03-0519_OC EMPLOYEES RETIREMENT SYSTEM_Amd & Rstd Agreement0 0
AMENDED AND RESTATED
AGREEMENT RE: ADDITIONAL RETIREE BENEFIT ACCOUNT
This Amended and Restated Agreement re Additional Retiree Benefit Account
("Agreement") dated May 19, 2003 is entered into as of the Effective Date, as defined herein, by
and between City of San Juan Capistrano, a public agency of the State of California ("City of San
Juan Capistrano'), and the Orange County Employees Retirement System, a public retirement
system organized and existing pursuant to the provisions of the County Employees Retirement
Law of 1937, as amended ("OCERS" or the "retirement system"). City of San Juan Capistrano
and OCERS are sometimes referred to herein individually as "Party" and collectively as "Parties."
RECITALS
A. OCERS provides and administers a program of retirement benefits for the
employees and retirees of the County of Orange ("County") and certain other public agencies
located within the County that participate in OCERS, including City of San Juan Capistrano,
pursuant to Government Code Sections 31450, et seq. ("CERL") and other applicable law.
B. City of San Juan Capistrano and OCERS are parties to an ARBA
Agreement, dated February 8, 1999, concerning the funding of a health benefit program for
retired employees of the City of San Juan Capistrano who are members of OCERS, and their
eligible beneficiaries (the "DISTRICT ARBA Agreement') and other matters.
C. The County and OCERS have entered into an Amended and Restated
Memorandum of Understanding Agreement re: Additional Retiree Benefit Account, dated
August 27, 2002 ("County ARBA Agreement'), a true and correct copy of which is attached
hereto as Exhibit A for reference.
D. City of San Juan Capistrano and OCERS wish to amend and restate the
City of San Juan Capistrano ARBA Agreement, to be consistent with the County ARBA
Agreement, and to accomplish other objectives of the parties, as more particularly set forth
herein.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the existence and
sufficiency of which the Parties hereby acknowledge, IT IS HEREBY AGREED AS
FOLLOWS:
1. Recitals. The foregoing RECITALS are true and correct and are
incorporated herein by this reference.
2. Amendment and Restatement of the ARBA Agreement. The Parties
hereby agree to amend and restate the City of San Juan Capistrano ARBA Agreement in this
Agreement. This Agreement is intended to and shall supercede the City of San Juan Capistrano
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ARBA Agreement in its entirety. Upon this Agreement becoming effective, the City of San Juan
Capistrano ARBA Agreement shall be null and void and of no further force or effect.
3. Intent of this Agreement. The intent of this Agreement is (a) to use a
portion of City of San Juan Capistrano Advance Reserves (as defined herein), as authorized by
Section 31592.2 of CERL, to provide a source of funding to help defray the cost to the City of
San Juan Capistrano of providing health benefit grants to its retired employees who are members
of OCERS and their eligible survivors, and for reasonable expenses of administration of the
benefit program, while minimizing employer contributions to the retirement system; and (b) to
make the City of San Juan Capistrano ARBA Agreement consistent with the County ARBA
Agreement.
Definitions. The following terms shall have the following definitions in
this Agreement.
"Additional Retiree Benefit Account" or "ARBA" is a portion of the
Unallocated Fund Balance (as defined herein) originally established by the ARBA Agreement, as
defined in the County ARBA Agreement, comprised of the Members' Share of Transferable
Funds (as defined herein) designated to help defray the cost to the County and other districts,
including City of San Juan Capistrano, of providing health and other benefit grants to their
retired employees who are members of OCERS and their eligible survivors, and for reasonable
expenses of the employers' administration of their benefit grant program.
"Employer Advance Reserves" is the reserve account in the retirement
fund comprised of (a) the contributions made into the fund from time to time by the County and
other employers, net of benefit payments, (b) the Employers' Share of Transferable Funds (as
defined herein), (c) the County and Employer RMBR Accounts (as defined herein), and (d)
accumulated investment earnings on all of the foregoing. "Employer Advance Reserves" has the
same meaning as the "County Advance Reserves" as defined in the County ARBA Agreement.
"City of San Juan Capistrano Members' Share of ARBA" is that portion of
ARBA held for the benefit of retired employees of the City of San Juan Capistrano who are
members of OCERS and their eligible survivors.
"Effective Date" shall have the meaning set forth in Paragraph 14 of this
Agreement.
"Investment Account" shall have the same meaning as set forth in the
County ARBA Agreement.
"Net Applicable Assets" is the total book value of assets of the retirement
system less the Unallocated Fund Balance (as defined herein), true payables (as determined from
time to time by OCERS' actuary), the Investment Account, the ARBA, and reserves established
by the Board of OCERS.
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"Net Unallocated Fund Balance" or "Net UFB" is the Unallocated Fund
Balance (as defined herein) less amounts in the ARBA and other reserves, including the UFB
Reserve (as defined herein), designated by the Board of OCERS.
"County and District RMBR Accounts" are those portions of the
Employer Advance Reserves maintained exclusively for the purpose of providing a source of
funding to help defray the cost to the County, the City of San Juan Capistrano and other
employers participating in OCERS of providing health and supplemental benefit grants to their
retired employees who are members of OCERS and their eligible survivors, and for reasonable
expenses of the County, and other districts' administration of their benefit grant programs. The
City of San Juan Capistrano's portion of the County and Employer RMBR Accounts shall be
referred to herein as the "City of San Juan Capistrano RMBR Account."
"Unallocated Fund Balance" or "UFB" is the fund created by earnings of
the retirement fund during any year in excess of (a) the total interest credited to contributions and
reserves during such year, pursuant to Sections 31592 and 31592.2 of CERL, and (b) amounts
determined by OCERS for deficiencies in interest earnings in other years, losses on investments
and other contingencies, as provided in Sections 31592 and 31592.2.
"Valuation Date" shall be the 315` day of December each year for which
OCERS' actuary prepares an annual valuation for purposes of establishing employer and
employee contributions into the retirement fund, for the fiscal year commencing on the next
following July 1.
5. Initial RMBR Transfer. As of the Effective Date, OCERS shall establish
and maintain a City of San Juan Capistrano RMBR Account as a sub -account of the Employer
Advance Reserves, and shall transfer on its books the sum of $160,000.00 from the ARBA to the
City of San Juan Capistrano RMBR Account. This sum is the amount determined by OCERS'
actuary to represent three (3) years' projected costs of the portion of City of San Juan Capistrano
grants to be funded pursuant to this Agreement, under the City of San Juan Capistrano's program
of providing health benefit grants to retired employees of the City of San Juan Capistrano who
are members of OCERS and their eligible survivors, plus reasonable expenses of the
administration of the health benefit program. The funds in the City of San Juan Capistrano
RMBR Account shall be used exclusively for the purposes and in the manner set forth in
Paragraph 10, below.
6. UFB Reserve. OCERS has established a policy of maintaining a reserve
against deficiencies in interest earnings in other years, losses on investments and other
contingencies, as provided in Sections 31592 and 31592.2, of five percent (5%) of the Net
Applicable Assets (the "UFB Reserve"). The Parties acknowledge that the Board of OCERS
may change the percentage level of the UFB Reserve from time to time, and that in the event the
level of UFB Reserve changes, the change shall have no effect on the other provisions of this
Agreement.
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7. Transfers to Employer Advance Reserves and ARBA.
a. As of the Valuation Date each year, OCERS shall determine, upon the
advice of its actuary, if there is available Net UFB in excess of funds to be transferred into the
City of San Juan Capistrano RMBR Account as required under Paragraph l Ob., below. Such
available funds shall be known as the "Transferable Funds." The Transferable Funds shall be
divided in the manner set forth in Paragraph 7b., below, resulting in the City of San Juan
Capistrano's Share of Transferable Funds and the City of San Juan Capistrano Members' Share
of Transferable Funds. OCERS shall transfer on its books the City of San Juan Capistrano's
Share of Transferable Funds to Employer Advance Reserves. OCERS shall transfer on its books
the City of San Juan Capistrano Members' Share of Transferable Funds to the City of San Juan
Capistrano Members' Share of ARBA.
b. The City of San Juan Capistrano's Share of Transferable Funds shall be
determined in the following manner:
(1) First, by multiplying the Transferable Funds by a fraction, the
numerator of which is the amount of all employer contributions to OCERS during the ten
(10) calendar years immediately preceding the Valuation Date, and the denominator of
which is the total of all employer and employee contributions to OCERS made during the
same period. The result shall be known as the "Employers' Share of Transferable
Funds." The balance of Transferable Funds shall be known as the "Members' Share of
Transferable Funds."
(2) Second, by multiplying the Employers' Share of Transferable
Funds by a fraction, the numerator of which is the amount of all employer contributions
to OCERS made by the City of San Juan Capistrano during the ten (10) calendar years
immediately preceding the Valuation Date, and the denominator of which is the total
employer contributions to OCERS made by the County, the City of San Juan Capistrano
and other participating districts during the same period. The result shall be the "City of
San Juan Capistrano's Share of Transferable Funds" and shall be distributed as set forth
in Paragraph 7a, above.
c. The City of San Juan Capistrano Members' Share of Transferable
Funds shall be determined by multiplying the Members' Share of Transferable Funds by a
fraction, the numerator of which is the amount of all employee contributions to OCERS made by
City of San Juan Capistrano's employees during the ten (10) calendar years immediately
preceding the Valuation Date, and the denominator of which is the total employee contributions
to OCERS by the employees of the County, the City of San Juan Capistrano and other
participating districts during the same period. The result shall be the "City of San Juan
Capistrano Members' Share of Transferable Funds" and shall be transferred on OCERS' books
as set forth in Paragraph 7a., above.
d. The remaining, untransferred balances of the Employers' Share of
Transferable Funds and the Members' Share of Transferable Funds shall be held in separate sub -
accounts of UFB, for the purpose of funding health and supplemental benefit programs
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administered by other districts participating in OCERS, pursuant to separate agreements to be
entered into by and between such districts and OCERS.
8. Transfers from ARBA for Retiree Health Benefits. For each fiscal year in
which the City of San Juan Capistrano provides a program of health benefits to retired
employees of the City of San Juan Capistrano who are members of OCERS and their eligible
survivors, OCERS shall transfer on its books from ARBA into Employer Advance Reserves an
amount, subject to availability, sufficient to pay for the portion of the health benefit grants to be
funded pursuant to this Agreement which the City of San Juan Capistrano provides to retired
employees of the City of San Juan Capistrano who are members of OCERS and their eligible
survivors, and for reasonable expenses of the administration of the health benefit program during
that fiscal year.
9. Interest Crediting on Accounts. OCERS shall credit interest on ARBA at
the assumed rate of interest as established by OCERS from time to time, currently eight percent
(8%) per annum; provided, however, that such interest is available for crediting from Net UFB.
OCERS shall not credit interest on the City of San Juan Capistrano RMBR Account.
10. City of San Juan Capistrano RMBR Account; Shortfalls in ARBA.
a. The City of San Juan Capistrano RMBR Account shall be used by
OCERS exclusively as a reserve against a deficiency in the City of San Juan Capistrano
Members' Share of ARBA. To the extent that in any fiscal year, the City of San Juan Capistrano
Members' Share of ARBA is insufficient or unavailable to provide the full amount required to be
transferred to Employer Advance Reserves pursuant to paragraph 8, above (an "ARBA
Shortfall"), OCERS shall transfer on its books an amount equivalent to the ARBA Shortfall from
the City of San Juan Capistrano RMBR Account to Employer Advance Reserves for the
exclusive purpose as set forth in paragraph 8 above.
b. As of each Valuation Date, on the advice of its actuary, OCERS shall
maintain a balance in the City of San Juan Capistrano RMBR Account not less than an amount
determined by OCERS' actuary to represent three (3) ensuing fiscal years' worth of projected
costs of the portion of the health benefit grants provided by the City of San Juan Capistrano to be
funded pursuant to this Agreement, plus reasonable expenses of administration of the health
benefit program during those fiscal years (the "Safety Level.") In the event that the balance of
the City of San Juan Capistrano RMBR Account at any time is less than the Safety Level,
OCERS shall transfer out of first available Net UFB sufficient funds to return the City of San
Juan Capistrano RMBR Account to the Safety Level. This transfer shall occur prior to the
transfers referred to in Paragraph 7, above.
11. Shortfalls in Net Unallocated Fund Balance. As of June 30 and December
31 of any fiscal year, if OCERS' earnings are insufficient to credit the assumed rate of interest to
all statutory reserves, such deficiency shall be made up at that time by transferring funds out of
the UFB. If such transfer results in a Net UFB of less than three percent (3%) of Net Applicable
Assets, then all employer contributions to OCERS shall be increased during the immediately
following fiscal year by an amount which is the lesser of (a) the amount necessary to restore the
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Net UFB to three percent (3%) of Net Applicable Assets or (b) an amount equal to one-half of
one percent (1f2%) of employer payroll subject to retirement contributions.
12. Further Actions. Each Party shall take all actions and do all things, and
execute, with acknowledgment or affidavit if required, any and all documents and writings, that
reasonably may be necessary or proper to achieve the purposes and objectives of this Agreement
and the transactions contemplated hereby.
13. Termination Date; Renewal.
a. The term of this Agreement shall be through and including December
31, 2007, the second anniversary of the tri -annual actuarial valuation of the retirement system
performed by the system's actuary as of December 31, 2001; provided, however, that this
agreement may be terminated sooner than December 31, 2007 if either the governing body of the
City of San Juan Capistrano or the Board of Retirement of OCERS determines, in the sole and
exclusive exercise of its duties, that it does not wish this Agreement to remain in force beyond
the end of the calendar year in which such determination is made. In the event of such
determination, the determining body or Board shall give the other not less than 60 days written
notice in advance of the end of that calendar year of its desire for earlier termination, and this
Agreement shall thereafter terminate effective at midnight on December 31 of that year.
b. Following the effective date of termination, (i) all funds remaining in
the City of San Juan Capistrano RMBR Account shall remain in that account, without further
credit for interest, and shall be used for the purposes and in the manner provided for under
Paragraph 10 of this Agreement after termination of this Agreement for so long as they are
available; (ii) all funds remaining in the City of San Juan Capistrano Members' Share of ARBA
shall be deemed to be Net UFB and there shall no longer be any funds designated as City of San
Juan Capistrano Members' Share of ARBA; and (iii) OCERS shall have no further obligation to
transfer on its books any funds pursuant to this Agreement.
c. Notwithstanding the foregoing subparagraph (a), the Parties may
mutually agree to extend the term of this Agreement in such interval(s) and upon such terms as
they may later agree upon in a writing executed prior to the termination of this Agreement.
14. Effective Date. This Agreement shall be effective as of the date on which
all Parties have signed this Agreement.
15. Entire Aereement. This Agreement represents the Parties' entire
agreement and constitutes the only existing and binding agreement between them with respect to
the matters stated herein. This Agreement supersedes any and all prior agreements,
representations, promises and understandings of any kind, whether oral or written, express or
implied, between the Parties regarding the subject matters of this Agreement. Nothing herein is
intended to nor shall affect any party's rights and obligations under CERL. In entering into this
Agreement, each Party disclaims any reliance upon any representation, fact or opinion that is not
otherwise set forth in writing in this Agreement. Each Party hereby waives any rules of
interpretation or construction contained in California Civil Code § 1654.
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16. Survival. The terms and conditions of Paragraphs 6, 10.b., 11, 14,15 and
17 of this Agreement shall survive its termination.
17. Modification. This Agreement may not be modified, altered, amended or
otherwise changed in any respect except by a writing duly executed and signed by each Party.
18. Authority to Execute Agreement. Each Party represents and warrants that
the person executing this Agreement on its behalf as indicated below has full power and
authority to do so.
Dated: � "1 '2003
CITY OF SAN JUAN CAPISTRANO
APPROVED AS TO FORM:
Dated: '2003
By:
_ 9 K�'—=
John haw
City Attorney
ATTEST:
3. Monahan, City Clerk
Capistrano
Dated: % 2003
BOARD OF RETIREMENT OF THE
ORANGE COUNTY EMPLOYEES
RETIREMENT SYSTEM
,
_W�FE�i� 13111A �
:;..,
APPROVED AS TO FORM:
Dated:00-t-1 19 2003
ORANGE COUNTY EMPLOYEES
RETIREMENT SYSTEM
By: i
e E. Wyne
neral Counsel
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