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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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September 22, 2008
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BOARD MEETING DATE:
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September 30, 2008
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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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Third Amendment to Contract for Actuarial Services
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Recommendation
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1) Authorizing an Amendment to the Agreement with Milliman, Inc., extending the agreement for two years through September 30, 2010, and increasing the amount by $150,000, from $150,000 to $300,000 to cover costs associated with a full actuarial valuation as of January 1, 2009, financial statement disclosures, and actuarial analyses in preparation for upcoming labor negotiations; and
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2) 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.
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Goal 20: Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.
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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). The initial valuation was performed as of July 1, 2005. In the last round of labor negotiations, the County agreed to enhance the sick leave conversion benefits for certain members effective January 1, 2007. As the new benefit provisions significantly changed the results of the initial valuation, the County performed a second valuation as of January 1, 2007 to capture the benefit changes for represented employees. A third valuation was also performed as of January 1, 2007 to comply with CalPERS earnings rate (7.75%) and the payroll growth rate (3.25%) assumptions. The next full valuation will be performed as of January 1, 2009, and will capture recent benefit changes for non-represented Management employees and the transfer of County assets to the Other Post Employment Benefits (OPEB) fund. Future valuations will be performed on a bi-annual basis. In addition to performing the January 1, 2009 actuarial valuation, Milliman Inc. will assist with financial statement disclosures and will provide actuarial analyses in preparation for upcoming labor negotiations.
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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 $150,000 for a new contract total of $300,000, with a two-year increase in term. There are sufficient appropriations in the Non-Departmental Services’ Tentatively Adopted FY 2008-09 Budget to cover this increase.
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