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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
County Manager’s Office
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DATE:
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June 7, 2010
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BOARD MEETING DATE:
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June 22, 2010
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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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David S. Boesch, County Manager
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SUBJECT:
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Adoption of Employer and Employee Retirement Contribution Rates for FY 2010-11
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RECOMMENDATION:
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Adopt a resolution setting the employer and member contribution rates for the San Mateo County Employee’s Retirement Association for FY 2010-11 in accordance with Government Code Sections 31453 and 31454.
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BACKGROUND:
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The Board of Retirement approved the recommended employer and member contribution rates on November 19, 2009. County staff has fully incorporated the rates in budget planning. This agenda item is to facilitate formal adoption of the rates as required by Government Code 31453 and 31454. The new rates are based on the June 30, 2009, actuarial valuation of the retirement association by Milliman, Inc.
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DISCUSSION:
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Section 31453 of the 1937 Act requires the board of retirement to conduct periodic actuarial valuations of the retirement system:
“§ 31453. Actuarial valuations; Recommendations; Adjustment in rates. (a) An actuarial valuation shall be made within one year after the date on which any system established under this chapter becomes effective, and thereafter at intervals not to exceed three years. The valuation shall be conducted under the supervision of an actuary and shall cover the mortality, service, and compensation experience of the members and beneficiaries, and shall evaluate the assets and liabilities of the retirement fund.”
Section 31454 of the 1937 Act requires the board of supervisors to adopt the recommended rates within a certain time period:
§ 31454. Adjustment of interest, contributions, and appropriations. (a) The board of supervisors shall, not later than 90 days after the beginning of the immediately succeeding fiscal year, adjust the rates of interest, the rates of contributions of members, and county and district appropriations in accordance with the recommendations of the board, but shall not fix them in amounts that reduce the individual benefits provided in this chapter.
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The Board of Retirement recommends contribution rates for FY 2010-11 as set forth in the attached SamCERA letter. The attached resolution has been reviewed and approved by County Counsel as to form and content.
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Adoption of the employee and employer retirement contribution rates for FY 2010-11 contributes to the Shared Vision 2025 outcome of a Collaborative Community, where leaders demonstrate fiscal stewardship, by ensuring that the County’s Retirement Fund is appropriately funded and well positioned for changing economic conditions.
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FISCAL IMPACT:
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The increased countywide costs are estimated at $41 million, most of that in the General Fund ($32.7 million). With the revised rates, the County’s budgeted appropriation for retirement contributions will approximate $147.8 million for FY 2010-11. This figure includes the County’s employer contribution of $141.9 million plus the amount of employee contributions the County covers pursuant to negotiated MOUs with employee bargaining units, approximately $5.9 million.
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The increased contribution was originally projected at $48 million but has been reduced to $41 million with the elimination of 198 net positions; mid-year reductions of 64 vacant positions, the addition of four positions added mid-year, and the proposed elimination of 138 positions in the FY 2010-11 Recommended Budget.
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