewals - Huot Assistant City Manager Huot introduced Human Resources Manager Christi Tenter who provided a summary of the annual process to prepare the rate renewal package for 2021. She stated Segal Company had worked with the various plan providers to obtain an understanding of the rates for the new plan year, which begins on January 1, 2021. The same information was provided to the Insurance Committee. She introduced Johnny Wu with the Segal Company (Segal) to present their report by way of a handout and PowerPoint presentation. Mr. Wu distributed information to the Committee and gave a summary overview. Key points are: The following plans experienced favorable renewals: Blue Shield Active PPO Kaiser Plans UCCI, Unum, Optum and Voya are in the last year of a multi-year rate guarantee and there is no increase. P&A Group is part of a multi-year rate guarantee and there is no increase. MES Vision proposed rate decreases for the PPO and HMOs of 29.61 %and 33.33% respectively. The City’s overall cost for active employee benefits decreased by 3.5% or $622,000 for 2021 at the current contribution level of 80%, when compared to the 2020 increase of 9.4% The 2021 premiums for retiree benefits decreased by 5.0% or $408,600 as did the subsidies paid by the City Mr. Wu also provided a summary of historic active and retiree plans rate information and enrollment comparisons for the last five years. He also provided a summary of the impacts to healthcare services due to the coronavirus disease (COVID-19) pandemic. Human Resources Director Tenter reported that after careful consideration and thorough discussion, the Insurance Committed voted unanimously to recommend the City accept and adopt the rate renewal package as presented. After a thorough discussion, the Committee unanimously approved a motion to accept the Insurance Committee and staff’s recommendation and submit the item for approval to the full City Council. 5.COMMITTEE COMMENTS There were no comments. 6.ADJOURNMENT The meeting was adjourned at 12:40 pm _______________________________________________________________ _ S:\Council Committees\2021\Personnel\August 18 ASR.docx Page 2 CH:mc DRAFT Documents Presented At The Personnel Committee May 18, 2021 Meeting City of Bakersfield –CalPERS & OPEB Update Personnel Committee -May 18, 2021 CalPERS Overview •Nation’s largest public pension fund –$442.9B (12/31/20) –2,052,082 members/878K Active •70.6% funded (6/30/20) –Assuming 7% discount rate •732,529 Retirees/survivors currently receiving benefits –$35,700 average annual benefit •40% of the beneficiaries actually receive $36K+ / 15% receive $72K+ CalPERS Pension Buck 32% of funding provided by employers–in 2017 amount was at 25%, 2019 at 28% Pension Reforms •Local Pension Reform -Measure D –November 2010 –Only affected Public Safety Employees (55.2% voted yes) •Reduced Formula and eliminated Employer Paid Member Contributions (EPMC) •Public Employees Pension Reform Act (PEPRA) –Reduced Benefit Formulas / pensionable compensation (153K –CPI adj) –50% of normal cost covered by employee –Eliminated employer option for EPMC and inclusion of certain pay-types –Final compensation based on highest 36 consecutive months City of Bakersfield –Pension Plans •Three plans through CalPERS w/ different tiers/formulas 3% @ 60 Hired before 8/20/2008 2.7% @ 55 Hired after 8/20/2008 but before 1/1/2013 2%@62 PEPRA -Hired After 1/1/2013 MISCELLANEOUS FIRE POLICE 3% @ 50 Hired before 1/1/2011 2% @ 50 Measure D –hired after 1/1/2011 but before 1/1/2013 2.7%@57 PEPRA -Hired After 1/1/13 3% @ 50 Hired before 1/1/2011 2% @ 50 Measure D –hired after 1/1/2011 but before 1/1/2013 2.7%@57 PEPRA -Hired After 1/1/13 City of Bakersfield –Pension Plans •City pension costs actuarially determined annually –Normal cost % based on future service cost accrual for active employees •Is a % of payroll paid versus a fixed amount –Unfunded Accrued Liability (UAL) –fixed amount based on amortized amount needed for past service credit. •City pays up front versus annually saving 3.3% in interest costs (2022 -$1.2 Million) •Employer Paid Member Contributions (EPMC) –Ongoing benefit that will phase out over time –882 Employees in 2019 compared to 757 in 2021 –annual cost –$5.8M •Expect to attrition down to less than $650K by 2040 (-88.8%) City of Bakersfield –Pension Plans City Plan 2021 Actuarial Reports (6/30/19 Measurement Date) PLAN MISCELLANEOUS FIRE POLICE TOTALS ACCRUED LIABILITY $599.9M $305.4M $536.6M $1.44 Billion MARKET VALUE OF ASSETS $422.8M $216.4M $336.9M $976.1M UNFUNDED LIABILITY $177.1M $89.0M $199.7M $465.8M FUNDED RATIO 70.5%70.9%62.8%67.7% ACTIVE /RETIRED MEMBERS 949 / 954 173 / 227 385 / 445 1507 / 1626 CalPERS Pension Outlook Tool – Miscellaneous Plan CalPERS Pension Outlook Tool – Miscellaneous Plan –adjusted to 6.0% 52.5% (2025 rates) 33.3% (2036 rates) 20.8% (2042 rates) 61.8% funded Moving Forward •Hypothetical Termination Liability –option to exit CalPERS –Based on Treasury Yield discounts rate (not plan discount rates) –Between $2.4B and $3.0B •Reduction of Discount Rate –Rolling average is under •Long Range Fiscal Modeling –Projection of CalPERS costs adjusting CalPERS Pension Outlook tool Long Range Pension Cost Estimates •Long Range Financial Model –Consultant Management Partners –Projections out to FY 2040 –Improves on CalPERS Outlook Tool •Builds in multiples scenarios (changes for discount rates and investment returns) •Includes ramp ups for discount rate changes •Includes calculations for vacancies •Includes reduction of EMPC costs Long Range Pension Cost Estimates $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 FY 2036 FY 2037 FY 2038 FY 2039 FY 2040 CalPERS Projection -by Cost Segment FY 2022 thru 2040 (7% Discount Rate / 7% Inv Return) Total-Normal Cost Total-City Pickup Total-UAL (3) 59.9M 78.2M 69.2M 59.6M 52.8M 75.0M Long Range Pension Cost Estimates $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 FY 2036 FY 2037 FY 2038 FY 2039 FY 2040 CalPERS Projection -by Cost Segment FY 2022 thru 2040 (7% Discount Rate / 7% Inv Return) Police Fire Miscellaneous 78.2M 59.9M 52.8M Long Range Pension Cost Estimates $0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 FY 2036 FY 2037 FY 2038 FY 2039 FY 2040 CalPERS Projection -by Cost Segment FY 2022 thru 2040 (6.0% Discount Rate / 6.5% Inv Return) Total-Normal Cost Total-City Pickup Total-UAL (3) 59.9M 82.4M 100.9M 112.2M 86.6M 102.7M Long Range Pension Cost Estimates $0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 FY 2036 FY 2037 FY 2038 FY 2039 FY 2040 CalPERS Projection -by Cost Segment FY 2022 thru 2040 (6.0% Discount Rate / 6.5% Inv Return) Police Fire Miscellaneous 112.2M 59.9M 86.6M Long Range Pension Cost Estimates $0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 FY 2036 FY 2037 FY 2038 FY 2039 FY 2040 CalPERS Projection -by Cost Segment FY 2022 thru 2040 (6.0% Discount Rate / 5% Inv Return) Total-Normal Cost Total-City Pickup Total-UAL (3) 59.9M 83.3M 105.9M107.7M 126.2M 120.1M Long Range Pension Cost Estimates $0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 FY 2036 FY 2037 FY 2038 FY 2039 FY 2040 CalPERS Projection -by Cost Segment FY 2022 thru 2040 (6.0% Discount Rate / 5% Inv Return) Police Fire Miscellaneous 105.9M 126.2M 59.9M Other Pension Plan Options •Section 115 Trust –Pension Rate Stabilization Fund –Part of the plan approved by the City Council in 2019 –Provides flexibility to City -locally controlled –Targeting mid-year FY 22 for initial funding •Pension Obligation Bonds –Significant increases in issuances by local governments –Interest rate consideration –“Resets” UAL calc –Assumes interest rate remains below CalPERS rate for UAL Retiree Medical Liability (OPEB) •City subsidizes medical premium costs for retirees –Based on years of service and type of plans •All receive 3% x Year of service of lowest single premium •Most also receive 42% subsidy of PPO premium •Program was closed to new employees in 2006 •The 42% subsidy was closed to new employees: –In 1996 for misc. employees -1998 for police / fire •There are 757 retirees currently receiving benefit •There are about 513 active employees that may be eligible upon retirement OPEB Funded Status $4,853,695 $16,400,695 $34,383,140 $50,722,418 $58,775,463 $66,455,251 $79,590,814 $87,988,281 $113,395,000 $113,609,784 $103,754,477 $110,400,975 $131,784,739 $140,014,779 $143,707,623 $129,471,089 $116,103,123 $108,541,305 $97,209,089 $69,371,337 $59,678,557 $73,009,276 $73,559,528 $56,438,596 $28,114,842 $- $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000 $160,000,000 June 2007 June 2008 June 2009 June 2010 June 2011 June 2012 June 2013 June 2014 June 2015 June 2016 June 2017 June 2018 June 2019 June 2020 June 2021 OPEB Liability vs. Trust Fund Balance (The dotted line is the "unfunded" portion) As of December 31, 2020 Trust Fund Balance Total OPEB Liability Net OPEB Liability Trust Balance –$88.2 Million (March 2021) –76.0% Funded OPEB Trust - self funded by 2037 CalPERS & OPEB Update QUESTIONS