2011-2012 Santa Clara County Civil Grand Jury Report an Analysis of Pension and Other Post Employment Benefits Issue

Conclusions 25

• CL1 Page 26
  Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees.
• CL2 Page 26
  Campbell, Gilroy, Los Altos Hills, Los Gatos, Milpitas and Palo Alto have adopted second tier plans that offer reduced Benefits, which help reduce future costs, but further changes are needed to address today’s unfunded liability. Santa Clara County and the cities of Cupertino, Los Altos, Monte Sereno, Morgan Hill, Mountain View, San Jose, Santa Clara, Saratoga and Sunnyvale have not adopted second tier plans.
• CL3 Page 27
  Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them.
• CL4 Page 27
  The Cities are making an overly generous contribution toward the cost of providing Benefits.
• CL5 Page 27
  The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios.
• CL6 Page 28
  The Cities’ defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities.
• CL7 Page 27
  The City of San Jose permits the transfer of pension trust fund money, when ROI exceeds expectations, to the SRBR, despite the fact that the pension trust funds are underfunded. 27
• CL8 Page 30
  How many defined pension plans do you have? Please identify them by name and answer all subsequent questions for each identified plan name.
• CL9 Page 30
  Does CalPERS administer your pension fund? If not, please identify and describe the manner in which the pension plan is being administered.
• CL10 Page 30
  Please provide a description of each defined pension plan that you provide to your employees. • At what age is an employee eligible for a pension? • How many years must an employee work to be vested for a pension? • Are employees required to make contributions to their own accounts? If so, what percent of their salary is paid toward their pension? Is there any annual or lifetime employee contribution cap? • Does the plan include cost-of-living allowance increases post retirement?
• CL11 Page 30
  For each identified plan, what percent of an employee’s income is earned toward retirement each year of employment? • For each identified plan, is there an identified maximum salary percent cap that can be earned in retirement?
• CL12 Page 30
  Do plan participants contribute to Social Security?
• CL13 Page 30
  For each identified plan, describe the formula for determining final compensation used in factoring a retiree’s pension. Include number of months that income is averaged, whether or not overtime is included or excluded from this calculation, and whether or not any other form of employee payments other than base salary are included in the formula (awards, bonuses, travel compensation, etc.).
• CL14 Page 30
  How much money was contributed in each of the last two fiscal years toward pensions (not including employee contributions)? • What percent was this of total payroll?
• CL15 Page 30
  How much pension money was paid out in each of the last two fiscal years to retirees? • How many retired employees are currently collecting benefits? • How many active employees are there currently? • How many employees are within five years of being eligible for retirement?
• CL16 Page 30
  For each plan, please identify and quantify all significant actuarial assumptions used in evaluation of ARC to include: a) Amortization period b) Investment rate of return c) Projected salary increases d) Overall payroll growth e) Inflation factor f) Smoothing duration g) Other, if applicable
• CL17 Page 30
  What is the unfunded liability of each identified plan for the fiscal years 2010 and 2011?
• CL18 Page 30
  Please indicate the major reasons for the unfunded liability. For each reason provided, indicate the approximate percentage of contribution to total unfunded liability.
• CL19 Page 30
  What is the funded ratio of each identified plan for the fiscal years 2010 and 2011?
• CL20 Page 30
  When was the last time the funds have been funded at the level of 100% or higher?
• CL21 Page 30
  Have pension contributions ever been reduced from calculated ARC payments? • What year was the last time this happened?
• CL22 Page 30
  Please summarize any significant changes to pension benefits over the last ten years for each plan. • For each, indicate if this was a pension benefit enhancement or reduction.
• CL23 Page 30
  Please provide any evidence that indicates how projected pension costs are expected to change in the next 5 to 10 years. (Page referencing within an included URL or separate attachment with appropriate material is an acceptable response.) 30 Appendix B: Grand Jury Survey - continued
• CL24 Page 31
  Please provide any evidence of the strategies that are in work to reduce the rate of pension escalation. (Page referencing within an included URL or separate attachment with appropriate material is an acceptable response.)
• CL25 Page 31
  For each plan, please provide evidence as to how pension fund past performance is doing relative to assumed performance for the last ten years. (Page referencing within an included URL or separate attachment with appropriate material is an acceptable response.) Section 2: OTHER POST EMPLOYMENT BENEFITS

No Responses Found 1

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