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Good morning, everybody, and welcome to get another presentation produced by the California Society Municipal Finance Officers. My name is Craig Lesner. Hopefully, you've seen us before. We've get around.

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But today we're presenting to you as you can see from the presentation on your screen, the CalPERS Actual Actuarial Excuse me, valuation reports as of June 30, 2020. It's a mouthful, right? And it's even more of an eyeful when you start looking at it. But that's the kind of stuff that we're going to be looking at today.

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And we've got a lot of people joining us today.

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These are one or more of our popular webinars.

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But for those of you that aren't used to joining us,

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and are looking for things like CPE credits,

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there's a couple of things you didn't know to make sure

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we can get you those credits.

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One, obviously if you can hear us,

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you can't get anything out of today's webinar.

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So if you're having trouble,

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there's two ways to get a hold of us through this webinar

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on the phone, obviously,

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just like in the olden days.

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Or through computer audio, usually.

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If one's not working,

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And if just by magically switching to the other one, it usually does work, it's for whatever

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reason, just the Gremlin's involved, just while you do both sometimes.

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But if you have trouble with that, let us know through the question tab, sort of you should

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be off to the right of your screen.

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If you're having trouble with polls, we have six polls today.

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The purpose of these polls are for us to record that your president and your paying attention.

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So it's important that if you are looking for CPE credits that you take those polls.

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If you're having trouble with those poles, that's usually we're told from the good folks

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that go to meeting.

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An issue with the sizing of the window or whether the window is actively engaged.

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And so what we're told is if you change the size of that window if it's larger, make it

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a little smaller, if it's small, make a little larger.

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That engages it and you should be able to take those poles.

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However, if you can't find a way to take those poles for whatever reason, we can't certify anything

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for your CPU kind of to just make sure that you pay attention to that.

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Today's objective is briefly, we want to provide guidance on how to extract the most

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value from the actual report.

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We want to look at those five of your contribution projections, highlighting some changes

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to the ADP or additional discretionary payments.

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A brief update on asset liability management process, but really focusing on that 2021 investment

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return impact and what you're all here to hear about.

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And, of course, to answer any other questions that we have.

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So if you have questions, again, you know, put these through your question tab and we'll

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filter those and get those to the speakers as best we can.

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And of course, if you're having trouble with hearing and things like that, then I'll handle

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those.

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But today, hopefully you're aware of who these speakers are.

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That's why you're already here.

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You want to hear what they have to say, but just for a brief introduction, we've got Julian

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Robinson.

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Julian is the senior pension actuary with the valuation services team at CalPERS.

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He's been with CalPERS since 2012.

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And Mr. Robinson is responsible for the actual work for various CalPERS contracting agencies throughout the state of California.

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He's also on, excuse me, CalPERS is asset liability management advisory council another month full.

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He is the actuary for the terminated agency pool, and for the judges retirement system part two, or the two, the second.

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In September 2018, he was elected to the Society of Actress Retirement Council and he frequently

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conducts webinars and current issues and represents CalPERS at conferences and other public

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events.

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In other words, he's very good or at least he's used to having to communicate a lot of complicated

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CalPERS information to people that don't exactly speak the way that they speak down at

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CalPERS or up big CalPERS.

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Joining us also, if we're a color commentator today, is Ms. Onix Jones, the CFO or the Chief

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Financial Officer for the City of Culver City, California.

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on accessing the CFO position for the city of back in February of 2019.

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So right before the good time started.

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Previously, she served for three years as the finance director

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and city treacher for the city Pomona,

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and three years as interim finance director for the city of Al-Dolanto,

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and seven years as deputy finance director for the city of Rialto.

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Mrs. Jones, excuse me, has accepted

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of experience in financial analysis and budgeting.

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She assisted two of her cities in creating utility,

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user tax revenue measures.

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And she's written budget manuals implemented

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major capital improvement projects and has led creative team building workshops.

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She's actually also a motivational speaker and an award-winning author.

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Her book, the Artificial Guide to Achieving Your Goals, won first place at the 2015 London

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Book Festival Award for the How-To category.

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Ms. Jones holds a master's degree in Professional Accountancy, from which a task to university.

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So we're hoping that on, ex-joins us today, and really gives us a perspective of how

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Culver City reacts to some of this information and how they address it and how they

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communicate it.

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So with that being said, I'd like to hand over the rains and controls to Julian.

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Julian, I think you might be muted. Let's see if we can fix it.

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Okay, let's try again. Welcome everybody this morning to the discussion on the valuation reports.

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I've been doing this for a number of years and I look forward to this each time, as a way to talk with my friends and colleagues at the CSMFO.

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I've been working with a new minister quite a while and to enjoy the questions that I get all the time and their interactions.

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I'm also happy that I'm sure it's here this morning to provide some kind of commentary to the discussion that we're going to have.

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The key takeaways we have to achieve this morning are understanding what your fiscal year 2022-23 contributions are.

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that's the main purpose of this funding port.

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We have looked at the fund that status of plans

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by the contributions, which are included in the body

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of the report, have a few comments about the fiscal year

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2021 investment return, and the brief discussion

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on some of the alternative ways of handling

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and funded approved legalities, or I may call that

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as we go on. Just a little bit of background on the pool plans versus non pool plans.

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The, before we get to the polling question, the pool admin in our system, as I'm

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sure you're all aware, we have two types of plans, plans which have less than 100 active members,

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are all part of the pools. We have two pools in the system. The miscellaneous pool and the safety

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pool. And of course, miscellaneous plant or a covered in the miscellaneous pool and the safety

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plants are in the safety pool. The pool plants have a separate normal cost for each of the

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plants in the pool. It's a standard normal cost and if there are certain additional benefits

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that a plan provides, there were surcharges for those. One of the unique things about the

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pool plans is the gains and losses across all the plans in the pool are shared with all the

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participating plans in the pool. It's an insurance concept which gives the volatility of rates

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lower than if each individual plan reflected its own gains and losses. On the other side,

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We have about 420 non-pull plants in the system.

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All of those plants have more than 100 active members.

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And again, there's two types of those plants in this land, yes, plants, safety plants.

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There's a combined normal cost rate for all tiers in each report.

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We'll talk a little bit better a little bit more detail soon.

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And the gains and losses for each plan are allocated to that specific plan.

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So that's a unique feature of the non-pull plans.

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And since there are sufficient size to handle those kinds of gains and losses in the volatility,

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that's why they're kept separate.

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Right? That's here at our first full question.

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All right. So the first poll question is, what type of plans do you have? So please select all that apply. Are you in a non pulled plan, a pool plan or both of the above?

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So we'll take some time to allow people to answer the poll question. I do have a question for you, Julian.

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And do you notice amongst the pool or not pooled whether the gains in loss is very, very much

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between the two different plans?

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In general, there's not significant difference unless there's some large advantage may affect

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the particular large non-pull plan.

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But in general, the, of course, the investment gains of losses are, you know, pretty much equal

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between the pool of the non-pulled, it's just the non-investment gains of losses. In other words,

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the demographic gains of losses, which potentially could have a bigger impact. But I'm right,

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I personally haven't noticed any substantial difference above between pooled and non-pulled

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That's when it comes to that.

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Oh, that's good to know.

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We would want one group to have a manager over the other.

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You know, to certainly, uh, that's so good.

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Yes.

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I should have not been to

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you.

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Okay.

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Let's see the results. So it looks like for the group that's on the call today 49% are in the pooled only. And then we do have 33% and non-pooled. And then 18% for both of the above. So we definitely will have information for everyone today, depending on which group they're in. I know you are presentation is going to speak to both.

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Right, I'm trying to advance this, here we go.

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So here's a couple of slides on highlighting some of the all the information.

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There's a section two pool report which covers all of the plans and the particular pool.

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So here we have some information about the miscellaneous

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or, as you can see, the middle of the screen with the blue highlighting of their all the basic formulas,

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which are covered in the miscellaneous pool with two prisoners 62, two prisoners 60, et cetera, et cetera.

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Those are the basic formulas which are provided in the benefit which are provided in those pools.

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And by looking at that table, you can see the relative costs of these benefits structures.

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Also of interest, perhaps at the bottom of the page, you can see the market value of assets in the miscellaneous pool is about $15 billion.

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was the liabilities of $19 billion approximately 76% funded so you can compare your individual

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plan to see how it compares to the rest of the pool.

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The next slide is similar information, but with respect to the safety pool, there's a

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the most generous benefits of the 3% at age 50 formula.

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And you can see the basic contribution rates,

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normal cost contribution, the range in 20% up to the 30%.

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The safety policy is a little bit larger than the miscellaneous pool

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with $19,000,000,000 in assets and approximately $26,000,000,000 of liabilities,

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when it has a slightly lower funded status in the miscellaneous pool.

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And you can compare your safety pool to the average of the safety pools here.

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So, in terms of the way we put together reports for the various pools, the non-pult plans are all contained in one report.

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For the pooled plans, there are going to be multiple reports, and those with pooled plans know that if you have different tiers of benefits and pretty much every agency has at least two,

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because we have a at least one classic tier and a pepper tier. So there's at least two section

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one reports that you receive and then there's a section two report which is available on the

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Kelpa's website that you can see all of the information and all of the analysis for the entire

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entire poll. So feel free to find that on the Kelpa's website I believe it is up already or

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has been recently posted or a little bit quite soon.

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Some highlights of the actual report.

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Let's get into the meeting potatoes this and to know as I've said before,

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these evaluations are for funding purposes,

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and the first three letters are for funding is fun,

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so let's strap on our seat belts and have some fun

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in the discussion that we're going to have.

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So come questions which I often get in my colleagues

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the other actress who serve the agencies this webinar this morning. What other required

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contributions everyone needs to know what their obligations are to help us, what's the

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how good a shape is the plan. Why do the contributions change for me to year?

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Where the contributions

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had it higher or lower or relatively stable. And funded a good liability is a very popular topic

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we get many calls about that, so understanding the schedules ends up.

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All alternative approaches to handling them is very important. It remembers where my peppermembers we get questions about that and what additional information is available in the reports.

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Let's tackle each of these questions about them.

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So on the front page of the report, we show the information for 2022-2023. It's we're already in the

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21-22 fiscal year and you're making contributions currently for that year. This allows you to plan for

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what is going to happen in the next fiscal year. You also put on the front page of the report,

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a projection of the results of the 2023-24 valuation and here we put an estimate as you know the rates for

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2023-24 will only be finalized when we do our next funding valuation next year.

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I have a little list of providers over here that the rates don't reflect any

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cost sharing information, so if you have any of those arrangements with your employees, that is

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willing to impact the rates which are shown on the front of the report.

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We didn't include any impact of the risk of the S again, the last year, the 21.2%

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Also, there's no impact in the projection of the front page with respect to any impact

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of risk mitigation or any other assumption changes, which are likely to be made over the

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next few months by kelp's board.

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There's a summary on page four of the report again of the contribution requirements,

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the

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of the contribution, and then the second component of the contribution is the payment of the

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unfunded availability. And as you know, there's an option in how you can handle the UAL payment

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of required UAL payment, you can either make a monthly payment or there's an up a disoption

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July of each year to pay the full unfunded afford liability commitment in one payment

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and if you take advantage of that, you get a half a year of interest and credit for if you

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make the payment in July of each year.

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Again, as I mentioned, the normal cost component,

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no cost is compared to components, the normal cost, which you pay on the monthly basis,

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or at least on the monthly basis depending on how often you submit the payroll to the

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workers and the UAL payment.

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Point which I always like to highlight is please don't pay your UAL that you're making

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that contribution to the injury and that's for some reason some agencies hate 12 times

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the monthly amount and that's more than required.

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But of course, if in the event that you do make that an extra payment by accident, we do

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credit it to your unfundered reliability, so it's not like the money just disappears.

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But for more precision, it's better and for our counting purposes, if the proper amount

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is paid on the next slide, I show what the invoice looks like.

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like for the first month of the year, and no, here and in the invoice, I light it in yellow here,

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is the annual amount, even though it shows at the bottom the total amount due, which is the monthly

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amount, but if you want to pre-pay, it does show that amount in the invoice.

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It is my planning

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of a shape. So one of the most common measures of a plan's financial stability is the

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funded ratio. So on this page, from front of you, we showed that 2019 and 2020 results for

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Now, there are some purposes only. Just to run through the items on the shown shown here, the present

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value of projected benefits. That's how actual estimate of what the total benefits payable for the

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plan will be for all current members. And assuming that the active members will continue working

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through retirement. The number two item, the entry-age approved liability for what we call

215
00:20:29,740 --> 00:20:36,420
the equity liability entry-age is a technical actuarial method which we use to come up with

216
00:20:36,420 --> 00:20:49,740
this number is the value of benefits which have accrued back to the valuation date and the

217
00:20:49,740 --> 00:20:57,480
project benefits and the NCH, a good liability is the expected benefits that current active

218
00:20:57,480 --> 00:21:05,780
members are expected to earn in the future with their working lifetimes. Number three is the

219
00:21:05,780 --> 00:21:12,400
market value of assets and we can take the difference between two and three, in this case the

220
00:21:12,400 --> 00:21:17,900
It's between 34 and 74 million and 254 million,

221
00:21:18,180 --> 00:21:22,780
approximately 120 million of unfunded liability.

222
00:21:23,620 --> 00:21:27,820
Let me look at the ratio, the assets divided by the liabilities

223
00:21:28,070 --> 00:21:31,980
to come up with the funded ratio amount.

224
00:21:34,460 --> 00:21:37,300
I have a question, Julian, for you.

225
00:21:37,700 --> 00:21:41,600
Is there ever a funded ratio where a city should sound the alarm

226
00:21:41,600 --> 00:21:43,580
agencies should be concerned?

227
00:21:46,280 --> 00:21:49,160
We get that question quite frequently.

228
00:21:51,640 --> 00:21:53,380
We're aiming to reach

229
00:21:53,380 --> 00:22:02,640
a hundred percent. Yes. Backbunders. If a plan drops to fifty percent, so that essentially

230
00:22:02,640 --> 00:22:10,100
means that the assets need to double in order to reach what the liabilities are to have

231
00:22:10,100 --> 00:22:18,320
the liabilities. So that's quite a extreme position, and we obviously know when to try to avoid

232
00:22:18,320 --> 00:22:27,500
that at all costs. But the most important thing is for there to be assets or times to cover,

233
00:22:27,560 --> 00:22:34,680
the benefit payment says they can do. That's the most pressing obligation and

234
00:22:34,680 --> 00:22:42,680
and calipers, but as a management, it also takes that into account that they maintain some

235
00:22:42,680 --> 00:22:50,780
level of liquidity to make sure that the benefits that are due to current retirees are made.

236
00:22:52,060 --> 00:22:55,900
And I should have mentioned that if anybody has questions, I'm not sure if people are sending

237
00:22:55,900 --> 00:23:06,700
questions yet, but no faces. Some questions as the discussion goes on, so we can deal with them as

238
00:23:06,700 --> 00:23:14,760
as you submit them. So this is the fund as that is as of June 30, 2020.

239
00:23:18,320 --> 00:23:20,430
The next question we

240
00:23:20,430 --> 00:23:28,050
free point to get is why did my plan have a change in the required contributions?

241
00:23:29,570 --> 00:23:35,490
So generally, the normal cost component, the normal cost component represents the amount

242
00:23:35,490 --> 00:23:43,510
of benefits which the count active, members are accruing each year that remains relatively

243
00:23:43,510 --> 00:23:44,150
stable.

244
00:23:44,150 --> 00:23:53,070
what does change as gains and losses for the plan? Gains and losses means that we have

245
00:23:53,070 --> 00:23:59,110
various expectations about how much we're going to earn on the assets invested and

246
00:23:59,110 --> 00:24:05,330
many people are going to live for what retirement age people are going to elect to retire

247
00:24:05,330 --> 00:24:12,330
out or kind of salary increases are given. So we have a whole slew of actual assumptions

248
00:24:12,330 --> 00:24:19,190
which are baked in to our liability numbers. Whenever there's a difference between those

249
00:24:20,130 --> 00:24:27,790
the assumptions and the actual experience that develops a gain of loss. So the gain of loss

250
00:24:27,790 --> 00:24:34,510
flows through to the into the liabilities and the unfunded approved liabilities and that's why

251
00:24:34,510 --> 00:24:40,850
this changes in the contribution he chair to handle those against muscles.

252
00:24:41,310 --> 00:24:44,950
We never ask you to pay a game unless often, immediately,

253
00:24:45,630 --> 00:24:52,070
but we have a whole amortization process depending on what the source of the game unless it's.

254
00:24:52,190 --> 00:24:58,670
So, in non-pull plans, there's a full-red reconciliation on page 15 of all the against muscles.

255
00:25:00,000 --> 00:25:14,260
For pool plans, there is a reconciliation in this section to report. And each plan in the pool is allocated a portion

256
00:25:14,260 --> 00:25:20,560
of the gains and losses based on the size of the plans, assets, based on the size of the plans,

257
00:25:20,560 --> 00:25:29,300
what liabilities and that's having the occasion to begin to losses for each of the plans in the pool is performed.

258
00:25:34,620 --> 00:25:46,600
We provide a five-year projection of where we expect contributions to be based on the assumptions in the plan.

259
00:25:46,600 --> 00:25:53,180
Now, what you see in front of you here is a projection for a non-poled plan.

260
00:25:53,460 --> 00:26:01,900
A non-poled plan contains both classic numbers and all the classic tiers as well as

261
00:26:01,900 --> 00:26:02,700
pepperminted.

262
00:26:03,520 --> 00:26:11,780
What we do in this projection, you can see the normal cost rate is decreasing over the

263
00:26:11,780 --> 00:26:20,800
five years and this is a reflection of the expectation that more members become peppermembers

264
00:26:20,800 --> 00:26:27,680
over that time. And peppermembers have lower benefits and lower normal costs, so that's

265
00:26:27,680 --> 00:26:41,760
why there's a decrease in the normal cost percent. There is a similar projection in the

266
00:26:41,760 --> 00:26:48,740
its own report and each paper tier has its own report. So you won't see a change in the normal

267
00:26:48,740 --> 00:26:53,860
costs contribution rate in the finalier projection for those plans.

268
00:26:55,320 --> 00:27:11,740
Our UAL payment here is the finalier projection of what the UAL payments is based on the current

269
00:27:11,740 --> 00:27:17,060
The point that they think to remember, particularly that this year's report is that it doesn't

270
00:27:17,060 --> 00:27:31,460
reflect the 2021 investment gain of 21.2%, so that's a very significant no gain which

271
00:27:31,460 --> 00:27:39,880
the plan is going to experience. Now the, as a result of that, we did have a risk mitigation

272
00:27:39,880 --> 00:27:46,000
event, which meant that since we earned more than the more than the 7% target and significantly

273
00:27:46,000 --> 00:27:55,660
more than the 7% target, it's kicked down our discount rate from 7% to 6.8% currently.

274
00:27:56,760 --> 00:28:04,640
So, that drop in the discount rate is going to be an impact for the next next year's valuation.

275
00:28:04,640 --> 00:28:20,860
The clock of that, and I'll talk about a little bit more detail, we're going through the whole ALM process, which I'm sure everybody is very focused on whether the board is going to be looking at the overall asset allocation for the whole fund.

276
00:28:20,860 --> 00:28:27,860
and they end up with the different discount rate in the 6.8%.

277
00:28:31,470 --> 00:28:36,730
At the bottom of the page, we have an estimate of what the percentage of payroll is,

278
00:28:36,730 --> 00:28:43,750
because I know what agencies or the rest put this thing as a lot of agencies budget based on a projection

279
00:28:43,750 --> 00:28:49,450
of the percentage of payroll based rather than based on fixed all the numbers.

280
00:28:49,450 --> 00:29:05,350
We put in the percentage of, we put in our estimate of what the projected peril is and this is based on no information from no June 30, 2020, which is arguably a little bit old.

281
00:29:06,570 --> 00:29:19,430
So you are much more able to come up with a more accurate payroll or your current peril and probably a projection that we are.

282
00:29:19,430 --> 00:29:31,710
So you can replace those payroll numbers there and then do a divide the UAL into the payroll and then add the normal cost per cent in order for you to

283
00:29:31,710 --> 00:29:41,050
misshop and there's total percentage of payroll numbers, but we provide this as a starting point for you.

284
00:29:41,050 --> 00:29:47,910
And Julian, there are some questions coming in and one is about the pension outlook tool.

285
00:29:47,990 --> 00:29:53,130
And I know that is also very useful for doing projections as well.

286
00:29:53,390 --> 00:29:59,570
And I think the question was, do you know when that will be updated with the 2020 valuation?

287
00:30:00,400 --> 00:30:08,800
Yes, a very great question. I'm going to be talking about the pension outlook tool later on, but I believe it's actually this week.

288
00:30:09,820 --> 00:30:22,400
So, very good. By the end of the week or by the beginning of next week, I mean, it should be updated because no, it's a very useful tool. We know many agencies are using it for

289
00:30:22,400 --> 00:30:32,380
for packaging purposes for more calculating UAL and other other impacts. So we're happy to be

290
00:30:32,380 --> 00:30:37,520
now submitted. It's going to be available. No, I spoke to my colleague, Kerry Walgain,

291
00:30:37,660 --> 00:30:44,700
who's very instrumental in the whole inch now look tool and the talking that it's going to

292
00:30:44,700 --> 00:30:59,980
available as of October. So let's see if you guys have access to it and it has a new new features

293
00:30:59,980 --> 00:31:04,600
which allow a little bit more flexibility and to introduce this for projections.

294
00:31:15,820 --> 00:31:16,440
With

295
00:31:16,440 --> 00:31:23,740
additional discretionary payments. This page was added, I think, last year or fairly recently,

296
00:31:24,700 --> 00:31:31,500
just giving agencies some basic information about what the required contribution is,

297
00:31:31,620 --> 00:31:38,760
the required employer contribution, and then the potential of making an additional contribution

298
00:31:38,760 --> 00:31:44,920
with different funding targets. What these funding targets mean is if I want to pay off

299
00:31:44,920 --> 00:31:53,820
My total unfunded UAL, for example, over 15 years is going to be this first line in the, I mean, the table.

300
00:31:54,680 --> 00:31:58,440
Obviously, you have to make your normal cost and minimum UAL payment.

301
00:31:59,000 --> 00:32:10,720
But if you made an additional payment, additional discretionary payment, ADP of $1 million in this example,

302
00:32:10,720 --> 00:32:20,240
It will achieve a payoff of all of the unfunded approved liability over a 15-year period.

303
00:32:21,060 --> 00:32:26,320
And similarly for the other target, unfunded target numbers here.

304
00:32:26,920 --> 00:32:32,520
Again, no five years is very aggressive, and you can see it's a significant additional contribution,

305
00:32:32,980 --> 00:32:39,880
but just to give agencies a ballpark of if they want to pay off their liabilities,

306
00:32:39,880 --> 00:32:41,480
these more rapidly,

307
00:32:43,840 --> 00:32:49,420
these are some sample numbers, which are, we put out, they're just

308
00:32:49,420 --> 00:32:51,020
sort of analysis purposes,

309
00:32:54,880 --> 00:32:59,600
all right, looks like we've reached a polling question number

310
00:32:59,600 --> 00:33:00,300
two.

311
00:33:00,740 --> 00:33:07,800
So, we'll give everybody a chance to answer, but it says, has your strategy for ADP changed

312
00:33:07,800 --> 00:33:15,960
do the COVID. So option one is no, we never had a strategy. No, we are still on course,

313
00:33:16,000 --> 00:33:23,540
consistent to pre-COVID. And yes, please submit how in the question tab. So you are

314
00:33:23,540 --> 00:33:32,640
allowed to add a little narrative as well. I will say that I'm sure many cities have had to

315
00:33:32,640 --> 00:33:41,380
rethink their forecast due to COVID and I know for us we did have a strategy not so much for the

316
00:33:41,380 --> 00:33:48,380
ADPs but we were trying to address OPEV as well and we had to shift during COVID because we weren't

317
00:33:48,380 --> 00:33:56,780
sure not only how much the revenues were going to be impacted by COVID but how long this was going to

318
00:33:56,780 --> 00:34:04,160
continue. So it will be interesting to see feedback from this poll and see what the responder say.

319
00:34:04,600 --> 00:34:12,440
Have you had any experiences Julian with the city's providing feedback because as a result of COVID

320
00:34:12,440 --> 00:34:17,340
in the strain it may have had on their current strategies for ADPs?

321
00:34:18,680 --> 00:34:26,620
Yeah, some cities have indicated they wanted to regularly make additional contributions

322
00:34:26,620 --> 00:34:37,740
But, as you mentioned, because of the financial stress on their budgets from different areas,

323
00:34:38,100 --> 00:34:42,660
they've had to head back on potential additional payments.

324
00:34:43,600 --> 00:34:54,620
Other agencies have somehow added additional funds available and have accelerated some of their ADP payments.

325
00:34:54,620 --> 00:34:59,860
So that across the board has been some different experience.

326
00:35:03,520 --> 00:35:15,380
So the results for the group is, no, we are still on course consistent with pre-COVID, that was 61%. So that's really good news.

327
00:35:15,380 --> 00:35:19,300
And we lost the rest of the results.

328
00:35:20,340 --> 00:35:21,520
There we go.

329
00:35:23,680 --> 00:35:25,220
Thanks for working on it.

330
00:35:25,540 --> 00:35:26,400
Yeah, it's coming.

331
00:35:26,940 --> 00:35:29,280
And then no, we never had a strategy,

332
00:35:29,620 --> 00:35:31,620
so maybe after today's presentation,

333
00:35:32,500 --> 00:35:37,420
this is something that the people who are attending may want to discuss

334
00:35:37,420 --> 00:35:41,160
with management to create a strategy,

335
00:35:41,400 --> 00:35:43,220
but there's 33% that said no,

336
00:35:43,320 --> 00:35:44,500
they never had a strategy.

337
00:35:44,500 --> 00:35:53,900
And then six percent said yes, and they have various, probably various ways of how they changed their strategy.

338
00:35:54,820 --> 00:35:56,540
Okay, all right.

339
00:35:56,540 --> 00:35:58,560
That's a very interesting results.

340
00:35:59,400 --> 00:36:00,340
That was.

341
00:36:00,980 --> 00:36:03,160
So this count, right, change.

342
00:36:04,220 --> 00:36:07,940
We did, so the valuation that we just completed the June 30,

343
00:36:13,180 --> 00:36:13,180
2020,

344
00:36:13,180 --> 00:36:21,940
have, as I mentioned before, a risk mitigation policy event was triggered this year and those

345
00:36:21,940 --> 00:36:33,140
get triggered by earning more than the 7% discount rate, which was kind of the target for

346
00:36:33,140 --> 00:36:40,340
the year. And since there's various triggers above the 7% if it's we get 2% above that

347
00:36:40,340 --> 00:36:48,680
we significantly exceeded it, so that meant that our discount rate was reduced at least

348
00:36:48,680 --> 00:37:01,540
from 7% to 6.8% and in general the effect of a lower discount rate is an increase in the

349
00:37:01,540 --> 00:37:09,680
crude liabilities and in the normal costs. So the notion behind the risk mitigation event and

350
00:37:09,680 --> 00:37:17,520
change in the discount rate, is that now after having a very good investment year, we – that's

351
00:37:17,520 --> 00:37:24,700
a feeling that there should be some risk taken off the table in some of the investments that

352
00:37:24,700 --> 00:37:33,940
so that reduces the expectation, the long-term return asset expectation, and the share in the

353
00:37:33,940 --> 00:37:51,360
is shared between the system and the employers that's why the lives may be high, but the assets are also going to be higher, and then there's a little bit of an increase potentially in normal costs.

354
00:37:51,360 --> 00:37:59,720
And I will say that we had to explain this concept to some of our members, especially those

355
00:37:59,720 --> 00:38:05,140
from the different unions and bargaining units, because they were very elated when the

356
00:38:05,140 --> 00:38:11,060
results of last year's interest rate return last fiscal year were announced and they thought,

357
00:38:11,120 --> 00:38:18,080
yes, so that means it's going to be smooth sailing. And we just kind of had to let them know that

358
00:38:18,080 --> 00:38:21,580
with the implementation of the policy, there is an offset.

359
00:38:21,740 --> 00:38:26,500
But it is much better situation now than years ago,

360
00:38:26,600 --> 00:38:30,040
when we lower down to the 7% discount rate.

361
00:38:30,060 --> 00:38:34,020
That was a significant hit to the city's budget.

362
00:38:34,100 --> 00:38:35,920
But this is nicer.

363
00:38:36,220 --> 00:38:37,740
This is an easier transition.

364
00:38:38,780 --> 00:38:41,160
And I agree that discount rate probably

365
00:38:41,160 --> 00:38:44,040
needs to be realigned to where it's more realistic.

366
00:38:44,820 --> 00:38:46,940
So I think this is great change.

367
00:38:51,000 --> 00:39:01,440
So a few comments about our asset liability management were in the middle of this process at the moment.

368
00:39:01,960 --> 00:39:16,760
It's conducted every four years. There's a deep analysis about the set allocation of the funders and what the potential earnings are for each class of assets.

369
00:39:16,760 --> 00:39:25,540
and the risks associated with that and then I hope folks who are on this call are

370
00:39:25,540 --> 00:39:37,380
tuning into the monthly regular board meetings that CalPERS has the meeting a few weeks ago

371
00:39:37,380 --> 00:39:42,680
September meeting and you can go on to the CalPERS website and listen to the presentation

372
00:39:42,680 --> 00:39:50,820
to the investment committee about the some some of the preliminary presentations of what

373
00:39:50,820 --> 00:39:59,600
the potential candidate portfolios look like and the expected discount rates which are

374
00:39:59,600 --> 00:39:59,980
Thank you.

375
00:40:00,000 --> 00:40:19,000
Associated with them, we're going to need enough further discussion at the November board meeting and we encourage all of the folks on this quarter, number one, tuning in and also participate in this opportunity for public comment.

376
00:40:20,600 --> 00:40:31,120
or I'm at all of all of these meetings, so, and I think it's like that this an event of meeting will also be a virtual meeting as well.

377
00:40:31,460 --> 00:40:44,180
So to be able to have a phone in and have your three minutes of opportunity to share your thoughts with the board and your concerns and the very responsive to that.

378
00:40:44,180 --> 00:40:53,260
And it's a valuable way of being able to express your views to the management of the system.

379
00:40:55,820 --> 00:41:03,560
So there's been no webinar's also associated with the asset-level management review.

380
00:41:03,560 --> 00:41:09,920
there also hosted on the kelpers web site and if you go to the kelpers web site and

381
00:41:09,920 --> 00:41:14,460
the search for as a liability management AOLM, you should be able to

382
00:41:14,460 --> 00:41:24,320
find pretty quickly some of the earlier webinars, which are being presented on this topic.

383
00:41:24,420 --> 00:41:28,420
I think there's another one scheduled for the month of October.

384
00:41:28,420 --> 00:41:34,680
So please check out the Kelps website for more information about that.

385
00:41:35,260 --> 00:41:40,920
So besides the review of the assets side of the portfolio and some of the information you can see here,

386
00:41:40,980 --> 00:41:49,600
see on the screen in front of you, we also do a review of the demographic assumptions in our experience study.

387
00:41:49,600 --> 00:41:58,440
So we look at some, for example, the our expected mortality rates and the actual mortality rate experience.

388
00:41:59,340 --> 00:42:09,840
Now what one point to mention that the dates that we used for this review only goes through June 30, 2019.

389
00:42:10,040 --> 00:42:16,020
So it doesn't reflect any of the impact of COVID on the mortality experience.

390
00:42:16,020 --> 00:42:27,220
in some significant impact, because of COVID, the big question from an actual standpoint is,

391
00:42:28,780 --> 00:42:35,440
is this just a temporarily temporary impact on mortality rates or is there believe that there

392
00:42:35,440 --> 00:42:45,020
could be potentially longer-term impacts on the mortality rates. And of course, the jury is still out

393
00:42:45,020 --> 00:42:52,960
with respect to that and we're kind of in the middle of this whole event anyway so it's a

394
00:42:52,960 --> 00:42:58,940
private charter where anybody to reach any conclusions at this point however the different people

395
00:42:58,940 --> 00:43:03,740
have different views and have started potentially impacts on liability is going forward.

396
00:43:07,040 --> 00:43:14,640
This was a recent change in 2000 to 19. We introduced a new

397
00:43:14,640 --> 00:43:27,800
and metysation policy, which effectively limits the period of MSATs into 20 years, which is

398
00:43:27,800 --> 00:43:36,680
shorter than now, 30-year period, which means the MSATs contains losses, is done more rapidly.

399
00:43:39,340 --> 00:43:46,420
Okay, are there any alternative unfunded or crude libel to more amortization schedules?

400
00:43:47,620 --> 00:43:56,080
So I'm sure everybody is familiar with this site here with our very imposing schedule

401
00:43:56,080 --> 00:44:09,320
of amortization bases, no brainactory and for finance people, numbers is a very exciting

402
00:44:09,320 --> 00:44:14,840
of art in my mind, but other people have different views on that.

403
00:44:16,960 --> 00:44:26,340
So the amitization schedule, basically, show how the unfunded afford liability has emerged

404
00:44:27,300 --> 00:44:39,140
over the, almost two decades, if you can see at the bottom of the screen, it's a $19.5 million

405
00:44:39,140 --> 00:44:44,740
that was found at a food liability as of evaluation date and you can see all the component

406
00:44:44,740 --> 00:44:51,360
pieces over the years.

407
00:44:52,360 --> 00:44:59,980
So essentially what ADP does is you're selecting an amount and it goes to...

408
00:45:00,000 --> 00:45:10,180
What's paying down, sound or all of the basis that we see? There were a number of agencies over

409
00:45:10,180 --> 00:45:16,960
the past year that did a pension obligation bond and a pay off significant amounts of their

410
00:45:17,480 --> 00:45:25,740
unsundered accrued liability. And there were many other agencies which were made around a plan to make

411
00:45:25,740 --> 00:45:33,820
significant contributions each year paying off various, the basis, the components of this

412
00:45:33,820 --> 00:45:42,980
unfunded recruit liability. One other option which we have in the emergencies, some have adopted

413
00:45:42,980 --> 00:45:53,160
is what we call a fresh start. So they take their complex series, a table of amortization basis

414
00:45:53,160 --> 00:46:02,160
And say, hey, what happens if we want to pay that off in an orderly manner over 15 years, or 10 years, or a fixed period of time?

415
00:46:03,380 --> 00:46:14,420
So there's a schedule in each of the reports, which in the straightive purposes shows what would happen if it gets paid off over 15 years, or 10 years.

416
00:46:15,540 --> 00:46:18,840
the Bammet Session period may be different in different reports.

417
00:46:20,060 --> 00:46:23,760
Of course, we're not going to let you choose an Mammet Session period,

418
00:46:24,320 --> 00:46:29,600
which is going to generate a lower UAL payment than the required payment.

419
00:46:30,060 --> 00:46:34,980
So it has to generate a more rapid payoff, which means you're going to get

420
00:46:34,980 --> 00:46:35,960
to generate savings.

421
00:46:36,460 --> 00:46:40,900
So if you see at the bottom of this page here in the estimate savings,

422
00:46:40,900 --> 00:46:54,320
If an agency went to a 15-year amortization, they would end up saving the 15 and a $15 and a half million dollars over the whole lifetime of the amortization.

423
00:46:55,320 --> 00:47:07,980
So it's also some agencies that see the significant savings that can be achieved in making additional contributions or electing a fresh start.

424
00:47:07,980 --> 00:47:15,060
as you can see in these schedules here. One point to remember is that if you an agency does choose

425
00:47:15,060 --> 00:47:24,180
to make a fresh start, you can't unpop the balloon service speaker, so it's an irrevocable

426
00:47:24,180 --> 00:47:32,720
decision to make a fresh start decision collection. What some agencies do is instead of making

427
00:47:32,720 --> 00:47:44,300
the election may make an ADP, as if they had made that election, so it has an impact on

428
00:47:45,460 --> 00:47:50,660
the savings, but it maintains the flexibility in the future. If the funds are not there

429
00:47:50,660 --> 00:47:59,680
for the commitment, for a 15-year commitment, to nearly do it on an out-hot basis, and mirroring

430
00:47:59,680 --> 00:48:05,580
the payment would have been had and the election didn't make. But all these kind of discussions,

431
00:48:05,980 --> 00:48:13,720
no, please contact your actuary and your actuary's name is in each of the reports. So to have

432
00:48:13,720 --> 00:48:15,980
no discussions about this kind of thing.

433
00:48:18,740 --> 00:48:23,500
How much savings for ADP is generated? What we do have a tool

434
00:48:23,500 --> 00:48:32,460
managing employer contribution tools, which, at quest, we put early, a customized spreadsheet

435
00:48:32,460 --> 00:48:40,660
together for each plan that you have, and you can run different ADP scenarios with

436
00:48:40,660 --> 00:48:48,060
that spreadsheet. You can also do some of the analysis with the pension outlook tool as

437
00:48:48,060 --> 00:48:54,500
And there's a mention of Contecua Actory if you're interested in this tool.

438
00:48:56,860 --> 00:49:02,460
So here's just a couple of screenshots from that tool.

439
00:49:03,160 --> 00:49:10,180
I know there's a lot of numbers on here, but to know around this area here in the middle you can

440
00:49:10,180 --> 00:49:19,900
choose the amount of the ADP. You can choose the date on which you want to make the ADP. And

441
00:49:19,900 --> 00:49:28,340
you can also select, which of the basis you want to pay off when you make that selection.

442
00:49:29,000 --> 00:49:36,580
A lot of agencies choose to pay off the longest basis first because that helps achieve the most

443
00:49:36,580 --> 00:49:44,080
in just savings when you pay off a bass with the 25 years of outstanding

444
00:49:46,220 --> 00:49:51,620
less and too, till it's fully paid off rather than the shorter space, but there's

445
00:49:51,620 --> 00:49:56,920
this different options and we encourage you to take advantage of that.

446
00:49:57,120 --> 00:49:59,880
So here is also a number.

447
00:50:00,000 --> 00:50:11,980
The tab on this tool where you can make a projection of what happened in the base of the 21.3% investment earnings and what

448
00:50:11,980 --> 00:50:21,900
no future earnings are likely to be. And you see what the impact on your unfunded credibility is for those changes.

449
00:50:21,900 --> 00:50:31,260
So it's quite a powerful tool, and it allows you to do some modeling and projections and things along those lines.

450
00:50:32,460 --> 00:50:45,160
So Julian, if you're an agency and we have a large sum of money, it's one time, it comes into the agency and the decision is, let's do an advanced payment or a direct payment to CalPERS.

451
00:50:45,160 --> 00:50:58,160
And we can use the tool to help us, but is it actually very also available to help us decide which basis would be best for our agency to make a direct payment to?

452
00:50:59,580 --> 00:51:00,000
Yes.

453
00:51:00,720 --> 00:51:09,180
You should definitely have a discussion with your actual about that because in the event that you do want to make a payment.

454
00:51:09,180 --> 00:51:16,060
that actually has to request the paperwork to be put together for you to complete at the time that

455
00:51:16,060 --> 00:51:24,360
you send in the additional payment, but then there's a discussion on the pros and cons of

456
00:51:24,360 --> 00:51:32,640
which, which, which basis, which basis, I'm laughing, you know, pay off yes, so we're here to help you

457
00:51:32,640 --> 00:51:36,680
with all of that kind of decision making in analysis.

458
00:51:40,240 --> 00:51:40,260
Okay,

459
00:51:42,510 --> 00:51:44,150
where are the pepper members?

460
00:51:44,650 --> 00:51:52,990
We get asked. So for a non-pull plan, all of the members in the plan, whatever tier,

461
00:51:53,150 --> 00:52:00,250
whether it's a classic tier 1, classic tier 2 and pepper, they're all included in the same report.

462
00:52:00,250 --> 00:52:07,370
And non-planned requires the same employer rate for all members in the plan.

463
00:52:08,810 --> 00:52:13,270
That's the employer makes a contribution for all members of the plan.

464
00:52:13,750 --> 00:52:21,670
So what essentially happens is it turns out to be a blended rate for all the different tiers from the employer side.

465
00:52:22,730 --> 00:52:26,850
Now, for the employee contribution, that's completely different.

466
00:52:26,850 --> 00:52:33,890
You know, the classic members rates are set by statute and the paper rates are also,

467
00:52:34,790 --> 00:52:41,810
I mean, members are required to pay 50% of the normal cost.

468
00:52:42,070 --> 00:52:55,450
And there's a page in the non-pull report, which note directly shows what the pepper calculation is.

469
00:52:55,450 --> 00:53:02,790
and the pepper contribution rate for members can change from time to time.

470
00:53:03,410 --> 00:53:15,810
And the basic principle is if there's a change of 1% or more since the previous change in the pepper rate,

471
00:53:16,430 --> 00:53:19,170
then the member rate will be adjusted.

472
00:53:19,170 --> 00:53:27,470
If the difference is less than 1% in the pepura and employee contribution rate remains the same.

473
00:53:29,290 --> 00:53:37,650
So, for this particular plan, in front of you, you can see that the change in the rate from the basis was 12.59.

474
00:53:38,230 --> 00:53:43,930
The total normal cost rate was 13.16 for the pepura members benefits.

475
00:53:43,930 --> 00:53:52,070
again, it's a new looking at the normal cost for peppermint events. Of course, and then

476
00:53:52,070 --> 00:53:58,670
so since the difference here is less than 1%, there was no change needed for peppermint

477
00:53:58,670 --> 00:54:08,090
events for the upcoming fiscal year. But please keep in mind that with changes of assumptions,

478
00:54:08,090 --> 00:54:17,990
as I mentioned, the drop from 7 to 6.8% and wherever the board may end up, potentially

479
00:54:17,990 --> 00:54:24,890
called lead to a change in the paper contribution rate for different members.

480
00:54:27,610 --> 00:54:35,290
We show in non-pool plans the normal cost rate for the different, for the different tiers.

481
00:54:35,290 --> 00:54:42,790
So you can see this plan is plan has two classic level benefits and a pepper level, which

482
00:54:42,790 --> 00:54:50,830
should the normal cost for each of the levels and the number of active members have at

483
00:54:50,830 --> 00:54:56,470
the particular plans. We have been seeing a lot of plans, of course, where the

484
00:54:56,470 --> 00:54:59,150
Pepper, membership is no.

485
00:55:00,000 --> 00:55:29,780
Increasing, it's kind of rare to see, you know, any significant increases in classic tiers, essentially, there are those are, those are closed, and there's a transfer from what, from one kelp is planned for another kelp is planned. So we, we, we wanted to those changes and overall that leads to a, a decreasing normal cost for, for

486
00:55:49,830 --> 00:56:02,250
We have some other additional information in the reports, which show the sensitivity to changes in the assumptions, what's interesting to you.

487
00:56:02,250 --> 00:56:11,090
Here on this one, the rate of return sensitivity of the discount rate gets moved from 7% down to 6%

488
00:56:11,090 --> 00:56:21,250
You can see that there's a significant increase in the crude liabilities as well as a significant increase in the normal cost rate.

489
00:56:21,250 --> 00:56:34,590
Similarly, if there was an increase in the normal cost rate, we would see a decrease in both a good liability and the normal cost rate.

490
00:56:35,010 --> 00:56:44,950
We also show in the next slide what a change in the inflation rate would have on the liabilities.

491
00:56:44,950 --> 00:56:54,050
And then find when you also show what the normal cost and what the the impact of a change of the mortality rates,

492
00:56:54,070 --> 00:57:02,930
because that's a significant assumption how long retirees are expected to earn their benefits.

493
00:57:03,670 --> 00:57:09,490
We have a slide in here, which summarizes some of the impact on these liabilities.

494
00:57:09,490 --> 00:57:15,630
I mean, up to 11 o'clock, so I have to let our needs to start our part of the presentation

495
00:57:16,490 --> 00:57:20,130
as a couple of more slides to cover before I hand over the controls.

496
00:57:20,770 --> 00:57:26,470
On these, we have a slide in here, which discusses the hypothetical termination liabilities

497
00:57:26,470 --> 00:57:34,710
in the plan. No, most of the plans, I'm sure all of the folks on the call here have ongoing plans,

498
00:57:35,150 --> 00:57:38,450
but we do have on occasion plans which terminate.

499
00:57:38,450 --> 00:57:43,510
and the underlying assumptions for terminating plan

500
00:57:43,510 --> 00:57:47,570
or significantly different, much, much lower discount rates

501
00:57:47,570 --> 00:57:53,270
and that reflects the very conservative investment strategy

502
00:57:53,270 --> 00:57:58,170
that assets for terminated plans are,

503
00:57:58,710 --> 00:58:02,650
because we essentially use government bonds

504
00:58:02,650 --> 00:58:05,950
for the terminated poll assets.

505
00:58:10,470 --> 00:58:20,050
polling question number three. Now this is one where everybody needs their crystal ball. It says I think the pandemic will last until.

506
00:58:21,370 --> 00:58:31,930
So, in the end of 2021, which is this year, early 2022, late 2022 and after 2022, so we'll

507
00:58:31,930 --> 00:58:36,230
give some time for attendees to select their option.

508
00:58:37,070 --> 00:58:39,790
And I just have a question for you, Julian.

509
00:58:40,750 --> 00:58:45,870
And, you know, of course, it's hard to tell how long the impact of this pandemic is going

510
00:58:45,870 --> 00:58:47,090
to go on for.

511
00:58:47,090 --> 00:58:59,510
But what are your thoughts on when our numbers that are being produced for CalPERS are going to start reflecting different mortality rates as a result of this pandemic?

512
00:59:00,630 --> 00:59:04,770
Will it take a couple of years or how long will it be, you think?

513
00:59:07,050 --> 00:59:31,870
Well, this is two issues. So number one is no black thing. The number of people that have actually passed away from COVID and the impact that has on the pension plans. That's one thing. And then this is the second impact is the longer term impact on mortality rates in general.

514
00:59:32,730 --> 00:59:44,190
So, regarding the first issue, the, you know, when we do our valuations as of next year from 2021.

515
00:59:45,970 --> 00:59:47,570
Sorry about the background noise.

516
00:59:51,240 --> 00:59:59,960
The valuations will reflect, you know, any deaths through June 30, 2021 reflected in.

517
01:00:00,680 --> 01:00:10,780
The next graduation. So we've got to see some gains and losses in marriage with respect to that. Again, the following year's

518
01:00:10,780 --> 01:00:17,040
valuation will never reflect even more than that data as well.

519
01:00:17,660 --> 01:00:29,120
I'm with respect to a lot of the longer term. Okay. Let's see what the group says late 2022, which I think

520
01:00:29,120 --> 01:00:30,660
is actually optimistic.

521
01:00:32,220 --> 01:00:37,140
The others, let's see, 2% says the end of this year,

522
01:00:37,820 --> 01:00:42,500
19% says early next year, and then after 2022,

523
01:00:42,620 --> 01:00:46,960
which is probably where my vote would be 35%.

524
01:00:46,960 --> 01:00:49,460
So kind of mixed across the board,

525
01:00:50,620 --> 01:00:54,000
but a lot of people are hopeful by the end of next year,

526
01:00:54,380 --> 01:00:56,480
this will kind of be over.

527
01:00:56,600 --> 01:00:57,840
So we hope so.

528
01:00:59,400 --> 01:01:02,840
We certainly need to thank you.

529
01:01:04,740 --> 01:01:07,840
So here, this was your question about the impact on the actual valuation.

530
01:01:08,600 --> 01:01:14,560
So, I wish you this year or how they had anything but the valuation ending June 30, 2021,

531
01:01:15,120 --> 01:01:22,860
will have a significant information on the COVID impact.

532
01:01:23,680 --> 01:01:29,140
There's other information in the reports, which you can see there on the slide.

533
01:01:30,040 --> 01:01:36,360
We talked about pension outlook before and I mentioned that the new tool is going to be available

534
01:01:37,080 --> 01:01:41,600
in the beginning of October tomorrow or the next week.

535
01:01:42,000 --> 01:01:43,580
So we can do a question.

536
01:01:44,580 --> 01:01:48,440
Our next polling question, which is a good one,

537
01:01:48,440 --> 01:01:52,460
Are you using the pension outlook tool?

538
01:01:52,940 --> 01:01:54,900
The option is yes, not yet.

539
01:01:55,140 --> 01:01:59,620
I will once it's available for pool plans or no.

540
01:02:00,160 --> 01:02:05,960
And I do know that the pension tool is very helpful and useful.

541
01:02:07,140 --> 01:02:15,040
And I encourage everyone to go out to the site and just play around with it.

542
01:02:15,260 --> 01:02:15,920
That's the whole plan.

543
01:02:15,920 --> 01:02:21,180
actually we should have updated this slide because it is available for pool plans

544
01:02:21,920 --> 01:02:29,340
awesome and has been for quite a while so hopefully all of our participants are aware of that

545
01:02:29,920 --> 01:02:39,000
and again it's a very pretty user-friendly tool to use you get access to it from the regular

546
01:02:39,000 --> 01:02:50,280
help us wet website. Anybody can sign up to get access to it. Okay, so 23% or using it.

547
01:02:52,500 --> 01:02:53,940
Hopefully, we'll.

548
01:02:54,380 --> 01:03:01,780
So 41% then I think the information you just shared will be very helpful to the 41%

549
01:03:01,780 --> 01:03:08,120
for those that are part of the pool plan. Just know that the tool is available for you now. And hopefully

550
01:03:08,120 --> 01:03:13,640
for those that say know that they'll at least venture out to the website and take a look at the

551
01:03:13,640 --> 01:03:21,000
tool. I know I had to use it during the first time we you CalPERS lowered the discount rate

552
01:03:21,000 --> 01:03:27,460
and there was a template that went around but then this tool was created and it's been really helpful

553
01:03:28,500 --> 01:03:35,840
when you want to play around with you know the different scenarios so please go out and check that out.

554
01:03:37,180 --> 01:03:45,460
good, and in the last thing, or well, for couples or wrapping up things, not the actually that's

555
01:03:45,460 --> 01:03:50,180
put together your report and signed it, it's right there in the report, so you can

556
01:03:50,180 --> 01:03:56,740
ways reach out to that actually, or, you know, that's a preferred method,

557
01:03:57,060 --> 01:04:02,920
you call the support center, you'll eventually get connected with your actually, but that may take

558
01:04:02,920 --> 01:04:12,260
a little bit longer, just want to throw it in. One word about the Calpis educational forum,

559
01:04:12,500 --> 01:04:18,480
which is online. This year is coming up in October. So please check it out website, whether

560
01:04:18,480 --> 01:04:24,760
it's for you or other folks in your agency. There's a lot of stuff about Calpis and

561
01:04:24,760 --> 01:04:44,580
aspects of benefits and administration and things along those lines, so you or many members of your staff may be interested in looking at or joining the educational forum later on in the October.

562
01:04:45,940 --> 01:04:51,620
But the key takeaways are a no contribution rates for next year.

563
01:04:51,920 --> 01:04:54,560
We took out the fund status of your contributions.

564
01:04:55,220 --> 01:04:59,960
Some issues about handling your unsundant criminal abilities in the impact of 20.

565
01:05:00,000 --> 01:05:10,980
May 2021 for you to invest in returns and use the recommendation to the virtual education forum and all.

566
01:05:11,380 --> 01:05:14,880
And everything else is my grandend on experience.

567
01:05:16,810 --> 01:05:23,030
Thank you so much, Julian. I learned a lot myself from the presentation.

568
01:05:23,030 --> 01:05:31,510
And so I appreciate that and to remind her for me too to go back out to look at the tool once it's been updated.

569
01:05:32,890 --> 01:05:33,970
Let's see here.

570
01:05:34,430 --> 01:05:35,430
Do I have?

571
01:05:36,210 --> 01:05:37,410
Yes, I am.

572
01:05:39,460 --> 01:05:40,240
I'm in control.

573
01:05:40,720 --> 01:05:41,480
Here we go.

574
01:05:41,940 --> 01:05:51,020
So how do we communicate information about CalPERS to city council and members of the public?

575
01:05:51,020 --> 01:05:59,580
So, in this slide here, we have our CalPERS annual valuation and this is actually from Page Six.

576
01:05:59,600 --> 01:06:05,220
This is the slide that Julian showed previously the table there as a five-year projection.

577
01:06:06,140 --> 01:06:12,880
And so, we do use, oops, let's see. We went forward to the polling.

578
01:06:15,060 --> 01:06:15,600
There we go.

579
01:06:15,600 --> 01:06:23,620
We do use this table, but I also do a 10 year forecast for city council and the members of the public.

580
01:06:24,080 --> 01:06:34,720
So we take it a step further, and we actually send our data and our report over to Bartel, which is also an agency we use for actually services.

581
01:06:35,640 --> 01:06:38,380
And so Bartel gives us a 10 year projection.

582
01:06:38,380 --> 01:06:51,400
And you can see there in the graph there that number one, some of the assumptions that Bartell factors into our numbers is the investment returns for the previous year.

583
01:06:51,640 --> 01:07:03,680
So fiscal year 2020, the 4.7% return is factored in the 21% return 21.2% return is factored in to this forecast as well.

584
01:07:03,680 --> 01:07:05,780
And that was from fiscal year 21.

585
01:07:07,040 --> 01:07:10,180
And so we also have employee cost sharing.

586
01:07:10,660 --> 01:07:13,720
And as Julian indicated, that's not built into these numbers.

587
01:07:13,940 --> 01:07:15,580
So they factor that in.

588
01:07:15,580 --> 01:07:20,300
And as Julian indicated, the projected payroll figures may need to be updated.

589
01:07:20,720 --> 01:07:22,560
Because we know our payroll figures best.

590
01:07:22,700 --> 01:07:24,700
So all that information is factored in.

591
01:07:24,880 --> 01:07:27,680
And we get this 10 year forecast that we can use.

592
01:07:27,780 --> 01:07:30,000
What you have here is the miscellaneous group.

593
01:07:30,000 --> 01:07:42,540
The green line is the normal cost, the red line is our unfundant liability payment, so the blue is represented of the total annual amount that we could expect to pay over the next 10 years.

594
01:07:43,180 --> 01:07:51,000
However, because we do have cost sharing agreements for both miscellaneous and safety group, the purple line represents the cost sharing.

595
01:07:51,000 --> 01:08:05,540
So when we combine that, we get a net employer cost, which is the gray line, so that's really the information we're communicating to council. It also shows the savings that we're realizing as a result of the employee cost share agreement.

596
01:08:06,000 --> 01:08:10,520
But as you can see even for the miscellaneous group, the safety is even higher.

597
01:08:10,880 --> 01:08:17,360
This is a significant contribution amount each year, so it becomes a major part of our budget.

598
01:08:17,360 --> 01:08:23,060
And when we're forecasting out 10 years, we definitely want to factor that in and it helps us make decisions.

599
01:08:23,880 --> 01:08:30,060
And in fact, we have done tax measures as a result of looking at our forecast 10 years out.

600
01:08:30,380 --> 01:08:37,720
Just to make sure that we have enough revenue for the next 10 years, we had a tax measure that was going to sunset in fiscal year 23.

601
01:08:37,960 --> 01:08:44,440
We went back to the community and explained why we needed to continue it for another 10 years.

602
01:08:44,440 --> 01:08:53,240
And so this is really helpful, and so I encourage you to look at the five-year forecast and really get familiar with the information.

603
01:08:55,080 --> 01:09:13,000
Next slide, do you use the five-year employer contribution projection for budgeting? So yes, yes, but we updated, you may update it for payroll calculations for cost sharing agreements, things of that nature, or no, you don't look at it.

604
01:09:13,000 --> 01:09:15,140
let's see what the results are.

605
01:09:19,220 --> 01:09:21,980
And we'll give people time to answer.

606
01:09:25,080 --> 01:09:27,400
And I will, I will go ahead, Julian.

607
01:09:28,020 --> 01:09:31,600
In I was gonna say that, I think you can also use

608
01:09:31,600 --> 01:09:34,380
the pension outlook tool to, yes.

609
01:09:34,660 --> 01:09:36,200
In the rate of five or 10 year,

610
01:09:36,340 --> 01:09:38,780
maybe even longer projection as well.

611
01:09:40,320 --> 01:09:40,880
Absolutely.

612
01:09:43,040 --> 01:09:47,680
It's definitely useful to try to get all your resources

613
01:09:47,680 --> 01:09:55,960
that you have because, you know, the information and let's see what results are, 40% say yes,

614
01:09:56,380 --> 01:09:59,960
42% say yes and they update it and make sure.

615
01:10:00,000 --> 01:10:08,140
And then 18% said no. So we need to get the 18% on board with this. It's very helpful.

616
01:10:09,740 --> 01:10:23,560
All right. Next slide. And why is doing the 10 year forecast helpful? Well, one of the reasons, as you see here, this is a report from the CalPERS annual evaluation report.

617
01:10:23,560 --> 01:10:28,020
And it shows the history of the investment returns.

618
01:10:28,800 --> 01:10:32,160
And so, you know, as those investment returns vary,

619
01:10:32,820 --> 01:10:35,820
it impacts what your contribution costs are.

620
01:10:36,040 --> 01:10:38,280
And so this is just one small example.

621
01:10:38,360 --> 01:10:42,840
So we received a report from Bartel back in April 2019

622
01:10:42,840 --> 01:10:44,320
with our projections.

623
01:10:44,900 --> 01:10:49,660
And you can see with the blue line that the contribution costs

624
01:10:49,660 --> 01:10:52,340
were pretty significant and they were increasing each year.

625
01:10:52,340 --> 01:11:05,820
And now with our updated report, that does factor in the investment returns of the 4.7% and the 21.2% from fiscal year 21, you see a significant difference.

626
01:11:06,620 --> 01:11:14,620
And so actually when you get out to fiscal year 27, 2627, the variance is about $2 million.

627
01:11:15,300 --> 01:11:17,860
So it's almost like we got a $2 million raise.

628
01:11:17,860 --> 01:11:27,160
Thank you CalPERS because the investment return really did make a shift in our forecasting.

629
01:11:28,180 --> 01:11:35,930
So it's just important. The only point here is take a look at it each year, do the projections each year.

630
01:11:36,760 --> 01:11:44,200
And just see where you are and communicate that information to the public to council, whoever would be interested in this information.

631
01:11:44,200 --> 01:11:53,180
But the investment returns from fiscal year 21 are definitely going to have a positive impact on our contributions cost going forward.

632
01:11:53,540 --> 01:11:58,900
And we hold that discontinues, but it's just something you have to monitor every year.

633
01:11:59,840 --> 01:12:00,720
Next slide.

634
01:12:01,780 --> 01:12:14,180
Now this is a discussion about the funded status and you discussed this Julian and showed us where to go and the report to find out what is the funded status of the agency.

635
01:12:14,180 --> 01:12:24,520
And I see that, you know, not only is this something of interest to council, but the bigger question is they do want to know, when are we going to get 100% funded?

636
01:12:25,060 --> 01:12:31,460
This is another report we received from Bartel. This is more of a stochastic report. So there's different.

637
01:12:31,460 --> 01:12:42,100
The most likely result is there the old green line there to we would be 100% funded around fiscal year 2039.

638
01:12:43,080 --> 01:12:50,500
That would be the most likely time that the agency this is for the miscellaneous group only would be fully funded.

639
01:12:50,500 --> 01:13:00,480
However, there is a 75% chance by this report that we would be fully funded at 100% in fiscal year 2029.

640
01:13:01,380 --> 01:13:09,060
And then there's also 25% chance that we would not be fully funded in the near future.

641
01:13:09,060 --> 01:13:19,040
24 or not, it would be sometime after 24, 9. Again, we just look at this annually, we want to make sure we're going in the right direction.

642
01:13:19,680 --> 01:13:23,900
We do communicate what our unfunded liability is to counsel.

643
01:13:24,460 --> 01:13:30,980
In fact, our unfunded liability is 280 million, and this was in the report just released from CalPERS.

644
01:13:31,760 --> 01:13:36,940
And so that's a material amount for our city, so it is something to monitor.

645
01:13:36,940 --> 01:13:40,380
and make sure we're just moving in the right direction.

646
01:13:40,520 --> 01:13:43,200
That number should be getting larger each year.

647
01:13:44,420 --> 01:13:46,900
And I do say, I did want to share,

648
01:13:47,000 --> 01:13:49,340
as a result of fiscal year 21,

649
01:13:50,160 --> 01:13:54,540
we do show that our projection is that we will be at 70,

650
01:13:54,780 --> 01:13:59,420
what is that 70, 177% in fiscal year 21.

651
01:13:59,740 --> 01:14:02,400
So that is up from the 68.3%.

652
01:14:02,400 --> 01:14:04,920
So that's good news, we're headed in the right direction.

653
01:14:04,920 --> 01:14:12,780
So you want to check that for your agency just to make sure that you're going to be seeing similar type results.

654
01:14:15,940 --> 01:14:15,960
Oops.

655
01:14:17,000 --> 01:14:18,440
Let's go back.

656
01:14:21,020 --> 01:14:22,400
I'm not going backwards.

657
01:14:25,300 --> 01:14:28,920
I may need some help from from Craig.

658
01:14:29,580 --> 01:14:30,260
There we go.

659
01:14:30,340 --> 01:14:31,760
Thank you.

660
01:14:32,460 --> 01:14:39,160
So this next slide is the work of art that Julian says that he sees when he sees this table.

661
01:14:40,220 --> 01:14:45,920
And I don't know if it's a work of art for us, but I will tell you why I like this table.

662
01:14:47,000 --> 01:14:55,220
As he discussed, depending on if you wanted to make a direct payment and you wanted to make it to your short bases or your long bases,

663
01:14:56,380 --> 01:14:59,240
you know, it would vary on how much money you would save.

664
01:15:00,900 --> 01:15:14,600
This is from our schedule. This is page 16. The lines that are highlighted in blue. If we took those and those are our short bases and we did a pre-payment.

665
01:15:15,200 --> 01:15:23,500
So, for the city of Culver City, we did set up a section 115 pension trust. In fiscal year 2019, we invested $10 million.

666
01:15:23,500 --> 01:15:31,040
And now is worth about 13.7 million projected to be around 14 million by the end of this year.

667
01:15:31,300 --> 01:15:34,080
Give her take, we'll see how the market does.

668
01:15:34,800 --> 01:15:38,660
But say we took that and we wanted to do a direct payment.

669
01:15:39,240 --> 01:15:42,760
And so we applied a portion to miscellaneous and a portion to safety.

670
01:15:43,180 --> 01:15:46,000
And as you can see here at the bottom of the slide,

671
01:15:46,360 --> 01:15:49,500
if we took 5.3 million towards miscellaneous,

672
01:15:50,520 --> 01:15:52,960
we would have a savings of 1.3 million.

673
01:15:52,960 --> 01:16:01,560
I will say if we took the rest of the money and applied it to the safety group, we would have a savings of 3.7 million.

674
01:16:02,180 --> 01:16:09,700
So it would be a total interest savings of about $5 million if we applied it to the short bases.

675
01:16:10,680 --> 01:16:19,940
Now if we in turn took the same amount of money but applied it to the long bases, which are the rows that are highlighted in kind of peach color.

676
01:16:19,940 --> 01:16:25,980
And we took the same amount of money, we would have a contribution savings for the miscellaneous

677
01:16:25,980 --> 01:16:33,960
group of 7.2 million, which is significantly more, and if we did the remainder of our balance

678
01:16:33,960 --> 01:16:40,660
and did a direct payment to the safety group, we would have a savings of 10.7 million.

679
01:16:40,660 --> 01:16:47,720
So we would have a total interest savings of about $17.9 million dollars.

680
01:16:48,460 --> 01:16:54,620
And so they're definitely advantages to making their direct payments if you have the funds available.

681
01:16:55,600 --> 01:17:02,620
Again, I, one-time money is also helpful to use those direct payments for one-time money.

682
01:17:03,160 --> 01:17:08,160
If it's not something that can be built into the budget on a regular basis.

683
01:17:08,160 --> 01:17:27,840
But definitely worth the savings there, and other option that we have looked at when communicating to council is taking the section 115 trust and pulling payments from it each year.

684
01:17:27,840 --> 01:17:37,600
And so, what you do is establish a target contribution amount, which on the graph on the left would be the orange line.

685
01:17:38,040 --> 01:17:42,740
And so, we've decided, okay, this is our target, our contribution budget.

686
01:17:42,840 --> 01:17:46,740
This is what we want to build into our budget. It's consistent.

687
01:17:47,440 --> 01:17:55,440
We can budget for it. We know the amount each year, so for the next, you know, seven years or so, we know how much we're going to pay.

688
01:17:55,440 --> 01:18:02,460
But when the actual contribution amount comes in, it is likely that it may come in higher than your target.

689
01:18:02,940 --> 01:18:09,000
And so in that scenario, what you can do is pull money from the section 115 trust to make up the difference.

690
01:18:09,780 --> 01:18:20,440
And so the graph on the right, the bar chart on the right shows pulling money from the section 115 trust, so the balance is going down each year.

691
01:18:20,440 --> 01:18:25,720
But Bartel did some analysis for us to see, you know, how much

692
01:18:26,400 --> 01:18:30,440
intersavings could we earn on this money over the years?

693
01:18:30,920 --> 01:18:34,740
And so again, we started out with an investment of 10 million, as I indicated,

694
01:18:35,880 --> 01:18:41,820
today it's worth about 13.7 million, if we used a 6% rate of return,

695
01:18:42,540 --> 01:18:47,060
which we think is, you know, doable over the next few years,

696
01:18:47,060 --> 01:18:52,200
We could potentially earn about 11.3 million dollars in interest.

697
01:18:52,840 --> 01:18:59,740
And so that is money that basically is helping us kind of lower our expenditures each year.

698
01:19:00,440 --> 01:19:11,400
So we would take money out the first year in this graph you see the funds would be withdrawn in fiscal year 2023.

699
01:19:12,320 --> 01:19:16,460
and it would continue through 2033, fiscal year 2033.

700
01:19:17,680 --> 01:19:20,220
And for the safety group, which is not here on this slide,

701
01:19:20,640 --> 01:19:23,140
we would continue to make payments to 2035.

702
01:19:23,620 --> 01:19:25,920
So over a 16 year period,

703
01:19:26,800 --> 01:19:29,580
we would be able to utilize these funds.

704
01:19:30,400 --> 01:19:34,460
So this is another idea that agencies consider as well.

705
01:19:35,060 --> 01:19:36,640
So with that,

706
01:19:37,480 --> 01:19:40,460
we are at discussion and Q&A.

707
01:19:41,080 --> 01:19:47,380
So, if there are any questions from the group that they would like to ask Julian or myself,

708
01:19:48,260 --> 01:19:49,760
you can send those through.

709
01:19:50,280 --> 01:19:54,740
There should be a panel there for questions and answers that you can submit.

710
01:19:57,640 --> 01:19:59,360
And we will read off your questions.

711
01:20:05,500 --> 01:20:22,560
I'm not seeing any questions come in, so obviously, I mean, we did get into some detail questions throughout the session, but I just, sorry, we went to a little too far. So just on a couple other issues though, obviously, if anybody in the audience has questions, oh, sorry. I think Julie and someone might have control here, let me take that slide.

712
01:20:26,480 --> 01:20:34,560
You know, if you do guys have any questions, I did clear beforehand to give out Julie's email, you know, you could be a very popular person and obviously on it.

713
01:20:35,260 --> 01:20:39,860
In in showing and sharing how she works with her board in her city.

714
01:20:40,500 --> 01:20:45,260
Either or are willing to answer questions that maybe if we don't get to today, we just have a question.

715
01:20:45,960 --> 01:20:47,620
And I'm a little just asking on it.

716
01:20:47,620 --> 01:20:52,800
Okay, for help, as CalPERS noticed an increase in retirement and if so, what effective

717
01:20:52,800 --> 01:20:56,820
any is that having, um, that's a good one, that is.

718
01:20:57,900 --> 01:21:05,460
Yeah, I think we have noticed, you know, impact on retirement rates, I guess, my most

719
01:21:05,460 --> 01:21:08,140
impacted by COVID,

720
01:21:10,320 --> 01:21:17,000
um, difficult to say exactly what the impact is going to be on the, on the

721
01:21:17,000 --> 01:21:25,160
funding status. Possibly there could be gains. People taking the benefit early on the other

722
01:21:25,160 --> 01:21:32,880
hand, the benefits will now be in retirement rather than actively working, so people will

723
01:21:32,880 --> 01:21:40,760
be expected to be receiving benefits for a longer period of years, so there's kind of offsetting

724
01:21:40,760 --> 01:21:48,820
impacts on the potential of setting impacts on the liability so until we actually sit down

725
01:21:48,820 --> 01:21:56,000
with paint papers that I speak and do the actual calculations. It's not separate, but certainly

726
01:21:56,000 --> 01:22:07,040
there we have noticed that agencies have had some higher retirement episodes and then we'll

727
01:22:07,040 --> 01:22:14,180
to see if it's also made up by additional new highest coming in as well, and generally for a new

728
01:22:14,180 --> 01:22:19,580
higher, there's going to be a pepper employee compared to a retiring classic, so you would expect

729
01:22:19,580 --> 01:22:29,860
the overall costs to decrease from that factor though, a number of different impacts put potentially here.

730
01:22:30,460 --> 01:22:35,280
Here's a question that just came in, Julian, thank you for that. The latest report factors and the

731
01:22:35,280 --> 01:22:39,100
returns from which fiscal year is the 2019 or the 2020, I believe?

732
01:22:40,000 --> 01:22:47,100
Right, through June 30, 2020, 2020, the next report will factor in the large game that

733
01:22:47,100 --> 01:22:56,140
we had plus the potentially offset by any decision the board makes with respect to and changes

734
01:22:56,140 --> 01:22:58,040
of the discount rate.

735
01:22:58,860 --> 01:23:04,340
And, Julie, it isn't true that the investment returns, for example, from 2021, you don't

736
01:23:04,340 --> 01:23:09,940
really start to see the effects of that until maybe some of the later years.

737
01:23:10,780 --> 01:23:18,920
Right, so the next report, which will do be the June 30, 2021 report, which will set the

738
01:23:18,920 --> 01:23:26,480
contribution rates for 2324. So it will take a little bit of time for, before we see the impact

739
01:23:26,480 --> 01:23:29,400
of that. Yeah. So into the right, yes.

740
01:23:30,300 --> 01:23:33,520
And Julie, here's another question. Can you please walk through the difference of the pepper

741
01:23:33,520 --> 01:23:42,300
normal costs, shown on page 22 and 23. So, pardon the movement, but let me go back to navigate

742
01:23:42,300 --> 01:23:43,240
back to those pages.

743
01:23:45,890 --> 01:23:46,370
The fees,

744
01:23:50,020 --> 01:23:56,940
22 and 23. Right. Yes. So, on, let's go back to the previous page,

745
01:23:58,240 --> 01:24:05,300
yeah, that page there. Okay. So, I mentioned what when we were looking at the normal cost projection,

746
01:24:05,300 --> 01:24:10,060
over this five year period for a non-pull plan.

747
01:24:10,960 --> 01:24:13,260
We can see the normal costs rate,

748
01:24:13,500 --> 01:24:15,240
no decreasing, it's 9.

749
01:24:15,820 --> 01:24:19,760
For the 22, 23 fiscal year, it's 9.83.

750
01:24:20,300 --> 01:24:22,560
Then we're having a decrease to 9.6,

751
01:24:22,880 --> 01:24:25,280
like 0.4, and 1.2 and 0.8.

752
01:24:25,420 --> 01:24:28,440
So the, because in general,

753
01:24:28,720 --> 01:24:32,380
no if you're dealing with the same group of employees,

754
01:24:32,540 --> 01:24:34,580
the normal costs should stay the same.

755
01:24:34,580 --> 01:24:39,500
But what we're factoring in here is based on the experience of the plan,

756
01:24:40,200 --> 01:24:45,600
the newer as new Pepper members, join in, join the plan,

757
01:24:45,960 --> 01:24:49,640
normal costs rate for those Pepper members.

758
01:24:50,260 --> 01:24:57,620
And has the overall effect of reducing the average normal cost for the entire plan.

759
01:24:58,400 --> 01:24:59,960
So what we do in the package.

760
01:25:00,000 --> 01:25:07,380
Reaction here is reflect, note the change in the balance of the number of paper employees, increases.

761
01:25:08,660 --> 01:25:19,420
The number of that is an impact of reducing the average normal costs of the whole group and similarly the normal cost percentage for the employer.

762
01:25:20,700 --> 01:25:23,780
So that's all we're demonstrating here.

763
01:25:23,780 --> 01:25:30,920
I don't think there was anything on, no more cost related on that second slide.

764
01:25:32,640 --> 01:25:36,820
Yeah, there was nothing specifically, no more cost related to you.

765
01:25:37,560 --> 01:25:39,400
And, honestly, we got a question actually for you too.

766
01:25:39,580 --> 01:25:43,340
Why not make the contribution directly to Galpers versus the 115 trust?

767
01:25:44,980 --> 01:25:47,520
You know, it really is a decision of the agency.

768
01:25:47,720 --> 01:25:50,860
I think for city council at the time,

769
01:25:50,860 --> 01:25:57,280
it, you know, when you look at our unfinished liability, it was just 10 million. It wasn't a whole lot.

770
01:25:58,060 --> 01:26:06,120
And they really focus on the forecast significantly, um, put a lot of weight into, will we be

771
01:26:06,120 --> 01:26:13,260
able to meet our expenditures five, seven years down the road. And the decision was one,

772
01:26:13,260 --> 01:26:19,860
let's see if we can get a better rate of return with our pension trust. But then also, let's have

773
01:26:19,860 --> 01:26:26,760
available so it can kind of even out our budget projections because it was really clear we had a structural

774
01:26:26,760 --> 01:26:34,220
deficit moving forward. Now we may want to revisit that because as I indicated we did recently

775
01:26:34,220 --> 01:26:40,440
get a new tax measure passed and you know kind of as a result of COVID and things going on we went

776
01:26:40,440 --> 01:26:46,460
to the community and said you know we need this tax measure and they supported it so it is something

777
01:26:46,460 --> 01:26:49,160
that may need to be revisited going forward.

778
01:26:49,280 --> 01:26:53,540
The decision at that time was, let's secure our budget

779
01:26:53,540 --> 01:26:58,360
so that we know, yes, so one more.

780
01:26:58,360 --> 01:26:59,840
Oh, you're going to do a different thing.

781
01:27:00,200 --> 01:27:01,300
I'm going back to there.

782
01:27:01,420 --> 01:27:03,120
We got a follow-up question to the patient.

783
01:27:03,120 --> 01:27:04,280
OK, I'm going to point through.

784
01:27:04,340 --> 01:27:05,140
Got it.

785
01:27:05,780 --> 01:27:10,980
And so, you know, let's make our budget so we can manage it.

786
01:27:10,980 --> 01:27:13,480
And we'll have that money available to make the difference

787
01:27:13,480 --> 01:27:22,720
When we get those increased contribution costs, we can make that with, you know, the funds in the section 115 address.

788
01:27:23,420 --> 01:27:25,280
Sorry to throw you off on, I said, and I know what to do.

789
01:27:25,340 --> 01:27:26,060
No worries.

790
01:27:26,500 --> 01:27:27,000
No worries.

791
01:27:27,180 --> 01:27:27,540
Go right ahead.

792
01:27:27,680 --> 01:27:28,520
But I just want to follow up.

793
01:27:28,540 --> 01:27:31,360
I think there's going to be the last opportunity for a question this today.

794
01:27:31,660 --> 01:27:34,380
Oh, if I mean that if you look on pages 22, sorry.

795
01:27:34,420 --> 01:27:34,920
I'm reading the question.

796
01:27:35,380 --> 01:27:41,980
And 23 of the valuation reports, the normal cost for the same year for Petra members is different.

797
01:27:41,980 --> 01:27:48,320
For example, our report shows 13.98% on page 22, and 12.95% on page 23,

798
01:27:48,640 --> 01:27:52,700
both are for the normal cost for fiscal year 22 to 23. Does that make sense?

799
01:27:54,220 --> 01:28:02,420
Yes. So what's going on there? It's a complicated answer. I'll try to do it in the nutshell.

800
01:28:03,600 --> 01:28:12,860
We, we determine the pepper contribution rate that employees pay a looking at the percentage

801
01:28:13,840 --> 01:28:18,420
of members in the plan, which are representatives.

802
01:28:19,100 --> 01:28:24,080
So basically it's less than a quarter of the active people, and this is only from the non-co plans.

803
01:28:24,880 --> 01:28:31,980
So in the non-co plan, if there's less than 25% of the members who are pepper members,

804
01:28:31,980 --> 01:28:40,240
the more we effectively do is we run all of the active members through and treat them as if

805
01:28:40,240 --> 01:28:47,620
they were peppermembers, notionally, and come up with a contribution rate as if all the members

806
01:28:47,620 --> 01:28:57,820
of the plan were peppermembers. If there's more than 25% or maybe 50% that can remember exactly,

807
01:28:57,820 --> 01:29:03,200
then we just run the Pepper members as a standalone group,

808
01:29:04,060 --> 01:29:06,440
lowering all of the classic members.

809
01:29:07,020 --> 01:29:08,920
So there are some demographic differences

810
01:29:08,920 --> 01:29:13,140
between the entire group and Pepper group

811
01:29:13,140 --> 01:29:16,060
that stand alone, so that generates the difference

812
01:29:16,060 --> 01:29:18,960
between the Pepper rates you see on one page

813
01:29:18,960 --> 01:29:20,700
and the following page,

814
01:29:20,940 --> 01:29:23,020
and getting into the details and the full figure.

815
01:29:23,820 --> 01:29:33,020
Which is exactly why we put your email up there and so just as we wrap up today, folks, let me just launch our last poll of the day and just which of today's session were of the greatest value.

816
01:29:34,300 --> 01:29:40,240
Provide guns on how to extract the most value from your 20 report that's pretty that's pretty valuable I would think.

817
01:29:40,400 --> 01:29:47,420
Discuss the changes you were seeing in the reports review the five of your contribution projections talk about the 80 p changes or all of the above.

818
01:29:47,420 --> 01:29:52,460
And obviously, we say goodbye today to Julie and Anonix.

819
01:29:52,520 --> 01:29:54,640
Thank you both so much for spending time.

820
01:29:54,740 --> 01:29:57,740
I know Julie and your kind of, this is kind of like a recurring theme for you,

821
01:29:57,740 --> 01:29:58,940
like, about the same time every year.

822
01:29:59,780 --> 01:29:59,980
And, you know,

823
01:30:00,000 --> 01:30:04,040
It's an encore performance because I think it's so useful for people and our members.

824
01:30:04,760 --> 01:30:07,940
And so we definitely thank you for repeating the performance again.

825
01:30:08,360 --> 01:30:12,860
And on X, I think it's especially helpful when we take this sort of state-wide information

826
01:30:12,860 --> 01:30:17,640
and really make it come to life and talk about, you know, in your particular example, the city of Culver City

827
01:30:17,640 --> 01:30:23,100
and how you can get it. We really do appreciate you guys taking the time today to kind of share that information with us.

828
01:30:23,460 --> 01:30:24,320
You're very welcome.

829
01:30:27,440 --> 01:30:33,720
And so with that, I'd like to again, thanks everyone for joining us today, and until next time,

830
01:30:34,480 --> 01:30:41,000
the just for everyone's clarification, the current copy of the handout will be available

831
01:30:41,000 --> 01:30:46,740
on the CSMO website, which is available here at this audio archive.

832
01:30:46,980 --> 01:30:54,000
There will be a video recording of this session, which I'm sure people will need to go through

833
01:30:54,000 --> 01:30:57,640
and recall those detailed pages that we looked at.

834
01:30:58,100 --> 01:30:59,820
But all that should be available by tomorrow afternoon.

835
01:31:00,600 --> 01:31:02,500
So if anybody has any issues or questions with that,

836
01:31:02,660 --> 01:31:03,540
feel free to let me know.

837
01:31:03,660 --> 01:31:05,440
But in the meantime, thanks, everyone,

838
01:31:05,800 --> 01:31:06,900
and have a great day.

839
01:31:07,660 --> 01:31:08,200
Thank you.

840
01:31:08,640 --> 01:31:09,120
Thank you.