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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 10990:6318165.2 -1- 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. 10990:6318165.2 -2- 0 0 "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. 10990.6318165.2 -3- 0 0 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 10990:6318165.2 -4- G� 9 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 10990:6318165.2 -5- 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. 10990:6318165.2 -6- 0 0 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 10990:6318165.2 -7-