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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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County Manager/Clerk of the Board
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DATE:
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March 5, 2007
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BOARD MEETING DATE:
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March 13, 2007
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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Reyna Farrales, Deputy County Manager
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SUBJECT:
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Amendment to Contract for Actuarial Services
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Recommendation
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Adopt a Resolution:
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Authorizing an Amendment to the Agreement with Milliman, Inc., increasing the amount by $25,000, from $100,000 to $125,000 to cover costs associated with completing a second full actuarial valuation to determine liability and accounting expense in compliance with GASB 45 requirements related to other post-employment benefits; and
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Authorizing the County Manager to execute subsequent amendments and minor modifications not to exceed an aggregate of $25,000 and to make minor changes in the types of services and activities provided under the Agreement.
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Vision Alignment
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Commitment: Responsive, effective and collaborative government.
Goal 20: Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.
This Agreement contributes to this goal by providing the County with the actuarial analysis required to determine the size of its liability associated with retiree health benefits so it can comply with new accounting standards for disclosure in its financial statements and use the information for financial planning purposes.
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Background and Discussion
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On September 14, 2005, the County entered into an agreement with Milliman, Inc. to provide actuarial services associated with determining the County’s liability for retiree health and other post-employment benefits to comply with new accounting and financial reporting standards (GASB 45). Based on the actuarial valuation performed by Milliman in January 2006, the County’s liability was $135 million using a 4% earnings assumption. The County set aside over $79 million to fund this liability. Since that time, the County has negotiated changes to retiree health benefits. A new valuation is needed to update the liability amount. It is recommended that the contract with Milliman be increased by $25,000 to cover additional hours required to complete a second full actuarial valuation.
Milliman, Inc. complies with the County’s insurance and contract requirements, including equal benefits, non-discrimination and jury service pay.
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Fiscal Impact
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This amendment increases the contract amount by $25,000 for a new contract total of $125,000, with no change in term. There are sufficient appropriations in the General Fund Non-Departmental Services budget unit to cover this increase.
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