REQUEST FOR PROPOSAL - SJCERA| Home · REQUEST FOR PROPOSAL ... Request for Proposals (RFP) issued: October 16, ... in SJCERA’s plans to write this module and include it as part

REQUEST FOR PROPOSAL

San Joaquin County Employees' Retirement Association 6 So. El Dorado Street, Suite 700

Stockton, California 95202 Phone: (209) 468-2163 FAX: (209) 468-0480

www.sjcera.org

Request for Proposal No. 2006-02

Consulting Actuary Services

Benefit Communication Services

SJCERA / Request for Proposal – Actuarial Services / Page 1

KEY DATES AND OTHER INFORMATION

Request for Proposals (RFP) issued: October 16, 2006 Notice of Intent to Propose Due October 27, 2006 Due date for submission of proposals: November 17, 2006 Evaluation of proposals: November 20 - 30, 2006 Recommendation to Board of Retirement: December 8, 2006 Possible Interview of Finalists: December 15, 2006 Estimated Board Approval and Contract Execution: January 12, 2007 Notice of Intent Each interested party should send a brief Notice of Intent to Propose to this RFP only via e-mail to [email protected] on or before 5:00 p.m. on Friday, October 27, 2006. The Notice must include the title of the RFP to which you intend to respond, the single point of contact at your firm responsible for the RFP response and the telephone, fax, and e-mail information for this individual. Written Questions Written questions will be accepted only via e-mail at [email protected]. All questions must identify the RFP section and page number to which the question refers. Questions and responses thereto will be posted on the SJCERA web site. Written questions to the above e-mail address will be accepted until 5:00 p.m. on Friday, November 3, 2006. Written responses will be posted on the SJCERA web site by 5:00 p.m. on Friday, November 10, 2006. Confidentiality All responses to this RFP become the property of SJCERA and will be kept confidential until such time as recommendation for award of a contract has been announced. Thereafter, proposals are subject to public inspection and disclosure under the California Public Records Act. If a proposer believes that any portion of its proposal is exempt from public disclosure, such portion may be marked “confidential.” SJCERA will use reasonable means to ensure that such confidential information is safeguarded but will not be held liable for inadvertent disclosure of such materials, data and information. Proposals marked “confidential” in their entirety will not be honored and SJCERA will not deny public disclosure of all or any portion of proposals so marked. By submitting information with portions marked “confidential”, the proposer represents it has a good faith belief that such material is exempt from disclosure under the California Public Records Act and agrees to reimburse SJCERA for, and to indemnify, defend and hold harmless SJCERA, its officers, fiduciaries, employees and agents from and against: (a) any and all claims, damages, losses, liabilities, suits, judgments, fines, penalties, costs and expenses including, without limitation, attorneys’ fees, expenses and court costs of any nature whatsoever (collectively, “Claims”) arising from or relating to SJCERA’s non-disclosure of any such designated portions of a proposal if disclosure is deemed required by law or court order. Additionally, SJCERA may request that the bidder directly defend any action for disclosure of any information marked confidential.


TABLE OF CONTENTS I. INTRODUCTION 3 A. General Information B. Term of Engagement II. ENTITY DESCRIPTION 4

A. Background Information B. Accounting and Reporting C. Information Systems D. Actuarial Information E. Plan Information F. Actuarial Services G. Benefit Communication Services

III. PROPOSAL REQUIREMENTS 7 A. Proposal Format B. General Requirements C. Standards for Lead Consulting Actuary D. General Responsibilities of Contractor E. Consulting Services for Actuarial Consulting Only F. Experience Analysis Services for Actuarial Consulting Only G. Valuation Services for Actuarial Consulting Only H. Benefit Communication Services

IV. FEE PROPOSAL 15 V. EVALUATION PROCEDURES 16 A. Evaluation Committee B. Review of Proposals C. Evaluation Criteria D. Finalists Interview E. Right to Reject Proposals F. Incomplete Proposals VI. TERMS AND CONDITIONS 17

A. General Terms and Conditions B. Limitations C. Termination D. Errors and Omissions E. Contract Approval

VI. INSURANCE REQUIREMENTS 18 Exhibit A BOARD OF RETIREMENT FUNDING POLICY 19


I. INTRODUCTION

A. General Information

This RFP covers specifications for two kinds of desired services: a) Actuarial consulting, and b) Benefit communication You may submit a proposal for either or both of these services. Because many of the requirements are the same regardless of the service desired, we've chosen to issue one combined RFP. Those provisions/specifications, which pertain to only one of the two types of services, are identified as Actuarial Consulting Only or Benefits Communication Only. Bidders submitting a proposal for only one of the two services should ignore those provisions/specifications for the other service. Finalists will be invited to make an oral presentation to the Board. The Board will expect presentation by the key personnel assigned to the account. By providing references as requested in Section III, A, the bidder is thereby giving permission to SJCERA to contact these individuals. There is no expressed or implied obligation on the part of SJCERA to reimburse firms for any expense incurred in preparing proposals in response to this request. All material submitted in response to this RFP will become the sole property of SJCERA. SJCERA expressly reserves the right to utilize any and all ideas submitted in the proposals received unless covered by legal patent or proprietary rights. Any inquiries concerning the request for proposals should be addressed to Actuarial Services RFP 2006-02 at [email protected]. During the evaluation process, SJCERA may request additional information or clarifications from proposers, as needed. Submission of a proposal indicates acceptance by the firm of the terms and conditions contained in this request for proposals, unless exceptions are clearly and specifically noted in the proposal. If the proposer objects to any term(s) in the RFP, or wishes to modify or add terms to a subsequent contract, the proposal must identify each objection, propose language for each modification and include the reasons for the modification. SJCERA reserves the right to modify the contract prior to execution.

B. Term of Engagement

A contract with an initial term of one (1) year is contemplated, with up to two (2) one-year extensions at SJCERA’s option. The decision to exercise contract extension(s) will be subject to review by SJCERA management, and satisfactory negotiation of terms (including a price acceptable to both SJCERA and the selected firm).


II. ENTITY DESCRIPTION

A. Background Information

The San Joaquin County Employees' Retirement Association (SJCERA) is a public, defined benefit pension plan, located in Stockton, California, established and governed under the provisions of the County Employees’ Retirement Law of 1937 (California Government Code, Title 3, Division 4, Part 3, Chapter 3, Section 31450 et seq.).

SJCERA is a cost-sharing multiple-employer, defined benefit pension plan covering the employees of the County of San Joaquin and other participating agencies. Participating agencies include the County of San Joaquin, San Joaquin County Superior Court, Local Agency Formation Commission, Lathrop-Manteca Rural Fire Protection District, Waterloo-Morada Rural Fire Protection District, Tracy Public Cemetery District, San Joaquin County Mosquito & Vector Control District, San Joaquin County Historical Society & Museum, Mountain House Community Services District, and San Joaquin County Law Library. The system was established on April 29, 1946, to provide retirement, disability, death and survivor benefits for covered employees. SJCERA operates as an independent governmental entity separate and distinct from the County of San Joaquin and is a component unit of the County of San Joaquin. SJCERA’s basic financial statements are included in San Joaquin County’s basic financial reports as a pension trust fund. The Board of Retirement includes nine members, four are appointed by the County’s Board of Supervisors, four are elected by the members of SJCERA, and San Joaquin County’s Treasurer is an ex-officio member. As of December 31, 2005, SJCERA’s membership included approximately 7,000 active and deferred members and approximately 3,600 retired members. Net assets totaled approximately $1.8 billion as of December 31, 2005. The Board of Retirement and SJCERA management are responsible for collecting, depositing, investing and managing trust funds for the purpose of providing benefits to participants and their beneficiaries. SJCERA management and staff are responsible for administering Post Employment Healthcare Plans for participants. SJCERA management and staff are responsible for daily operations involving the administration of retirement, disability and death benefits, investments, member services, accounting, and information system management. As of December 31, 2005, SJCERA budgeted for 17 positions. Additional information regarding SJCERA’s financial condition, investment policies and portfolio composition, and organization can be found in its 2004 Comprehensive Annual Financial Report.

B. Accounting and Reporting The financial statements are prepared on a calendar year basis, January 1 through

December 31, using the accrual basis of accounting. Contributions are recognized in the period in which the contributions are due. Benefits and refunds are recognized when due and payable in accordance with the terms of the System. The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and with the Governmental Accounting Standards Board (GASB) statements on financial reporting such as: GASB No. 25-Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans; GASB No. 26-Financial Reporting for Postemployment Healthcare Plans Administered by Defined Benefit Pension Plans; GASB No. 28-Accounting and Financial Reporting for Securities Lending Transactions; GASB No. 40-Deposit and Investment Risk Disclosure; and, GASB No. 43- Financial Reporting for Post-employment Benefit Plans Other Than Pension Plans.


The accrual basis of accounting has been applied in both the current and comparative years, including the Notes to the Basic Financial Statements and the Required Supplementary Information.

C. Information Systems

1. CORE-37: CORE-37 is a comprehensive retirement system written for the 1937

Act Law. It is an integrated pension and benefits administration system written at SJCERA by Cornerstone Solutions. The CORE-37 modules include AMS-37 (Active Management System), RMS-37 (Retirement Management System), and OMS-37 (Office Management System). Its functions include all management and processing of member records, disbursements and reporting. The system houses over 10,000 member records and various statistics to assist staff. AMS-37 receives bi-weekly data from the San Joaquin County’s PeopleSoft payroll system. This data includes all employees processed by county payroll, member status changes, salaries, service purchase deductions, etc.

2. Retirement Allowance Program (RAP): Retirement benefits are currently

calculated using RAP from Buck Consultants, an independent actuarial firm. It is in SJCERA’s plans to write this module and include it as part of the CORE-37 system. It is in our plans to have our actuarial services contractor provide testing and acceptance of the software during the creation phase and when updates are made to the module.

3. Financial Systems: The Northern Trust Company (NT) serves as SJCERA’s

master custodian and maintains records of all investment transactions. SJCERA’s accounting division reconciles SJCERA records with NT records monthly. The San Joaquin County Auditor-Controller’s office process all non-investment related transactions (revenue and expense). SJCERA currently uses Excel for general ledger recording and San Joaquin County’s PeopleSoft for accounts payable. However, we are currently testing automated accounting systems to transition our complete financial entry and reporting system.

D. Actuarial Information

The latest valuation was performed as of December 31, 2005. The funded ratio of the

actuarial assets to the actuarial accrued liability is 89.2%. The valuation assets total $1.8 billion and the actuarial accrued liability is $2.0 billion. Summary information and assumptions are outlined below.

Valuation Date December 31, 2005 Actuarial Cost Method Entry-age normal actuarial cost method Amortization Method Level percentage of projected future payroll Remaining Amortization Period Rolling 10-year period from December 31,

2005 Asset Valuation Method Five-year smoothed market Projected Long-term Investment Rate of Return

8.00 %

Projected Salary Increase 4.25 % Cost-of-Living 3.00 % Inflation 3.50 %


E. Plan Information

SJCERA is a cost sharing, multiple-employer defined benefit plan for San Joaquin County and nine participating agencies located in San Joaquin County. Coverage begins the first day of employment. Benefits vest after five years of service.

There are two types of membership, safety members and general members. Permanent or interim employees engaged in the performance of active law enforcement are considered safety members and are not covered by Social Security. Probation officers were added to this group in 1990. All eligible employees not classified as safety members, hired after January 1, 1958, are considered general members and are covered by Social Security. Employees who worked for the County prior to January 1, 1958, who did not choose to join the integrated plan, are covered only by the County Employees Retirement System as it was established under the County Retirement Law of 1937. General and Safety members who retire at or after age 50 with 10 years of credited service are entitled to a monthly retirement benefit. For Safety members, this benefit is payable monthly for life, in an amount equal to 3% of their final average compensation for each year of credited service at age 50. For General members, this benefit is payable monthly for life, in an amount equal to 2% of their final average compensation for each year of credited service at age 55½. Final compensation for all members is the highest average compensation subject to retirement during any 365 consecutive days. Members may also retire at any age with 30 or more years of credited service or at age 70 regardless of the number of years of credited service.

F. Actuarial Services

A Valuation is performed each year as of December 31. The Board expects a recommendation from the actuary regarding the economic assumptions to be used in that year's valuation. Typically the Board's review and action on these recommendations occurs in August following the year for which the valuation will be performed. Contribution rates resulting from the valuation are reviewed and adopted by the Board no later than September each year and recommended to the Board of Supervisors for its acceptance effective the first pay period in the new calendar year. Sometimes a review of the valuation may trigger a request by the Board for special studies that arise out of the report.

Every three years an Experience Analysis precedes the annual Valuation. The next three-year Experience Analysis is scheduled for early 2007 on 2004-2006 experience. Neither the County nor any of the other employers in SJCERA have issued Pension Obligation Bonds (POB).

G. Benefit Communication Services

Each year since March 1992, the Retirement System has prepared and mailed individualized Benefit Statements to each of its active members. We began preparing and mailing Deferred Benefit Statements in 2005. The benefit statement for County employees, currently, includes information about account balances, projected retirement benefits, proof of birth on file, and the beneficiary of record. The Deferred Statement includes information about account balances and member information, such as beneficiary(ies) of record and proof of birth on file. Benefit communication services in the form of Individualized Benefit Statements and the electronic data are due the second week in April each year.


III. PROPOSAL REQUIREMENTS

A. Proposal Format

Proposers must submit one (1) original and four (4) copies and one (1) electronic version of their proposal in a sealed package no later than 4 p.m. PST on Friday, November 17, 2006. Proposals received after this deadline will not be considered, nor will fax proposals, whenever received. Proposals should be sent to:

Actuarial Services RFP 2006-02 San Joaquin County Employees’ Retirement Association 6 S. El Dorado Street, Suite 700 Stockton, CA 95202 Telephone: (209) 468-2163

The proposer may withdraw at any time prior to the deadline upon presentation of a written request to SJCERA. After the submission deadline, proposals shall be firm and may not be withdrawn for a period of 180 days. Interviews of the top-qualifying firms may be conducted at SJCERA’s discretion. If required, interviews are expected to take place on December 15, 2006. Once confirmed, all top-qualifying firms will be notified of interview date and time at least one week in advance.

The proposal should be submitted in a format that includes the following materials.

1. One (1) original (so marked) of the proposal and four (4) copies; one (1)

electronic copy to include the following: a. Title Page

Title page showing the request for proposals subject; the firm's name; the name, address and telephone number of the contact person; and the date of the proposal.

b. Table of Contents c. Transmittal Letter

A letter signed by an individual who is authorized to bind the firm contractually that summarizes the proposer's understanding of the work to be done, the commitment to perform the work within the time period, and a statement that the proposal is a firm and irrevocable offer. At a minimum, the letter must include the following:

1. Proposer certifies that it can and will provide, and make available, at a minimum, all services set forth in Section III, Proposal Requirements.

2. Proposer warrants that it is willing and able to comply with State of California laws with respect to foreign (non-state of California) corporations.

3. Proposer warrants that it is willing and able to obtain an errors and omissions insurance policy providing a prudent amount of coverage for the willful or negligent acts, or omissions of any officers, employees or agents thereof.

4. Proposer warrants that it will not delegate or subcontract its responsibilities under an agreement without the prior written permission of SJCERA.


5. Proposer warrants that all information provided by it in connection with this proposal is true and accurate.

d. Detailed Proposal

The purpose of the proposal is to demonstrate the qualifications, competence and capacity of the firms seeking to undertake actuarial and/or benefit communications for SJCERA in conformity with the requirements of this request for proposals. The proposal should provide a straightforward, concise description of the proposer's capabilities to satisfy the requirements of the request for proposals. While additional data may be presented, the following subjects must be addressed. They represent the criteria against which the proposal will be evaluated.

Independence: The firm should provide an affirmative statement that it is independent of SJCERA. The firm should also provide an affirmative statement that it is not currently in litigation with SJCERA, the County of San Joaquin or any other participating agencies or employee groups within the SJCERA plan. License to Practice in California: An affirmative statement should be included that the firm and engagement partner are properly licensed to practice in California and are in good standing with such licensing agencies.

Firm Qualifications and Experience: The proposer should state the size of the firm, the size of the firm's staff, the location of the office from which the work on this engagement is to be performed and the number and nature of the professional staff to be employed in this engagement. If the proposer is a joint venture or consortium, the qualifications of each firm comprising the joint venture or consortium should be separately identified and the firm that is to serve as the principal should be noted, if applicable. Prior Engagements with SJCERA or the County of San Joaquin: List separately all engagements within the last five years, ranked on the basis of total staff hours, for SJCERA or the County of San Joaquin by type of engagement. Indicate the scope of work, date, engagement partners, total hours, the location of the firm's office from which the engagement was performed, and the name and telephone number of the principal client contact. Similar Engagements With Other Pension Plans: For the firm's office that will be assigned responsibility for services, list the most significant engagements that are similar to the engagement described in this request for proposal. The engagements should be ranked on the basis of total staff hours. Indicate the scope of work, date, engagement partners, total hours, and the name and telephone number of the principal client contact. Partner, Supervisory and Staff Qualifications and Experience: Identify the supervisory and management staff, including engagement partners, managers, other supervisors and specialists, who would be assigned to the engagement.


Provide as much information as possible regarding the number, qualifications, experience and training, including relevant continuing professional education, of the specific staff to be assigned to this engagement. Indicate how the quality of staff over the term of the agreement will be assured. Liaison with Other Entities: The proposer shall describe arrangements or access that it has to offices of the state or federal government or other entities relevant to this engagement for the purpose of obtaining prompt responses to inquiries on technical or procedural questions that may arise during the course of the examination. Procedures Resolving Potential Issues: The proposal should identify and describe any anticipated potential issues, the firm's approach to resolving problems should they arise and any special assistance that will be requested from SJCERA. Disputed Reports, Studies, and Other Issues: The proposal should identify each report involving the engagement partner, engagement manager or engagement supervisor that has been the subject of litigation, arbitration, mediation or other dispute resolution mechanism within the past five (5) years and describe the outcome. The proposal should also identify any instances in the past five (5) years in which the firm or the engagement partner, engagement manager or engagement supervisor has been named as a defendant in any malpractice, misrepresentation, or professional negligence action and describe the outcome. The proposal should also identify any instances in the past five (5) years in which the firm or the engagement partner, engagement manager or engagement supervisor has had a complaint filed against him or her with an association governing the accounting profession, or has been the subject of disciplinary proceedings by any association governing the accounting profession, and describe the outcome.

References: A minimum of three (3) business references for the proposer’s most relevant project or programs within the past five (5) years must be provided. Each reference should include the following:

i. Reference organization’s name and purpose. ii. Reference organization’s address, phone, and fax numbers. iii. Contact persons representing the reference organization, title,

phone and fax numbers, and e-mail address. The reference contact persons must be familiar with the proposer and the proposer’s relevant experience and performance.

iv. Brief statement of the person’s or organization’s relationship to the proposer and the period of the relationship.

e. Assistance from SJCERA

The Information Systems division staff and other management and financial personnel will be available to assist the firm by providing information, documentation and explanations. SJCERA’s Information Systems Division will work with the selected Actuarial Firm to define data and written specifications needed to create reports and Benefit Statements.


B. General Requirements The bidder's response package, as a minimum, must include the following:

1. Actuarial Consulting and Benefits Communication:

a. A description of the bidder's understanding of the work to be performed, including, but not limited to, the firm’s planning and approach to conduct the actuarial valuation and experience analysis studies.

b. The firm's name, home office address, address of the office providing the services under the contract and telephone number.

c. General description of the firm, including size, number of employees, primary business (consulting, pension planning, tax, insurance, investment evaluation, etc.), other business or services, type of organization (franchise, corporation, partnership, etc.) and other descriptive material.

d. Identification of other personnel who will be performing work under the contract.

e. Provide summary information regarding the professional and experience qualifications of lead and support actuaries who will perform work under the contract.

f. Description of the computer resources equipment, software, and communication capabilities. Provide a statement as to the ownership and location of this equipment to be utilized in the performance of the contract.

g. Statement of the availability and location of staff and other required resources for performing all services and providing deliverables within indicated time frames. Statement as to whether or not the services outlined in these specifications will be performed using only your present staff.

h. Statement regarding the circumstances and status of any litigation or disciplinary action taken or pending against the firm during the past three (3) years with state regulatory bodies, professional organizations or previous clients.

i. Description of your firm's turnover experience in professional, para-professional, and support staff within the last three years, and why.

j. Identify any potential for conflict of interest your firm would have in serving the SJCERA plan. Describe how this potential would be eliminated.

k. If your firm has lost any accounts during the past 36 months, please list that account and the reason(s) for termination.

2. Actuarial Consulting Only:

a. Identification of the lead consulting actuary and back-up actuary assignment of the engagement.

This lead person must meet or exceed the "Standards for Lead Consulting

Actuary" as provided elsewhere in these specifications.


Two actuaries are desired so that at least one is available for immediate response to our needs.

b. Statement of the firm's ability to provide guidance on matters pertaining to the

Plan's tax-qualification status and whether this service is included in your retainer fee.

c. Statement of the firm's ability to perform pricing analysis of proposed legislation,

complete with actuarial certificate showing assumptions, pricing base, actuarial implications on total program, cost and alternative funding techniques. The System will provide three weeks notice for these services (but may on special occasions require the information with less than 24 hours notice).

d. Enclose samples of your work products, including actual actuarial valuation

report and experience analysis report for a public employee retirement system.

e. List of public employee retirement systems for which the firm currently provides actuarial consulting services, including system name, approximate number of participants, and number of years the firm has been retained. For three major public employee retirement systems included on the list (each involving 10,000 or more participants) provide the address, telephone number, name, and title of person(s) responsible for the administration of the system. Enclose samples of your work products.

3. Benefits Communication Only:

a. List of public employee retirement systems for which the firm currently provides benefit communication services, including system name, approximate number of participants, and number of years firm has been retained. For these major public employee retirement systems included on the list (each involving 5,000 or more participants) provide the address, telephone number, name, and title of person(s) responsible for the administration of the system.

b. For each of the engagements listed above, describe the nature of the service

provided. Enclose a sample of the material produced.

C. Standards for Lead Consulting Actuary:

Fellow or Associate of the Society and/or Fellow of the Conference of Actuaries in Public Practice and/or Member of the American Academy of Actuaries and/or meet standards of a qualified actuary under the provisions of the Employee Retirement Income Security Act of 1974. Experience as a lead-consulting actuary including consulting services, experience analysis and valuation assignments for public retirement systems, which had memberships in excess of 10,000 at the time of service. The Board prefers, but does not require experience as a lead consulting actuary for one or more California County retirement systems governed by the County Employees Retirement Law (1937 Act). Experience in testifying before legislative and administrative bodies in support of actuarial positions and/or the principles used in valuing the system or in pricing legislation. Ability to discuss in laymen's terms: actuarial theory; basis for assumptions; and other actuarial matters.


D. General Responsibilities of Contractor:

1. SJCERA will furnish the Contractor with such data or statistical information as may be determined to be necessary for the performance of the work described herein and which is available in its records and files. The bulk of the data will be provided electronically.

2. The Contractor, and subcontractor, if any, will be expected to treat all information as

confidential.

3. The Contractor shall provide a means by which any change in its staff may be effected with a minimum of disruption to the services provided to SJCERA.

4. The Contractor shall channel all requests, reports and all other communication in

connection with this contract through SJCERA's Administrator or a designee. 5. The Contractor shall document ideas and issues raised in discussions and meetings.

6. Additional Responsibilities for Actuarial Consulting Only:

a. The professional actuarial services for SJCERA shall be performed under the

direct supervision of a member of the Contractor's firm who meets or exceeds the "Standards for Lead Consulting Actuary." The Retirement Board reserves the right to reject the Contractor's choice of lead consulting actuary and may terminate the contract if an actuary, acceptable to the Board, cannot be made available by the Contractor.

b. All actuarial certificates on pricing, final reports, presentations of assumptions

and similar technical documentation from the contractor must be approved and signed by the lead-consulting actuary.

E. Consulting Services for Actuarial Consulting Only:

1. Provide actuarial consultation and advisory services on any technical, policy, legal, or administrative problems arising during the course of operation - by meetings and routine telephone calls and written correspondence.

2. Make recommendations to SJCERA from time to time relative to possible

improvements in its financing and benefit structure, and to give effect to new developments in the retirement industry. Keep the board apprised of current trends and progress within the actuarial profession.

3. Give consultation on and perform certain work in pricing proposed legislation (up to

two per year to be included in retainer fee).

4. Assist in the preparation of proposed changes to the governing Retirement Laws.

5. Give consultation and advisory services in the policy and administrative problems of implementing new legislation and/or amendments to the retirement plan.

6. Develop and provide various tables and factors needed by the System. These

include, but are not limited to, mortality tables, present value factors, and survivor benefit factors.


7. Appear at selected meetings and hearings for discussion of actuarial standards and/or the principles used in the determination of the funding requirement and in the pricing of legislation.

8. Assist in establishing specifications for SJCERA data files. Periodically review the

form and content of data files maintained by the System and make recommendations for modification, additions, or deletions that will insure the maintenance of the full range of data needed for legislative pricing, actuarial studies, experience analysis, and valuations.

9. Keep SJCERA advised on developments in federal legislation and/or regulations

regarding financing, benefits, vesting, fiduciary responsibility, disclosure, etc.

10. The lead and/or support actuary shall be readily accessible to SJCERA's Administrator or a designee by telephone within one working day and will be available for meetings within five working days of request.

11. The lead and/or support actuary shall be available for periodic educational

discussions with Board and/or staff members.

12. Assist the Board of Retirement in adhering to its Statement of Funding Policy (Exhibit A); review and make recommendations on compliance with said Policy.

13. Provide testing and certification of acceptance to the automated benefit calculation

software to be developed and maintained by SJCERA.

14. Calculate the "Actuarial Value of Assets" (five year "smoothed" market value), which adjusts market value to recognize differences between assumed and actual investment return.

15. Calculate the difference between the Actuarial Accrued Liability and the Unfunded

Actuarial Accrued Liability as a level percentage of projected future payrolls over a 10-year rolling period.

16. The above consulting services typically require three to four visits to Stockton,

California per year, including one meeting each year to review the annual actuarial valuation.

F. Experience Analysis Services for Actuarial Consulting Only:

1. Actuarial gain/loss Experience Analysis shall be performed every three years as of the end of the calendar year. The next such analysis will be required for the year ending December 31, 2006.

a. Reports (20 paper and 1 electronic copy) for these analyses shall be

delivered to SJCERA, by the Contractor, no later than sixteen (16) weeks after SJCERA has delivered complete data for the analyses to the Contractor.

b. The analyses shall describe the reasons for changes in the contribution

rates based on a comparison of actual changes in liabilities with expected changes according to each of the various actuarial assumptions.


2. The Contractor's study of non-economic assumptions in the Experience Analysis shall include but not be limited to rates of terminations, service retirement rates, pay increase assumptions, mortality before and after retirement, disability, disability mortality, and shall distinguish General and Safety membership where pertinent.

G. Valuation Services for Actuarial Consulting Only:

1. Actuarial Valuations shall be performed each year as of the end of the calendar year.

a. Each year the actuary, in consultation with the Board's investment consultant, recommends the economic assumptions to be used in the annual valuation. This report is reviewed by the Board at its first meeting in August at which time the economic assumptions are either adopted as recommended or may be subject to modification by the Board. This valuation report shall describe in detail both the results and the recommendations arising from the valuation and shall compare the results of additional valuations made based upon two different inflationary and investment assumptions from the recommendation of the Contractor.

b. Valuation reports (20 copies) shall be delivered to SJCERA, by the Contractor,

no later than the last week in July.

c. If the economic assumptions differ from those used in the prior year's valuation, the Contractor shall produce valuation results using both the old and new assumptions.

d. In those years when an Experience Analysis is not performed, the Contractor

shall use the same non-economic actuarial assumptions that were used for the prior valuation. If analysis of the current data during the performance of the valuation indicates any material variations from those assumptions, the Contractor shall be expected to discuss the variations in the valuation report and present an estimate of the effect on the normal cost and/or on the unfunded actuarial accrued liability of the Retirement System.

e. Valuation reports shall include a calculation of SJCERA's funding ratio on an

accrued basis, obligation basis, a pension benefit obligation basis, and an actuarial liability basis. The supplemental calculations shall include, but not be limited to, calculations in compliance with Governmental Accounting Standards Board Statement No. 5, No. 25, and No. 27 (or successor accounting and financial reporting standards).

f. Valuation reports shall contain a glossary of terms and sufficient explanatory text

to permit a reasonable understanding of the actuarial assumptions, cost methods, display of age groups, and service matrices for active members and display of retired lives by age groups and types of benefits.

g. Twenty copies of any "special studies" requested shall be delivered no later than

two (2) weeks after SJCERA has received the valuation report, unless a later date is agreed to by both parties.

H. Benefit Communication Services:

1. A Statement of Benefits is to be printed for each active and deferred member and sent in department number and alpha order no later than the second week in April of each year.


2. An electronic copy of the data used to create the statements is due to SJCERA upon delivery of the hard copy statements.

3. The Contractor shall act as project manager in close consultation with the Retirement

Administrator or designee.

4. The Contractor is expected to develop and assure adherence to a project timetable and to coordinate planning and design meetings.

5. The Contractor will advise on statement layout, text, and production techniques to

produce an accurate, easy-to-read, and cost efficient product.

6. If any subcontractors are used on design, printing, binding, and/or delivery services, the Contractor shall be solely responsible for their performance, shall supervise their work, shall receive and process their invoices, and shall pass through those expenses to SJCERA which have been agreed upon in advance.

7. The Contractor will begin services under this RFP after January 1, 2007.

IV. FEE PROPOSAL

1. The Contractor's fee proposal shall be for the above-described services for the Experience Analysis and Valuation in 2007 and valuation studies in calendar years 2008 and 2009. The fee must be all-inclusive, as no additional charges will be allowed except as provided in paragraph 3 of this section. All fee proposals for subsequent calendar years will be submitted by the contractor no later than the preceding October 1.

a. Increases in the future annual charges in excess of increases for inflation

(defined as the Bay Area CPI) will be grounds for termination of the Contract, in the absence of Board-approved changes in the level of services.

b. There will be no additional reimbursement for travel time or expenses, telephone

costs, copying costs, etc. except as provided in 2d below.

c. Fee proposals for actuarial services should be separate from fee proposals for benefit communication services.

2. The fee will be paid on the following basis:

a. For actuarial services as outlined in Section III, E, on a retainer basis paid in equal quarterly amounts. Please propose your retainer basis fee.

b. For actuarial services as outlined in Section III, F and G (except "special studies"

in G, 1g) upon delivery and acceptance of the report(s). Please propose your fee on a fixed-fee basis.

c. For special studies as outlined in Section G, 1g, upon delivery and acceptance of

the studies. Please provide an approximate fee or fee range.

d. For benefit communication services as outlined in section H, fees for actual consulting will be paid upon completion of the work. Fees for subcontracted work (art, printing, postage, etc) will be paid upon receipt of a valid invoice for same. Please propose your consulting fee on a "time and expense not to exceed" basis. Please provide estimates of costs for subcontracted work.


3. If the number of client visits would impact the fee proposal, please indicate the number of visits that are included in your proposed fee.

4. Please indicate your hourly time charges for additional services requested by the

System, if any, not included within the scope of the routine services outlined in these specifications. Additional services will be agreed upon in advance in writing.

5. If you propose additional services, such services should be outlined and separately

priced in your proposal.

6. In evaluating the proposals, price will not be the sole factor. The Board may consider any factors it deems necessary and proper for best value, including price, quality of service, and response to this request, prior experience, and general reputation. The Board reserves the right to reject any or all proposals.

V. EVALUATION PROCEDURES

A. Evaluation Committee An evaluation committee consisting of SJCERA staff will evaluate proposals submitted. B. Review of Proposals SJCERA reserves the right to retain all proposals submitted and use any idea in a

proposal regardless of whether that proposal is selected. SJCERA may request clarification and/or request additional information from proposers if

necessary. The proposers shall submit such clarifications and/or additional information as an Addendum to the Proposal upon request of SJCERA. However, since no additional input may be required, proposers are advised to submit complete information in the proposal.

C. Evaluation Criteria Proposals will be evaluated using three sets of criteria. Firms meeting the mandatory

criteria will have their proposals evaluated and scored for both technical qualifications and price. The following represent the principal selection criteria that will be considered during the evaluation process.

1. Mandatory Elements a. The firm is independent and licensed to practice in California. b. The firm has no conflict of interest with regard to any other work

performed by the firm for SJCERA. c. The firm adheres to the instructions in this request for proposal on

preparing and submitting the proposal. 2. Technical Qualifications and Price

The following factors will be considered by SJCERA: a. The proposer’s planning and approach to conduct the actuarial study. b. The firm’s experience and capabilities. c. The quality of assigned professional personnel. d. The cost.


D. Finalists Interviews During the evaluation process, one or more of the proposers may be identified as finalists

and have an interview with the Board of Retirement, a committee of the Board, or SJCERA management. All firms that are invited for an interview will be notified of the proposed interview date and time at least one week in advance. If required, interviews are currently planned for Friday, December 15, 2006.

E. Right to Reject Proposals Submission of a proposal indicates acceptance by the firm of the conditions contained in

this request for proposal unless clearly and specifically noted in the proposal submitted and confirmed in the contract between SJCERA and the firm selected. SJCERA reserves the right without prejudice to reject any or all proposals.

F. Incomplete Proposals If the information in a firm’s proposal is deemed to be insufficient for evaluation, SJCERA

reserves the right to request additional information or to reject the proposal outright.

VI. TERMS AND CONDITIONS

A. General Terms and Conditions

The general terms and conditions listed below are in addition to those specified in the standard agreement and will be incorporated into the final agreement.

1. The legal authority of the signed contract will include the RFP, the proposer’s

response and any other documents that are submitted as part of the response evaluation or contractual negotiation process, and the contract document.

2. Payment is only made after the submission of an authorized invoice to SJCERA.

SJCERA will pay its invoices within 45 days of receipt, unless they are formally contested. Interim billing shall cover a period of not less than a full calendar month.

3. Reimbursement for travel and subsistence will not be paid by SJCERA for any

consultant staff or subcontractor engaged by virtue of this contract. 4. The consultant must keep detailed records for all billings. The consultant must agree

that these records may be subject to audit by SJCERA.

5. The following changes must be approved in writing:

a. any changes to the project schedule that will add more than a total of 5 business days to the project

b. any changes in the specification c. any Change Orders that may arise from the project d. all invoices submitted by the consultant e. all project deliverables (note: the passage of time does not convey approval

of any deliverable on the part of SJCERA)

6. No change order will be valid without the signatures of both the SJCERA and the proposer.


B. Limitations

1. This RFP does not commit SJCERA to award a contract, pay any costs incurred in the preparation of a response, or procure or contract for services of any kind whatsoever. SJCERA reserves the right, in its sole discretion, to accept or reject any or all responses as a result of the RFP, to negotiate with any or all firms considered, or to cancel this RFP in whole or in part.

2. A proposing firm may be required to participate in negotiations and to submit any

price, technical or other revisions to its proposal which may result for such negotiations.

C. Termination

SJCERA shall have the right, in the first twelve months, to terminate this agreement upon thirty (30) days written notice to the Contractor. Thereafter, either party shall have the right to terminate the relationship with or without cause upon 30 days prior written notice to the other party.

D. Errors and Omissions

If a Proposer discovers any ambiguity, conflict, discrepancy, omission or other error in this RFP, please immediately notify SJCERA in writing at [email protected] of such error and request clarification or modification of the document.

Should SJCERA find it necessary, modification to the RFP will be made by addenda. Such modifications may be given by written notice to all parties who have furnished an RFP or a written Notice of Intent to Propose.

If the Proposer fails to notify SJCERA of a known error or an error that reasonably should have been known prior to the final filing date for submission, the Proposer shall assume the risk. If awarded the contract, the Proposer(s) shall not be entitled to additional compensation or time by reason of the error or its late correction.

E. Contract Approval

SJCERA’s selection of a successful Proposer shall not be binding until it has been approved by SJCERA’s Board of Retirement.

VII. INSURANCE REQUIREMENTS

ACTUARY shall procure and maintain various insurances for the duration of the Agreement at a minimum to meet legal insurance requirements for conducting business within the State of California.

Professional Liability Insurance

ACTUARY shall procure and maintain for the duration of this Agreement, and for three (3) years after ACTUARY has ceased to provide services pursuant to this Agreement, professional and fiduciary liability insurance which shall insure against errors and omissions and breaches of fiduciary responsibility of ACTUARY in the performance of such services. The insurance shall afford coverage in an amount not less than $10,000,000 per occurrence, shall cover costs of investigation and defense, and shall include not more than a $150,000 deductible. Prior to approval of this Agreement by the SJCERA, ACTUARY shall file with the Retirement Administrator evidence satisfactory to the SJCERA of such insurance.


Exhibit A

BOARD OF RETIREMENT FUNDING POLICY

San Joaquin County Employees' Retirement Association

6 South El Dorado Street, Suite 700 • Stockton, CA 95202 (209) 468-2163 • Fax (209) 468-0480 • www.sjcera.org

Statement of Funding Policy October 2003 A. Introduction

The purpose of this Statement of Funding Policy is to record the funding objectives and strategy set by the Board of Retirement (Board) for the San Joaquin County Employees' Retirement Association (SJCERA). The Board re-establishes this Statement of Funding Policy to ensure future benefit payments for members of SJCERA. In addition, this document records certain guidelines established by the Board to assist in administering SJCERA in a consistent and efficient manner. It is a working document and may be modified as the Board deems necessary. (Last modification: July 1998)

B. Funding Objectives

The Board's primary funding objectives, in order of importance, are to:

1. Provide sufficient assets to permit the payment of all benefits under SJCERA. 2. Fund the plan on an ongoing basis to maintain a Funded Ratio, as defined in

Section E, between 90% and 110%. 3. Minimize the volatility of the County's annual contribution rate as a percentage of

covered pay. C. Funding Guidelines

This statement reflects the current policy of the Board and establishes guidelines for setting the County contribution rates.

1. Regular Contribution Rate

We will attempt to minimize the volatility of the County's contribution rate from year to year as a percentage of covered pay. The County contribution is the sum of the County's Normal Cost and a payment to amortize the Unfunded Actuarial Accrued Liability as of the date of valuation:

SJCERA / Statement of Funding Policy / 2003 / Page 2 of 4

a. The Normal Cost and Actuarial Accrued Liability used for this purpose will be

calculated using the Entry Age actuarial funding method. b. The Actuarial Value of Assets used for this purpose will be a smoothed value

that recognizes realized and unrealized investment gains over a five-year period, but in no event shall be more than 120% of market value nor less than 80% of market value. An important element of this asset valuation method is the recognition in advance that only some portion of the total income of the fund will ultimately be used to pay for regular pension benefits. This Actuarial Allocation Percentage should be maintained at 90%, and is subject to class-action settlement requirements.

c. For Valuation Years after 2002, the Unfunded Actuarial Accrued Liability will

be amortized as a percentage of expected payroll over a rolling ten-year period.

2. Minimum Contribution Rate

In the interest of maintaining the funded position of SJCERA and to ensure that assets are sufficient at all times to provide for the prompt delivery of benefits and related services to plan participants, the Board will, under certain circumstances increase the County's contribution rate above the Regular Contribution Rate, as detailed below:

a. If the Market Value of Assets is less than expected to be needed to pay

benefits and expenses during the year, the County contributions shall be increased to a level sufficient to provide for such payments.

b. If the Funded Ratio is less than 90%, the County contributions shall be

increased to a level that would restore the Funded Ratio to at least 90% over a five-year period.

This section shall take precedence over the Maximum Contribution Rate section.

3. Maximum Contribution Rate

In the interest of maintaining the target relationship between plan assets and liabilities, the Board will, under certain circumstances, decrease the County's contribution rate below the Regular Contribution Rate, as detailed below:


a. If the Funded Ratio is more than 110%, the County contributions shall be decreased to a level that would reduce the Funded Ratio to no more than 110% over a five-year period, subject to class action settlement requirements.

D. Assumption Guidelines

The actuarial assumptions directly affect only the timing of contributions; the ultimate contribution level is determined by the benefits and expenses actually paid and by actual investment returns. To the extent that actual experience deviates from the assumptions, experience gains and losses will occur. These gains (or losses) then serve to reduce (or increase) future contribution levels. Assumptions are generally grouped into two major categories:

• Demographic assumptions -- which include withdrawal, retirement, disability,

marriage and mortality rates • Economic assumptions -- which include inflation, valuation interest rate, and

salary increase

The assumptions represent the Board's best estimate of anticipated experience under SJCERA and are intended to be long term in nature. Therefore, in developing the assumptions, the Board considers not only past experience, but also trends, external forces and future expectations. Irrespective of the care with which actuarial assumptions are chosen, actual experience over the short term is not expected to match these assumptions exactly.

E. Glossary of Terms

Actuarial Allocation Percentage: The portion of total earnings expected to be allocated to pension reserves over the long term.

Actuarial Funding Method: The technique used to allocate costs to various time

periods. Actuarial Accrued Liability (AAL): The portion of the Present Value of Projected

Benefits that is attributed to past years of service by the Actuarial Funding Method.

Actuarial Value of Assets: The value of assets used by the actuary in the actuarial

valuation. Although the value of assets for this purpose can be either the Market Value of Assets or Book Value of Assets, a smoothed value is often used in order


to reduce the impact of market fluctuations on the County's contribution rate, while capturing the long-term intrinsic value of those plan assets that will be used to pay for promised benefits. For SJCERA, the Actuarial Value of Assets shall be no more than 120% of market value and no less than 80% of market value.

Entry Age Actuarial Funding Method: An Actuarial Funding Method that determines

the plan's Normal Cost as a level percentage of pay over the working lifetime of plan members.

Experience Gains and Losses: The difference between the experience anticipated

by the actuarial assumptions and the plan's actual experience during the period between valuations. If actual experience is financially more favorable to the plan, it is a Gain, (e.g., more deaths than expected, or higher investment return than expected). If actual experience is financially less favorable to the plan, it is a Loss, (e.g., higher salaries than expected, or lower investment return than expected).

Funded Ratio: The ratio of the Actuarial Value of Assets to the Actuarial Accrued

Liability of the plan. Normal Cost: The portion of the Present Value of Projected Benefits that is

attributed to the current year by the Actuarial Funding Method. Unfunded Actuarial Accrued Liability (UAAL): The portion of the Actuarial Accrued

Liability not currently covered by plan assets. It is calculated by subtracting the Actuarial Value of Assets from the Actuarial Accrued Liability.

Documents

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