"REQUEST FOR PROPOSAL Other Post Employment Benefits Actuarial Study"
REQUEST FOR PROPOSAL Other Post Employment Benefits Actuarial Study GASB 43 & 45 Compliance Proposals Due Friday, November 14, 2008 – 5:00 p.m. CITY OF GRASS VALLEY FINANCE DEPARTMENT 125 EAST MAIN STREET GRASS VALLEY, CA 95945 1 EXHIBIT “A” AGENDA ITEM #_________ Request for Proposals To Provide Actuarial Consulting Services and Report of Other Post Employment Benefits for the City of Grass Valley I. Introduction A. General Information The City of Grass Valley "City" is requesting proposals from qualified actuarial firms to perform an actuarial study for the purposes of complying with Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Post Employment Benefits Other Than Pensions. The proposal would be for completion of the actuarial study, although it is possible the firm will be retained for the purpose of updating the study for two (2) subsequent years. B. Background The City is a member of the California Public Employee’s Retirement System and CalPERS Health Plan. At the time the City enrolled in the CalPERS Health Plan, the City elected to participate in the “equal” method of contribution for its retired employees. The current year contribution for both active and retired members is $97.00. There are 106 active and 24 retired members currently enrolled in CalPERS Health. The City offers several additional Retiree Health Plan Benefits based on the bargaining unit the employee is in. Pertinent sections of the various Labor Agreements are attached to this RFP. The City also offered a post employment benefit to retired department heads per Resolutions 93-114 and 84-129. The resolutions were rescinded during 2007/08 and are no longer in effect except for the seven retirees who qualified previously. The City does not record a liability for this contribution towards health care but has been recording the expenditure when paid. The City has not previously had an actuarial study done for post employment benefits. C. Term of Agreement The RFP requests a firm propose the preparation of the actuarial valuation in conformance with GASB 43 and 45. However, the firm may be retained to complete updates of the study for two additional years. The initial valuation should include a determination of the City’s retiree medical benefit actuarial liability as of June 30, 2008. 2 EXHIBIT “A” AGENDA ITEM #_________ D. Instructions to Proposers 1. Submission of Proposals Please provide proposals as provided below. Submissions must be received no later than Friday, November 14, 2008 by 5 p.m. (PST). Please send to either: Hand deliver: By Mail: By E-mail:_________ City of Grass Valley City of Grass Valley email@example.com Attn: Carol Fish Attn: Carol Fish 125 East Main Street 125 East Main Street Grass Valley, CA 95945 Grass Valley, CA 95945 If mailing or delivering copies of proposals, the Consultant shall submit four (4) copies of the Proposal, (one original and three copies). 2. Clarifications to RFP Clarifications or substantive changes to the RFP specifications, if any, prior to the proposal submission due date will be disseminated to all consultant’s of record by issuance of addenda to this RFP. 3. Examination of Proposal Documents The submission of a proposal shall be deemed a representation by the Consultant that their proposal fully complies with all provisions and specifications as contained in this solicitation and resulting contract. A consultant taking any exceptions to the requirements set forth in this solicitation shall so indicate in their proposal. If none are indicated, Consultants are cautioned to fully examine all provision and specification requirements of this solicitation, including the provisions and City’s insurance and policy endorsement requirements set forth in the attached sample Consultant Services Agreement, attached hereto which the Consultant will be expected to execute if selected, along with this RFP and the consultant’s proposal, will form the contract. No Consultant may withdraw the offer for a period of sixty (60) days after the date of proposal submission. The City may (1) reject any or all offers, (2) accept an offer(s) other than the lowest offer(s), and (3) waive informalities or minor irregularities in this RFP and/or offers received. The City may award a contract on the basis of initial proposals received, without further discussions, negotiations or request for best-and-final proposals with any consultant. Therefore, each initial offer should contain the firm's best terms from a cost or price, technical and responsiveness standpoint. 3 EXHIBIT “A” AGENDA ITEM #_________ 4. Questions regarding Proposal All questions regarding this RFP should be directed to Carol Fish, Director of Finance at (530) 274-4302. In the absence of the Director of Finance, Debby Sultan, Asst. Director of Finance can be contacted at (530) 274-4303. E. Attachments The attachments below are included with this Request for Proposal (RFP) for your review and submittal: 1. City of Grass Valley Terms and Conditions and Agreement for Professional Services 2. Sections of the City of Grass Valley’s MOU agreements pertaining to OPEB (retiree medical benefit) 3. City of Grass Valley’s most recent retiree information. F. RFP Schedule 1. The Agency desires to finalize a contract by the end of November, 2008. Please provide a proposed implementation and deliverables timeline based on this date. 2. The Agency may recommend the successful firm attend either the November 25th or December 9th, 2008 City Council Meeting to make a formal presentation to the City Council. Activity Date & Time Release Request for Proposals October 15, 2008 Deadline to Submit Questions for Clarification 5:00 PM November 7, 2008 Deadline for Submittals 5:00 PM November 14, 2008 Select Firm – Issue Notice of Selection By End of November, 2008 Contract Negotiations/Contract Award By December 9, 2008 Completion Date for Actuarial Valuation February, 2009 In-Person Presentation – City Council February or March 2009 II. Scope of Services and Contents of Proposal The selected firm will be required to perform and deliver the following, as well as tasks related to completing the analysis: 1. Prepare an actuarial valuation following GASB 43 and GASB 45 standards and including the following information: 4 EXHIBIT “A” AGENDA ITEM #_________ • All assumptions used • Actuarial present value of total projected benefits • Actuarial accrued liability • Actuarial value of assets • Unfunded actuarial accrued liability • Normal cost • Annual required contribution of the employer as a level dollar amount and as a level percentage of covered payroll • Net OPEB obligation • Prepare the necessary material for the CAFR to comply with GASB OPEB reporting and disclosure requirements • Prepare the annual gain/loss analysis to determine reasons for changes in the unfunded actuarial accrued liability, whenever a prior actuarial valuation is available to support this. • Determine the implicit rate subsidy, if any, and the impact it would have on the OPEB liability. 2. Prepare an analysis to determine how establishing a trust or equivalent arrangement would affect the interest rate assumption. Timing considerations of establishing the trust should also be considered. 3. Be required to make a formal presentation to the City Council. 4. Prepare a cash flow analysis (the pay-as-you-go cost). 5. Prepare a sensitivity analysis showing the impact of alternative assumptions on the employer’s contributions (healthcare trend rates and investment rate assumptions). 6. If a trust is not established, determine the difference in liability based upon the investment returns under a diversified portfolio versus a short-term fixed income portfolio. 7. As appropriate, provide recommendations on managing the OPEB liability. This may include changes in plan design. 8. As appropriate, review and update plan documents and design. Make recommendations as to formalizing informal plans. 9. Analyze the data to assess any inconsistencies and make recommendations for enhancing data quality. III. Information to be Submitted : These instructions outline the guidelines governing the format and content of the proposal and the approach to be used in its development and presentation. The Bid 5 EXHIBIT “A” AGENDA ITEM #_________ proposal package, in response to the RFP, at a minimum, must include the following analysis and descriptions. A. Profile of Proposing Firm Please provide brief written answers to the following points: 1. Firm name, address of office, phone, fax, email, website (if applicable). 2. General description of business, including size, number of employees, number of credentialed actuaries, primary business, other business or services offered, past changes in ownership. 3. Name of supervising actuary who will be assigned to the engagement and contact information. 4. Other actuaries and personnel who will have key roles in the work should be identified. 5. List the number and percent of consulting staff that has left each of the past five years. 6. Brief resumes should be furnished for key professional staff who will be assigned to this engagement. a. Summary information should be provided covering the professional qualifications and experience of the supervising and support actuaries and other personnel who would perform the requested work. b. The firm should provide a description of its experience in providing actuarial and consulting services for governmental entities/plans and a list of governmental entities it has performed services for similar to those identified under scope of services. c. Describe firm’s experience with retiree medical healthcare and other post-employment benefit plans for other public entities. Also describe private sector OPEB valuation experience. d. Provide a list of the most significant engagements performed in the last five years that are similar to the engagement described in this RFP. The list can be both in the private or public sector but must be labeled as such. 7. For the engagements listed above, indicate scope, date, supervising actuaries, and the name and phone number of the principal client contact who would serve as a reference for the firm. 6 EXHIBIT “A” AGENDA ITEM #_________ 8. List any clients that have been lost in the last five years. 9. Provide an affirmative statement that the firm is independent of the governmental entity/plan and that it is unaware of any potential conflicts of interest if it were selected to perform the requested work. 10. Describe any limits on liability that the firm requests from its clients due to negligence of the firm. 11. Firm should warrant that it maintains errors and omissions insurance that provide a prudent amount of coverage for negligent acts or omissions and that its coverage is applicable to the work requested in this proposal. 12. The response to the request for proposal should be signed by a representative of the firm with the acknowledgement that this individual is authorized to contractually bind the firm. 13. The firm should indicate if there are any pending legal actions against it. B. Process & Approach 1. State the overall approach of the valuation, including objectives, scope of work to be performed, and methodologies to be used. 2. Describe how the firm will work with the City to determine the proper actuarial cost method, actuarial asset valuation method, amortization method and key assumptions to the valuation based on relevant accounting and actuarial standards. Some key assumptions to consider are: • Turnover • Retirement age • Disability retirement age • Mortality • Projected salary increase • Inflation rate • Healthcare cost trend data for appropriate region • Amortization timeframe • Investment return • Post retirement benefit changes • Actuarial assumptions associated with the method (projected unit credit, entry age normal, etc.) 3. Provide an analysis of allowed actuarial methods and amortization methods with the pros and cons of each method and recommend the most appropriate or commonly used one or two methods for this type of study. 7 EXHIBIT “A” AGENDA ITEM #_________ 4. Describe how the firm would assist in the interpretation of the plan and value the associated costs in situations where there is ambiguity related to the substantive plan. 5. Timeline – the firm will identify the major tasks and milestones in the valuation engagement and provide a proposed timeline for completion of services under this Agreement. The City desires to finalize a contract by the end of November, 2008. Please provide a proposed implementation and deliverables timeline based on this date. 6. Data requirements – the firm should list all data requirements, other than what has been identified in the RFP, that they require to complete the valuation and in what type of format that data must be provided. 7. Support – The firm shall identify the support that is required of the City’s staff. The firm should also identify what will be the responsibility of the City staff. 8. Security – Describe how the firm will keep employees’ information secure, and what identifiers are used, if any, other than Social Security Numbers. C. Proposal Costs 1. Please provide the cost of the engagement detailing out the cost of the valuation and any optional consulting services included in the scope of services. The proposal should include estimated hours, hourly rates and expenses, as well as a total, not-to-exceed cost that should be clear and concise. 2. Costs for any of the services indicated as “optional” by the Consultant in the Scope of Services section of this document should be requested as separate from the cost of the valuation. D. Compliance and Potential Conflicts 1. Audit or investigation. Has your firm been audited or investigated by any regulatory agency within the past 5 years? Discuss the outcome of the audit or investigation and what changes were made as a result. 2. Litigation or proceedings. Please list all litigation or proceedings to which your firm is a party and which would either (a) materially impair your ability to perform the services requested herein, and for which this RFP was issued or (b) if decided in an adverse manner, materially affect the financial condition of your firm. 8 EXHIBIT “A” AGENDA ITEM #_________ 3. Conflict of interest. Describe in detail any potential conflicts of interest your firm may have in regards to this engagement. 4. Exceptions. The Proposer is expected to agree with the form of contract and its terms and conditions. However, if the Proposer has any specific exceptions, such exceptions should be set forth in a separate document included with its response to this RFP. The Agency is under no obligation to entertain or accept any such specific exceptions. Failure to raise issues at the time of Proposal submission shall preclude the raising of such issues at a later time. E. Documents to be Submitted with Proposal Please provide copies of the following documents as attachments to the Proposal: 1. Copy of your HIPPA Business Associate 2. Copy of condensed audited financial statements. 3. Document showing your firm’s organizational structure. 4. Copy of a sample report or a significant section of a sample report, similar to the report being requested in this Scope of Services. 9 EXHIBIT “A” AGENDA ITEM #_________