Attachment 21 of
Actuarial Services – Bartel Associates 1st Amendment dated 06-04-19
AMENDMENT TO AGREEMENT
This AMENDMENT TO AGREEMENT is dated for identification this 4th day of June 2019 and
amends that certain agreement for actuarial services dated September 28, 2017, made by and
between the Town of Los Gatos, ("Town,") and Bartel Associates. (“Consultant.”)
RECITALS
A.Town and Consultant entered into an actuarial services Agreement on September 28, 2017,
(“Agreement”), a copy of which is attached hereto and incorporated by reference as Exhibit
A to this Amendment.
AMENDMENT
1.Section 2.6 – Compensation is hereby amended to state that compensation for consultant’s
professional services shall not exceed $117,000.
2.All other terms and conditions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the Town and Consultant have executed this Amendment.
Town of Los Gatos Approved as to Consent:
By: _______________________________ By: ______________________________
Laurel Prevetti, Town Manager John E. Bartel
President
Department Approval:
_______________________________________
Stephen Conway
Finance Director
Approved as to Form: Attest:
______________________________ ______________________________
Robert Schultz, Town Attorney Shelley Neis, CMC, Clerk Administrator
ATTACHMENT 2
MGR 1_ }.20q
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AGREEMENT FOR CONSULTANT SERVICES
THIS AGREEMENT is made and entered into on September 28, 2017 by and between TOWN OF
LOS GATOS, a California municipal corporation, ( "Town ") and Bartel Associates, ( "Consultant "),
whose address is 411 Borel Avenue, Suite 101, San Mateo, CA 94402. This Agreement is made
with reference to the following facts.
I. RECITALS
1.1 The Town desire to engage Consultant to provide actuarial services.
1.2 The Consultant represents and affirms that it is willing to perform the desired work pursuant
to this Agreement.
1.3 Consultant warrants it possesses the distinct professional skills, qualifications, experience,
and resources necessary to timely perform the services described in this Agreement.
Consultant acknowledges Town has relied upon these warranties to retain Consultant.
IL AGREEMENTS
2.1 Scope of Services. Consultant shall provide services as described in that certain Bartel
Associates proposal June 30, 2017 sent to the Town on February 6, 2017; that certain Bartel
Associates proposal for 2017 GASB 68 actuarial information for CalPERS Cost - Sharing
plans sent to the Town on February 22, 2017; and that certain Bartel Associates proposal for
Ca1PERS review sent to the Town on September 12, 2017, all are hereby incorporated by
reference and attached as Exhibit A.
2.2 Term and Time of Performance. This contract will remain in effect from September 28,
2017 to June 30, 2020. Consultant shall perform the services described in this agreement
as described in Exhibit A.
2.3 Compliance with Laws. The Consultant shall comply with all applicable laws, codes,
ordinances, and regulations of governing federal, state and local laws. Consultant
represents and warrants to Town that it has all licenses, permits, qualifications and
approvals of whatsoever nature which are legally required for Consultant to practice its
profession. Consultant shall maintain a Town of Los Gatos business license pursuant to
Chapter 14 of the Code of the Town of Los Gatos.
2.4 Sole Responsibility. Consultant shall be responsible for employing or engaging all persons
necessary to perform the services under this Agreement.
2.5 Int'orntation /Report Handling. All documents furnished to Consultant by the Town and all
reports prepared by the Consultant under this Agreement are the
Town's property and shall be delivered to the Town upon the completion of Consultant's
services or at the Town's written request. All reports, information, data, and exhibits
prepared or assembled by Consultant in connection with the performance of its services
Actuarial Services — Bartel Associates TIC dated 9 -28 -17
Page 1 of 6
EXHIBIT A
pursuant to this Agreement are confidential until released by the Town to the public, and the
Consultant shall not make any of the these documents or information available to any
individual or organization not employed by the Consultant or the Town without the written
consent of the Town before such release. The Town acknowledges that the reports to be
prepared by the Consultant pursuant to this Agreement are for the purpose of evaluating a
defined project, and Town's use of the information contained in the reports prepared by the
Consultant in connection with other projects shall be solely at Town's risk, unless
Consultant expressly consents to such use in writing. Town further agrees that it will not
appropriate any methodology or technique of Consultant which is and has been confirmed
in writing by Consultant to be a trade secret of Consultant.
2.6 Compensation. Compensation for Consultant's professional services shall not exceed
40,300. Payment shall be based upon Town approval of each task.
2.7 Billing. Billing shall be monthly by invoice within thirty (30) days of the rendering of the
service and shall be accompanied by a detailed explanation of the work performed by whom
at what rate and on what date. Also, plans, specifications, documents or other pertinent
materials shall be submitted for Town review, even if only in partial or draft form.
Payment shall be net thirty (30) days. All invoices and statements to the Town shall be
addressed as follows:
Invoices:
Town of Los Gatos
Attn: Accounts Payable
P.O. Box 655
Los Gatos, CA 95031 -0655
2.8 Availability of Records. Consultant shall maintain the records supporting this billing for
not less than three years following completion of the work under this Agreement.
Consultant shall make these records available to authorized personnel of the Town at the
Consultant's offices during business hours upon written request of the Town.
2.9 Assignability and Subcontracting. The services to be performed under this Agreement are
unique and personal to the Consultant. No portion of these services shall be assigned or
subcontracted without the written consent of the Town.
2.10 Independent Contractor. It is understood that the Consultant, in the performance of the
work and services agreed to be performed, shall act as and be an independent contractor and
not an agent or employee of the Town. As an independent contractor he /she shall not obtain
any rights to retirement benefits or other benefits which accrue to Town employee(s). With
prior written consent, the Consultant may perform some obligations under this Agreement
by subcontracting, but may not delegate ultimate responsibility for performance or assign or
transfer interests under this Agreement. Consultant agrees to testify in any litigation brought
regarding the subject of the work to be performed under this Agreement. Consultant shall
be compensated for its costs and expenses in preparing for, traveling to, and testifying in
such matters at its then current hourly rates of compensation, unless such litigation is
Actuarial Services — Bartel Associates LLC dated 9.28 -17
Page 2 of 6
EXHIBIT A
brought by Consultant or is based on allegations of Consultant's negligent performance or
wrongdoing.
2.11 Conflict of Interest. Consultant understands that its professional responsibilities are solely
to the Town. The Consultant has and shall not obtain any holding or interest within the
Town of Los Gatos. Consultant has no business holdings or agreements with any individual
member of the Staff or management of the Town or its representatives nor shall it enter into
any such holdings or agreements. In addition, Consultant warrants that it does not presently
and shall not acquire any direct or indirect interest adverse to those of the Town in the
subject of this Agreement, and it shall immediately disassociate itself from such an interest,
should it discover it has done so and shall, at the Town's sole discretion, divest itself of such
interest. Consultant shall not knowingly and shall take reasonable steps to ensure that it
does not employ a person having such an interest in this performance of this Agreement. If
after employment of a person, Consultant discovers it has employed a person with a direct
or indirect interest that would conflict with its performance of this Agreement, Consultant
shall promptly notify Town of this employment relationship, and shall, at the Town's sole
discretion, sever any such employment relationship.
2.12 Equal Employment Opportunity. Consultant warrants that it is an equal opportunity
employer and shall comply with applicable regulations governing equal employment
opportunity. Neither Consultant nor its subcontractors do and neither shall discriminate
against persons employed or seeking employment with them on the basis of age, sex, color,
race, marital status, sexual orientation, ancestry, physical or mental disability, national
origin, religion, or medical condition, unless based upon a bona fide occupational
qualification pursuant to the California Fair Employment & Housing Act.
III. INSURANCE AND INDEMNIFICATION
3.1 Minimum Scope of Insurance:
Consultant agrees to have and maintain, for the duration of the contract,
General Liability insurance policies insuring him /her and his /her firm to an
amount not less than: one million dollars ($1,000,000) combined single limit
per occurrence for bodily injury, personal injury and property damage.
ii. Consultant agrees to have and maintain for the duration of the contract, an
Automobile Liability insurance policy ensuring him/her and his/her staff to
an amount not less than one million dollars ($1,000,000) combined single
limit per accident for bodily injury and property damage.
iii. Consultant shall provide to the Town all certificates of insurance, with
original endorsements effecting coverage. Consultant agrees that all
certificates and endorsements are to be received and approved by the Town
before work commences.
Actuarial Services — Bartel Associates LLC dated 9 -28 -17
Page 3 of 6
EXHIBIT A
iv. Consultant agrees to have and maintain, for the duration of the contract,
professional liability insurance in amounts not less than $1,000,000 which is
sufficient to insure Consultant for professional errors or omissions in the
performance of the particular scopc of work under this agreement.
General Liability:
The Town, its officers, officials, employees and volunteers are to be covered
as insured as respects: liability arising out of activities performed by or on
behalf of the Consultant; products and completed operations of Consultant,
premises owned or used by the Consultant. This requirement does not apply
to the professional liability insurance required for professional errors and
omissions.
ii. The Consultant's insurance coverage shall be primary insurance as respects
the Town, its officers, officials, employees and volunteers. Any insurance or
self - insurances maintained by the Town, its officers, officials, employees or
volunteers shall be excess of the Consultant's insurance and shall not
contribute with it.
iii. Any failure to comply with reporting provisions of the policies shall not
affect coverage provided to the Town, its officers, officials, employees or
volunteers.
iv. The Consultant's insurance shall apply separately to each insured against
whom a claim is made or suit is brought, except with respect to the limits of
the insurer's liability.
3.2 All Coveraees. Each insurance policy required in this item shall be endorsed to state that
coverage shall not be suspended, voided, cancelled, reduced in coverage or in limits except
after thirty (30) days' prior written notice by certified mail, return receipt requested, has
been given to the Town. Current certification of such insurance shall be kept on file at all
times during the term of this agreement with the Town Clerk.
3.3 Workers' Compensation. In addition to these policies, Consultant shall have and maintain
Workers' Compensation insurance as required by California law and shall provide evidence
of such policy to the Town before beginning services under this Agreement. Further,
Consultant shall ensure that all subcontractors employed by Consultant provide the required
Workers' Compensation insurance for their respective employees.
3.4 Indemnification. The Consultant shall save, keep, hold harmless and indemnify and defend
the Town its officers, agent, employees and volunteers from all damages, liabilities,
penalties, costs, or expenses in law or equity that may at any time arise or be set up because
of damages to property or personal injury received by reason of, or in the course of
Actuarial Services — Bartel Associates LLC dated 9.26.17
Page 4 of 6
EXHIBIT A
performing work which may be occasioned by a willful or negligent act or omissions of the
Consultant, or any of the Consultant's officers, employees, or agents or any sub consultant.
IV. GENERAL TERMS
4.1 Waiver. No failure on the part of either party to exercise any right or remedy hereunder
shall operate as a waiver of any other right or remedy that party may have hereunder, nor
does waiver of a breach or default under this Agreement constitute a continuing waiver of a
subsequent breach of the same or any other provision of this Agreement.
4.2 Governing Law. This Agreement, regardless of where executed, shall be governed by and
construed to the laws of the State of California. Venue for any action regarding this
Agreement shall be in the Superior Court of the County of Santa Clara.
4.3 Termination of Agreement. The Town and the Consultant shall have the right to terminate
this agreement with or without cause by giving not less than fifteen days (15) written notice
of termination. In the event of termination, the Consultant shall deliver to the Town all
plans, files, documents, reports, performed to date by the Consultant. In the event of such
termination, Town shall pay Consultant an amount that bears the same ratio to the
maximum contract price as the work delivered to the Town bears to completed services
contemplated under this Agreement, unless such termination is made for cause, in which
event, compensation, if any, shall be adjusted in light of the particular facts and
circumstances involved in such termination.
4.4 Amendment. No modification, waiver, mutual termination, or amendment of this
Agreement is effective unless made in writing and signed by the Town and the Consultant.
4.5 Dis utes. In any dispute over any aspect of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, including costs of appeal.
4.6 Notices. Any notice required to be given shall be deemed to be duly and properly given if
mailed postage prepaid, and addressed to:
Town of Los Gatos Bartel Associates
Attn: Town Clerk Attn: John Bartel
110 E. Main Street 411 Bore] Avenue Suite 101
Los Gatos, CA 95030 San Mateo, CA 94402
or personally delivered to Consultant to such address or such other address as
Consultant designates in writing to Town.
4.7 Order of Precedence. In the event of any conflict, contradiction, or ambiguity between the
terns and conditions of this Agreement in respect of the Products or Services and any
Actuarial Services — Bartel Associates LLC dated 9. 29.17
Page 5 of 6
EXHIBIT A
attachments to this Agreement, then the terms and conditions of this Agreement shall
prevail over attachments or other writings.
4.8 Entire Agreement. This Agreement, including all Exhibits, constitutes the complete and
exclusive statement of the Agreement between the Town and Consultant. No terms,
conditions, understandings or agreements purporting to modify or vary this Agreement,
unless hereafter made in writing and signed by the party to be bound, shall be binding on
either party.
IN WITNESS WHEREOF, the Town and Consultant have executed this Agreement.
Town of Los Gatos by:
Lau I Prevetti, Town Manager
Recommendo b /y,
f'
Stephet onway, i ce Director
Approved as to Form:
Robert Schultz, Town
Consultant, by:
I — M
John E. Bartel
Actuarial Services — Bartel Associates LLC dated 9 -28 -17
Page 6 of 6
EXHIBIT A
February 6. 2017
Stephen Conway
Finance & Administrative Services Director
Town of Los Gatos
110 E. Main Street
Los Gatos, CA 95030
Re: June 30, 2017 OPEB Actuarial Valuation Proposal & Data Request
Dear Mr. Conway:
Bartel Associates would be pleased to provide actuarial consulting services to the Town of Los Gatos.
This letter summarizes the project scope and our fee estimate for a Jute 30, 2017 actuarial valuation and
related GASBS 75 information for the Town's retiree healthcare plan.
Actuarial Valuation
The last actuarial valuation as of June 30, 2015 provided the Annual Required Contribution for 2016/17
and the Actuarially Determined Contribution for 2017118. (`Actuarially Determined Contribution" is
GASBS 75 terminology for the recommended Town funding contribution.) Tlx: next actuarial valuation
as of June 30, 2017 will provide the Actuarially Determined Contributions for 2018119 and 2019120.
Accounting Changes
GASBS 75 provides new OPEB accounting rules for employers effective for the Town's 2018 fiscal year.
GASBS 75 liability information can be determined as of a measurement date no earlier than the prior
fiscal year -end and can be based on a roll- forward of the results of an actuarial valuation performed no
earlier than 30 months prior to the fiscal year -end.
We suggest using the June 30, 2017 actuarial valuation as the basis for GASBS 75 reporting for the 2018
fiscal year using a measurement date of June 30, 2017 and for the 2019 fiscal year using a measurement
date of June 30, 2018. Note, however, that actuarial valuations may need to be done more frequently
when there are significant changes to participants, plan provisions. or actuarial assumptions. GASBS 75
financial information reports will be provided separately from the actuarial valuation report.
Estimated Fees
Our estimated fees to prepare the June 30, 2017 actuarial valuation, including one meeting with the Town
to review valuation results, and the following two years' GASBS 75 financial information reports, are as
follows:
Praieet Fiscal Year -End Estimated Fee Not -to- Exceed Fee
Actuarial Valuation 6 30%17 18,000 21,000
GASBS 75 Accounting Information 6/3018 3,000 4,000
GASBS 75 Accounting Information 6/30 /19 3,000 4,000
Our GASBS 75 fee estimates assume there will be no changes in the plan provisions or investment policy
since the prior actuarial valuation. Please note below what will be included in the actuarial valuation and
what will require an additional fee. If the Town needs a fixed fee in its contract or purchase order with
414 8oref Av me. Suite 101 -San Mateo Cakiornia 94402
main: 650,377 -1800 • rax 6501 345 -2067 -web 4 barteiassoaataa win
EXHIBIT A
Steven Conway
February 6, 2017
Page 2 (
17)
A)
us, it should include our not -to- exceed fee. We will not bill more than this amount without prior
discussion. Fees might be higher, for example. if the project scope changes or the Town needs additional
work.
Our fee estimate assumes:
We will bill the Town at the following hourly rates:
President 5320
Vice President 270
Assistant Vice President 240
Associate Actuary 190
Senior Actuarial Analyst 170
Actuarial Analyst 140
The Town has trade no changes to its retiree healthcare plan provisions since the last actuarial
valuation as of June 30, 2015. (Please review the benefit summary in our June 30, 2015 valuation
report and let us know of any changes.)
Participant census data requested will be provided completely and accurately in an Excel workbook
with one record per participant.
The Town has followed and not changed its funding policy since the June 30, 2015 actuarial valuation.
Please review the funding policy as stated in the June 30, 2015 valuation report and let us know of
any changes.)
OPEB obligations will be presented with a breakdown by cash subsidy and implied subsidy.
OPEB obligations will be presented for the plan as a whole with no breakdowns by employee groups.
We will include a -gain/loss- analysis showing the reasons for changes in the Actuarial Accrued
Liability and funded status since the last valuation.
We will include a 10 -year projection of the Actuarially Determined Contributions, Unfunded Actuarial
Accrued Liability, and funded status.
We will have one meeting with the Town to review the actuarial valuation results and will provide a
discussion outline for the meeting.
We will provide the actuarial certification, funding policy certification, and Excel valuation
information spreadsheet required by Ca1PERS for agencies funding with CER13T along with a certified
final valuation results outline.
We will provide separate GASBS 75 financial information reports based on the June 30, 2017 actuarial
valuation for the 2018 and 2019 fiscal years.
We will invoice the Town monthly based an time incurred, subject to the above maximum fees,
Our fee estimate may be higher if:
The Town has changed its retiree healthcare plan design since the June 30, 2015 actuarial valuation.
if the Town has made any changes to the retiree healthcare plan provisions since the June 30, 2015
valuation, it should provide us those changes so we can revise our fee estimate, if necessary.)
Participant census data is not complete, accurate, or is not provided in an Excel workbook with one
record per participant.
Results are needed separately for additional employee groups_
Results are needed for alternative actuarial assumptions, contribution policies, or plan designs.
The Town makes any plan provision or investment policy changes between the actuarial valuation date
and the GASBS 75 measurement dates.
411 Bonet Avenue, Suite 14' -San Mateo. C 1ronua 94462
man 650,,377 -WOO -lax 6501345 -8057 - weo. www bartef- associates.com
EXHIBIT A
Steven Conway
February 6, 2017Page3
The Town requests additional meetings, such as a planning meeting, a committee meeting, a meeting
with the Board, or meetings to review the accounting results. Our fee for additional meetings will be
based on our billing rates, the time needed for the meetings, and any additional presentation material.
The Town requests an executive summary.
The Town requests assistance with its OPEB footnote.
The Town decides to make changes that will affect the valuation results after the valuation is begun or
requests additional work after the valuation is completed, including changing plan provisions, actuarial
assumptions, healthcare plan options, funding policy, investment policy, or any of the data provided
for the valuation.
Data Requirements
In order for us to begin the OPEB valuation, please provide:
Written summary of the Town's retiree healthcare plan and other OPEB provisions, including a
description of the Town's contributions for active and retired employees if they have changed since the
June 30, 2015 actuarial valuation. This summary will be used as the basis of retiree healthcare benefits
and other OPEB provided by the Town for the June 30, 2017 actuarial valuation.
Copies of the most recent MOUs for bargained employee groups and agreements for unrepresented
groups if not available on the Town's website.
The Town's 2016 financial statement when available if not on the Town's website.
Total Town pay -as- you -go costs for retiree healthcare benefits for 201-5 16 and 2016/17
Town's active employee healthcare costs for 2016/17 and budgeted active employee healthcare costs
for 201718 and 2018/14, if available.
The Town's most recent CaIPERS health premium invoice, including a list of the Town's contribution
for each active employee and retiree.
All quarterly and annual CERBT trust statements since June 30, 2015 including contributions and
dates made.
Any anticipated changes to the current funding policy.
Active and retired participant data as of the June 30, 201 valuation date in an Excel workbook format.
Active and retired participant information can be provided on separate worksheets.
Active Emulovee Data - name, employee number (not Social Security number), gender, birth date,
hire date, healthcare plan, singlei2- partyifamily coverage, CaIPERS pension plan category
Miscellaneous, Safety), CaIPERS pension plan tier (e.g. 2.50/6@55, 2 %,(a 60, 29/wa62, 3e1 50,
2.7° /oCq 57, etc.), total CaIPERS service including service at other agencies (if available), bargaining
or employee group (including Town Council members, if eligible). OPEB eligibility (e.g., Town
Council members and part-time, seasonal, and temporary employees not eligible for CalPERS may
not be eligible for OPEB), and 2016?17 PERSable compensation.
We request PERSable payroll for the prior fiscal year so the ADC as a percentage of payroll will be
comparable to that provided by CalPERS for the Town's pension plan. The Town can provide a
different amount for payroll, such as base pay, if more convenient, but the ADC as a percentage of
payroll may not be on the same basis as presented by CaIPERS for the pension plan.
Retiree Data - name employee number (not Social Security number), gender, birth date, hire date.
retirement type (service retirement, disability retirement, surviving spouse), retirement date,
healthcare plan, single/2-party-family coverage, bargaining or employee group (including Town
Council members, if eligible), spouse's birth date (if available), portion of monthly premium paid
411 Sorel Avenue, Suite 101 • San Mateo, Calitomla 94402
mar.: 6501377-1600 • lax. 6507$45 -8057 1 web: rr banekmsociates cam
EXHIBIT A
Steven Conway
February 6, 2017
Page 4 j
by the Town, and portion of premium paid by the retiree. Include any retirees or surviving spouses
of retirees who have waived coverage.
CaIPERS PEMHCA Data Extract - We recommend the Town provide the above participant census
data by requesting a copy of its June 30, 2017 CalPERS PEMHCA database. You can obtain this
database by contacting CalPERS at CERBT4U(tfcalpers.ca.gov. If the Town wants us to use the
CaIPERS data extract for the valuation_ it should add_
2016117 PERSabie compensation to each active Nord.
Bargaining unit or employee group to each active and retiree record.
Any employer contribution in excess of that reported by CalPERS to each retiree record.
Employer contribution to any retiree record that shows the retiree waived PEMHCA coverage if
the Town provides a contribution for coverage under a non-PEMHCA healthcare plan.
Please indicate additions or changes to the original data extract, for example, by color. Please send
us both the original data extracts provided by CaIPERS and the files with your changes.
Our fee estimate assumes the Town will merge and reconcile all census data rites and provide one
file with one complete record for each employee and eligible retiree in an Excel workbook. If the
Town needs our help to merge and reconcile data, our fees will be higher.
In order to maintain confidentiality, please do not provide Social Security numbers on any of the
information provided. We will delete any files that include Social Security numbers and request
revised files.
We may need additional data depending on our review of the Town's retiree healthcare plan design.
Timing
Normally, we will need 6 to 8 weeks to complete the actuarial valuation after we receive all the requested
information and the Town replies to any questions we may have after our initial review of the data
provided. The Town should therefore provide the requested data early enough so we can complete the
valuation in time to meet any needs the Town may have for the valuation results.
We look forward to continue working with you and the Town. Please call meat 650 - 377 -1610 with any
questions.
Sincerely,
Joseph R. D'Onoftio, FSA
Actuary
c: Katherine Moore, Bartel Associates, LLC
O:'fliertts!Toum of Lns GatoxProposak,20ITQA f..osGatosYn I T- It1-06 OPGQ 17- tth-} p vatuatim proposal lenr`.ducx
411 Bore! Avenue. State 141 • San Mateo. Catifonua 94442
main: 6W377.16M • tax: 65W345 -W57 •xe6: wa«4+ Uanel-associates =n
UNIONr_1
February 22, 2017
Stephen Conway
Director of Finance
Town of Los Gatos
110 E. Main Street
Los Gatos, CA 95030
Re: 2017 GASES 68 Actuarial Information for CAPERS Cost- Sharing (Risk Pool) Plans
Dear Mr, Conway:
As this past year, Bartel Associates is available to assist the Town of Los Gatos with 6130/2017
GASBS 68 reporting. For our returning clients, we offer reduced pricing this year as well as a more user -
friendly report format — but still containing standard journal entries, reconciliations, and supporting detail.
Based on your participation in the Safety risk pool only, our base fee of S 1,200 includes
Your proportionate share of net pension liability, NPL sensitivity, and deferral amounts
All employer- specific deferrals and associated amortization schedules
Net pension expense
All actuarial amounts required for the note disclosures and RSI
Up to l hour review/discussion of the report with you and/or your auditors.
To complete the report we need:
FY 2017 CalPERS contributions by rate group (available on MyCa1PERS)
FY 2017 covered payroll (available on MyCa1PERS)
Link to your 2016 CAFR or financial statements.
This data won't be available until after June 30, 2017. We expect turnaround for the reports to be 2 -3
weeks after we receive all data. We also can prepare an earlier preliminary report using estimated
amounts for an additional fee. Extra work or schedules not in our standard report are available at an
additional charge.
To authorize us to begin this engagement, please complete the iinformation on the following page or
contact me or Kateryna Doroshenko, actuarial analyst, by email as listed below. We look forward to
assisting you again with this important reporting requirement.
Sincerely,
Mary Beth Redding
Vice President & Actuary
mbreddingQa bartel- associates com; 650/377 -1617
kdoroshenko(aDbartel- associares.com; 650577 -1663
LI:R11111&.l
Stephen Conway n
ll
February 22, 2017
Page 2
I accept Bartel Associates' proposal to prepare GASES 68 information for our CaIPERS cost sharing
plans. Reports will be completed 2 -3 weeks after receipt of your final June 30, 2017 data.
Agency: Town of Los Gatos
Risk Pool Safety risk pool only
Base Fee: $1,200
Additional services requested:
V Preliminary report using estimated data (projected fee $300).
Please provide estimated CaIPERS FY2017 contributions, separately by rate group.
Date preliminary report required
Completion of spreadsheets required by your auditors (projected fee $300).
Allocation of amounts among cost groups. We will need the allocation basis for our calculations.
For a fee quote, please send a sample of the allocation.
Cost sharing allocation inside a CalPERS risk pool plan. We will need the allocation basis for our
calculations. Contact us for a fee quote.
Accepted by:
Signature
Date
Town of Los Gatos
Add ress'EmaillPhone:
EXHIBIT A
September 12, 2017
Stephen Conway
Finance & Administrative Services Director
Town of Los Gatos
110 E. Main Street
Los Gatos, CA 95030
Re: Town of Los Gatos— CaIPERS Review
Dear Mr. Conway:
Bartel Associates would be happy to provide the Town of Los Gatos actuarial consulting services.
Background
The Town participates in CaIPERS, providing
Miscellaneous employees:
Hired before September 15, 2012, the 2.5 % @55 benefit formula
Classic employees hired on or after September 15, 2012, the 2 % @60 benefit formula
For new members hired on or after January 1, 2013, the PEPRA 2.5 % @67 benefit formula (also
referred to as the 2 % @62 benefit formula).
Safety employees:
Hired before January 1, 2013 and classic employees hired on or after January 1, 2013, the
3 % @50 benefit formula
For new members hired on or after January 1, 2013, the PEPRA 2.7 % @57 benefit formula.
Safety group is in a risk pool.
CalPERS made several changes to its funding policy and actuarial assumptions over the last few years:
In April 2013, the CaIPERS Board approved funding policy changes, including new amortization and
smoothing methods, effective for June 30, 2013 valuations. These changes resulted in higher Town
contribution rates phased -in over 5 years starting with 2015/16.
In February 2014, CalPERS completed a new experience study, adopting demographic assumption
changes for June 30, 2014 valuations, which increased Town contribution rates phased -in over 5
years starting with 2016/17.
In December 2016, CalPERS approved a reduction in the discount rate over the next 3 valuations and
suspended the risk mitigation implementation until the June 30, 2018 valuation. The decision was, in
part, based on outside investment advisors' belief that investment returns over the next 10 years will
be 6.2 %, below the 7.5% current assumed return.
Valuation
Date
Discount
Rate
Fiscal Year of
Initial Impact Full Impact
6/30/16 7.375% 18/ 19 22/23
6/30/17 7.25% 19/20 23/24
6/30/18 7.00% 20/21 24/25
In February 2017, in conjunction with the decrease in the discount rate, the CalPERS Board delayed
its risk mitigation policy, originally adopted in November 2015, to begin in 2020 /21. The risk
mitigation policy will result in gradually increasing Town contribution rates over the next 20 or so
years.
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J ICItIF: p'_'i ' -1 o lil • /[d'v [ r3 APeb. ,,0kiricI EXHIBITA
Stephen Conway ff
September 12, 2017 `/ 1
Page 2
We believe the Town would like to understand the impact of CalPERS recent changes. CalPERS
June 30, 2016 actuarial valuation reports released in July provided estimated contribution projections
through 2024/25 including the impact of funding policy changes, assumption changes, and the discount
rate reductions. Our analysis will provide Town contribution rate projections, over a longer period, based
on more current investment returns than CalPERS reports and sensitivity analysis for all of these
CalPERS changes, including the impact of additional pension tiers, enabling the Town to better
understand the cost increases and their volatility. We will explain projected Town contribution rates in
easily understood terms. In addition, we will discuss with the Town the options to pay off each plan's
unfunded liability understanding that any pension plan's unfunded liability can be volatile.
We understand the Town has established or is in the process of setting up a Section 115 supplemental
pension trust and is interested in developing a model to pay down the unfunded liability and mitigate
contribution rate fluctuation.
Project Scope and Fees
Bartel Associates will project CalPERS contribution rates and dollar amounts, including asset return
sensitivity, for each fiscal year through 2028/29 showing the impact of:
PEPRA changes,
CalPERS new contribution policy,
Discount rate changes,
Lower expected investment returns over the next 10 years, and
Investment return volatility.
We will provide a comprehensive review and summary of historical CalPERS actuarial information
including:
Review historical actuarial valuation reports;
Summary of historical information for the Miscellaneous plan:
Participant demographic information,
Contribution rates,
Investment returns, and
Funded status
Review of the options the Town has to pay down the unfunded liability and to establish a rate
stabilization fund
Supplemental Pension Trust: modeling a supplemental pension trust that pays down unfunded
liability and mitigates contribution rate fluctuation
Guide the Town to select target contribution rates
Help the Town to determine the initial contribution and/or subsequent contribution
Analyze the likelihood of the supplemental pension trust being successful over a certain period
by using a stochastic investment return model
One meeting with Town staff to discuss results
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main: hij,- 0weiT.e I. irlc EXHIBITA
Stephen Conway
September 12, 2017
Page 3
The following table summarizes the project options and fee estimates:
i
Project Options Estimated Fees Not To Exceed
CalPERS Review 6,500 7,500
Pension supplemental trust analysis 2,000 2,000
Total 8,500 9,500
Please note:
We will bill the Town at the following hourly rates (however, much of the time for the above project
would be at the Partner level):
Partner 270-$ 320
Assistant Vice President 240
Associate Actuary 190
Senior Actuarial Analyst 170
Actuarial Analyst 140
The above time is estimated and does not include time for:
Executive Summary. The project includes a discussion outline with significant detail. This
document is not meant to be a stand -alone explanation of results that the Town should give to
Council. An Executive Summary is a stand -alone report summarizing results. Our fees to
prepare an Executive Summary will be approximately $2,000.
More than 1 meeting. Additional meetings (e.g. additional Council and/or bargaining group
meetings) will increase the above time by actual meeting and preparation time. If no
additional work is necessary, then fees will be $1,000 to $1,250 for an additional meeting.
Hourly rates include provision for miscellaneous expenses.
Data
To complete our review, please provide:
We have some old reports from prior projects and already downloaded reports from June 30, 2013
through 2016 from CalPERS website. We would need the Miscellaneous and Safety actuarial reports
from June 30, 2003 through June 30, 2012.
Please advise if the Town pays Employer Paid Member Contributions (EPMC) for classic members
or if the Town has any employee cost sharing arrangements in addition to the statuary member
contributions. If so, please provide us the details.
If the Town issued any Pension Obligation Bonds (POBs), please provide us the debt service and its
allocations between Miscellaneous and Safety plans.
Other CalPERS correspondence, if appropriate.
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Stephen Conway
September 12, 2017
Page 4
Timing
We are prepared to begin this project immediately and can set a meeting date as soon as we receive the
above information. Initial meeting dates are usually set approximately 4 -5 weeks after we receive the
actuarial information. We look forward to working with you and the Town.
Sincerely,
Bianca Lin, FSA
Assistant Vice President and Actuary
c Joseph D'Onofrio, Bartel Associates, LLC
John Bartel, Bartel Associates, LLC
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