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.
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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
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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