SR 09-13-2022 5D
City Council
Report
City Council Meeting: September 13, 2022
Agenda Item: 5.D
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Financial Operations
Subject: Approval of Professional Services Agreement for Other Post-Employment
Benefits (OPEB) valuation services to MacLeod Watts
Recommended Action
Staff recommends that the City Council:
1. Award RFP 318 to MacLeod Watts Inc, a Washington state-based corporation,
to provide consulting services in connection with valuing the City’s OPEB
liability for use in the City’s financial reporting and calculate the City’s
Actuarially Determined Contribution;
2. Authorize the City Manager to negotiate and execute an agreement with
MacLeod Watts, in an amount not to exceed $108,010 for eight years.
Summary
The City provides post-employment health care benefits in the form of both direct
payments and implicit subsidies to retiree’s medical insurance premiums. These are
classified as Other Post-Employment Benefits (OPEB). These benefits, subject to
negotiations between the City and each bargaining unit, require the approval of the City
Council. Benefits include:
• The City pays medical insurance for the Executive Pay Plan group and
management employees of the Rent Control Board if their combined retirement
age and years of service with public agencies equals or exceeds 70;
• The City subsidizes the cost of insurance to non-sworn permanent retirees so
that they can participate in a City health plan at the same rate as active
employees; and
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• The City maintains minimum benefits for public safety employees provided by the
City’s contract with its healthcare provider CalPERS.
Per best practice and recommendation of Government Finance Officers Association
(GFOA), the City has an IRS Section 115 irrevocable trust (Trust) that manages the
funds contributed by the City for these benefits. The Trust ensures that all funds
contributed cannot be changed, reversed, or recovered and all assets held in the Trust
are legally protected from creditors of the City. The City’s CalPERS OPEB Trust is
called the California Employer’s Retirement Benefits Trust (CERBT).
The City engages an actuary to perform a valuation of the City’s OPEB plan in
compliance with Governmental Accounting Standards Board Statement Number 75
(GASB 75) for inclusion in the City’s basic financial statements, as well as calculating
the Actuarially Determined Contribution to be paid to the CERBT. The Actuarially
Determined Contribution is the amount that the City should pay to CERBT to prefund
plan benefits, broken down by Fund to be accurately recorded by staff in the financial
system. Staff recommends that the City enter into an eight-year agreement with
MacLeod Watts Inc. to provide actuarial valuation services to the City.
Discussion
The requirements of GASB 75 allows for a biennial valuation process. The first year
includes a more costly and full actuarial valuation. The second year includes a less
expensive remeasurement of the liability utilizing the previous year’s assumptions and
amounts. The City will require a full actuarial valuation for inclusion in the FY 2021-22
financial statements. The actuarial report must also provide the Actuarially Determined
Contribution. GASB 75 and CERBT also require detailed reporting information that must
be included in the report. Lastly, the actuarial consultant must be able to communicate
the results of the report to City financial staff, and if asked, to the Audit Subcommittee
and Council.
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Vendor Selection
Bidder Recommendation
Best Qualified Person/Firm MacLeod Watts Inc.
Evaluation Criteria Experience and technical competence, ability to meet project work plan
and timeliness, quality control, cost of services, cost control,
stability/references, and value add/breadth of service.
Municipal Code SMMC 2.24.190
RFPs Received
Athena Actuarial Consulting Bartel Associates, LLC David Dougherty LLC Jefferson Solutions, Inc
Lauterbach & Amen, LLP MacLeod Watts Inc.
RFP Data
Posted On
Posted On
Advertised In
(City Charter & SMMC)
Vendors
Downloaded
Date Publicly
Opened
03/30/2022 City's Online
Bidding Site Santa Monica Daily Press 8 03/30/2022
Justification to Award
Based on the evaluation criteria above and criteria in SMMC 2.24.190, staff recommends
MacLeod Watts, Inc. as the best qualified firm to provide OPEB actuary valuation
services for a total not-to-exceed amount of $108,010 during the eight-year term based
on their technical knowledge, emphasis on time management, planning, and realizing
deadlines, and ability to provide valuable insight and information related to accounting
standards, industry best practices, and the analyses and outcomes that appear in the
actuarial report.
Financial Impacts & Budget Actions
Staff seeks authority to approve funding from the General Fund to award an agreement
with MacLeod Watts for actuarial valuation services. Future year funding is contingent
on Council budget approval.
Contract Request
Request Amount FY 2022-23 Budget Dept/CIP Account # Total Contract Amount
$20,500 01300003.552010 $108,010
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Prepared By: Stephanie Manglaras, Financial Operations Manager
Approved
Forwarded to Council
Attachments:
A. MacLeod Watts Oaks fy 22-23
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CITY OF SANTA MONICA
OAKS INITIATIVE NOTICE
NOTICE TO APPLICANTS, BIDDERS, PROPOSERS
AND OTHERS SEEKING DISCRETIONARY PERMITS, CONTRACTS,
OR OTHER BENEFITS FROM THE CITY OF SANTA MONICA
Santa Monica’s voters adopted a City Charter amendment commonly known as
the Oaks Initiative. The Oaks Initiative requires the City to provide this notice and
information about the Initiative’s requirements. You may obtain a full copy of the Initiative’s
text from the City Clerk.
This information is required by City Charter Article XXII—Taxpayer Protection. It
prohibits a public official from receiving, and a person or entity from conferring, specified
personal benefits or campaign advantages from a person or entity after the official votes,
or otherwise takes official action, to award a “public benefit” to that person or entity. The
prohibition applies within and outside of the geographical boundaries of Santa Monica.
All persons or entities applying or receiving public benefits from the City of Santa
Monica shall provide the names of trustees, directors, partners, and officers, and names
of persons with more than a 10% equity, participation or revenue interest. An exception
exists for persons serving in those capacities as volunteers, without compensation, for
organizations exempt from income taxes under Section 501(c)(3), (4), or (6), of the
Internal Revenue Code. However, this exception does not apply if the organization is a
political committee or controls political committees. Examples of a “public benefit” include
public contracts to provide goods or services worth more than $25,000 or a land use
approval worth more than $25,000 over a 12-month period.
In order to facilitate compliance with the requirements of the Oaks Initiative, the City
compiles and maintains certain information. That information includes the name of any
person or persons who is seeking a “public benefit.” If the “public benefit” is sought by an
entity, rather than an individual person, the information includes the name of every person
who is: (a) trustee, (b) director, (c) partner, (d) officer, or has (e) more than a ten percent
interest in the entity. Therefore, if you are seeking a “public benefit” covered by the Oaks
Initiative, you must supply that information on the Oaks Initiative Disclosure Form. This
information must be updated and supplied every 12 months.
5.D.a
Packet Pg. 210 Attachment: MacLeod Watts Oaks fy 22-23 (5287 : Approval of Professional Services Agreement to MacLeod Watts)
5.D.a
Packet Pg. 211 Attachment: MacLeod Watts Oaks fy 22-23 (5287 : Approval of Professional Services Agreement to MacLeod Watts)