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HomeMy WebLinkAboutRFQ Response - Bolton Partners5 zx j' t § i �F f .: z'a3 y#yg sCgM � his 17 ,. tii F .a` ! P`�_ °` �f �4.ys �'� - �� � s 1 per' 1 �t �`F '§� r�r�`� � 1 6 Ea .� y�.l. •� � �^�x, ,cit PER Sk 1a aria - ,NL E e ,,-c£:y§ i tea: �. -''six,• `rr. _ m r t Certification Statement Please quote on this form, if applicable, net prices for the item(s) listed. Return signed original and retain. a copy for your files. Prices should include all costs, including transportation to destination. The City reserves the right to accept or reject all or any part of this submission. Prices should be firm for a minimum of 180 days following the time set for closing of the submissions, In the event of errors in extension of totals, the unit prices shall govern in determining the quoted prices. We (1) certify that we have read your solicitation, completed the necessary documents, and propose to furnish and deliver, F.Q.B. DESTINATION, the items or services specified herein. The undersigned hereby certifies that neither the contractual party nor any of its principal owners or personnel have been convicted of any of the violations, or debarred or suspended as set in section 18-107 or Ordinance No. 12271. All exceptions to this submission have been documented in the section below (refer to paragraph and section). EXCETITONS: We m certify that any and all information contained in this submission is true; and we (1) further certify that this submission is made without prior understanding, agreement, or connection with any corporation, firm, or person submitting a submission for the same materials, supplies, equipment, or service, and is in all respects fair and without collusion or fraud. We (I) agree to abide by all terms and conditions of this solicitation and. certify that I am authorized to sign this submission for the submitter. Please print the following and sign your name: SiJPPLIER Nom: Bolton. Partners. Inc. ADDRESS. 100 Light Street, 9th Floor, Baltimore, Marvland 21202 PHONE: 1-800394-0263 FAX: 410-685®1924 EMAIL: _ infonboltonpartners.com BEEPER: SIGNED BY: Thomas B. Lowman�`-ti�---- TITLE: Vice -President DATE: -1122-LI-5 FAILFJRE TO GOMpLFTL SIGN ANIUMIULMS FORM SHALL DISO Z H+'V Tffi+ DID. Page 2 of 40 Certifications Legal blame of Firm: Bolton Partners Inc. Entity Type: Partnership, Sole Proprietorship, Corporation, etc. l Corporation Year Established: 1981 Office Location: City of Miami, Miami -Dade County, or Other Boca Raton Occupational License Number: N/A Occupational License Issuing Agency: N/A. Occupational License Expiration Date: N/A If Proposer has a local office, as defined under Chapterl8/Article 111, Section 18-73 of the City Code, has Proposer filled out, notarized, and included with its proposal, the "City of Miami Local Office Certification" form? YES or NO? The City of Miami Local Office Certification form is located in the Oracle Sourcing System ("iSupplier"), under the Header/Notes and Attachment Section of this solicitation, N/A Please list and acknowledge all addendum/addenda received. List the addendum/addenda number and date of receipt (i.e. Addendum No. 1, 5/1115), If no addendum/addenda was/were issued, please insert N/Ar Addenda 1-5 received by 8/5/2015 Has Proposer reviewed the attached Sample Professional Services Agreement (PSA)? Yes Does the Proposer acknowledge that the attached PSA is an example of the standard Agreement used in conjunction with the services related to this solicitation and shall not be amended? Yes Page 3 of 40 ECover Letter............................................................................................................................ 2 ExecutiveSummary., ................................................................................... - ........................... 4 ProposerInformation............................................................................................................. 5 a. A. Proposer's General Experience, Past Performance Exceptions ............................ 5 B. Category Specific Experience................................................................................... 7 Category Specific Experience and Qualifications of Key Personnel .............................. 13 1 Appendices............................................................................................................................. 19 Appendix A - Sample Work Product............................................................................ 19 I ` Appendix B ® Price Proposal Schedule.......................................... 35 BOLTONJ PARTNERS August 6, 2015 Ms. Maritza Suarez, CPPB Purchasing Department City of Miami 3500 Pan American Drive Miami, Florida 33133 Re: RFQ#501331- Request for Miscellaneous Management Advisory Consulting Services Dear Ms. Suarez: On behalf of Bolton Partners, Inc, we are pleased to submit our proposal for the above referenced item. Our proposal briefly demonstrates why Bolton Partners is uniquely qualified to assist the City of Miami (the City) with professional actuarial services for the Finance and Economics category under requested services of the RFQ. Founded in 1981, Bolton Partners, Inc. is an employee benefits consulting firm headquartered in Baltimore, Maryland. Bolton Partners also maintains offices in Boca Raton, Florida; Washington, D.C.; Trenton, New Jersey; Philadelphia, Pennsylvania; Atlanta, Georgia; and Denver, Colorado. We have over ninety full-time employees in our firm. Headquarters: 100 Light Street, 9th Floor Baltimore, Maryland 21202 1(800) 394-0263 Boca Raton Office: 7279 Panache Way Boca Raton, Florida 33433 (561) 362-7176 Jeff DeLisle, senior consultant and Kevin Binder, FSA, EA, senior consultant are authorized to represent the firm.. Contact Information: Jeff DeLisle 7279 Panache Way Boca Raton, Florida 33433 (561) 362-7176 idelisle@bolfonpartners.com Kevin Binder, FSA, EA 100 Light Street, 91h Floor Baltimore, Maryland 21202 443-573-3906 kbinder@boltonpartners.com Bolton Partners, Inc. 7279 Panache Way • Boca Raton, Florida 33433 • (561) 362-7176 • cell (443) 824-6901 Actuarial, Benefit and Investment Consultants Ms. Suarez August 6, 2015 Page 2 Bolton Partners EIN# 52-1231144 Thank you for considering us. We look forward to working with you and your colleagues. If there is any aspect of our business we can further elaborate on, please feel free to contact us directly. Sincerely, BOLTON PARTNERS, INC. deDeLisle Senior Consultant BOLTON PARTNERS, INC. 1 A Kevin Binder, FSA, EA Senior Consultant Bolton Partners, Inc. Bolton Partners 7279 Panache Way, Boca Raton, .Florida 33433 561.362.7176 EXECUTIVE SUMMARY Bolton Partners has been serving clients as actuaries and benefits consultants for more than 30 years. We have over 30 clients in Florida who we assist with pension and OPEB valuations and studies. As actuaries and employee benefit consultants, we are well positioned to help you with your needs in those areas as they arise. We would like to bring the following to your attention: • We have worked with several Florida cities over the past two years on pension and OPER (retiree medical) issues. We are well versed in Florida pension rules. Our clients in Florida have been the employers and not the plans/Trustees. • We have provided advice, expert witness support and testimony in some of the most significant actuarial litigation cases in the country. This includes the State of Alaska $500 million settlement and the recent San Jose settlement of pension litigation. • We have been involved in pension negotiations in the State of Kentucky, Rhode Island, and the City of Baltimore. • We are very involved to the emerging derisking debate for public plans. This includes providing derisking options for our valuation clients, documenting the risk associated with pension designs/improvements and writing/reviewing papers on this subject. • We have "stochastic" modeling software that projects the probabilities of different contribution levels in the future. • We have over a hundred pension and OPEB valuation clients. • We know the GASB pension and accounting rules and testified and the GASB hearings on both sets of rules when they were proposed. • We are pension and OPER design and funding experts. • We are involved with national professional organization and Tom Lowman (our Chief Actuary) is the Vice Chair of both the Conference of Consulting Actuaries Public Plans Community and the American Academy of Actuaries Public plans subcommittee. Tom helped write the CCA paper on funding thot can be found at: http://www.ccactuaries com/publications/news/CCA-PPC-White-Paper-on- Public-Pension-Fundin-Policy_.pdf • We have experts in the area of pension investment and employee health and welfare benefits. 41 Page f Bolton Partners 7279 Panache Way, Boca Raton, Florida 33433 561.362.7176 .i 4. PROPOSER INFORMATION A. Proposer's General Experience, Past Performance and Exceptions 1. Describe the Proposer's past performance and experience and state the number of years that the Proposer has been in existence, the current number of employees, and the primary markets served. Since 1981, Bolton Partners has provided actuarial, benefit and investment consulting services to clients throughout the United States. Bolton Partners, Inc. (BP) was founded by Mr. Robert G. Bolton, FSA, EA, MAAA, FCA, as an independent actuarial and employee benefits firm. Headquartered in Baltimore, Maryland, Bolton Partners also maintains offices in Boca Raton, Florida; Atlanta, Georgia; Washington, DC; Trenton, New Jersey; Philadelphia, Pennsylvania and Denver, Colorado. Our 4 divisions are: • Retirement Actuarial • Health and Welfare Benefit Consulting • Investment Consulting • Health Actuarial Consulting Since our founding, actuarial and consulting for public sector benefit plans has been a central focus. We also provide actuarial and consulting services to multi-employer plans and the private sector. In addition, our Health Actuarial Division provides health care actuarial consulting services for insurance companies, states and the federal government. Bolton Partners one hundred employees serve our clients throughout the United States, with an emphasis on the East Coast market. 2. List all contracts which the Proposer has performed for the City of Miami, and include for each project: (i) name of the City Department which administers or administered the contract, (ii) description of work, (iii) total dollar value of the contract, (iv) dates covering the term of the contract, (v) City contact person and phone number, (vi) statement of whether Proposer was the prime contractor or subcontractor, and (vii) the results of the project. Although Bolton Partners has varied experience in Florida, we have yet to perform any projects for the City of Miami. 5 1 Page Bolton Partners 7279 Panache Way, Boca Raton, Florida 33433 561.362.7176 i 3. Provide any information concerning any prior or pending litigation, either civil or criminal, involving a governmental agency or which may affect the performance of the services to be rendered herein, in which the Proposer, any of its employees or subcontractors is or has been involved within the last three years. Bolton Partners does not have any prior or pending litigation, either civil or criminal, involving any governmental agency. 6 1 Page i Bolton. Partners 7279 Panache Way, Boca Raton, Florida 33433 561.362.7176 B. CATEGORIC SPECIFIC EXPERIENCE Note: Any Proposer submitting a proposal for multiple service categories must provide in its proposal complete and separate responses for items 4 through 7 below for each service category. 4. Describe Proposer's past performance and experience with regard to the particular service category and state the number of years that the Proposer has worked in this area, the current number of employees working in this area, and the primary markets served. Service Category: Finance & Economics Category - Actuarial Services ' Bolton Partners regularly provides pension/valuation consultation and OPEB valuation services to clients like the City of Miami. BP has provided pension consulting services of this nature for more than 30 years. We have selected an exceptional actuarial and consulting team with a broad depth of relevant experience. The actuaries for this project, Tom Lowman and Kris Seets, currently provide the services requested to 28 public pension plans. Depending on our client needs, we serve different roles including the plan's valuation actuary, actuary for the plan sponsor, and actuary for the union. We also provide a full range of retiree medical, pension and retirement plan services including actuarial, consulting and plan operation services for all types of plans. These include retiree medical, 401(a) plans, 401(k) plans, 403(b) plans, 457 plans and other types of non- qualified deferred compensation. In 1994 we added an investment consulting practice (Bolton Partners Investment Consulting Group) to our firm. Partly because of our contract with the Pension Benefit Guaranty Corporation (PBGC), we see a large number of new plans every year, which we quickly need to understand and interpret. Our understanding is to the detail level that in a typical year we write 35 benefit calculation programs and produce benefit statements for about 10,000 participants. In FY03 we produced nearly 20,000 benefit statements covering around 35 different pians and numerous customization issues. Our work for the PBGC includes the review of actuarial valuations and estimation of liabilities for large ongoing distressed plans. These range in size from 1,000 to over 100,000 participants. We review about three such plans per month. Our success for the last 30+ years is based on our technical knowledge, our work product, and our outstanding client service. Bolton Partners has maintained this success because of our industry leading professional depth and expertise; which is not only a 7 1 Page Bolton Partners 7279 Panache Way, Boca Raton, Florida 33433 561.3623176 strong point of our firm, but also a major asset to our clients. Out of a professional staff of ninety, we have nine Fellows of the Society of Actuaries (FSAs). In addition, we have ten Associates of the Society of Actuaries (ASAs), fifteen Enrolled Actuaries (EAs), eight CEBS (Certified Employee Benefit Specialists), one CFA (Chartered Financial Analyst), and six MBAs or MSFs. We are proactive participants in the actuarial and benefits community. Not only are we members of the Society of Actuaries, fhe American Academy of Actuaries, the Conference of Consulting Actuaries, the International Foundation of Employee Benefit Plans, International Society of Certified Employee Benefit Specialists (ISCEBS) and Working in Employee Benefits (WEB), but we take significant research and Leadership roles with these organizations. Our team's resumes included in this proposal provide further information. We speak frequently at the request of professional organizations and recently presented at several GFOA Education programs on GASB 67/68 rule changes. Kristopher Seets, Senior Actuary, presented at the Space Coast Chapter FGFOA and the Virginia GFOA Spring Conference; an event attended by over 300 members. We have also presented to the Palm Beach County Chapter and at the FGFOA annual conference. We are also members of the Florida City County Managers Association (FCCMA) and the Florida Government Finance Officers Association (FGFOA). 5. Provide detailed descriptions of a minimum of five (5) comparable contracts (similar in scope of services to those requested herein for the particular service categories) which the Proposer has either ongoing or completed within the past five years. The description should identify for each project: (1) the client, (ii) description of work, (111111) total dollar value of the contract, (iv) contract duration, (v) customer contact person and phone number for reference, (vi) statement or notation of whether Proposer is/was the prime contractor or subcontractor or subconsultant, and (vii) the results of the project. Specify if the scheduled completion time and budgets approved by the client were met for each of the projects. If the scheduled time and budgets were not met, please provide an explanation. Where possible, list and describe those projects performed for government clients and/or large organizations. In the event that the Proposer has not performed five (5) comparable contracts in the particular service category, the Proposer should provide information that demonstrates its ability to perform the requested services. Below are six of the cities in Florida that we have provided actuarial services to over the last five years. The work is generally of a project nature and most have had projects done in either 2014 or 2015. The work provided is of the type covered in our proposal to Bolton Partners 7279 Panache Way, Boca Raton, Florida 33433 569..362.7176 the City of Miami. Our work was delivered on time and on budget. Our list focuses on Florida clients since the issues in Florida are somewhat different than pension work issues we have worked on in places like the City of Philadelphia because of specific Florida rules and the very generous pensions offered by Florida cities. However, we have included the City of Philadelphia as a seventh reference. Client # 1: (i) The client: City of Cocoa (ii) Description of work: Various pension and OPEB projects including (1) preparing GASB45 valuation, (2) assistance with police and fire pension negotiations, (3) review of public safety pension benefits/funding/assumptions (iii) Total dollar value of the contract: $52,500 (iv) Contract duration: 2009 present (v) Customer contact person and phone number for reference: Teri Butler, 321-433- 8626 (vi) Statement or notation of whether Proposer is/was the prime contractor or subcontractor or subconsultant: Prime Contractor (vii) Results of the project: Successful labor negotiations Client #2: (i) The client: City of Fort Lauderdale (ii) Description of work: OPEB(retiree medical) valuations (proposal pending to do Pension audit) (iii) Total dollar value of the contract: $20,338 (iv) Contract duration: 2011 - current (v) Customer contact person and phone number for reference: Linda Logan -Short, 954-828-5168 (vi) Statement or notation of whether Proposer is/was the prime contractor or subcontractor or subconsultant: Prime Contractor _I (vii) Results of the project: Compliance with accounting standards 1 Client #3: (i) The client: City of Melbourne (ii) Description of work: Various pension and OPEB projects including (1) preparing GASB45 valuation and looking at possible OPER benefit changes, (2) review of pension benefits/funding/assumptions, (3) review of option to join FRS (iii) Total dollar value of the contract: $26,817 (iv) Contract duration: 2008 - 2014 (v) Customer contact person and phone number for reference: Michelle Ennis, 321- 953-6247 91Page Bolton Partners 7279 Panache Way, Boca Raton, Florida 33433 561.362.7176 (vi) Statement or notation of whether Proposer is/was the prime contractor or subcontractor or subconsultant: Prime Contractor (vii) Results of the project: Completed OPER valuation and FRS option discussions Client #4: (i) The client: City of Miramar (ii) Description of work: Various pension projects including attending labor negotiation to discuss problems with union proposed changes, (2) analysis of actual historical DROP (Deferred Retirement Option Plan) cost. (iii) Total dollar value of the contract: $47,987 (iv) Contract duration: 2013 - 2014 (v) Customer contact person and phone number for reference: Sam Hines, 954- 602-3810 (vi) Statement or notation of whether Proposer is/was the prime contractor or subcontractor or subconsultant: Prime Contractor (vii) Results of the project: Successful labor negotiations Client #5: (i) The client: City of Sanford (ii) Description of work: Analysis of police and fire pension plans (iii) Total dollar value of the contract: $20,225 (iv) Contract duration: 2012 - 2013 (v) Customer contact person and phone number for reference: Cynthia Lindsay, 407-688-5026 (vi) Statement or notation of whether Proposer is/was the prime contractor or subcontractor or subconsultant: Prime Contractor (vii) Results of the project: Successful labor negotiations Client #6: (i) The client: Town of Davie (ii) Description of work: Assistance with pension labor negations for general, police and fire employees (iii) Total dollar value of the contract: $36,868 (iv) Contract duration: 2012 - current (v) Customer contact person and phone number for reference: William Ackerman, 954-797-1050 (vi) Statement or notation of whether Proposer is/was the prime contractor or subcontractor or subconsultant: Prime Contractor (vii) Results of the project: Successful labor negotiations Client #7 Bolton Partners 7279 Panache Way, Boca Raton, Florida 33433 561.362.7176 (i) The client: City of Philadelphia City Counsel (ii) Description of work: Review of DROP plan cost and general pension design efforts (iii) Total dollar value of the contract: $205,327 (iv) Contract duration: 2010 - 2014 (v) Customer contact person and phone number for reference: Hat Fichandler 215- 686-7667 (vi) Statement or notation of whether Proposer is/was the prime contractor or subcontractor or subconsultant: Prime Contractor (vii) Results of the project: Successful labor negotiations 6. Provide one sample Work Product from any of the comparable contracts identified in questions 3 and 4 above that best demonstrates the Proposer's ability to provide the services requested. Please see Appendix A for our sample work product. 7. Describe any relevant industry / subject matter expertise, including any experience in the particular service area category, and any unique or proprietary project methodologies relevant to the requested services. Bolton Partners, Inc. is an employee benefits consulting firm. We consult on pension, retiree medical and employee health and welfare benefits. Our talents include knowing Florida pension laws and the pension landscape in Florida. We are national experts in certain plan provisions such as DROPS (having written the Society of Actuaries study on that topic) and derisking of public pension plans. For example, Tom Lowman is the Chief Actuary at Bolton Partners. Tom has over thirty- seven years of national pension actuarial experience. He is a Fellow of the Society of Actuaries (1982), an Enrolled Actuary (1981), a member of the American Academy of Actuaries (1982), and a Fellow of the Conference of Consulting Actuaries (2009). Tom is vice chair of the Conference of Consulting Actuaries (CCA) Public Plans Community and vice chair of the American Academy of Actuaries Public Plans subcommittee. Tom's clients include the federal government (PBGC and Treasury), and pension clients in Maryland, Virginia, California, Rhode Island, Florida and Delaware. In the past Tom has worked on Large plans including the State of New York Retirement plan and the Federal Civil Service and FERS plans. 11 1 Page Bolton Partners 7279 Panache Way, Boca Raton, Florida 33433 561.362.7176 One area of particular relevance to the City of Miami is our activity over the last few years in helping Florida cities review their pension plan provisions and funding. Our work is independent of the Pension Board and the Board's actuary. Attached (in Appendix A) is a sample benefit study for one Florida city. We have also done independent audits of assumptions and plan funding, OPEB valuations and FRS transfer studies. 12 1 Page I Bolton Partners 7279 Panache Way, Boca Raton, Florida 33433 561.362.7176 C. CATEGORY SPECIFIC EXPERIENCE AND QUALIFICATIONS OF KEY PERSONNEL AND SUBCONTRACTORS PERFORMING SERVICES Note. Any Proposer submitting a proposal for multiple service categories must provide in its proposal complete and separate responses for items 8 and 9 below for each service category. ;f 8. Provide an organization chart showing all key personnel, including their titles, who may be assigned to projects resulting from this Solicitation. This chart must clearly identify the Proposer's employees and those of any subcontractors or subconsultants. All key personnel includes all partners, managers, associates and other professional staff that will perform work and/or services in this project. 9. Describe the experience, qualifications and other vital information, including relevant experience on previous similar projects, of the identified personnel who will be assigned to projects resulting from this Solicitation. This information shall include the general functions to be performed by the key individuals and the subcontractors or subconsultants. 13 1 Page Bolton Partners 7279 Panache Way, Boca Raton, :Florida 33433 561.362.7176 THOMAS B. LOWMAN, FSA, EA, MAAA, FCA Thomas B. Lowman is the Chief Actuary at Bolton Partners. Tom has over 37 years of pension actuarial experience. He is a Fellow of the Society of Actuaries (1982), an Enrolled Actuary (1981), a member of the American Academy of Actuaries (1982), and a Fellow of ' the Conference of Consulting Actuaries (2009). Tom is vice chair of the Conference of Consulting Actuaries (CCA) Public Plans Community. Tom is recognized as one of the top national experts on public sector plans and is sought out as a resource in this area by the professional actuarial societies, GASB, and national journalists. His work with national actuarial organizations is exfensive. Tom served a three-year elected term on the Society of Actuaries' Pension Section Council and served as Chair of the Society of Actuaries' Pension Section Research Committee. Tom also served on the Actuarial Standards Board Pension Committee and the Society of Actuaries Enterprise Risk Management Task Force on Pensions. Tom helped draft the 2014 CCA White Paper on funding. He was interviewed by the SOA Blue Ribbon Panel of Public Plans and in April 2014 presented to the Actuarial Standards Board Pension Committee his thoughts on the difficulties of introducing the Panel's recommendations into actuarial standards of practice. Tom has been the Chair of several Society of Actuaries Project Oversight Groups. He was chair of the Pension Assumption and Method Project, studying how assumptions and methods vary depending on the type of plan/plan sponsor - ERISA single employer vs. state/local vs. Federal vs. Social Security. Tom wrote a paper on the Issues with applying Financial Economic principals to public pension pians which he presented in 2009 and presented another paper to the 2010 Society of Actuaries' Retirement 20/20 Symposium. He has authored numerous papers that are considered primary actuarial reference documents. • DROP designs, co-authored with Robert Bolton • Public Sector Gain Sharing designs for the Society of Actuaries, co-authored with Colin England and Ann Sturner • Cash Balance Plans To access Tom's papers, visit Tom's Corner at www.boltonpartners.com/fom-s- corner.hfml. Tom holds a mathematics degree from the University of Delaware in 1977. 14 1 Page Bolton Partners 7279 Panache Way, Boca Raton, Florida 33433 561.362.7176 KRISTOPHER E. SEETS, FSA, EA, FCA Kris Seets has extensive experience with retirement systems and is the lead analyst for over 20 public sector defined benefit plans. His roles include preparing and reviewing actuarial reports, coordinating tasks with staff and clients, attending trustees' meetings, and reviewing internal valuation methods and procedures. Public Sector Retirement System Experience Kris has a lead role in the completion of the firm's actuarial valuations and has provided actuarial consulting services for public pension plans in Alaska, California, Delaware, Florida, Maryland, New Hampshire, New York, Rhode Island, Virginia, and the District of Columbia. He is responsible for the tracking and coordination of tasks and deadlines with staff and clients. This includes client communication and reviewing internal valuation methods and procedures. Kris provides comprehensive services to his clients and understands the importance of clear communication and organization. This is beneficial for all types of projects including plan experience studies, benefit cost analysis, plan design studies, and analyzing effects of legislation. He is involved in the entire valuation process, from data collection to presentation of the final report. Professional involvement Kris stays current on local and national topics and has a strong understanding of the issues relevant to pensions in the public sector. Kris shares his insight with his clients and the public plan community. He is an active member of the GFOA in Florida, Maryland, Virginia, and New Jersey. He has provided educational seminars on various employee benefits topics, including the implementation of the new pension accounting standards (GASB68). Retirement Plan Experience Outside the Public Sector Kris also has extensive experience assessing the liabilities and funding positions of the largest single employer pension plans in the country.. This includes calculating pension related bankruptcy claims and termination liabilities for the PBGC. His work for the PBGC has involved industry wide risk studies and the preparation of actuarial reports related to highly publicized current events and plan terminations. He has also helped prepare expert witness reports for the United States Department of Justice in pension settlement cases. 15 1 Page Bolton Partners 7279 Panache Way, Boca Raton, Florida 33433 561.362.7176 Education & Employment Kris is a Fellow of the Society of Actuaries, a Fellow of the Conference of Consulting Actuaries, and an Enrolled Actuary. He holds a Bachelor of Science in Mathematics from Towson University. He joined the Balton Partners team in 2008. KEVIN BINDER, FSA, MAAA, EA Kevin Binder is a senior actuary with Bolton Partners, Inc. Kevin has been with Bolton Partners since 2005 and has 25 years of actuarial experience in both the private and public sectors. Kevin heads up Bolton's OPEB practice; in that role he is responsible for the actuarial valuation under GASB 45 for over 80 governmental plans. Recently Bolton Partners was retained by a consortium of three Unions representing State and Local Government employees of New Hampshire, to assist them in designing a Union run OPEB pian for current employees. Kevin also certifies to the solvency of self-funded insurance plans under Section 112.08 of the Florida Statutes, calculates IBNR reserves and is the attesting actuary certifying that retiree medical prescription drugs are at least as generous as the Part D Medicare program under the Retiree Drug Subsidy program of CMS. Prior to joining Bolton Partners, Kevin worked for Watson Wyatt. While at Wyatt, Kevin supervised the post-retirement medical valuations for Delphi, Dominion Resources, and Norfolk Southern. Prior to his employment at Watson Wyatt, Kevin worked at Hay Group where he worked on a team that assisted the Congressional Research Service analyze Heath Care Reform Proposals. He is a Fellow in the Society of Actuaries, a Member of the Academy of Actuaries and an Enrolled Actuary. Kevin has extensive experience with retiree medical plans including: • Accounting for Public Sector Plan OPEB Plans Under GASB45 • Accounting for Private Sector OPEB Plans Under SFAS 106 and SFAS152 • Claims Analysis • Funding vehicles for retiree medical programs • Plan design studies 16 1 Page Bolton Partners 7279 Panache Way, Boca Raton, Florida 33433 561.362.7176 • Actuarial Equivalence Certifications for the Medicare Part D Retiree Drug Subsidy program. • Demographic experience studies He has authored articles in the Actuary and Contingency magazines on discount rate selection for partially funded plans under GASB 45 and was a speaker at the Society of Actuary's Health Care Section Annual Meeting on this Topic. He has co-authored a series of 22 company newsletters on GASB 45 related topics. He also authored an article for the Pension Section News of the Society of Actuaries on Mortality Improvement. Kevin has been an active volunteer for fhe Society of Actuaries research projects since i 1995.. He is a former chairperson of the Research Committee of the Society of Actuaries Pension Section and of the Society of Actuaries Retirement Plan Experience Committee that developed the RP2000 mortality table. He was also the chairperson of a SOA Project Oversight Group that oversaw the development of a model to estimate long- term medical trends and has served on several other project oversight groups for other research projects. He remains an active member of the Research Committee of the Society of Actuaries Pension Section. .JEFFREY A. DELISLE Jeffrey DeL.isle, Senior Consultant for Dolton Partners, Inco Boca Raton, Florida offices As a Senior Consultant, Jeff works in collaboration with actuaries and other specialized consultants to review, audit, assess and to offer timely and appropriate recommendations to Bolton Partners staff, plan trustees, nonprofit organizations, and public entity management. Examples of past work include; i • benefit maintenance • simplifying complexities • general plan management • plan structure • collective bargaining agreement restructure • public entity expenditure control • alternative methodologies • various recommendations to assist stakeholders with their fiduciary responsibilities I and goals. 17 1 Page Bolton Partners 7279 Panache Way, Boca Raton, Florida 33433 561.362.7176 Additional Background: Analyzes and assists with effective implementation of plan changes, and provides public sector management/labor relations consulting, with a specialty in public safety. Joined Bolton Partners as a Senior Consultant in 2006, but has worked directly with the company's principals for over thirty years. Mr. De Lisle is a graduate of the Trenner Academy (BCFD) and Catonsville College (AA); with continuing education from the University of Baltimore (Robert G. Merrick Business School) and Strayer University (Human Resource Management). He is also a Leadership graduate of the Greater Baltimore Committee, a nonpolitical graduate level program that is involved with many nonprofit boards and government commissions. Jeff served several terms as a US Presidential appointee to the National Fire Academy (USFA) Board of Visitors (Directors). 18 1 Page Sample Work Product 19 1 Page Prepared By: Bolton Partners, Inc. 100 Light Street, 911, Floor Baltimore, MD 21202 BOLTON 09, PARTNERS BOL'T'ON, j PARTNERS September 8, 2014 City Manager EFLE32922 Re: Benefit Study Conducted -for = Firefighters'Retirement Plan Dear m: The City requested Bolton Partners, Inc. to estimate the effects of possible changes to the benefits provided by the Firefighters' Retirement Plan. For each proposed change, we provide an estimated immediate effect to the City's required contribution and an estimated ultimate effect to the City's normal cost rate. Since these changes are prospective, there will be emerging savings as more participants are covered by the new terms. i� It is important to note that the effects we have provided are only estimates. The future is uncertain and the cost of benefits will be determined by the experience of the plan. In addition, the City's required contributions are set by the plan actuary and are therefore subject to the methods and assumptions used by the plan actuary. This report was completed for the City to provide the estimated effects of possible ! changes to the benefits provided by the City Firefighters' Retirement Plan. These estimates are intended to be used by the City, as the City sees fit, for understanding the future costs of benefits for purposes of future collective bargaining or pension reform. The City should seek legal counsel before implementing any changes to plan benefits. Data and Methods Used in This Report The methods, assumptions, and participant data used are provided in the October 1, 2013 valuation report prepared by Foster. & Foster. We also relied on additional participant information provided by the City including overtime pay by fiscal year and accrued unpaid leave balances. Changes made to plan benefits and assumptions in order to estimate the effect of changes are described in the respective subsections and sumniari.zed in Section 2. All changes are assumed to be made as of October 1, 2013 and to affect the City's required contributions for. FY2015. Bolton Partners, Inca 100 Light Street e 9th Floor • Baltimore, Maryland 21202 • (410) 547-0500 ® (800) 394-0263 • Fax (410) 685-1924 Actuarial, Benefit and Investment Consultants t August 5, 2015 Page 2 Data and Methods Used in This Report (cont.) We believe the information, methods, and assumptions used to be sufficient to provide a reasonable estimate of the effects of changes to plan benefits. The actual effect of any change will be determined by the methods and assumptions used by the plan actuary to determine the City's required contribution. I, Kristopher Seets, am a member of the Society of Actuaries and meet the qualification standards set by the American Academy of Actuaries to render the actuarial opinions contained i herein. We are not aware of any direct or material indirect conflicts of interest that would impair the objectivity of this work. If you. have any questions or would like additional information, I am available at (443) 573-3911. KS/cdj Sincerely, BOLTO . ARTNERS, INC. Kris opher Seets, ASA, EA Bolton Partners, Inc. ® Retirement Plan I Benefit Study Table of Contents 1. Results..................................................................................................................................................1 2. Summary of Assumptions and Methods...........................................................................................7 i 3. Actuarial Certification......................................................................................................................10 i Bolton Partners, Inc. Retirement Plan Benefit Study 1. Results We provide our estimated effects for each plan change in the respective subsections. Each change is assumed to be prospective in that it will not affect any currently accrued benefits. Specific descriptions are provided for each change. Our estimates assume that participants who are currently eligible for normal or early retirement will not be affected by the changes. The terms used for these estimates (e.g. which participants and years of service are affected by the changes) are not a determination of the terms to be implemented. We have amortized the estimated change to the unfunded. actuarial accrued liability over a period of 20 years for the purpose of this report. While we believe this to be a reasonable period, the amortization method applied to any actual changes would be selected by the plan's trustees. There may be a small additional savings if the City were to extend changes to include participants who are currently eligible for retirement, but it is also possible that those participants would retire or join DROP in order to avoid the effects of the changes. if the City were to extend the changes only to new participants or non -vested participants, there would be less immediate savings, but similar estimated ultimate savings. The City should seek legal. counsel before implementing any changes to plan benefits. For each change, we provide an estimated immediate effect and an estimated ultimate effect. The immediate effect is our estimate of the change to the City's required contribution in the year of implementation. For all of these changes, there will be emerging savings as more participants have a larger portion of their benefits affected by the new terms. The ultimate effect is our estimate of the change to the City's normal cost rate (including expenses) when all employees have their entire benefit subject to the new terms. This will likely be about 20 years after implementation. Increases to Employee Contribution hates The City can receive immediate savings by increasing the employee contribution rate. This does not decrease plan benefits, but instead shifts more of the cost to the participants. The amount of savings is also easy to quantify. A 1.00% increase to employee contributions would decrease the City's required contribution by 0.92%1 of employee payroll. For example, if the employee contributions were increased from 6.50% to 8.50%, the City's required contribution for FY2015 would decrease from 68.13% to 66.29% of participant payroll. This relationship can be extended to estimate the combined effect of an increase to employee contributions with any of the other changes being studied. 1 This relationship has been estimated based on the decrease to the City's contribution of 1.00% due to the increased offset for employee contributions combined with an increase of 0.08% for the expected increased cost of refunding employee contributions to participants who terminate non -vested. Bolton Partners, Inc. Plan 1. Results (cont.). Reductions to Benefit Accrual Rate (Benefit Multiplier) Changing the benefit accrual rate is a very transparent way to adjust benefits. It is easy for all parties to understand the effects of the change. Our estimates assume the change would affect all participants who are not currently retirement eligible and would only reduce the accrual rates for future service (i.e. service after the effective date). We use the City's FY2015 annual required contribution (ARC) rate of 68.13%0 of participant payroll and normal cost (NC) rate of 14.30% as the baseline to measure the effect of the change, We assume the City will continue to receive the t $94,660 State Contribution since the measured changes meet or exceed the minimums defined in Chapter 175. The ultimate effect was calculated assuming all current participants receive a benefit based on the new benefit accrual rate. This will be fully reflected in about 20 years. We believe the best way to express this effect is by comparing the City's normal cost (NC) rates. Since this is an estimate of the ultimate effect, we assume no unfunded liabilities and focus on the effect to the City's cost for benefits — the normal cost (NC) rate. We assume the City's NC rate includes administrative expenses of 3.32% of participant payroll and is offset by the employee and State contributions. Table 1—Estimated Effects of Changes to Benefit Accrual Rate The assumed rate for past service is 3.00% in all scenarios. The rates shown in the first column are only applied to service after the effective date. We did not adjust any of the assumptions to reflect the change in accrual rate (e.g. rates of future retirements and terminations). We calculated the estimated effects of lowering the benefit accrual rate to 2.00% per year for future service. The estimates for other rates have been interpolated. We believe these methods to be sufficient for the scope of this report. This reduction would be reflected immediately in the normal cost (cost for current year benefits) and would not change significantly over time. 2 Bolton Partners, Inc. Immediate Effect Ultimate Df ect Benefit Accrual Rate City's ARC City's NC Per Year of Service Rate Difference Rate Difference 3.00% 68.13% 0.00% 14.30% 0.00% i 2.75% 66.45% 1.68% 12.66% 1.64% 2.50% 64.77% 3.36% 11.01% 3.29% 2.00% 61.41% 6.72% 7.72% 6.58% The assumed rate for past service is 3.00% in all scenarios. The rates shown in the first column are only applied to service after the effective date. We did not adjust any of the assumptions to reflect the change in accrual rate (e.g. rates of future retirements and terminations). We calculated the estimated effects of lowering the benefit accrual rate to 2.00% per year for future service. The estimates for other rates have been interpolated. We believe these methods to be sufficient for the scope of this report. This reduction would be reflected immediately in the normal cost (cost for current year benefits) and would not change significantly over time. 2 Bolton Partners, Inc. Retirement Plan Benefit Study 1. Results (cont.) Increases to Requirements for Retirement Eligibility Table 2 provides the estimated effects to increase the requirements for retirement eligibility to the minimum required by Chapter 175 for all participants who are not currently eligible to retire. It is possible that the City could provide benefits below the minimum required by Chapter 175 and still receive the State Contribution. The City should seek legal counsel before implementing any changes to plan benefits. Table 2 Estimated Effects of Changes to Retirement Eligibility The plan actuary currently assumes all participants will retire (or join DROP) when they reach normal retirement age. In order to estimate the effects of a change to retirement eligibility, we were consistent with the current assumption and assumed all participants would retire (or join DROP) when they reach the new normal retirement age of 52 with 25 years of service or 55 with 10 years of service. F Participants would be eligible to receive their accrued benefits as of the effective date at their normal retirement date under current provisions. We assumed all participants would wait until the new normal retirement date since the participants who would be most affected didnot have f significant accrued service (i.e. the participants with the largest adjustments to retirement date do not have many years of service). This assumption does cause a larger immediate savings since there would be a reduction to the accrued liabilities and therefore a reduction to the payment toward unfunded liabilities. Table 3 provides the estimated combined effect of a reduction to future benefit accrual rates and the change to retirement eligibility. Bolton Partners, Inc. Immediate Ef ect Ultimate f f ect Normal Retirement City's ARC C,ity's NC Date Rate Difference Rate Difference 25 Years of Service or Age 52 68.13% 0.00% 14.30% 0.00% with 10 Years of Service Age 52 with 25 Years of Service66.90% 1.23% 13.54% 0.76% or Age 55 with 10 Years of Service The plan actuary currently assumes all participants will retire (or join DROP) when they reach normal retirement age. In order to estimate the effects of a change to retirement eligibility, we were consistent with the current assumption and assumed all participants would retire (or join DROP) when they reach the new normal retirement age of 52 with 25 years of service or 55 with 10 years of service. F Participants would be eligible to receive their accrued benefits as of the effective date at their normal retirement date under current provisions. We assumed all participants would wait until the new normal retirement date since the participants who would be most affected didnot have f significant accrued service (i.e. the participants with the largest adjustments to retirement date do not have many years of service). This assumption does cause a larger immediate savings since there would be a reduction to the accrued liabilities and therefore a reduction to the payment toward unfunded liabilities. Table 3 provides the estimated combined effect of a reduction to future benefit accrual rates and the change to retirement eligibility. Bolton Partners, Inc. ® �® .Retirement Plan Benefit Study .i 1. Results (cont.) Increases to Requirements for Retirement Eligibility (cont.) Table 3 - Estimated Effects of Changes to Benefit Accrual Rate and Retirement Eligibility We did not make any additional changes to the assumptions or methods to reflect the combined effect of both changes. Reductions to Cost of Living Adjustments (COLAs) Cost of Living Adjustments (COLAs) provide participants with valuable protection from inflation during retirement. However, COLAs have a significant cost and the City may decide to reduce the annual adjustments in order to control costs. We provide the estimated effects of reducing or eliminating the COLAs for future service. .Benefits based on service earned prior to the effective date would continue to receive the current plan COLA based on CPl up to 3.00% per year. Similar to the other studies, we also assume participants who are currently eligible to retire would not be affected by the change. Table 4 - Estimated Effects of Changes to Cost of Living Adjustments (COLA) Immediate Effect Ultimate Effect Benefit Accrual Rate City's ARC City's NC Per Year of Service Rate Difference Rate Difference { Baseline 68.13% 0.00% 14.30% 0.00% 3.00%3 66.90% 1.23% 13.54% 0.76% 2.75% 65.17% 2.96% 11.95% 2.35% 2.50% 63.43% 4.70% 10.36% 3.94% 1 2.00% 59.96% 8.17% 7.18% 7.12% We did not make any additional changes to the assumptions or methods to reflect the combined effect of both changes. Reductions to Cost of Living Adjustments (COLAs) Cost of Living Adjustments (COLAs) provide participants with valuable protection from inflation during retirement. However, COLAs have a significant cost and the City may decide to reduce the annual adjustments in order to control costs. We provide the estimated effects of reducing or eliminating the COLAs for future service. .Benefits based on service earned prior to the effective date would continue to receive the current plan COLA based on CPl up to 3.00% per year. Similar to the other studies, we also assume participants who are currently eligible to retire would not be affected by the change. Table 4 - Estimated Effects of Changes to Cost of Living Adjustments (COLA) All scenarios assume the continued structure of only providing COLAs once a retiree has reached age 65. In order to be consistent with the current assumptions, we assume future COLAs will be the maximum in all years. For example, in the CPI up to 2.00% scenario, we 2 This scenario assumes the current plan provisions including retirement eligibility. The other scenarios all assume the change to retirement eligibility. 3 This is the study shown in Table 2, repeated here for convenience. 4 Bolton Partners, Inc. Immediate Ef ect Ultimate Ef ect Annual COLA for City's ARC City's NC .Future Service Rate Difference Rate Difference 1 CPI up to 3.00% 68.13% 0.00% 14.30% 0.00% CPI up to 2.00% 67.58% 0.55% 13.74% 0.56% CPI up to X.00% 67.13% 1.00% 13.29% 1.01% No COLA 66.68% 1.45% 12.84% 1.46% All scenarios assume the continued structure of only providing COLAs once a retiree has reached age 65. In order to be consistent with the current assumptions, we assume future COLAs will be the maximum in all years. For example, in the CPI up to 2.00% scenario, we 2 This scenario assumes the current plan provisions including retirement eligibility. The other scenarios all assume the change to retirement eligibility. 3 This is the study shown in Table 2, repeated here for convenience. 4 Bolton Partners, Inc. Retirement Plan Benefit Study 1. Results (cont.) Reductions to Cost of Living Adjustments (COLAs) (cont.) assume future COLAs will be 2.00% per year for benefits based on future service and 3.00% per year for benefits based on past service. While this is consistent for the immediate change to the City's ARC (i.e. consistent with current assumption), it does overstate the ultimate effect since there will almost certainly be years where the COLA is below the annual limit. The effects for the 1.00% annual limit were interpolated from the other scenarios. We believe these methods and assumptions to be reasonable for the scope of this project. This reduction would be reflected immediately in the normal cost (cost for current year benefits) and would not change significantly over time. Changes to Pensionable Earnings4 Compensation used to determine plan benefits currently includes several types of non -regular wages. These non -basic wages include overtime pay and pay received to "cash -out" unused sick and vacation leave balances at retirement. This compensation received at retirement for unused sick and vacation leave can significantly increase the Average Monthly Compensation used to determine plan benefits. The plan's actuary currently loads benefits by 20% to account for this non -regular pay. We provide estimated effects of reducing the amount of non -regular compensation that can be included in pensionable earnings. For each limit, we have estimated an adjustment to the current 20% load used to account for non -regular compensation. The actual effect to the City's required contribution will depend on the adjustment made by the plan's actuary. 1 Table 5 — Estimated Effects of Changes to Pensionable Earnings Immediate Effect Ultimate Effect Limit to Non -Regular City's ARC City's NC Compensation Rate Difference Rate Difference Current (No Limit) 68.13% 0.00% 14.30% 0.00% Up to 300 hours per year 67.47% 0.66% 12.00% 2.30% Up to 200 hours per year 67.21% 0.92% 11.85% 2.45% Up to 100 hours per year 67.05% 1.08% 11.55% 2.75% i No Non -Regular Cornp 66.79% 1.34% 11.24% 3.06% 4 The results and comments in this section are draft and subject to verification of how the load for non -regular compensation is applied by the plan actuary. Results shown assume the load is applied to Average Monthly Compensation. The results would differ significantly if the load is applied to a single year of compensation. Bolton Partners, Inc. Retirement Plan Benefit Study 1. Results (Cont.) Changes to Pensionable Earnings4.(cont.) These estimates are based on assumed adjustments to the current load of 20% used to reflect non -regular compensation. The assumed adjustments for each scenario are included in Section 2. While we believe our methods to be reasonable, the effect to the City's required contribution will depend on the adjustments made by the plan's actuary. For the immediate effect, we have assumed that all participants would be able to include their current accrued unpaid leave amounts even if they were to exceed the maximum. We also assumed that the restrictions would not apply to participants who are currently eligible for retirement. The estimated ultimate effect does not have these restrictions since this is intended to represent the savings after all current participants have left employment. This creates a significant increase to ultimate savings as the current participants with large balances are replaced by new participants after the effective date. Participants will still accrue leave balances, but the amounts used for pensionable earnings would be restricted. While similar calculations were not completed for the City's Police Officers' Retirement Plan, we would expect similar (not exact) results. The adjustments made in the Police plan's April 10, 2014 Actuarial Impact Statement prepared by Foster & Foster appear to be consistent with our analysis. 6 Bolton Partners, Inc. Retirement Plan Benefit Study 2. Summary of Assumptions and Methods The baseline figures are based on the methods, assumptions, participant information, and plan provisions provided in the October 1., 2013 actuarial valuation report prepared by Foster & Foster. The estimates provided are based on these same methods, assumptions, participant information, and provisions except as explicitly described within this report. All estimated changes to the plan's unfunded actuarial accrued liability were assumed to be amortized over a period of 20 years at the amortization rate used in the 2013 valuation (i.e. 8.00% interest and 0.00% payroll growth). We believe this to be a reasonable period, but the actual amortization period for any changes would be set by the plan trustees. While we believe our methods and assumptions to be reasonable for the purpose of this report, the actual. effects to the City's required contributions will be determined by the methods and assumptions chosen by the plan's actuary. The true cost of the plan will depend on the future experience of the plan's investments and the plan participants. Adjustments to Expected Future Retirement Rates In order to estimate the effect of increased retirement eligibility requirements shown in Tables 2 and 3, we adjusted the assumed rates of future retirements. To be consistent with the current assumption, we assumed all participants would retire (or join DROP) upon reaching eligibility for normal retirement. We assume that current participants would be able to retire as of the current normal retirement date, but that benefits earned after the effective date would be reduced for early commencement. We did not assume any participants would elect to retire prior to the date they could receive all benefits without reduction. Those currently eligible to retire were not assumed to 'be effected. Those close to retirement generally did not have significant changes to thea normal retirement dates. Those with significant changes to normal retirement dates did not generally have significant amounts of accrued service. Adjustments to Expected Future COLA Rates In order to estimate the effect of changes to the COLAs for fixture service shown in Table 4, we adjusted the assumed COLA rates. In order to be consistent with the current assumption, we assumed all future COLAs would be equal to the limit. This set of assumptions is conservative since it is highly unlikely that the annual change to CPI would exceed the limit in every year.; however, we did not want to measure the years below the limit as the effect of the change. While this is consistent for the immediate change to the City's ARC (i.e. consistent with current assumption), it does overstate the ultimate effect since there will almost certainly be years where the COLA is below the annual limit. Bolton Partners, Inc. Retirement Plan Benefit Study 2. Summary of Assumptions and Methods (cont.) Adjustments to Expected Future COLA Rates (cont.) Our estimates assume the new COLA limits would only apply to benefits based on future service. For example, if a participant had 13 years of service as of the effective date and later retired with 26 years of service, then %2 of his retirement benefit would be subject to the 3.00% annual COLA limit and'/2 of his benefit would be subject to the reduced annual COLA limit. A similar proration is assumed .for disability benefits that are not based on years of service. The methods used for this study do not determine those to be implemented; however, this application is consistent based on our interpretation of the methods used by FRS. The City should seek legal counsel before making implementing any changes to plan benefits. The results shown in Table 4's CPI up to 1.00% scenario are interpolated as the arithmetic average of the results shown for the CPI up to 2.00% and No COL, scenarios. Adjustments to the Load for Non -Regular Compensation The estimated effects of changes to pensionable earnings shown in Table 5 are based on assumed adjustments to the 20% load currently used to account for non -regular compensation. Table 6 — Loads Used to Estimate Changes to Non -Regular Earnings Limit to Non -Regular Immediate Ultimate Compensation Loads Load Current (No Limit) 20.00% 20.00% Up to 300 hours per year 19.00% 5.00% Up to 200 hours per year 18.00% 4.00% Up to 100 hours per year 18.00% 2.00% No Non -Regular Comp 17.00% 0.00% The load was set for each scenario based on analysis of overtime pay during FY201 1 -FY2013 and current unpaid sick and vacation balances provided by the City. Each participant's assumed non -regular compensation at .retirement was estimated based on current service and balances projected to retirement. These estimated projected balances were assumed to be consistent with the current 20.00% load. For each scenario, the projected balances were restricted by the limit. The restricted projected balances were compared to the unrestricted projected balances in order to estimate an adjustment to the Ultimate Load (the load applied to estimate the ultimate effect). The linmediate Loads (the loads applied to estimate the immediate effect) were determined by comparing to the current s For each scenario (other than Current (No Limit)), the load shown is the average for the vested participants. The average for the participants with five or more years of service was 14% for the 300 hour limit scenario. Loads were set by individual in order to more accurately model the relationship between service and accrued leave balances. Bolton Partners, Inc. Retirement Plan Benefit Study 2. Summary of Assumptions and Methods (cont.) Adjustments to the Load for Non -Regular Compensation (cont.) balances under the assumption that the unpaid leave balances accrued prior to the effective date would not be subject to the limits. We also assumed that participants who are currently eligible to retire would not be affected. These immediate loads were set by individual in order to more accurately model the relationship between service and accrued leave balances. No adjustments were made to reduce the annual earnings used for valuation purposes by the overtime pay (which would also decrease contributory payroll). The effects of the change were only estimated by reducing the current 20% load for non -regular compensation. We believe this method to be reasonable for these purposes. 9 Bolton Partners, Inc. ® Retirement Plan Benefit Study 3. Actuarial Certification This report sets forth our estimates of the effects to the ® (the City) annual required contributions due to possible changes in benefits provided by the Firefighters' Retirement Plan (the Plan). These calculations are deterministic in that they are based on a single set of assumptions. This set of assumptions is only one possible basis for these calculations. Other assumptions may be equally valid. The future is uncertain and the Plan's actual experience will differ from those assumptions; these differences may be significant or material because these results are very sensitive to the assumptions made and, in some cases, to the interaction between assumptions. We may consider that some factors are not material to these calculations and may not provide a specific assumption for those factors. We have used the methods and assumptions as described in the October 1, 201.3 actuarial valuation report prepared by Foster & Foster. We have adjusted the methods and assumptions as we deemed appropriate in order to model the potential changes to plan benefits. 'We believe these adjustments to be reasonable based on the information provided to us by the City as of the date of this report. If similar work is completed at a future date, assumptions and methods will be selected based on the then current information and may differ from the assumptions and methods used in this report. Different assumptions or scenarios within. the range of possibilities may also be reasonable and results based on those assumptions would be different. As a result of the uncertainty inherent in a forward looking projection over a very long period of time, no one projection is uniquely "correct" and many alternative projections of the future could also be regarded as reasonable. Two different actuaries could, quite reasonably, arrive at different results based on the same data and different views of the future. A sensitivity analysis shows the degree to which results would be different if you substitute alternative assumptions within the range of possibilities .for those utilized in this report. We have not been engaged to perform such a sensitivity analysis and thus the results of such an analysis are not included in this report. At the City's request, Bolton Partners, Inc. is available to perform such a sensitivity analysis. The City could reasonably ask how the results would change if we used a different assumption set or if plan experience exhibited variations from our assumptions. This report does not contain such an analysis. This type of analysis would be a separate assignment. The cost of this plan is determined by the benefits promised by the plans'the plan's participant population, the investment experience of the plan and many other factors. As the experience of the plan evolves, it is normal for the level of contributions to the plan to change. The plan sponsor is responsible for funding the cost of the plan. We make every effort to ensure our calculations are accurately performed. These calculations are complex. Despite our best efforts, we may make a mistake. We reserve the right to correct any potential errors by amending the results of this report or by including the corrections in a future report. 10 Bolton Partners, Inc. Retirement .Plan Benefit Study 3. Actuarial Certification (cont.) Because modeling all aspects of a. situation is not possible or practical, we may use summary information, estimates, or simplifications of calculations to facilitate the modeling of future events in an efficient and cost-effective manner. We may also exclude factors or data that are immaterial in our judgment. Use of such simplifying techniques does not, in our judgment, affect the reasonableness of the results provided. This report is based on plan provisions, participant information, and actuarial reports provided by the City. We have relied on this information for purposes of preparing this report, but have not performed an audit. The accuracy of the results presented in this report is dependent on the accuracy and completeness of the underlying information. The plan sponsor is solely responsible for the validity and completeness of this information. The information in this report was prepared for internal use of the City for understanding the future costs of benefits for purposes. of future collective bargaining or pension reform. It is neither intended nor necessarily suitable for other purposes.. Bolton Partners, Inc. is not responsible for the consequences of any other use. The City should notify Bolton Partners, Inc. promptly after receipt of this report if the City disagrees with anything contained in the report or is aware of any information that would affect the results of the report that has not been communicated to Bolton Partners, Inc. or incorporated therein. The report will be deemed final and acceptable by the City unless the City promptly provides such notice to Bolton Partners, Inc. . The undersigned credentialed actuary meets the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. He is currently compliant with the Continuing Professional Development requirement of the Society of Actuaries. We are not aware of any direct or material indirect financial interest or relationship, including investments or other services that could create a conflict of: interest that would impair the objectivity of our work. I am available to answer questions on the material in this report to provide explanations or further details as appropriate. BOLTON ARTNERS, INC. Krist pher Seets, ASA, EA 11 Bolton Partners, Inc. Price Proposal Schedule 35 1 Page ,a My of M'lamh Florida RFO No 501339 Attachment A Price Proposal Schedule The Proposer's price shall be submitted on this "Price Proposal Schedule", and In the manner stated herein. Proposer Is requested to fill in the applicable blanks on this form and to :make no other marks. I PROPOSED RATES j Proposer should list in the tables below not -to -exceed hourly rates for the various staff levels proposed to complete the services as stated in this Solicitation, Hourly rates shall apply to the applicable service category(les) and shall only be completed for a proposal for those specific categories, proposing on. The rates shall remain firm and fixed for the initial term of the Contract. The 'City reserves the right to negotiate the rates for renewal and/or extension periods. The positions identified in the following table by the Proposer should be the same as the personnel identified in tho Proposer's Information under Key Personnel and Subcontractors Performing Services. The City expects that these personnel will be perform Ing the services as needed under any Work Order. MAXIMUM PROPOSED HOURLY RATES Title of Personnel General Operations Finance Management Category Category Category Senior Actuary $ $ $ 478 Actuary $ $ $ 315 OPEB Actuary $ $ $ 478 Actuarial Assistant $ $ $ 254 Administrative Assistant $ $ $ 127 $ $ $ Notes; 1. All out-of-pocket expenses, including materials, employee travel, per diem, and miscellaneous costs and fees, should be included In the Proposer's price., as they shall not be reimbursed separately by the City. 2. Notwithstanding the rates •above,, compensation to the selected Proposer shall 'be based on the projects assigned during the Work Order process. The selected Proposer shall not exceed the maximum hourly rates when calculating the not-to=exceed cost statement required for each work order. 3. Proposer may attach another sheet if necessary.