Receive Other Post Employment Benefits (OPEB) Actuarial Report for June 30, 2016 and presentation on options to address pension liability. (No general fund impact) (Newens)

1. Receive Other Post Employment Benefits Actuarial Valuation for June 30, 2016.
    
2. Receive staff presentation on options to stabilize pension funding.

Operational Excellence

Two of the County's significant unfunded liabilities are pension and other post-employment benefits (OPEB).  The Board has taken significant steps to reduce the unfunded liability for OPEB.  Those steps were to cap the amount of premium paid by the County for retiree medical costs and to initiate a pre-funding plan.  The 2016 biannual actuary performed by Bartel and Associates (Attachment A) demonstrates how the Board's action on these two items has significantly reduced this liability from the 2014 liability of $153,091,000 to the 2016 liability of $82,126,000. This 46% reduction is an impressive step toward eliminating the unfunded liability in 15 years.

With a successful plan in place to address OPEB, the next step is to initiate a plan to address the $243,511,563 unfunded pension liability.  Options to address pension liability are more limited than those available for OPEB due to the local control decision-making that drives OPEB.  The chart below highlights the differences between each aspect of the two benefits:
 

Aspect	Pension	OPEB
Degree of obligation	Established by state laws	Established by county ordinance, bargaining unit agreements and practices
Benefits	Defined by laws	Controlled by governing board
Cost control	Through plans established with CalPERS according to laws	Through change to benefits as negotiated with employee groups
Administration	Part of agent multiple employer plan administered by CalPERS	Single employer plan administered by the county
Funding status	County always paid full ADC*	Still ramping up to pay full ADC*
Contributions	County and employees contribute	County contributes; not employees.
Assets	Controlled and invested by CalPERS	In the custody of and invested by trustee under direction of county
Risk control	CalPERS	Shared by county and PARS
Unfunded Accrued Actuarial Liability (UAAL)	Due mostly to investment losses and CalPERS policy changes	Due mostly to insufficient contribution below ADC
Cost recovery	Cost budgeted and charged at FTE level; recoverable from external funding sources.	Cost (including contribution up to ADC) budgeted and charged at FTE level; recoverable from external funding sources.

 
ADC: actuarially determined contribution

Staff have prepared options available to stabilize the funding of the pension liability for Board consideration (Attachment B)

County Administrator's Office