HomeMy WebLinkAboutAGENDA REPORT 2015 0121 CCSA REG ITEM 09B ITEM 9.B.
CITY OF MOORPARK,CALIF();i IA
City Council Meeting
MOORPARK CITY COUNCIL �� m /®
AGENDA REPORT ACTIO , !MI&
1 ..-.
415
TO: Honorable City CouncilEY:^,
FROM: Ron Ahlers, Finance Director !:
DATE: December 31, 2014 (City Council Meeting of January 21, 2015)
SUBJECT: Consider Resolution Amending the Fiscal Year 2014-15 Budget to
Appropriate Funding to Pay Down the City's California Public
Employee Retirement System (CaIPERS) Pension Plan Unfunded
Liability
BACKGROUND
The City contracts with the California Public Employees Retirement System (CaIPERS)
to provide pension benefits to City employees. CaIPERS recently released the actuarial
report for June 30, 2013 for the City of Moorpark. The report details the City's unfunded
liability for pensions at $4,486,070. Staff contacted the actuary at CaIPERS to discuss
paying off the unfunded liability. Due to the large investment return in fiscal year (FY)
2013-14 and actuarial assumption changes at CaIPERS, the actuary calculated the
current unfunded liability to be about $3.6 million for the City. Staff is requesting the
City Council consider paying down the unfunded liability in the pension system by
making a contribution of $3.6 million to CaIPERS.
The City's pension plan is currently funded at 81%. By way of comparison, the table
below shows the funded status of other government plans as of June 30, 2013.
Ca1PERS Camarillo 71 %
State of CA 66 % Fillmore 77 %
Public Agencies 71 % Moorpark 81 %
School Districts 76 % Oxnard 76 %
Port Hueneme 74 %
Santa Paula 72 %
Simi Valley 72 %
Thousand Oaks 75 %
Ventura County 79 % Ventura 79 %
42
Honorable City Council
January 21, 2015
Page 2
DISCUSSION
CalPERS has changed how they will collect the pension contributions beginning in FY
2015-16. The employee pension contribution remains at 7% of pay for "classic"
members. The employer rate for FY 2015-16 is split into two parts: normal cost,
expressed as a percentage of pay; and unfunded liability, expressed as a dollar amount.
In total, the pension contribution will experience an increase of less than 0.7% of pay.
The FY 2014-15 employer rate is 11.032% of pay, while for FY 2015-16 the rate is
estimated to be 11.706% (my computation). The City's "pensionable compensation" is
approximately $5.1 million; therefore the City expects to pay $596,987 for FY 2015-16;
an increase of about $34,000 from FY 2014-15. The increase for the General Fund is
about $25,000 while other funds are $9,000.
Funded Status
As of June 30, 2013, the funded status of the City's pension plan using the market value
of assets is 81 %. The normal accrued liability is $23.7 million; market value of assets is
$19.2 million; therefore an unfunded liability of $4.5 million. Ideally, the plan should be
100% funded. The recent changes in funding mechanisms at CalPERS should move us
forward to 100% funding, albeit in 30 years. As discussed later in this report, staff is
recommending that the current unfunded liability be paid off using reserve funds.
Employer Normal Cost
The employer normal cost has increased by 0.179% of pay, from 7.824% in FY 2014-15
to 8.003% for FY 2015-16. CalPERS expects the normal cost to increase to 8.3% in FY
2016-17 and remain at 8.3% for the ensuing five years. The City cannot prepay the
normal cost contributions. CalPERS now requires the City to pay the normal cost with
each payroll. This has been our practice for the past four years.
Unfunded Liability
The total unfunded liability for the City's pension plan is $4,486,070 as of June 30,
2013. The FY 2015-16 CalPERS required minimum contribution to pay down this
unfunded liability is expressed as a dollar amount and not as a percentage of pay. The
minimum contribution amount is $188,834, payable in equal installments of $15,736
each payday. The City has the option to prepay the unfunded liability contribution
amount at $182,128 in July 2015; saving $6,706 in FY 2015-16. CalPERS now requires
the City to pay the unfunded liability in dollars, not as a percent of pay.
Changes since the June 30, 2013 actuarial report
CalPERS recorded investment earnings of 18.4% in FY 2013-14; therefore the
unfunded liability has decreased since June 30, 2013 since the actual investment
returns of 18.4% is greater than the assumption of 7.5%.
In FY 2016-17, CalPERS will implement the new mortality rates which will increase the
unfunded liability substantially. The new mortality table reflects that both males and
43
Honorable City Council
January 21, 2015
Page 3
females are living longer lives and that our lifespans are actually increasing with each
succeeding generation. The CalPERS pension is paid every month for the lifetime of
the employee and the spouse.
Even if the current unfunded liability is paid, the City could have an unfunded liability in
the future based on unknown and unpredictable events such as: CalPERS investment
losses, changes in demographic assumptions, changes in City employee demographics
and other events.
Staff requested the City's actuary at CalPERS to calculate a current updated figure for
the unfunded liability. The CalPERS board made a significant change in the pooling
structures this past year. The City belongs to the "miscellaneous pool"; which is
composed of all public agencies with less than 100 non-safety employees. The City can
now pay off this unfunded liability in full or in part. For example, the City could pay
CalPERS the total unfunded liability of $4,486,070 based on the June 30, 2013
valuation. However, much has transpired since June 2013 and we need to factor in the
investment gains and the mortality assumption changes. The CalPERS actuary has
performed those calculations. The investment gain for FY 2013-14 is about $2.1 million.
The mortality assumption change is about a $1.1 million loss. There were also other
gains and losses which reduced the unfunded liability to $3,673,000. The CalPERS
actuary states that this is a "rough" estimate. Because of the eighteen month lag
between the actuarial valuation date (June 30, 2013) and the contributions, the
CalPERS actuary made the following suggestion: pay $3,600,000 now. This will lower
the unfunded liability contribution for FY 2015-16 from $188,834 to about $37,000. The
$37,000 can be fully paid in July 2015. These two payments should effectively pay off
the entire, current unfunded liability to CalPERS.
The table below shows the unfunded liability contributions required by CalPERS over
the next six years (page 18 of actuarial report). If the City completely pays off the
unfunded liability, then the City will not have to pay these unfunded liability contributions
in the future. Over the next six years the City would save $1,682,049. The General
Fund savings is about $1,262,000 and all the other funds is about $420,000. The return
calculation is based on the City paying off the total unfunded liability of $3,600,000.
44
Honorable City Council
January 21, 2015
Page 4
Unfunded Liability Contributions
Year Annual Cumulative
2015-16 $151,834 $151,834
2016-17 $ 227,920 $ 379,754
2017-18 $ 269,183 $ 648,937
2018-19 $ 312,716 $ 961,653
2019-20 $ 358,619 $ 1,320,272
2020-21 $ 361,777 $ 1,682,049
Return
Annual Cumulative
4.2% 4.2%
6.3% 10.5%
7.5% 18.0%
8.7% 26.7%
10.0% 36.7%
10.0% 46.7%
Note: Assumes Ca/PERS meets all their actuarial and investment assumptions.
RISK
The main risk to the payoff is the investment return assumption by CalPERS of 7.5%.
So, staff feels confident any future unfunded liabilities would be demographic. With the
contribution of $3,600,000, plus investment earnings, the City's market value of assets
is estimated to increase to $29.2 million as of June 30, 2015. If there is a significant
decrease in the investment markets, similar to 2007-09, then the City could be facing
the same unfunded liability in the millions of dollars in the future. However, the City is
currently earning 1.5% on the investment portfolio, which is significantly less than that
earned by CalPERS, once CalPERS investment structure have been revised.
PEP RA
The Public Employees' Pension Reform Act of 2013 (PEPRA) requires all "new"
employees to contribute one-half of the normal costs. The City currently has two "new"
employees, who currently contribute 6.25% of pay. The City contributes 6.25%, which
equates to a total contribution of 12.5%. There is no unfunded liability for the City's
"new" employees.
Conclusion
Each year CalPERS will produce an actuarial report for the City's pension plan. The
report will show either a shortfall (unfunded liability) or a surplus (excess reserves).
Each year the City can decide to pay off any unfunded liability, if one develops.
FISCAL IMPACT
The $3,600,000 in appropriation will pay down the City's pension plan unfunded liability.
The cost to the General Fund is $2,892,546; which would entail a transfer from the
Special Projects Fund. This is about 11 % of the current Special Projects Fund balance.
The cost to the other funds is $707,454. The City can contribute about $37,000 in FY
2015-16 to eliminate the remaining unfunded liability.
45
Honorable City Council
January 21, 2015
Page 5
The savings to the budget in FY 2015-16 is about $114,000 for the General Fund and
$38,000 for all other funds. Total savings of about $152,000 in FY 2015-16. Over the
next six years the General Fund projected savings is about $1,262,000 and all the other
funds is about $420,000.
STAFF RECOMMENDATION (Roll Call Vote)
Adopt Resolution No. 2015-___ _
Attachment:
1. Resolution No. 2015-
2. CalPERS -Miscellaneous Plan of the City of Moorpark, Annual Valuation Report
as of June 30, 2013
46
Attachment 1
RESOLUTION NO. 2015 ---
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
MOORPARK, CALIFORNIA, AMENDING THE FISCAL YEAR
2014-15 BUDGET TO APPROVE CERTAIN
APPROPRIATIONS REQUIRED TO PAY DOWN THE CITY'S
CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM
(CALPERS) PENSION PLAN UNFUNDED LIABILITY
WHEREAS, on June 18, 2014, the City Council adopted the Budget for fiscal year
2014-15; and
WHEREAS, on January 21, 2015, a staff report has been presented to the City
Council discussing the City's pension plan and providing the cost to pay down the City's
CalPERS pension plan unfunded liability by $3,600,000; and
WHEREAS, on January 21, 2015 a staff report has been presented to the City
Council requesting an aggregate appropriation increase of $3,600,000; and
WHEREAS, Exhibit "A", attached hereto and made a part hereof, describes said
budget amendments and its resultant impacts to the budget line item(s).
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK DOES
HEREBY RESOLVE AS FOLLOWS:
SECTION 1. That a Budget Amendment in the aggregate increase of
$3,600,000, as more particularly described in Exhibit "A", is hereby approved.
SECTION 2. The City Clerk shall certify to the adoption of this resolution and
shall cause a certified resolution to be filed in the book of original resolutions.
PASSED AND ADOPTED this 21 51 day of January, 2015.
Janice S. Parvin, Mayor
ATIEST:
Maureen Benson, City Clerk
Attachment: Exhibit 'A': Budget Appropriation
47
Resolution No. 2015---
Exhibit A
Budget Amendment to
General Fund and Other Funds
To Pay Down the City's Pension Plan Unfunded Liability
FY 2014/15
A. Fund Allocation to pay down pension unfunded liability
Fund Account Amount
1 ODO-General Fund 1000-5500 $ 2,112,770
1010-Library Fund 1010-5500 $ 29,319
2000-Traffic Safety Fund 2000-5500 $ 46,085
2001-Traffic System Mgt Fund 2001-5500 $ 13,059
2003-Crossing Guard Fund 2003-5500 $ 4,242
2151-Art in Public Places 2151-5500 $ 3,218
2200-Community Development Fund 2200-5500 $412,385
2201-City Affordable Housing Fund 2201-5500 $ 98,214
2300-LLMD 2300-5500 $ 6,262
2301-LLMD 2301-5500 $ 919
2302-LLMD 2302-5500 $ 2,409
2303-LLMD 2303-5500 $ 61
2304-LLMD 2304-5500 $ 328
2305-LLMD 2305-5500 $ 3, 194
2306-LLMD 2306-5500 $ 12
2307-LLMD 2307-5500 $ 518
2308-LLMD 2308-5500 $ 919
2309-LLMD 2309-5500 $ 263
2310-LLMD 2310-5500 $ 13,820
2311-LLMD 2311-5500 $ 61
2312-LLMD 2312-5500 $ 8,039
2314-LLMD 2314-5500 $ 194
48
Resolution No. 2015---
Fund Account Amount
2315-LLMD 2315-5500 $ 6,076
2316-LLMD 2316-5500 $ 263
2318-LLMD 2318-5500 $ 328
2320-LLMD 2320-5500 $ 16,690
2321-LLMD 2321-5500 $ 138
2322-LLMD 2322-5500 $ 39,584
2400-Park Maintenance Fund 2400-5500 $ 265,704
2603-Local Transportation 8A Fund 2603-5500 $ 162,956
2605-Gas Tax Fund 2605-5500 $ 115,645
2620-Engineering/PW Fund 2620-5500 $ 89;345
2800-Endowment Fund 2800-5500 $41,831
5000-Local Transit Programs 8C Fund 5000-5500 $ 48,741
5001-Solid Waste AB939 Fund 5001-5500 $ 56,408
TOTAL $ 3,600,000
8. Distribution of Appropriation to Expenditure Accounts
Account Number Current Revision Amended
Budget Budget
1000-1100-0000-9013 $ 6,788 $ 33,912 $ 40,700
1000-2100-0000-9013 $ 55,832 $ 226,003 $ 281,835
1000-2210-0000-9013 $ 9,376 $ 37,953 $ 47,329
1000-2411-0000-9013 $ 27,501 $111,321 $ 138,822
1000-3100-0000-9013 $ 39,791 $161,070 $ 200,861
1000-3110-0000-9013 $44,197 $ 178,905 $ 223,102
1000-3120-0000-9013 $ 51,580 $ 208,791 $ 260,371
1000-3160-0000-9013 $ 17,539 $ 70,996 $ 88,535
1000-5110-0000-9013 $ 88,864 $ 359,713 $ 448,577
1000-6100-0000-9013 $ 8,380 $ 33,921 $ 42,301
1000-7100-0000-9013 $ 13,268 $ 53,708 $ 66,976 -
49
Resolution No. 2015---
Account Number Current Revision Amended
Budget Budget
1000-7210-0000-9013 $ 12,995 $ 52,603 $ 65,598
1000-7210-7210-9013 $ 16,638 $ 67,349 $ 83,987
1000-7610-0000-9013 $ 26,283 $ 106,391 $ 132,674
1000-7620-0000-9013 $ 25,669 $ 103,906 $ 129,575
1000-7630-0000-9013 $ 56,594 $ 229,087 $ 285,681
1000-8100-0000-9013 $ 15,250 $ 61,731 $ 76,981
1000-8320-0000-9013 $ 3,807 $ 15,410 $ 19,217
1010-7640-0000-9013 $ 7,243 $ 29,319 $ 36,562
2000-8210-0000-9013 $ 4,015 $ 16,252 $ 20,267
2000-8310-0000-9013 $ 524 $ 2, 121 $ 2,645
2000-8330-0000-9013 $ 6,846 $ 27,712 $ 34,558
2001-7620-0000-9013 $ 3,226 $ 13,059 $ 16,285
2003-8210-0000-9013 $ 1,048 $ 4,242 $ 5,290
2151-2100-0000-9013 $ 795 $ 3,218 $ 4,013
2200-6100-0000-9013 $14,715 $ 59,565 $ 74,280
2200-6430-0000-9013 $ 19,032 $ 77,040 $ 96,072
2200-6440-0000-9013 $ 68, 129 $ 275,780 $ 343,909
2201-2430-0000-9013 $ 16,967 $ 68,681 $ 85,648
2201-6430-0000-9013 $ 3,264 $13,212 $ 16,476
2201-7620-0000-9013 $ 4,032 $ 16,321 $ 20,353
2300-7900-7901-9013 $ 1,547 $ 6,262 $ 7,809
2301-7900-7901-9013 $ 227 $ 919 $ 1, 146
2302-7900-7901-9013 $ 541 $ 2, 190 $ 2,731
2302-8320-8902-9013 $ 54 $ 219 $ 273
2303-7900-7901-9013 $ 15 $ 61 $ 76
2304-7900-7901-9013 $ 81 $ 328 $ 409
2305-7900-7901-9013 $ 735 $ 2,975 $ 3,710
2305-8320-8902-9013 $ 54 $ 219 $ 273
2306-7900-7901-9013 $3 $ 12 $ 15
50
Resolution No. 2015---
Account Number Current Revision Amended
Budget Budget
2307-7900-7901-9013 $ 128 $ 518 $ 646
2308-7900-7901-9013 $ 227 $ 919 $ 1, 146
2309-7900-7901-9013 $ 65 $ 263 $ 328
2310-7900-7901-9013 $ 2,770 $11,213 $ 13,983
2310-8320-8902-9013 $ 644 $ 2,607 $ 3,251
2311-7900-7901-9013 $ 15 $ 61 $ 76
2312-7900-7901-9013 $ 1,986 $ 8,039 $ 10,025
2314-7900-7901-9013 $ 48 $ 194 $ 242
2315-7900-7901-9013 $ 1,501 $ 6,076 $ 7,577
2316-7900-7901-9013 $ 65 $ 263 $ 328
2318-7900-7901-9013 $ 81 $ 328 $ 409
2320-7900-7901-9013 $ 4, 123 $ 16,690 $ 20,813
2321-7900-7901-9013 $ 34 $ 138 $ 172
2322-7900-7901-9013 $ 9,779 $ 39,584 $ 49,363
2400-7800-0000-9013 $ 65,640 $ 265,704 $ 331,344
2603-8310-0000-9013 $ 40,257 $ 162,956 $ 203,213
2605-8310-0000-9013 $ 28,569 $ 115,645 $ 144,214
2620-8410-0000-9013 $ 22,072 $ 89,345 $ 111 ,417
2800-2100-0000-9013 $ 10,334 $41,831 $ 52, 165
5000-8510-0000-9013 $ 12,041 $ 48,741 $ 60,782
5001-3140-3003-9013 $ 13,935 $ 56,408 $ 70,343
TOTAL $ 889,349 $ 3,600,000 $ 4,489,349
51
Resolution No. 2015---
C. Fund Allocation for Transfers
Fund Account Amount
4004-Special Projects Fund 4004-5500 $ 2,892,546
1000-General Fund 1000-5500 ($ 2,112,770)
2200-Community Development Fund 2200-5500 ($ 412,385)
2300-LLMD 2300-5500 ($ 6,262)
2301-LLMD 2301-5500 ($ 919)
2303-LLMD 2303-5500 ($ 61)
2305-LLMD 2305-5500 ($ 3, 194)
2306-LLMD 2306-5500 ($ 12)
2307-LLMD 2307-5500 ($ 518)
2308-LLMD 2308-5500 ($ 919)
2309-LLMD 2309-5500 ($ 263)
2314-LLMD 2314-5500 ($ 194)
2400-Park Maintenance Fund 2400-5500 ($ 265,704)
2620-Engineering/PW Fund 2620-5500 ($ 89,345)
TOTAL $0
D. Distribution of Appropriation to Expenditure Accounts for Transfers
Account Number Current Revision Amended
Budqet Budget
4004-9820 $0 $ 2,892,546 $ 2,892,546
1000-6100-0000-9820 $ 778,725 $ 412,385 $1,191,110
1000-7800-0000-9820 $ 1,521,775 $ 265,704 $ 1,787,479
1000-7900-0000-9820 $ 107,510 $ 6,080 $ 113,590
1000-8900-0000-9820 $ 16,463 $ 6,262 $ 22,725
1000-8410-0000-9820 $ 78,881 $ 89,345 $ 168,226
TOTAL $ 2,503,354 $ 3,672,322 $ 6,175,676
52
Resolution No. 2015---
E. Distribution of Appropriation to Revenue Accounts for Transfers
Account Number Current Revision Amended
Budqet Budget
1000-3720 $0 $ 2,892,546 $ 2,892,546
2200-3720 $ 778,725 $ 412,385 $ 1, 191, 110
2300-3720 $161,294 $ 6,262 $ 167,556
2301-3720 $ 5,233 $ 919 $ 6,152
2303-3720 $ 766 $ 61 $ 827
2305-3720 $ 37,590 $ 3,194 $ 40,784
2306-3720 $ 574 $ 12 $ 586
2307-3720 $ 3,837 $ 518 $ 4,355
2308-3720 $ 9,508 $ 919 $ 10,427
2309-3720 $ 3,605 $ 263 $ 3,868
2314-3720 $ 1,566 $ 194 $ 1,760
2400-3720 $ 1,521,775 $ 265,704 $ 1,787,479
2620-3720 $ 78,881 $ 89,345 $ 168,226
TOTAL $ 2,603,354 $ 3,672,322 $ 6,275,676
Finance Approval: ~ ~
53
A
Cal PERS
October 2014
California Public Employees' Retirement System
Actuarial Office
P.O. Box 942709
Sacramento, CA 94229-2709
TTY: (916) 795-3240
(888) 225-7377 phone-(916) 795-2744 fax
www.calpers.ca.gov
MISCELLANEOUS PLAN OF THE CITY OF MOORPARK
(CalPERS ID: 4690157978)
Annual Valuation Report as of June 30, 2013
Dear Employer,
ATTACHMENT 2
As an attachment to this letter, you will find a copy of the June 30, 2013 actuarial valuation
report of your pension plan. Because this plan is in a risk pool and the calPERS Board approved
structural changes to risk pooling on May 21, 2014 you will notice some changes between your
last actuarial report and this one. An overview of the changes to pooling is provided below and
we urge you to carefully review the information provided in this report.
Because this plan is in a risk pool, the following valuation report has been separated into two
Sections:
• Section 1 contains specific information for your plan, including the development of your
pooled employer contributions and projected employer contributions, and
• Section 2 contains the Risk Pool Actuarial Valuation appropriate to your plan, as of June
30, 2013.
Section 2 can be found on the calPERS website at (www.calpers.ca.gov) then select in order
"Employers", "Actuarial, Risk Pooling & GASB 27 Information", "Risk Pooling", ''Risk Pool Annual
Valuation Reports", then select the appropriate pool report.
Your 2013 actuarial valuation report contains important actuarial information about your
pension plan at calPERS. Your CalPERS staff actuary, whose signature appears in the Actuarial
Certification Section on page 1, is available to discuss your report with you after October 31,
2014.
Future Contribution Rates
Fiscal
Year
2015-16
2016-17 (projected)
Employer Normal
Cost Rate
8.003%
8.3%
+ Employer Payment of
Unfunded Liability
$ 188,834
$ 227,920
The exhibit above displays the Minimum Employer Contributions, before any cost sharing, for
2015-16 along with estimates of the contributions for 2016-17. The estimated contributions for
2016-17 are based on· a projection of the most recent information we have available, including
an estimated 18.0 percent investment return for fiscal 2013-14, the impact of the new
amortization methods adopted by the calPERS Board in April 2013 that will impact employer
rates for the first time in 2015-16 and new actuarial assumptions adopted by the calPERS
Board in February 2014 that will impact rates for the first time in 2016-17. These new
demographic assumptions include a 20-year projected improvement in mortality.
54
MISCELLANEOUS PLAN OF THE CTTY OF MOORPARK
(CalPERS ID: 4690157978)
Annual Valuation Report as of June 30, 2013
Page 2
A projection of employer contributions beyond 2016-17 can be found in the Risk Analysis
Section of this report, "Analysis of Future Investment Return Scenarios", under a variety of
investment return scenarios. Please disregard any projections provided to you in the past.
Member contributions, other than cost sharing (whether paid by the employer or the
employee), are in addition to the above amounts. The employer contributions in this report do
not reflect any cost sharing arrangements you may have with your employees.
The estimate for 2016-17 also assumes that there are no future contract amendments and no
liability gains or losses (such as larger than expected pay increases, more retirements than
expected, etc.) This is a very important assumption because these gains and losses do occur
and can have a significant effect on your contributions. Even for the largest plans or pools, such
gains and losses can impact the employer's contribution rate by one or two percent of payroll or
even more in some less common circumstances. These gains and losses cannot be predicted in
advance so the projected employer contributions are estimates. Your actual employer
contributions for 2016-17 will be provided in next year's valuation report.
Changes since the Prior Year's Valuation
On April 17, 2013, the calPERS Board of Administration approved a recommendation to change
the calPERS amortization and rate smoothing policies. Beginning with the June 30, 2013
valuations that set the 2015-16 rates, calPERS will employ an amortization and smoothing
policy that will pay for all gains and losses over a fixed 30-year period with the increases or
decreases in the rate spread directly over a 5-year period. The impact of this new actuarial
methodology is reflected in the "Analysis of Future Investment Return Scenarios" subsection of
the "Risk Analysis" section of your report.
On January 1, 2013, the Public Employees' Pension Reform Act of 2013 (PEPRA) took effect. In
addition to creating new retirement formulas for newly hired members PEPRA also effectively
closed all existing active risk pools to new employees. As such it is no longer appropriate to
assume that the payroll of the risk pools for the classic formulas will continue to grow at 3
percent annually. Funding the promised pension benefits as a percentage of payroll would lead
to the underfunding of the plans. In addition the current allocation of the existing unfunded
liabilities based on payroll would create equity issues for employers within the risk pools.
Furthermore the declining payroll of the classic formula risk pools will lead to unacceptable
levels of employer rate volatility.
In order to address these issues the calPERS Board of Administration approved at their May 21,
2014 meeting structural changes to the risk pools. All pooled plans will be combined into two
active pools, one for all miscellaneous groups and one for all safety groups, effective with the
2013 valuations. By combining the pools this way the payroll of the risk pools and the
employers within the pools can once again be expected to increase at the assumed 3 percent
annual growth. However two important changes are being made which will affect employers.
1. Beginning with FY 2015-16 calPERS will collect employer contributions toward your
unfunded liability and side fund as dollar amounts instead of the prior method of a
contribution rate. This change will address the funding issue that would still arise from
the declining population of classic formula members. Although employers will be
invoiced at the beginning of the fiscal year for their unfunded liability and side fund
55
MISCELLANEOUS PLAN OF THE QTY OF MOORPARK
(calPERS ID: 4690157978)
Annual Valuation Report as of June 30, 2013
Page 3
payments the plan's normal cost contribution will continue to be collected as a
percentage of payroll.
2. The pool's unfunded liability will be allocated to each individual plan based on the plan's
total liability rather than by plan individual payroll. This will allow employers to track
their own unfunded liability and pay it down faster if they choose. The change in the
allocation of unfunded liabilities will result in some employers paying more towards their
unfunded liability and some paying less.
On January 1, 2013, the Public Employees' Pension Reform Act of 2013 (PEPRA) took effect.
The impact of the PEPRA changes are included in the rates and the benefit provision listings of
the June 30, 2013 valuation for the 2015-16 rates. For more information on PEPRA, please refer
to the calPERS website.
In 2014 calPERS completed a 2-year asset liability management study incorporating actuarial
assumptions and strategic asset allocation. On February 19, 2014 the calPERS Board of
Administration adopted relatively modest changes to the current asset allocation that will
reduce the expected volatility of returns. The adopted asset allocation is expected to have a
long-term blended return that continues to support a discount rate assumption of 7.5 percent.
The Board also approved several changes to the demographic assumptions that more closely
align with actual experience. The most significant of these is mortality improvement to
acknowledge the greater life expectancies we are seeing in our membership and expected
continued improvements. The new actuarial assumptions will be used to set the FY 2016-17
contribution rates for public agency employers. The increase in liability due to new actuarial
assumptions will be calculated in the 2014 actuarial valuation and will be amortized over a 20-
year period with a 5-year ramp-up/ramp-down in accordance with Board policy.
Besides the above noted changes, there may also be changes specific to your plan such as
contract amendments and funding changes.
Further descriptions of general changes are included in the ''Highlights and Executive Summary"
section and in Appendix A, ''Statement of Actuarial Data, Methods and Assumptions" of your
section 2 report. We understand that you might have a number of questions about these
results. While we are very interested in discussing these results with your agency, in the
interest of allowing us to give every public agency their result, we ask that, you wait until after
October 31 to contact us with actuarial related questions.
If you have other questions, please call our customer contact center at (888) calPERS or (888-
225-7377).
Sincerely,
;JLj$-__
ALAN MILLIGAN
Chief Actuary
56
THIS PAGE
INTENTIONALLY
LEFT BLANK
57
A
CalPERS
ACTUARIAL VALUATION
as of lune 30, 2013
for the
MISCELLANEOUS PLAN
of the
CITY OF MOORPARK
(CalPERS ID: 4690157978)
REQUIRED CONTRIBUTIONS
FOR FISCAL YEAR
July 1, 2015 -lune 30, 2016
58
THIS PAGE
INTENTIONALLY
LEFT BLANK
59
TABLE OF CONTENTS
SECTION 1 -PLAN SPECIFIC INFORMATION
SECTION 2 -RISK POOL ACTUARIAL VALUATION INFORMATION
60
THIS PAGE
INTENTIONALLY
LEFT BLANK
61
Section 1
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Plan Specific Information
for the
MISCELLANEOUS PLAN
of the
CITY OF MOORPARK
(CalPERS ID: 4690157978)
(Rate Plan: 1460)
(CY) FIN PROCESS CONTROL ID: 434555 (PY) FIN PROCESS CONTROL ID: 422049 REPORT ID: 79573
62
THIS PAGE
INTENTIONALLY
LEFT BLANK
63
TABLE OF CONTENTS
ACTUARIAL CERTIFICATION
HIGHLIGHTS AND EXECUTIVE SUMMARY
• INTRODUCTION
• PURPOSE OF SECTION 1
• REQUIRED EMPLOYER CONTRIBUTION
• PLAN'S FUNDED STATUS
• PRo.JECTED CONTRIBUTIONS
ASSETS AND LIABILITIES
1
5
6
7
8
8
• DEVELOPMENT OF PLAN'S SHARE OF POOL'S UAL 11
o DEVELOPMENT OF PLAN'S SHARE OF POOL'S MVA 11
o SCHEDULE OF PLAN'S SIDE FUND & OTHER AMORTIZATION BASES 12
• ALTERNATE AMORTIZATION SCHEDULES 13
• FUNDING HISTORY 14
• PLAN'S TOTAL NORMAL COST RATE 14
RISK ANALYSIS
• VOLATILITY RATIOS
• PRo.JECTED EMPLOYER CONTRIBUTIONS
• ANALYSIS OF FUTURE INVESTMENT RETURN SCENARIOS
• ANALYSIS OF DISCOUNT RATE SENSITIVITY
• HYPOTHETICAL TERMINATION LIABILITY
PARTICIPANT DATA
LIST OF CLASS 1 BENEFIT PROVISIONS
INFORMATION FOR COMPLIANCE WITH GASB STATEMENT NO. 27
PLAN'S MAJOR BENEFIT OPTIONS
17
18
18
19
20
21
21
22
25
64
THIS PAGE
INTENTIONALLY
LEFT BLANK
65
CALPERS ACTUARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF TI-IE CTTY OF MOORPARK
calPERS ID: 4690157978
ACTUARIAL CERTIFICATION
Section 1 of this report is based on the member and financial data contained in our records as of June 30, 2013
which was provided by your agency and the benefit provisions under your contract with calPERS. Section 2 of
this report is based on the member and financial data as of June 30, 2013 provided by employers participating
in the SAFETY risk pool to which your plan belongs and benefit provisions under the calPERS contracts for
those agencies.
As set forth in Section 2 of this report, the Pool Actuary has certified that, in their opinion, the valuation of the
Risk Pool containing your MISCELLANEOUS PLAN has been performed in accordance with generally accepted
actuarial principles consistent with standards of practice prescribed by the Actuarial Standards Board, and that
the assumptions and methods are internally consistent and reasonable for the Risk Pool as of the date of this
valuation and as prescribed by the calPERS Board of Administration according to provisions set forth in the
califomia Public Employees' Retirement Law.
Having relied upon the information set forth in Section 2 of this report and based on the census and benefit
provision information for your plan, it is my opinion as your Plan Actuary that the Side Fund and other
Unfunded Accrued Liability bases as of June 30, 2013 and employer contribution rate as of July 1, 2015, have
been properly and accurately determined in accordance with the principles and standards stated above.
The undersigned is an actuary for calPERS, who is a member of both the American Academy of Actuaries and
Society of Actuaries and meets the Qualification Standards of the American Academy of Actuaries to render the
actuarial opinion contained herein.
~--J
KERRY J. WORGAN, MAAA, FSA, FCIA
Senior Pension Actuary, calPERS
Plan Actuary
Rate Plan belonging to the Miscellaneous Risk Pool Page 1
66
THIS PAGE
INTENTIONALLY
LEFT BLANK
67
HIGHLIGHTS AND EXECUTIVE SUMMARY
• INTRODUCTION
• PURPOSE OF SECTION 1
• REQUIRED EMPLOYER CONTRIBUTION
• PLAN'S FUNDED STATUS
• PROJECTED CONTRIBUTIONS
68
THIS PAGE
INTENTIONALLY
LEFT BLANK
69
CALPERS AcnJARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE CTIY OF MOORPARK
CalPERS ID: 4690157978
Introduction
This report presents the results of the June 30, 2013 actuarial valuation of the MISCELLANEOUS PLAN of the
CTIY OF MOORPARK of the California Public Employees' Retirement System (CalPERS). This actuarial
valuation was used to set the 2015-16 required employer contribution rates.
On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the CalPERS
amortization and rate smoothing policies. Beginning with the June 30, 2013 valuations that set the 2015-16
rates, CalPERS will employ an amortization and smoothing policy that will pay for all gains and losses over a
fixed 30-year period with the increases or decreases in the rate spread directly over a 5-year period. The
impact of this new actuarial methodology is reflected in the ''Analysis of Future Investment Return
Scenarios' subsection of the "Risk Analysis" section of your report.
On January 1, 2013, the Public Employees' Pension Reform Act of 2013 {PEPRA) took effect. In addition to
creating new retirement formulas for newly hired members PEPRA also effectively closed all existing active
risk pools to new employees. As such it is no longer appropriate to assume that the payroll of the risk pools
for the classic formulas will continue to grow at 3 percent annually. Funding the promised pension benefits
as a percentage of payroll would lead to the underfunding of the plans. In addition the current allocation of
the existing unfunded liabilities based on payroll would create equity issues for employers within the risk
pools. Furthermore the declining payroll of the classic formula risk pools will lead to unacceptable levels of
employer rate volatility.
In order to address these issues the CalPERS Board of Administration approved at their May 21, 2014
meeting structural changes to the risk pools. All pooled plans will be combined into two active pools, one for
all miscellaneous groups and one for all safety groups, effective with the 2013 valuations. By combining the
pools this way the payroll of the risk pools and the employers within the pools can once again be expected
to increase at the assumed 3 percent annual growth. However two important changes are being made
which will affect employers.
1. Beginning with FY 2015-16 CalPERS will collect employer contributions toward your unfunded
liability and side fund as dollar amounts instead of the prior method of a contribution rate. This
change will address the funding issue that would still arise from the declining population of classic
formula members. Although employers will be invoiced at the beginning of the fiscal year for their
unfunded liability and side fund payments the plan's normal cost contribution will continue to be
collected as a percentage of payroll.
2. The pool's unfunded liability will be allocated to each individual plan based on the plan's total
liability rather than by the plan's individual payroll. This will allow employers to track their own
unfunded liability and pay it down faster if they choose. The change in the allocation of unfunded
liabilities will result in some employers paying more towards their unfunded liability and some
paying less.
The impact of most of the PEPRA changes will first show up in the rates and the benefit provision listings of
the June 30, 2013 valuation that sets the contribution rates for the 2015-16 fiscal year. For more detailed
information on changes due to PEPRA, please refer to the CalPERS website.
In 2014 CalPERS completed a 2-year asset liability management study incorporating actuarial assumptions
and strategic asset allocation. On February 19, 2014 the CalPERS Board of Administration adopted relatively
modest changes to the current asset allocation that will reduce the expected volatility of returns (see
Appendix). The adopted asset allocation is expected to have a long-term blended return that continues to
support a discount rate assumption of 7.5 percent. The Board also approved several changes to the
demographic assumptions that more closely align with actual experience. The most significant of these is
mortality improvement to acknowledge the greater life expectancies we are seeing in our membership and
expected continued improvements. The new actuarial assumptions will be used to set the FY 2016-17
contribution rates for public agency employers. The increase in liability due to new actuarial assumptions
will be calculated in the 2014 actuarial valuation and will be amortized over a 20-year period with a 5-year
ramp-up/ramp-down in accordance with Board policy.
Rate Plan belonging to the Miscellaneous Risk Pool Page 5
70
CALPERS ACTUARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE QTY OF MOORPARK.
CalPERS ID: 4690157978
Purpose of Section 1
This section 1 report for the MISCELLANEOUS PLAN of the QTY OF MOORPARK of the California Public
Employees' Retirement System (CalPERS) was prepared by the Plan Actuary in order to:
• Set forth the assets and accrued liabilities of this plan as of June 30, 2013;
• Detennine the required employer contribution for this plan for the fiscal year July 1, 2015 through June
30, 2016;
• Provide actuarial infonnation as of June 30, 2013 to the CalPERS Board of Administration and other
interested parties; and
• Provide pension infonnation as of June 30, 2013 to be used in financial reports subject to Governmental
Accounting Standards Board (GASS) Statement Number 27 for a Cost Sharing Multiple Employer
Defined Benefit Pension Plan.
The use of this report for any other purposes may be inappropriate. In particular, this report does not
contain infonnation applicable to alternative benefit costs. The employer should contact their actuary before
disseminating any portion of this report for any reason that is not explicitly described above.
california Actuarial Advisory Panel Recommendations
This report includes all the basic disclosure elements as described in the Model Disclosure Elements for
Actuarial Valuation Reports recommended in 2011 by the California Actuarial Advisory Panel (CAAP), with
the exception of including the original base amounts of the various components of the unfunded liability in
the Schedule of Amortization Bases shown on page 12.
Additionally, this report indudes the following "Enhanced Risk Disclosures" also recommended by the CAAP
in the Model Disclosure Elements document:
• A "Deterministic Stress Test," projecting future results under different investment income
scenarios
• A "Sensitivity Analysis," showing the impact on current valuation results using a 1 percent plus or
· minus change in the discount rate.
Rate Plan belonging to the Miscellaneous Risk Pool Page 6
71
CALPERS ACTUARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE CITY OF MOORPARK
CalPERS ID: 4690157978
Required Employer Contribution
Actuarially Determined Employer Contributions:
Employer Contributions (in Projected Dollars)
Plan's Employer Normal Cost
Plan's Payment on Amortization Bases
Surcharge for Class 1 Benefits3
None
Phase out of Normal Cost Difference4
Amortization of Side Fund
Total Employer Contribution
Projected Payroll for the Contribution Fiscal Year
Required Employer Contributions (Percentage of Payroll)
Plan's Net Employer Normal Cost
Plan's Payment on Amortization Bases
Surcharge for Class 1 Benefits3
None
Phase out of Normal Cost Difference4
Amortization of Side Fund
Total Employer Contribution Rate
Required Employer Contribution for FY 2015-16
Employer Contribution Rate5
Plus Monthly Employer Dollar UAL Payment6
Annual Lump Sum Prepayment Option
$
$
$
Fiscal Year
2014-151
419,694
172,083
0
0
0
591,777
5,364,186
7.824%
3.208%
0.000%
0.000%
0.000%
11.032%
$
$
$
$
$
Fiscal Year
2015-16
431,708
188,834 2
0
0
0
620,542
5,394,321
8.003%
3.501%2
0.000%
0.000%
0.000%
11.504%
8.003%
15,736
182,128
For FY 2015-16 the total minimum required employer contribution is the sum of the Plan's Employer
Contribution Rate (expressed as a percentage of payroll) plus the Employer Unfunded Accrued Liability
(UAL} Contribution Amount (in dollars). Whereas in prior years it was possible to prepay total employer
contributions for the fiscal year, beginning with FY 2015-16 and beyond, only the UAL portion of the
employer contribution can be prepaid.
1 lhe results shown for FY 2014-15 reflect the prior year valuation and do not reflect any lump sum payment, side fund
payoff or rate adjustment made after annual valuation report is completed.
2 For FY 2015-16 the Plan's Payment on Amortization Bases reflects the sum of all UAL amortization bases induding the
Plan's Side Fund (where applicable).
3 Section 2 of this report contains a list of Gass 1 benefits and corresponding surcharges for each benefit.
4 Risk pooling was implemented for most plans as of June 30, 2003. The normal cost difference was scheduled to be
phased out over a five year period. The phase out of normal cost difference is 100 percent for the first year of pooling,
and is incrementally reduced by 20 percent of the original normal cost difference for each subsequent year.
5 The minimum employer contribution under PEPRA is the greater of the required employer contribution or the total
employer normal cost.
6 The Plan's Payment on Amortization Bases Contribution amount for FY 2015-16 will be billed as a level dollar amount
monthly over the course of the year. Late payments will accrue interest at an annual rate of 7.5 percent. Lump sum
payments may be made through mylCalPERS. Plan Normal Cost contributions will be made as part of the payroll
reporting process. As a percentage of payroll your UAL contribution is 3.501 percent.
Rate Plan belonging to the Miscellaneous Risk Pool Page 7
72
CALPERS ACTIJARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE CTTY OF MOORPARK
calPERS ID: 4690157978
Plan's Funded Status
1. Present Value of Projected Benefits (PVB)
2. Entry Age Normal Accrued Liability
3. Plan's Market Value of Assets (MVA)
4. Unfunded Liability [(2) -(3)]
5. Funded Ratio [{3) / (2)]
Projected Contributions
$
June 30, 2012 June 30, 2013
27,237,621 $ 29,073,709
21,855,414 23,722,988
16,821,769 19,236,918
5,033,645 4,486,070
77.0% 81.1%
The contribution rate and amount shown below is an estimate for the employer contribution for fiscal year
2016-17. The estimated contribution is based on a projection of the most recent information we have
available, including an estimate of the investment return for fiscal year 2013-14, namely 18.0 percent. It
also reflects implementation of the direct rate smoothing method and the impact of new actuarial
assumptions.
Projected Employer Contribution Rate:
Projected Plan UAL Contribution $
8.3%
227,920
The estimate also assumes that there are no liability gains or losses among the plans in your risk pool, that
your plan has no new amendments in the next year, and that your plan's and your risk pool's payrolls both
increase exactly 3.0 percent in the 2013-14 fiscal year. Therefore, the projected employer contribution for
2016-17 is strictly an estimate. Your actual rate for 2016-17 will be provided in next year's valuation report.
A more detailed analysis of your projected employer contributions over the next five years can be found in
the "Risk Analysis" section of this report.
Rate Plan belonging to the Miscellaneous Risk Pool Page 8
73
ASSETS AND LIABILITIES
• DEVELOPMENT OF PLAN'S SHARE OF POOL'S UAL
o DEVELOPMENT OF PLAN'S SHARE OF POOL'S MVA
• SCHEDULE OF PLAN'S SIDE FUND & OTHER AMORTIZATION BASES
• ALTERNATIVE AMORTIZATION SCHEDULES
• FUNDING HISTORY
• PLAN'S TOTAL NORMAL COST RATE
74
THIS PAGE
INTENTIONALLY
LEFT BLANK
75
CALPERS ACTUARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE QTY OF MOORPARK
CalPERS ID: 4690157978
Development of the Plan's Share of Pool's
Unfunded Accrued Liability
It is the policy of the CalPERS to ensure equity within the risk pools by allocating the pool's unfunded
accrued liability in a manner that treats each employer fairly and that maintains benefit security for the
members of the System while minimizing substantial variations in employer contributions. Commencing with
the June 30, 2013 actuarial valuation~ and for purposes of allocating the pool's unfunded accrued liability to
all the individual plans within the pool, an individual plan's total unfunded accrued liability (Preliminary Plan
UAL) on a specific valuation date will be set equal to the sum of the outstanding unamortized balances on
the valuation date for the following:
a) Side Fund
b) Plan's share of Pool UAL due to benefit changes (including golden handshakes) provided to the
members of that plan
c) Plan's share of the Pool UAL created before the valuation date for reasons other than benefit
changes
1. Plan's Accrued Liability
2. Plan's Side Fund
3. Increase in Plan's AL for amendments in FY 2012-13
4. Pool's Accrued Liability
5. Sum of Pool's Individual Plan Side Funds
6. Increase in Pool's AL for amendments in FY 2012-13
7. Pre-2013 Pool's UAL
8. Plan's Share of Pre-2013 Pool's UAL [{l}-(2)-(3)]/[(4}-{5)-(6)] * (7)
9. Pool's 2013 Investment & Asset (Gain)/Loss
10. Pool's 2013 Other (Gain)/Loss
11. Plan's Share of Pool's Asset (Gain)/Loss [{l}-(2)-{3}]/[{4}-(5)-(6)] * (9)
12. Plan's Share of Pool's Other (Gain)/Loss [{l)]/[(4)] * (10)
13. Plan's UAL as of 6/30/2013 [(2}+(8}+(11)+{12)]
$
$
$
$
$
23,722,988
0
52,553
4,434,848,248
108,339,918
409,907
371,706,237
2,033,807
442,846,571
(4,364,079)
2,423,054
(23,344)
4,486,070
Development of the Plan's Share of Pool's Market
Value of Assets
1. Plan's Accrued Liability
2. Plan's UAL
3. Plan's Share of Pool's MVA {1)-(2)
Rate Plan belonging to the Miscellaneous Risk Pool
$
$
$
23,722,988
4,486,070
19,236,918
Page 11
76
CALPERS AcnJARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE CTTY OF MOORPARK
(alPERS ID: 4690157978
Schedule of Plan's Side Fund and Other Amortization Bases
There is a two-year lag between the Valuation Date and the Contribution Fiscal Year.
The assets, liabilities and funded status of the plan are measured as of the valuation date; June 30, 2013.
The employer contribution determined by the valuation is for the fiscal year beginning two years after the valuation date; fiscal year 2015-16.
This two-year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and due to the need to provide public agencies
with their employer contribution well in advance of the start of the fiscal year.
The Unfunded Liability is used to determine the employer contribution and therefore must be rolled forward two years from the valuation date to the first day of the
fiscal year for which the contribution is being determined. The Unfunded Liability is rolled forward each year by subtracting the expected Payment on the Unfunded
Liability for the fiscal year and adjusting for interest. The Expected Payment on the Unfunded Liability for a fiscal year is equal to the Expected Employer
Contribution for the fiscal year minus the Expected Normal Cost for the year. The Employer Contribution Rate for the first fiscal year is determined by the actuarial
valuation two years ago and the rate for the second year is from the actuarial valuation one year ago. The Normal Cost Rate for each of the two fiscal years is
assumed to be the same as the rate determined by the current valuation. All expected dollar amounts, with the exception of the Side Fund base, are determined by
multiplying the rate by the expected payroll for the applicable fiscal year, based on payroll as of the valuation date.
Amaunts fOr Fiscal 2015-16
Amorti-Expected Expected Scheduled Payment as
Date zation Balance Payment Balance Payment Balance Payment fOr Pen:ienlage of
Reason tor ease Established Period 6/30/13 2013-14___ 6/30/14 2014-15 6/30/15 2015-16 Payroll
SIDE ~-----------.Q§L_~B _____ _Q_ _____________ _jQ_ _______ _jQ___ 0 __jQ___ $0 $0 0.000%
_SHARE OF PRE-2013 PQQl,JJ~L __ 06/30LQ. ____________ _?f__ ____ $2,033,807 __________ m~,§Cl4 _____ g,D.§Z,519 __________ .$.!?~861 $2,040,246 $145,243 2.693%
ASSET (GAIN)/LOSS . __________ 06/30/l_L_ ____ . ··---~---·--····-------~2,423,054 _ _ __ ______ JQ _________ $2,604,783 _______ Hj()___ _ --~,142 _______ $]2,384 ~~-_
!lQ!!.:~LC§!-!~Q?~ __ __Q§l}.QL!L_ 30 ______ _j(23,344)_ _jQ___ ___M,~ ______ H ______ jQ_ __$(26,977L ______ $(379) ____ {_0.007%) __ _
_ GOLDEN HAf'!DSHAKE ____ __06/3_0/J] _______ --~---------~-~53 ____________ !Q ______ ~~----------1()__ _____ $60,731 -----~~---0~5% ___ _
_ JQ:rAL ___________________________ ···········----------_____ _!4~70 ______ t!~,6~----$4,703,701 ____!!!_~~----~,874,142 $188,834 3.501%
Commencing with the June 30, 2013 actuarial valuations, the side fund will be treated as a liability as opposed tD an asset. Prior'tD June 30, 2013, a
positive side fund conveyed that a public agency had a surplus when risk pooling began June 30, 2003. Conversely, a negative side fund signified
that a public agency had an unfunded liability that required elimination through an amortization payment schedule. After lune 30, 2013 a positive
side fund will signify that an agency has an unfunded liability while a negative side fund will indicate a surplus asset. The amortization schedule will
remain unc:hanged, with the exception that a plan with a negative side fund may have its amortization period extended at the discretion of the plan
actuary.
Your plan's allocated share of the risk's pool's unfunded accrued liability is based on your plan's accrued liability and is amortized over the average amortization period of
the combined existing amortization bases prior to June 30, 2013. The payments on this base for Fiscal Year 2013-14 and 2014-15 are allocated by your plan's payroll.
The (gain)/loss base is your plan's allocated share of the risk pool's asset gain/loss for the Fiscal Year 2012-13, the change in unfunded atcrued liability due to direct
rate smoothing and your plan's allocated share of the risk pool's other liability gains and losses for fiscal year 2012-13. This base will be amortized according to
Board policy over 30 years with a 5-year ramp-up.
Rate Plan belonging to the Miscellaneous Risk Pool Page 12
77
CALPERS ACTUARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE GTY OF MOORPARK
(alPERS ID: 4690157978
Alternate Amortization Schedules
The amortization schedule shown on the previous page shows the minimum contributions required according to
calPERS amortization policy. There has been considerable interest from many agencies in paying off these
unfunded accrued liabilities sooner and the possible savings in doing so. As a result, we have provided alternate
amortization schedules to help analyze your current amortization schedule and illustrate the advantages of
accelerating unfunded liability payments towards your plan's unfunded liability of $4,874,142 as of June 30, 2015,
which will require total payments of $12,542,086.
Shown below are the level rate payments required to amortize your plan's unfunded liability assuming a fresh
start over the various periods noted. Note that the payments under each scenario would increase by 3 percent for
each year into the future.
Level Rate
Period 2015-16 Total Total Savings Payment Payments Interest
25 $ 322,154 $ 11,745,498 $ 6,871,356 $ 796,588
20 $ 368,024 $ 9,888,943 $ 5,014,801 $ 2,653,143
Current calPERS Board policy calls for lump sum contributions in excess of the required employer contribution
shall first be used to eliminate the side fund, if applicable, and then the plan's share of the pool's unfunded
accrued liability.
Please contact your plan actuary before making such a payment to ensure that the payment is applied correctly.
Rate Plan belonging to the Miscellaneous Risk Pool Page 13
78
CALPERS ACTUARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE QTY OF MOORPARK
calPERS ID: 4690157978
Funding History
The Funding History below shows the actuarial accrued liability, the plan's share of the pool's market value of
assets, plan's share of the pool's unfunded liability, funded ratio and the annual. covered payroll.
Valuation Accrued Share of Pool's Plan's Share of Funded Annual
Date Liability Market Value of Pool's Unfunded Ratio Covered
(AL) Assets (MVA) Liability Payroll
06/30/2011 $ 20,711,269 $ 16,903,108 $ 3,808,161 81.6% $ 4,861,780
06/30/2012 21,855,414 16,821,769 5,033,645 77.0% 4,908,990
06/30/2013 23,722,988 19,236,918 4,486,070 81.1% 4,936,568
Plan's Total Normal Cost Rate
The Public Employees' Pension Reform Act of 2013 requires that new employees pay at least 50 percent of the
total annual normal cost and that current employees approach the same goal through collective bargaining.
Please refer to the calPERS website for more details.
Shown below are the total annual normal cost rates for your plan.
Plan's Net Total Normal Cost Rate for 2% @ 55
Surcharge for Class 1 Benefits
None
Plan's Total Normal Cost Rate
Rate Plan belonging to the Miscellaneous Risk Pool
Fiscal Year
2014-15
14.711%
0.000%
14.711%
Fiscal Year
2015-16
14.894%
0.000%
14.894%
Page 14
79
RISK ANALYSIS
• VOLATILITY RATIOS
• PROJECTED EMPLOYER CONTRIBUTIONS
• ANALYSIS OF FUTURE INVESTMENT RETURN SCENARIOS
• ANALYSIS OF DISCOUNT RATE SENSITIVITY
• HYPOTHETICAL TERMINATION LIABILITY
80
THIS PAGE
INTENTIONALLY
LEFT BLANK
81
CALPERS ACTUARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE CTTY OF MOORPARK
CalPERS ID: 4690157978
Volatility Ratios
The actuarial calculations supplied in this communication are based on a number of assumptions about very
long-term demographic and economic behavior. Unless these assumptions (terminations, deaths,
disabilities, retirements, salary growth, and investment return) are exactly realized each year, there will be
differences on a year~to-year basis. The year-to-year differences between actual experience and the
assumptions are called actuarial gains and losses and serve to lower or raise the employer's rates from one
year to the next. Therefore, the rates will inevitably fluctuate, especially due to the ups and downs of
investment returns.
Asset Volatility Ratio (AYR)
Plans that have higher asset to payroll ratios produce more volatile employer rates due to investment
return. For example, a plan with an asset to payroll ratio of 8 may experience twice the contribution
volatility due to investment return volatility, than a plan with an asset to payroll ratio of 4. Below we have
shown your asset volatility ratio, a measure of the plan's current rate volatility. It should be noted that this
ratio is a measure of the current situation. It increases over time but generally tends to stabilize as the plan
matures.
Liability Volatility Ratio (LVR)
Plans that have higher liability to payroll ratios produce more volatile employer rates due to investment
return and changes in liability. For example, a plan with a liability to payroll ratio of 8 is expected to have
twice the contribution volatility of a plan with a liability to payroll ratio of 4. The liability volatility ratio is also
included in the table below. It should be noted that this ratio indicates a longer-term potential for
contribution volatility and the asset volatility ratio, described above, will tend to move closer to this ratio as
the plan matures.
Rate Volatility
1. Market Value of Assets
2. Payroll
3. Asset Volatility Ratio (AVR = 1. / 2.)
4. Accrued Liability
5. Liability Volatility Ratio (LVR = 4. / 2.)
Rate Plan belonging to the Miscellaneous Risk Pool
$
$
As of June 30, 2013
19,236,918
4,936,568
3.9
23,722,988
4.8
Page 17
82
CALPERS ACTlJARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF lHE CTTY OF MOORPARK
(.alPERS ID: 4690157978
Projected Employer Contributions
The estimated rate for 2016-17 is based on a projection of the most recent information we have available,
induding an estimated 18.0 percent investment return for fiscal 2013-14, the impact of the new smoothing
methods adopted by the c.alPERS Board in April 2013 that will impact employer rates for the first time in 2015-
16 and new actuarial assumptions adopted by the CalPERS Board in February 2014. These new demographic
assumptions indude a 20-year projected improvement in mortality. A complete listing of the new demographic
assumptions to be implemented with the June 30, 2014 annual actuarial valuation and incorporated in the
projected rates for FY 2016-17 and beyond can be found on the (.alPERS website at: http://www.calpers.ca.gov
/eip-docs/about/pubs/employer/actuarial-assumptions.xls
The table below shows projected employer contribution rates (before cost sharing) for the next five Fiscal
Years, assuming ca/PERS earns 18.0% for fiscal year 2013-14 and 7.SO percent every fiscal year
thereafter, and assuming that all other actuarial assumptions will be realized and that no further changes to
assumptions, contributions, benefits, or funding will occur between now and the beginning of the fiscal year
2016-17.
New Rate Projected Future Employer Contribution Rates
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Normal Cost %: 8.003% 8.3% 8.3% 8.3% 8.3% 8.3%
UAL$ $ 188 834 $ 227,920 $ 269183 $ 312 716 $ 358 619 $ 361,777
Analysis of Future Investment Return Scenarios
In 2014 c.alPERS completed a 2-year asset liability management study incorporating actuarial assumptions and
strategic asset allocation. On February 19, 2014 the calPERS Board of Administration adopted relatively modest
changes to the current asset allocation that will reduce the expected volatility of returns. The adopted asset
allocation is expected to have a long-term blended return that continues to support a discount rate assumption
of 7.5 percent. The newly adopted asset allocation has a lower expected investment volatility that will result in
better risk characteristics than an equivalent margin for adverse deviation. The current asset allocation has an
expected standard deviation of 12.45 percent while the newly adopted asset allocation has a lower expected
standard deviation of 11. 76 percent.
The investment return for fiscal year 2013-14 was announced July 14, 2014. The investment return in fiscal
year 2013-14 is 18.42 percent before administrative expenses. This year, there will be no adjustment for real
estate and private equities. For purposes of projecting future employer rates, we are assuming a 18.0 percent
investment return for fiscal year 2013-14.
The investment return realized during a fiscal year first affects the contribution rate for the fiscal year 2 years
later. Specifically, the investment return for 2013-14 will first be reflected in the June 30, 2014 actuarial
valuation that will be used to set the 2016-17 employer contribution rates, the 2014-15 investment return will
first be reflected in the June 30, 2015 actuarial valuation that will be used to set the 2017-18 ernployer
contribution rates and so forth.
Based on a 18.0 percent investment return for fiscal year 2013-14, the April 17, 2013 c.alPERS Board-approved
amortization and rate smoothing method change, the February 18, 2014 new demographic assumptions
including 20-year mortality improvement using Scale BB and assuming that all other actuarial assumptions will
be realized, and that no further changes to assumptions, contributions, benefits, or funding will occur between
now and the beginning of the fiscal year 2016-17, the effect on the 2016-17 Employer Rate is as follows:
Normal Cost O/o:
UAL$
Estimated 2016-17
Employer Contribution
8.3%
$ 227,920
Rate Plan belonging to the Miscellaneous Risk Pool
Estimated Inaease in
Employer Contribution between
2015-16 and 2016-17
0.3%
$ 39,086
Page 18
83
CALPERS ACTUARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE CITY OF MOORPARK
CalPERS ID: 4690157978
As part of this report, a sensitivity analysis was performed to determine the effects of various investment
returns during fiscal years 2014-15, 2015-16 and 2016-17 on the 2017-18, 2018-19 and 2019-20 employer
rates. Once again, the projected rate increases assume that all other actuarial assumptions will be realized and
that no further changes to assumptions, contributions, benefits, or funding will occur.
Five different investment return scenarios were selected.
o The first scenario is what one would expect if the markets were to give us a 5th percentile return from
July 1, 2014 through June 30, 2017. The stti percentile return corresponds to a -3.8 percent return for
each of the 2014-15, 2015-16 and 2016-17 fiscal years.
• The second scenario is what one would expect if the markets were to give us a 25th percentile return
from July 1, 2014 through June 30, 2017. The 25th percentile return corresponds to a 2.8 percent
return for each of the 2014-15, 2015-16 and 2016-17 fiscal years.
o The third scenario assumed the return for 2014-15, 2015-16, 2016-17 would be our assumed 7.5
percent investment return which represents about a 49th percentile event.
• The fourth scenario is what one would expect if the markets were to give us a 75th percentile return
from July 1, 2014 through June 30, 2017. The 75th percentile return corresponds to a 12.0 percent
return for each of the 2014-15, 2015-16 and 2016-17 fiscal years.
• Finally, the last scenario is what one would expect if the markets were to give us a 95t11 percentile
return from July 1, 2014 through June 30, 2017. The 95t11 percentile return corresponds to a 18.9
percent return for each of the 2014-15, 2015-16 and 2016-17 fiscal years.
The table below shows the estimated projected contribution rates and the estimated increases for your plan
under the five different scenarios.
2014-17 Investment
Return Scenario
-3.8%
2.8%
7.5%
12.0% 75th
18.9% 95th
Estimated Employer UAL Contribution
2017-18 2018-19 2019-20
309 927 435 383
286 131 364 860
269 183 312 716
252 954 261 292
228 066 0
Estimated Total
Change in Employer
UAL Contribution
between 2016-17
and 2019-20
377 051
237 690
130 699
21984
227 920
In addition to the UAL Contribution amounts shown above the estimated employer normal cost of 8.3% of
payroll will also be payable in each of the fiscal years shown above. The projected plan normal cost is expected
to remain relatively stable over this time period.
Analysis of Discount Rate Sensitivity
The following analysis looks at the 2015-16 employer contributions under two different discount rate scenarios.
Shown below are the employer contributions assuming discount rates that are 1 percent lower and 1 percent
higher than the current valuation discount rate. This analysis gives an indication of the potential required
employer contribution rates if the PERF were to realize investment returns of 6.50 percent or 8.50 percent over
the long-term.
This type of analysis gives the reader a sense of the long-term risk to the employer contributions.
2015-16 Employer Contribution
As of June 30, 2013 6.500/o Discount Rate 7 .500/o Discount Rate 8.500/o Discount Rate
(-10/o) (assumed rate) (+10/o)
Plan's Emplover Normal Cost 11.4% 8.0% 5.4%
Accrued Liability $ 27159,991 $ 23 722 988 $ 20 882 841
Unfunded Accrued Liability $ 7 923,073 $ 4,486,070 $1645 923
Rate Plan belonging to the Miscellaneous Risk Pool Page 19
84
CALPERS ACTUARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE aTY OF MOORPARK
calPERS ID: 4690157978
Hypothetical Termination Liability
Below is an estimate of the financial position of your plan if you had terminated your contract with calPERS
as of June 30, 2013 using the discount rates shown below. Your plan liability on a termination basis is
calculated differently compared to the plan's ongoing funding liability. For this hypothetical termination
liability both compensation and service is frozen as of the valuation date and no future pay increases or
service accruals are induded. In December 2012, the calPERS Board adopted a more conservative
investment policy and asset allocation strategy for the Terminated Agency Pool. Since the Terminated
Agency Pool has limited funding sources, expected benefit payments are secured by risk-free assets. With
this change, calPERS increased benefit security for members while limiting its funding risk. This asset
allocation has a lower expected rate of return than the PERF. Consequently, the lower discount rate for the
Terminated Agency pool results in higher liabilities for terminated plans.
In order to terminate your plan, you must first contact our Retirement Services Contract Unit to initiate a
Resolution of Intent to Terminate. The completed Resolution will allow your plan actuary to give you a
preliminary termination valuation with a more up-to-date estimate of your plan liabilities. calPERS advises
you to consult with your plan actuary before beginning this process.
Valuation Hypothetical Market Value Unfunded Termination Termination
Date Termination of Assets Termination Funded Liability
Liability1 (MVA) Liability Ratio Discount
Rate2
06/30/2011 $ 29,825,193 $ 16,903,108 $ 12,922,085 56.7% $ 4.82%
06/30/2012 39,820,407 16,821,769 22,998,638 42.2% 2.98%
06/30/2013 37,725,450 19,236,918 18,488,532 51.0% 3.72%
1 The hypothetical liabilities calculated above include a 7 percent mortality load contingency in accordance
with Board policy. Other actuarial assumptions, such as wage and inflation assumptions, can be found in
appendix A.
2 The discount rate assumption used for termination valuations is a weighted average of the 10 and 30-year
US Treasury yields in effect on the valuation date that equal the duration of the pension liabilities. For
purposes of this hypothetical termination liability estimate, the discount rate used, is the yield on the 30-
year US Treasury Separate Trading of Registered Interest and Principal of Securities (STRIPS). Note that as
of June 30, 2014 the 30-year STRIPS rate is 3.55 percent.
Rate Plan belonging to the Miscellaneous Risk Pool Page 20
85
CALPERS ACTUARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE QTY OF MOORPARK
calPERS ID: 4690157978
Participant Data
The table below shows a summary of your plan's member data upon which this valuation is based:
June 30, 2012 lune 30, 2013
Projected Payroll for Contribution Purposes $ 5,364,186 $ 5,394,321
Number of Members
Active 61 60
Transferred 34 30
Separated 38 38
Retired 37 43
List of Class 1 Benefit Provisions
• None
Rate Plan belonging to the Miscellaneous Risk Pool Page 21
86
CALPERS ACTUARIAL VALUATION -June 30, 2013
MISCELLANEOUS PLAN OF THE CTTY OF MOORPARK
calPERS ID: 4690157978
Information for Compliance with GASB Statement No. 27
for Cost-Sharing Multiple-Employer Defined Benefit Plan
Disclosure under GASB 27 follows. However, note that effective for financial statements for
fiscal years beginning after June 15, 2014, GASB 68 replaces GASB 27. Disclosure required
under GASB 68 will require additional reporting. CalPERS is intending to provide GASB 68
disclosure information upon request for an additional fee. We urge you to start discussions
with your auditors on how to implement GASB 68.
Your plan is part of the Miscellaneous Risk Pool, a cost-sharing multiple-employer defined benefit plan. Under
GASB 27, an employer should recognize annual pension expenditures/expense equal to its contractually
required contributions to the plan. Pension liabilities and assets result from the difference between
contributions required and contributions made. The contractually required contribution for the period July 1,
2015 to June 30, 2016 has been determined by an actuarial valuation of the plan as of June 30, 2013. Your
unadjusted mntribution for the indicated period is a normal cost mntribution of 8.003 percent of payroll and
an unfunded accrued liability dollar amount of $188,834. In order to calculate the dollar value of the
contractually required contributions for indusion in financial statements prepared as of June 30, 2016, this
normal cost mntribution rate, less any employee cost sharing, and as modified by any subsequent financing
changes or contract amendments for the year, would be multiplied by the payroll of covered employees that
was actually paid during the period July 1, 2015 to June 30, 2016 combined with the UAL amount of
$188,834. However, if this contribution is fully prepaid in a lump sum, then the dollar value of contractually
required contributions is equal to the lump sum prepayment. The employer and the employer's auditor are
responsible for determining the contractually required contributions. Further, the required contributions in
dollars and the percentage of that amount contributed for the current year and each of the two preceding
years is to be disclosed under GASB 27.
A summary of principal assumptions and methods used to determine the contractually required
contributions is shown below for the cost-sharing multiple-employer defined benefit plan.
Valuation Date
Actuarial Cost Method
Amortization Method
Asset Valuation Method
Actuarial Assumptions
Discount Rate
Projected Salary Increases
Inflation
Payroll Growth
Individual Salary Growth
June 30, 2013
Entry Age Normal Cost Method
Level Percent of Payroll
Market Value
7.50% (net of administrative expenses)
3.30% to 14.20% depending on Age, Service, and type of employment
2.75%
3.00%
A merit scale varying by duration of employment coupled with an
assumed annual inflation growth of 2. 75% and an annual production
growth of 0.25%.
Complete information on assumptions and methods is provided in Appendix A of the Section 2 report.
Appendix B of the Section 2 report contains a description of benefits included in the Risk Pool Actuarial
Valuation.
A Schedule of Funding for the Risk Pool's actuarial value of assets, accrued liability, their relationship, and
the relationship of the unfunded liability (UL) to payroll for the risk pool(s) to which your plan belongs can
be found in Section 2 of the report.
Rate Plan belonging to the Miscellaneous Risk Pool Page 22
87
PLAN'S MAJOR BENEFIT OPTIONS
88
THIS PAGE
INTENTIONALLY
LEFT BLANK
89
Plan's Major Benefit Options
Shown below is a summary of the major Ql1tiQngJ benefits for which your agency has contracted. A description of principal standard and optional plan provisions
is in Appendix B within Section 2 of this report.
Contract package
Receiving Active
Misc
Benefit Provision
Benefit Formula 2.0%@55
Social Security Coverage no
Full/Modified full
Final Average Compensation Period 36 mos.
Sick Leave Credit yes
Non-Industrial Disability standard
Industrial Disability no
Pre-Retirement Death Benefits
Optional Settlem.ent 2W yes
1959 Survivor Benefit Level level 4
Special no
Alternate (firefighters) no
Post-Retirement Death Benefits
Lump Sum $5000 $5000
Survivor Allowance (PRSA) no no
COLA 2% 2%
CalPERS Actuarial Valuation -June 30, 2013 Page 25
Rate Plan belonging to the Miscellaneous Risk Pool
90
Section 2
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
Section 2 may be found on the CalPERS website
(wwwcalpers.ca.gov) then selecting:
• Employers
• Actuarial & GASB 27 Information
• Risk Pooling
• Risk Pool Annual Valuation Report
91