SR-08-28-2012-3HCity Council Meeting: August 28, 2012
Agenda Item: 5 H
To: Mayor and City Council
From: Gigi Decavalles- Hughes, Director of Finance
Subject: Modification of Professional Services Agreement with AON Consulting &
Insurance Services for Actuarial Valuation Services
Recommended Action
Staff recommends that City Council authorize the City Manager to execute a
modification to a professional services agreement with AON Consulting & Insurance
Services (AON), a California -based company, to conduct an actuarial valuation of post
employment benefits, other than pensions, as required by governmental accounting
standards, to increase the contract amount by $28,500 for a total contract amount not to
exceed $98,500 for the five -year contract term.
Executive Summary
AON has provided actuarial services to the City since entering into a five -year
contractual agreement in July 2008, following a competitive bid process. AON has
performed an actuarial valuation that satisfies the requirement of governmental
accounting standards in each of the fiscal years beginning July 1, 2007 through June
30, 2011, with results reported in the Comprehensive Annual Financial Reports each
fiscal year. The original not -to- exceed amount was $70,000. In order to complete the
valuation for the final year of the five -year term, staff is requesting an increase in the
contract amount of $28,500 for a new not -to- exceed amount of $98,500.
Background
Beginning with the fiscal year ended June 30, 2008, the Governmental Accounting
Standards Board requires local governments to report other post employment benefits,
using an actuarially determined valuation. The City provides medical insurance benefits
to certain retired employees and allows all retirees to continue participating in one of the
City's health plans at the same rate as active employees. In addition, certain members
of the Supervisory Team Associates bargaining group and United Transportation Union
are entitled, under certain circumstances, to a post employment benefit, based on their
accumulated sick leave balances at retirement. Public safety employees participating in
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CalPERS insurance programs are also assured minimum benefits after retirement. In
July 2008, the City entered into a five -year agreement with AON to perform these
actuarial services for a total not -to- exceed amount of $70,000. This amount is not
sufficient to cover the cost of the fifth year of the contract. AON conducted full
valuations in 2008 and 2010 and partial valuations in 2009 and 2011 at a total cost of
$66,500. In order to perform a full valuation in 2012, the contract amount has to be
increased by $28,500 for a new total not to exceed amount of $98,500.
Contractor /Consultant Selection
In 2007, the City awarded a Professional Services Agreement to AON following a
Request for Proposal process. Consistent with City practices of seeking competitive
proposals at least once every five years for ongoing services, a new Request for
Proposal process will be completed for 2013.
Financial Impacts & Budget Actions
The professional services agreement modification to be awarded to AON Consulting &
Insurance Services is $28,500. Funds are available in the FY 2012 -13 budget in division
01222; contract will be charged to account 01222.555060.
Prepared by: Candace Tysdal, Financial Operations Manager
Director of Finance
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Forwarded to Council:
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Rod Gould
City Manager
Reference Contract No.
9636 (CCS).