HomeMy WebLinkAbout1989-11-08 Council Packet - Work Session, CIP RIPKenai City Council
Work Session
November 8, 1989
Capital Improvement Projects
Retirement Incentive Program
EMT Ambulance Program
AGENDA
KENAI CITY COUNCIL WORK SESSION
NOVEMBER 8, 1989
A. Direction of City, 5 Years
B. Capital Improvement List (CIP)
C. Retirement Incentive Program (RIP)
D. Scheduling of Work Session for EMT Ambulance Program
E. Request by KCHS-PAC for Purchase of 3 Bicentennial
Watches
NOTE:
A. Governor's Commission on Permanent Fund Meeting,
Nov. 11, 1989, 11:00 AM to 4:00 PM, Legislative
Information Office, K-Beach
B. Kenai Caucus Annual Meeting, Nov. 11,1989, 9:30 AM
to 4:00 PM, Borough Assembly Room
CITY OF KENAI
1990-91 Capital Improvement Projects
(Proposed)
1. Area Wide Economic Development:
Congregate Housing $ 6,000,000
2. Health & Safety:
a. Water & Sewer Main Line Development 1,800,000
b. Sewer Treatment Plant Modification 325,000 **
C. Community Road Development 2,200,000
3. Economic Development & Tourism:
a. Boat Ramp Facilities $ 200�000
b. Softball Control Center
& Pavilions 150�000
c. Old Town Roads & Viewing
Platforms 650,j000
t
Total
1,000,000
$11,325,000
* In addition to a $1,200,000 grant requested from ADEC
water & sewer grant program
** Needed to comply with latest NPDES discharge permit and
EPA/DEC requirements. In addition to a $325,000 grant
requested from ADEC water & sewer grant program.
1. Michael W. Ah1fors
1)
2.
Gretchen Alexander
3.
Wm. J. Brighton
4-
David C, lour. not 1,
S.
Emily H. DeForest
Howard 1". hackl)ey
7.
Alf red. Ivai)of. t
S.
Clyde ;Johnson
9.
Dennis A. bovett,
10.
Garlawli (Kayo) McGili:vra-,17
!I.
Richard A. Mc,(;raov
H) i a.-r H. S P a r Y) (-.. I
4.
1) a 14
I
Ramon Rodgers
I
'j. Rouer;
17.
Xictiard A. Foss
oa))(--�I. A. z"'Utosajo
Wiliam M. Mercer Meidinger Hansen, Incorporated
STATE OF ALASKA
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
ACTUARIAL VALUATION REPORT
AS OF JUNE 30, 1988
Prepared by
William M. Mercer Meidinger Hansen, Incorporated
3200 One Union Square
Seattle, Washington 98101
Wirearn M. Mercer Meidinger Hansen, Incorporated
JIGHLIGHTS
This report has been prepared by William M. Mercer Meidinger Hansen,
Incorporated to:
(1) present the results of a valuation of the Alaska Public
Employees' Retirement System as of June 30, 1988;
(2) review experience under the plan for the year ended June
30, 1988;
(3) determine the contribution rates for the State and for each
political subdivision in the system;
(4) provide reporting and disclosure information for financial
statements, governmental agencies, and other interested
parties.
The report is divided into two sections. Section 1 describes the basis
of the valuation. It summarizes the plan provisions, provides
information relating to the plan participants, and describes the
funding methods and actuarial assumptions used in determining
liabilities and costs.
Section 2 contains the results of the valuation. It includes the
experience of the plan during the 1987-88 plan year, the current annual
costs, and reporting and disclosure information.
The principle results are as follows:
Funding
Status as of June 30:
(a)
Valuation Assets*
$1,898,253
$2,088,428
(b)
Accrued Liability*
1,905,005
2,246,583
(c)
Funding Ratio,
Contributions
for Fiscal Year:
1 (
9911
(a)
Consolidated Rate
9.23%
10.37%
(b)
Average Past Service Rate
.07%
1.63%
(c)
Average Total Contribution
Rate 9.30%
12.00%
* In thousands.
1
William M. Mercer Meidinger Hansen, Incorporated
n preparing thi
ctuarial methods
rovided to us by
y Peat, Marwick,
flan liabilities.
for funding it are
Standards Board,
regulations.
s
valuation, we have employed generally accepted
and assumptions, in conjunction with employee data
the plan sponsor and financial information provided
Main & Company, to determine a sound value for the
We believe that this value and the method suggested
in full compliance with the Governmerntal Accounting
the Internal Revenue Code, and all applicable
Respectfully submitted,
Robert F. Richardson, ASA
Principal
RFR/BRM/js
March 30, 1989
Brian R. McGee, FSA
Principal
2
William M. Mercer Meidinger Hansen, Incorporated
ANALYSIS OF THE VALUATION
Retiree Medical Insurance
Last year there was an actuarial loss of $118,947,000 due to the large
increase in retiree medical premiums. More importantly, from a cost
point of view, this increase resulted in a 5.66% increase in the
employer contribution rate.
An analysis of retiree medical claims for the past two years shows a
decrease in hospital admissions and hospital days per retiree per year,
for both under and over age 65. However, total hospital expenses per
retiree during these two years increased 18% for retirees over age 65,
and 36% for those under age 65.
For many years, we have commented on the substantial increases in
retiree medical insurance premiums. The following table summarizes
the monthly premium, per benefit recipient, since retiree medical
became a benefit of the PERS.
Monthly Premium
Annual
Average Annual
Fiscal
Per Retiree
Percentage
Increase
Year
For Health Coverage
Increase
Since 1978
1977
$ 34.75
--
--
1978
57.64
664
--
1979
69.10
20%
20%
1980
64.70
- 6%
6%
1981
96.34
49%
19%
1982
96.34
0%
14%
1983
115.61
20%
15%
1984
156.07
35%
18%
1985
191.85
24%
19%
1986
168.25
-12%
14%
1987
165.00
- 2%
12%
1988
140.25
-15%
9%
1989
211.22
51%
13%
1990
252.83
204
13%
In FY86, the upward spiral of retiree health insurance premiums
reversed. At the time it was felt that some of this decrease was due
to the cost containment measures which were established and some was
due to a correction from the prior year's increase. This downward
trend continued in 1987 and 1988. Unfortunately, medical premiums for
retirees have once again reversed with an 80% increase in the last two
years.
3
RUM --cost after a -retiree reaches age 65. During the next few
years, the percentage of retirees over age 65 should increase,
relieving some of the upward pressure on retiree medical premiums.
The chart on page 5 shows medical claims for pre-65 retirees increasing
faster than claims for post-65 retirees. This may reflect the impact
of DRG reimbursement holding down claims for retirees over age 65 and
eligible for Medicare, and a "cost shift" toward retirees under age 65
and not eligible for Medicare.
Investment Performance
The effect of "Black Monday" on stock market prices was still felt by
the equity portion of the PERS portfolio by the end of the fiscal year.
Based upon the fund's market value, the investment return during the
year was only 2.04%. Valuation assets are based upon a three-year
smoothing of actuarial values. Nevertheless, investment return based
upon valuation assets was only 6.12% during the year. The net result
was an actuarial loss from investment sources of $55,684,000.
Retirement Incentive Program
The cost of the RIP is being paid by employers based on the actuarial
value of the extra benefits, calculated individually for each employee
who elected to retire under the Program. This cost is being paid over
a three-year period. Based on historical averages, it was assumed in
the RIP cost calculations that 69% of all retirees would reside in
met, the total cost to the System is
value paid by employers for the RIP.
)trity is eepectea to aecrease as
If the original assumptions are
projected to equal the actuarial
4
NiTPiarn M. Mercer Meidinger Hansen, Incorporated
alary Increases
omewhat offsetting the above -mentioned actuarial losses was an
ctuarial gain from salary increases which were less than anticipated.
he actuarial gain from these less -than -anticipated salary increases
as $18,488,000.
Additional Exhibits
In this year's actuarial valuation report we have included several new
graphs and exhibits. These exhibits will be regular features of our
reports in the coming years.
Summary
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TO DO L T
NOVEMBER , 1989
KENAI CITY CO CIL WORK SESSION
' 1. J. Ruotsala - List "D'rection of City" items for
Council work sessio
2. Sr. Connection Gro - Meet with Ashley Reed and
available legisla rs re/Congregate Housing
3. K. Kornelis - CI brochure publication
4. C. Brown - Reso ution at 11-21 meeting for RIP
acceptance. List of eligible employees with total of
training cos at bottom of print out.
J. Ruotsala Arrange gift of Bicentennial watches for
Russian vi tors to KCHS
�. J. Ruotsa - Arrange Work Session for EMT on Dec. 4.
jr