This report has been prepared at the request of the City of Bakersfield to assist in administering the Plan. This valuation report may not otherwise be copied or reproduced in any form without the consent of the City of Bakersfield and may only be provided to other parties in its entirety. The measurements shown in this actuarial valuation may not be applicable for other purposes. Copyright © 2023byThe Segal Group, Inc. All rights reserved.doctag_01_actuarialvaluation City of Bakersfield Governmental Accounting Standards Board (GASB) Statements 74 and 75 Actuarial Valuation and Review of Other Postemployment Benefits (OPEB) Measured as of June 30, 2022 for Reporting as of June 30, 2023REVISED 500 North Brand Boulevard, Suite 1400 Glendale, CA 91203-3338 segalco.com T 818.956.6700 November 22, 2023 Mr. Randy McKeegan Finance Director City of Bakersfield 1600 Truxtun Avenue, Suite 200 City of Bakersfield, CA 93301 Dear Mr. McKeegan: We are pleased to submit this Actuarial Valuation and Review of Other Postemployment Benefits (OPEB) as of June 30, 2022 under Governmental Accounting Standards Board Statements No. 74 and No. 75. The report summarizes the actuarial data used in the valuation, discloses the Net OPEB Liability (NOL), and analyzes the preceding year’s experience. This report has been revised to reflect an updated employer contribution amount of $6,207,752 for fiscal year ending June 30, 2022. The employer contribution of $10,207,752 reported in the GASB 74/75 report dated September 26, 2023 has been revised to reflect removal of $4.0 million that was contributed to a separate pension rate stabilization trust. This report was based on the census data provided by City of Bakersfield and the terms of the Plan. Segal does not audit the data provided. The accuracy and comprehensiveness of the data is the responsibility of those supplying the data. Segal, however, does review the data for reasonableness and consistency. The actuarial calculations were completed under the supervision of Mehdi Riazi, FSA, MAAA, FCA, EA. The health care trend and other related medical assumptions have been reviewed by Daniel J. Rhodes, FSA, MAAA. The measurements shown in this actuarial valuation may not be applicable for other purposes. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; and changes in plan provisions or applicable law. The actuarial valuation has been completed in accordance with generally accepted actuarial principles and practices. To the best of our knowledge, the information supplied in this actuarial valuation is complete and accurate. Further, in our opinion, the assumptions used in this valuation and described in Section 3, Exhibit II are reasonably related to the experience of and the expectations for the Plan. The actuarial projections are based on these assumptions and the plan of benefits as summarized in Section 3, Exhibit III. We look forward to reviewing this report with you and to answering any questions. Sincerely, SegalJohnny WuConsulting Actuary Table of Contents
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 20233 Section 1: Actuarial Valuation Summary .............................................................................................................................................. 4Purpose and basis ........................................................................................................................................................................... 4 Highlights of the valuation ................................................................................................................................................................ 4 Summary of key valuation results .................................................................................................................................................... 6 Important information about actuarial valuations .............................................................................................................................. 7 Section 2: GASB 74/75 Information .................................................................................................................................................... 10 General information about the OPEB plan ..................................................................................................................................... 10 Net OPEB liability .......................................................................................................................................................................... 12 Determination of discount rate and investment rates of return ....................................................................................................... 13 Sensitivity ...................................................................................................................................................................................... 14 Schedule of changes in Net OPEB Liability – Last two fiscal years ................................................................................................ 15 Deferred outflows of resources and deferred inflows of resources ................................................................................................. 17 Schedule of recognition of change in total Net OPEB Liability ....................................................................................................... 18 OPEB expense .............................................................................................................................................................................. 22 Schedule of reconciliation of Net OPEB Liability ............................................................................................................................ 23 Schedule of contributions – Last ten fiscal years ........................................................................................................................... 24 Actuarially Determined Contribution (ADC) .................................................................................................................................... 26 Section 3: Supporting Information ...................................................................................................................................................... 27 Exhibit I: Summary of Participant Data........................................................................................................................................... 27 Exhibit II: Actuarial Assumptions and Actuarial Cost Method ......................................................................................................... 28 Exhibit III: Summary of Plan ........................................................................................................................................................... 41 Appendix A: Definition of Terms..................................................................................................................................................... 44 Appendix B: Accounting Requirements .......................................................................................................................................... 45 City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 20234 Section 1: Actuarial Valuation SummaryPurpose and basisThis report presents the results of our actuarial valuation of City of Bakersfield (the “Employer” or the “City") OPEB plan as of June 30, 2022, required by Governmental Accounting Standards Board (GASB) Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other than Pension Plans and GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. The actuarial computations made are for purposes of fulfilling plan accounting and funding requirements. Determinations for purposes other than meeting financial accounting requirements may be significantly different from the results reported here. This valuation is based on: The benefit provisions of OPEB Plan, as administered by the City; The characteristics of covered active members, terminated vested members, and retired members and beneficiaries as of June 30, 2022, provided by the City; The assets of the Plan as of June 30, 2022, provided by the City; Economic assumptions regarding future salary increases and investment earnings adopted by the City for the June 30, 2022 valuation; and Other actuarial assumptions, regarding employee terminations, retirement, death, etc. adopted by the City for the June 30, 2022 valuation. Highlights of the valuation Accounting and Financial Reporting1. For GASB 75 reporting as of June 30, 2023, the Total OPEB Liability (TOL) and Net OPEB Liability (NOL) were measured as of June 30, 2022. Consistent with the provisions of GASB 75, the assets and liabilities measured as of June 30, 2022 are not adjusted or rolled forward to the June 30, 2023 reporting date. 2. The NOL as of June 30, 2022 is $22,882,795, an increase of $7,295,972, from the prior valuation NOL of $15,586,823. The NOL had been expected to decrease to $11,366,298, due to normal plan operations. The difference between actual and expected NOL was the net effect of: Prior to any assumption changes, the NOL increased by $14,728,015. This was primarily due to investment losses, and to a smaller extent, due to actual benefit payments being higher than the amount projected in the prior valuation.
Section 1: Actuarial Valuation Summary
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 20235 Valuation assumption changes decreased the NOL by $3,211,518. This was a result of updating the trend rates on health costs to reflect actual premium renewals effective January 1, 2023. 3. As of June 30, 2022, the ratio of assets to the Total OPEB Liability (the funded ratio) is 78.49%. This is based on the market value of assets as of the measurement date. 4. The Annual OPEB Expense increased to -$9,691,033 for the measurement period ending June 30, 2022. The expense was -$12,127,334 last year. The increase to the OPEB expense was driven by the new amortization bases related to this year’s investment losses. 5. The discount rates used in the valuations for financial disclosure purposes as of June 30, 2022 is the assumed investment returns on Plan assets (i.e. 4.75%). As contributions that are required to be made by the City to amortize the Unfunded Actuarial Accrued Liability are determined on an actuarial basis, the future Actuarially Determined Contributions and current Plan assets, when projected in accordance with the method prescribed by GASB 74, are expected to be sufficient to make all benefit payments to current members. 6. This report has been revised to reflect an updated employer contribution amount of $6,207,752 for fiscal year ending June 30, 2022. The employer contribution of $10,207,752 reported in the GASB 74/75 report dated September 26, 2023 has been revised to reflect removal of $4.0 million that was contributed to a separate pension rate stabilization trust.
Section 1: Actuarial Valuation Summary
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 20236 Summary of key valuation resultsReporting Date for Employer under GASB 75 June 30, 2023June 30, 2022Measurement Date June 30, 2022June 30, 2021Disclosure elements for Total OPEB Liability $106,405,849 $107,846,786 fiscal year ending Plan Fiduciary Net Position (Assets) 83,523,054 92,259,963 June 30: Net OPEB Liability 22,882,795 15,586,823 OPEB Expense-9,691,033 -12,127,334 Service Cost at Beginning of Year 1,093,753 1,303,741 Schedule of contributions Actuarially determined contributions $2,661,016 $4,636,647 for fiscal year ending Actual contributions1 6,207,752 6,852,674 June 30: Contribution deficiency / (excess) -3,546,736 -2,216,027 Demographic data2:Number of retired members, married dependents and surviving spouses receiving a health subsidy754754Number of active members3428428Key assumptions as of Discount rate4.75% 4.75%June 30: Subsidy trend rates City “Years of Service” Formula 2.25% in 2022, 8.31% in 2023, and 7.00% in 2024 graded to 4.50% over 10 years 7.50% graded to 4.50% over 12 yearsSpecial 42% Contribution–Non-Medicare5.45% in 2022, 8.98% in 2023, and 7.00% in 2024 graded to 4.50% over 10 years 7.50% graded to 4.50% over 12 years–Medicare 6.28% in 2022, 5.61% in 2023, and 6.50% in 2024 graded to 4.50% over 8 years 7.00% graded to 4.50% over 10 years1The employer contributions of $6,207,752 consists of $4,640,002 in trust contributions plus $1,567,750 of benefits paid by the City with its own assets($4,640,002 in total benefit payments paid by the City minus trust reimbursements of $3,072,252). 2Demographic data is as of July 1, 2021 for the June 30, 2021 and June 30, 2022 measurements.3Excludes Miscellaneous, Supervisory, and Management employees hired after February 22, 2006, Fire Safety employees hired after May 5, 2006, and Police Safety employees hired after May 24, 2006.
Section 1: Actuarial Valuation Summary
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 20237 Important information about actuarial valuationsAn actuarial valuation is a budgeting tool with respect to defining future uncertain obligations of a postretirement health plan. As such, it will never forecast the precise future stream of benefit payments. It is an estimated forecast – the actual cost of the plan will be determined by the benefits and expenses paid, not by the actuarial valuation. In order to prepare a valuation, Segal relies on a number of input items. These include: Plan of benefits Plan provisions define the rules that will be used to determine benefit payments, and those rules, or the interpretation of them, may change over time. Even where they appear precise, outside factors may change how they operate. For example, a plan may provide health benefits to post-65 retirees that coordinates with Medicare. If so, changes in the Medicare law or administration may change the plan’s costs without any change in the terms of the plan itself. It is important for the City to keep Segal informed with respect to plan provisions and administrative procedures, and to review the plan summary included in our report to confirm that Segal has correctly interpreted the plan of benefits. Participant data An actuarial valuation for a plan is based on data provided to the actuary by the plan. Segal does not audit such data for completeness or accuracy, other than reviewing it for obvious inconsistencies compared to prior data and other information that appears unreasonable. It is not necessary to have perfect data for an actuarial valuation: the valuation is an estimated forecast, not a prediction. The uncertainties in other factors are such that even perfect data does not produce a “perfect” result. Notwithstanding the above, it is important for Segal to receive the best possible data and to be informed about any known incomplete or inaccurate data. AssetsThe valuation is based on the market value of assets as of the valuation date, as provided by the City.Actuarial assumptionsIn preparing an actuarial valuation, Segal starts by developing a forecast of the benefits to be paid to existing plan participants for the rest of their lives and the lives of their beneficiaries. To determine the future costs of benefits, Segal collects claims, premiums, and enrollment data in order to establish a baseline cost for the valuation measurement, and then develops short- and long-term health care cost trend rates to project increases in costs in future years. This forecast also requires actuarial assumptions as to the probability of death, disability, withdrawal, and retirement of each participant for each year, as well as forecasts of the plan’s benefits for each of those events. The forecasted benefits are then discounted to a present value, typically based on an estimate of the rate of return that will be achieved on the plan’s assets or, if there are no assets, a rate of return based on a yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent quality on another rating scale). All of these factors are uncertain and unknowable. Thus, there will be a range of reasonable assumptions, and the results may vary materially based on which assumptions the actuary selects within that range. That is, there is no right answer (except with hindsight). It is important for any user of an actuarial valuation to understand and accept this constraint. The actuarial model necessarily uses approximations and estimates that may lead to significant changes in our results but will have no impact on the actual cost of the plan. In addition, the actuarial assumptions may change over time, and while this can have a significant impact on the reported results, it does not mean that the previous assumptions or results were unreasonable or wrong.
Section 1: Actuarial Valuation Summary
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 20238 The user of Segal’s actuarial valuation (or other actuarial calculations) should keep the following in mind: The actuarial valuation is prepared for use by the City Finance Department. It includes information for compliance with accounting standards and for the plan’s auditor. Segal is not responsible for the use or misuse of its report, particularly by any other party. If the City is aware of any event or trend that was not considered in this valuation that may materially change the results of the valuation, Segal should be advised, so that we can evaluate it. An actuarial valuation is a measurement at a specific date – it is not a prediction of a plan’s future financial condition. Accordingly, Segal did not perform an analysis of the potential range of financial measurements, except where otherwise noted. The actual long-term cost of the plan will be determined by the actual benefits and expenses paid and the actual investment experience of the plan. Sections of this report include actuarial results that are not rounded, but that does not imply precision. Critical events for a plan include, but are not limited to, decisions about changes in benefits and contributions. The basis for such decisions needs to consider many factors such as the risk of changes in plan enrollment, emerging claims experience, health care trend, and investment losses, not just the current valuation results.Segal does not provide investment, legal, accounting, or tax advice. Segal’s valuation is based on our understanding of applicable guidance in these areas and of the plan’s provisions, but they may be subject to alternative interpretations. The City should look to their other advisors for expertise in these areas. While Segal maintains extensive quality assurance procedures, an actuarial valuation involves complex computer models and numerous inputs. In the event that an inaccuracy is discovered after presentation of Segal’s valuation, Segal may revise that valuation or make an appropriate adjustment in the next valuation. Segal’s report shall be deemed to be final and accepted by the City upon delivery and review. The City should notify Segal immediately of any questions or concerns about the final content. As Segal has no discretionary authority with respect to the management or assets of the Plan, it is not a fiduciary in its capacity as actuaries and consultants with respect to the Plan.
Section 1: Actuarial Valuation Summary
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 20239 Actuarial Certification November 22, 2023 This is to certify that Segal has conducted an actuarial valuation of certain benefit obligations of City of Bakersfield’s other postemployment benefit programs as of June 30, 2022, in accordance with generally accepted actuarial principles and practices. The actuarial calculations presented in this report have been made on a basis consistent with our understanding of GASB Statements 74 and 75 for the determination of the liability for postemployment benefits other than pensions. The actuarial valuation is based on the plan of benefits verified by the Employer and reliance on participant, premium, claims and expense data provided by the Employer or from vendors employed by the Employer. Segal does not audit the data provided. The accuracy and comprehensiveness of the data is the responsibility of those supplying the data. Segal, however, does review the data for reasonableness and consistency. The actuarial computations made are for purposes of fulfilling plan accounting and funding requirements. Determinations for purposes other than meeting financial accounting and funding requirements may be significantly different from the results reported here. Accordingly, additional determinations may be needed for other purposes, such as judging benefit security at termination of the plan, or determining short-term cash flow requirements. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: retiree group benefits program experience or rates of return on assets differing from that anticipated by the assumptions; changes in assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period); and changes in retiree group benefits program provisions or applicable law. Retiree group benefits models necessarily rely on the use of approximations and estimates, and are sensitive to changes in these approximations and estimates. Small variations in these approximations and estimates may lead to significant changes in actuarial measurements. The scope of the assignment did not include performing an analysis of the potential change of such future measurements except where noted. To the best of our knowledge, this report is complete and accurate and, in our opinion presents the information necessary to comply with GASB Statements 74 and 75 with respect to the benefit obligations addressed. The signing actuaries are members of the Society of Actuaries, the American Academy of Actuaries, and other professional actuarial organizations and collectively meet the “General Qualification Standards for Statements of Actuarial Opinions” to render the actuarial opinion contained herein. Mehdi Riazi, FSA, MAAA, FCA, EA Daniel J. Rhodes, FSA, MAAAVice President and Consulting Actuary Senior Vice President and Consulting ActuaryCertifying Liability Calculations Certifying Claims and Medical Trend Calculations City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202310 Section 2: GASB 74/75 InformationGeneral information about the OPEB plan Plan Description Plan administration. The City provides a single-employer Post-Employment Retiree Medical Benefit Plan in accordance with a resolution approved by the City Council. Two primary plans exist. All employees with a retirement date prior to January 1, 1985 were eligible for benefits upon retirement. Post-1985 employees must retire with fifteen years accumulated service upon retirement to participate. The service requirement is waived for safety employees who retire with a job-related disability. Employees hired after the dates listed below will not participate in either of the retiree health subsidy programs mentioned above. Miscellaneous Employees February 22,2006 Management and SupervisoryMarch 22, 2006Fire SafetyMay 5, 2006Police SafetyMay 24, 2006For employees hired prior to the dates listed above, the City provides lifetime postretirement medical benefit for eligible retirees and qualified dependents with a choice of three medical options. Blue Shield PPO, Kaiser High Deductible Health Plan, and Kaiser Permanente HMO. Mental Health benefits are carved out and provided through Optum Behavioral Health. After reaching eligibility for Medicare, retirees are offered a choice of Blue Shield PPO, Blue Shield Medicare Advantage HMO or Kaiser Senior Advantage HMO. Retirees may also elect dental coverage but must self-pay the premiums for such coverage. Vison coverage is not offered to retirees. Retiree rates are unblended from the employee rates.
Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202311 Plan membership. All regular full-time employees of the City hired before the repurchase dates shown above are members of the Plan. At June 30, 2021, OPEB Plan membership consisted of the following: Retired participants currently receiving benefits 754 Active participants 428 Total 1,182 Benefits provided. The City of Bakersfield provides post-employment health insurance benefits to eligible employees. The City contributes 3% of the lowest single-party rate per year of service to a maximum of 30 years (90%). If the dollar amount is greater than the premium for a retiree covered under one of the Medicare Advantage plans, the retiree receives a cash reimbursement of the difference to a maximum of $42.50 per month per person. The City also contributes 42% of the Blue Shield PPO for all retirees who elect the Blue Shield PPO plan, excluding Miscellaneous employees hired after April 1, 1996 and Safety employees hired after April 1, 1998.
Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202312 Net OPEB liabilityReporting Date for Employer under GASB 75 June 30, 2023 June 30, 2022Measurement Date June 30, 2022 June 30, 2021 Components of the Net OPEB LiabilityTotal OPEB Liability $106,405,849 $107,846,786Plan Fiduciary Net Position83,523,05492,259,963Net OPEB Liability 22,882,795 15,586,823Plan Fiduciary Net Position as a percentage of the Total OPEB Liability78.49% 85.55%The NOL was measured as of June 30, 2022 and 2021. Plan Fiduciary Net Position (plan assets) was valued as of the measurement dates and the TOL was determined from actuarial valuations using data as of June 30, 2021. Actuarial assumptions. The TOL as of June 30, 2022 was measured by an actuarial valuation as of June 30, 2021. The non-health related actuarial assumptions used in the June 30, 2022 valuation were based on the December 2021 experience study performed by the CalPERS actuary derived from the data collected during fiscal years 2000 to 2019. In particular, the following actuarial assumptions were applied to all periods included in the measurement: Inflation2.30%Salary increases Ranges from 14.61% to 3.34% based on years of service, including inflation.Investment rate of return4.75%Health care trend rates–City “Years of Service” Formula 2.25% in 2022, 8.31% in 2023, and 7.00% in 2024 graded to 4.50% over 10 years –Special 42% Contribution•Non-Medicare 5.45% in 2022, 8.98% in 2023, and 7.00% in 2024 graded to 4.50% over 10 years •Medicare 6.28% in 2022, 5.61% in 2023, and 6.50% in 2024 graded to 4.50% over 8 years Detailed information regarding all actuarial assumptions can be found in Section 4, Exhibit II.
Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202313 Determination of discount rate and investment rates of returnThe long-term expected rate of return on OPEB plan investments was determined using a building block method in which expected future rates of return (expected returns, net of inflation) are developed for each major asset class. These returns are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation and subtracting expected investment expenses and a risk margin. The target allocation and projected arithmetic real rates of return for each major asset class, after deducting inflation, but before investment expenses, are summarized in the following table. These values were used in the derivation of the long-term expected investment rate of return assumption that was used in the actuarial valuation as of June 30, 2022. Asset Class Target Allocation Long-Term Expected Arithmetic Real Rate of Return1Domestic equity22.47% 6.91% Developed International equity 2.78% 7.21% Emerging Markets Equity1.80%8.71% Core Fixed Income 68.48% 1.61% Real Estate1.53% 3.61% Short Term Money Market 2.94% 0.71% Total100.00%Discount rate. The discount rate used to measure the TOL was 4.75% as of June 30, 2022 and June 30, 2021. The projection of cash flows used to determine the discount rate assumed employer contributions will be made at rates equal to the actuarially determined contribution rates. For this purpose, only employer contributions that are intended to fund benefits for current plan members and their beneficiaries are included. Projected employer contributions that are intended to fund the service costs for future plan members and their beneficiaries are not included. Based on those assumptions, the OPEB Plan’s Plan Fiduciary Net Position was projected to be available to make all projected future benefit payments for current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the TOL as of both June 30, 2022 and June 30, 2021. 1Long-term nominal rate of return less investment advisor’s inflation assumption of 2.40%.
Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202314 SensitivityThe following presents the NOL of the City as well as what the City’s NOL would be if it were calculated using a discount rate that is 1-percentage-point lower (3.75%) or 1-percentage-point higher (5.75%) than the current rate. Also, shown is the NOL as if it were calculated using healthcare cost trend rates that were 1-percentage-point lower or 1-percentage-point higher than the current healthcare trend rates. 1% Decrease (3.75%) CurrentDiscount Rate (4.75%) 1% Increase (5.75%) Net OPEB Liability (Asset) as of June 30, 2022$40,122,752$22,882,795$9,124,9881% Decrease inHealth Care Cost Trend Rates Current Health Care Cost Trend Rates 1% Increase in Health Care Cost Trend Rates Net OPEB Liability (Asset) as of June 30, 2022$8,903,487$22,882,795$40,338,238 Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202315 Schedule of changes in Net OPEB Liability – Last two fiscal yearsReporting Date for Employer under GASB 75 June 30, 2023 June 30, 2022Measurement Date June 30, 2022 June 30, 2021 Total OPEB LiabilityService cost $1,093,753 $1,303,741 Interest5,065,7545,765,058Change of benefit terms 0 0Differences between expected and actual experience251,076-10,056,063Changes of assumptions -3,211,518 -1,005,648Benefit payments, including refunds of member contributions-4,640,002-4,263,425Net change in Total OPEB Liability -$1,440,937 -$8,256,337Total OPEB Liability – beginning107,846,786116,103,123Total OPEB Liability – ending $106,405,849$107,846,786Plan Fiduciary Net PositionContributions – employer1 $6,207,752 $6,852,674Contributions – employee00Net investment income -10,063,094 10,311,017Benefit payments, including refunds of member contributions-4,640,002-4,263,425Administrative expense -241,565 -231,118Other00Net change in Plan Fiduciary Net Position -$8,736,909 $12,669,148Plan Fiduciary Net Position – beginning92,259,96379,590,815Plan Fiduciary Net Position – ending $83,523,054 $92,259,963Net OPEB Liability – ending $22,882,795$15,586,823Plan Fiduciary Net Position as a percentage of the Total OPEB Liability 78.49% 85.55%Covered payroll2 $35,014,171$39,698,602Plan Net OPEB Liability as percentage of covered payroll 65.35% 39.26%1The employer contributions of $6,207,752 consists of $4,640,002 in trust contributions plus $1,567,750 of benefits paid by the City with its own assets ($4,640,002 in total benefit payments paid by the City minus trust reimbursements of $3,072,252). 2Payroll for measurement date June 30, 2022 was based on the salaries provided for the June 30, 2021 valuation. Payroll for measurement date June 30, 2021 was based on the payroll provided by the City for the June 30, 2019 measurement date, increased by the payroll growth assumption, offset by the anticipated decline in the active group.
Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202316 Notes to Schedule:For 2023 Reporting Benefit changes: None Changes of assumptions: The trends on health costs were updated based on actual premium renewals effective January 1, 2023.
Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202317 Deferred outflows of resources and deferred inflows of resourcesReporting Date for Employer under GASB 75 June 30, 2023 June 30, 2022Measurement Date June 30, 2022 June 30, 2021 Deferred Outflows of ResourcesChanges of assumptions or other inputs $156,715 $1,078,572Net difference between projected and actual earnings on OPEB plan investments 7,048,1660Difference between expected and actual experience in the Total OPEB Liability 174,2940Total Deferred Outflows of Resources $7,379,175$1,078,572Contributions subsequent to the measurement date1 $2,815,008 $6,207,752Deferred Inflows of ResourcesChanges of assumptions or other inputs $3,646,211 $3,256,046Net difference between projected and actual earnings on OPEB plan investments 06,079,147Difference between expected and actual experience in the Total OPEB Liability 6,879,52818,084,700Total Deferred Inflows of Resources $10,525,739$27,419,893Deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as follows:Reporting Date for Employer under GASB 75 Year Ended June 30: 2023 N/A -$13,668,3132024-$7,008,613-8,998,6672025 -389,397 -2,379,45120261,356,058-1,294,8902027 2,895,388 0202800Thereafter 0 01The employer contribution of $2,815,008 consists of $1,480,250 in trust contributions plus $1,334,758 of benefits paid by the City with its own assets ($3,398,008 in total benefit payments paid by the City minus trust reimbursements of $2,063,250).
Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202318 Schedule of recognition of change in total Net OPEB LiabilityIncrease (Decrease) in OPEB Expense Arising from the Recognition of the Effects of Differences between Expected and Actual Experience on Total OPEB Liability Reporting Date for Employer under GASB 75 Year Ended June 30 Differences between Expected and Actual Experience Recognition Period (Years) 2022 2023 2024 2025 2026 2027 2028 & Thereafter 2018-$6,042,3454.73-$932,541$0$0$0$0$0$02019 -762,025 4.17 -182,740 -31,065 0 0 0 0 0 2020-20,451,9484.17-4,904,544-4,904,544-833,7720 0 0 0 2021 -11,723,133 3.67 -3,194,314 -3,194,314 -2,140,191 0 0 0 0 2022-10,056,0633.27-3,075,249-3,075,249-3,075,249-830,3160 0 0 2023 251,076 3.27 N/A76,78276,78276,78220,7300 0 Net increase (decrease) in OPEB expense-$12,289,388-$11,128,390-$5,972,430-$753,534$20,730$0$0 Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202319 Increase (Decrease) in OPEB Expense Arising from the Recognition of the Effects of Assumption Changes Reporting Date for Employer under GASB 75 Year Ended June 30 Assumption Changes Recognition Period (Years) 2022 2023 2024 2025 2026 2027 2028 & Thereafter 2018 -$5,330,662 4.73 -$822,702 $0 $0 $0 $0 $0 $0 2019 0 4.17 0 0 0 0 0 0 0 2020 3,844,143 4.17 921,857 921,857 156,715 0 0 0 0 2021 -5,621,334 3.67 -1,531,699 -1,531,699 -1,026,237 0 0 0 0 2022 -1,005,648 3.27 -307,538 -307,538 -307,538 -83,034 0 0 0 2023 -3,211,518 3.27 N/A -982,116 -982,116 -982,116 -265,170 0 0 Net increase (decrease) in OPEB expense -$1,740,082 -$1,899,496 -$2,159,176 -$1,065,150 -$265,170 $0 $0 Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202320 Increase (Decrease) in OPEB Expense Arising from the Recognition of the Effects of Differences between Projected and Actual Earnings on OPEB Plan Investments Reporting Date for Employer under GASB 75 Year Ended June 30 Differences between Projected and Actual Earnings Recognition Period (Years) 2022 2023 2024 2025 2026 2027 2028 & Thereafter 2018 -$77,269 5.00 -$15,453 $0 $0 $0 $0 $0 $0 2019 1,133,160 5.00 226,632 226,632 0 0 0 0 0 2020 -153,467 5.00 -306,293 -306,293 -306,295 0 0 0 0 2021 -856,051 5.00 -171,210 -171,210 -171,210 -171,211 0 0 0 2022 -6,474,448 5.00 -1,294,888 -1,294,890 -1,294,890 -1,294,890 -1,294,890 0 0 2023 14,476,939 5.00 N/A 2,895,387 2,895,388 2,895,388 2,895,388 2,895,388 0 Net increase (decrease) in OPEB expense -$1,561,212 $1,349,626 $1,122,993 $1,429,287 $1,600,498 $2,895,388 $0 Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202321 Total Increase (Decrease) in OPEB ExpenseReporting Date for Employer under GASB 75 Year Ended June 30 Total Increase (Decrease) in OPEB Expense 2022 2023 2024 2025 2026 2027 2028 & Thereafter 2018-$11,450,276-$1,770,696$0$0$0$0$0$02019 371,135 43,892 195,567 0 0 0 0 0 2020-16,761,272-4,288,980-4,288,980-983,3520 0 0 0 2021 -18,200,518 -4,897,223 -4,897,223 -3,337,638 -171,211 0 0 0 2022-17,536,159-4,677,675-4,677,677-4,677,677-2,208,240-1,294,8900 0 2023 11,516,497 N/A1,990,0531,990,0541,990,0542,650,9482,895,3880 Net increase (decrease) in OPEB expense-$15,590,682-$11,678,260-$7,008,613-$389,397$1,356,058$2,895,388$0 Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202322 OPEB expense Reporting Date for Employer under GASB 75 June 30, 2023 June 30, 2022Measurement Date June 30, 2022 June 30, 2021 Components of OPEB ExpenseService cost $1,093,753 $1,303,741Interest on the Total OPEB Liability5,065,7545,765,058Expensed portion of current-period changes in proportion and differences between employer's contributions and proportionate share of contributions 0 0 Current-period benefit changes0 0 Expensed portion of current-period difference between expected and actual experience in the Total OPEB Liability 76,782 -3,075,249Expensed portion of current-period changes of assumptions or other inputs -982,116 -307,538 Member contributions 0 0 Projected earnings on plan investments -4,413,845 -3,836,569 Expensed portion of current-period differences between actual and projected earnings on plan investments 2,895,387 -1,294,888 Administrative expense241,565231,118Other 0 0 Recognition of beginning of year deferred outflows of resources as OPEB expense1,148,4891,148,489Recognition of beginning of year deferred inflows of resources as OPEB expense -14,816,802 -12,061,496Net amortization of deferred amounts from changes in proportion and differences between employer’s contributions and proportionate share of contributions0 0 OPEB Expense -$9,691,033 -$12,127,334 Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202323 Schedule of reconciliation of Net OPEB Liability Reporting Date for Employer under GASB 75 June 30, 2023 June 30, 2022Measurement Date June 30, 2022 June 30, 2021 Beginning Net OPEB Liability$15,586,823$36,512,308OPEB expense -9,691,033 -12,127,334Employer contributions-6,207,752-6,852,674New net deferred inflows/outflows 9,526,444 -12,858,484Change in allocation of prior deferred inflows/outflows0 0 New net deferred inflows/outflows due to change in proportion 0 0 Recognition of prior deferred inflows/outflows13,668,31310,913,007Recognition of prior deferred inflows/outflows due to change in proportion 0 0 Ending Net OPEB Liability$22,882,795$15,586,823 Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202324 Schedule of contributions – Last ten fiscal yearsYear Ended June 30 Actuarially Determined Contributions1,2Contributions in Relation to the Actuarially Determined Contributions Contribution Deficiency / (Excess) Covered Payroll Contributions as a Percentage of Covered Payroll 20146,539,2996,950,125-410,82653,368,98613.02%2015 6,539,299 8,038,622 -1,499,323 50,985,920 15.77%20167,530,0315,645,8391,884,19244,930,76112.57%2017 7,530,031 5,050,000 2,480,031 44,930,761 11.24%20186,973,7117,527,447-553,73646,166,35716.31%2019 6,973,711 7,940,057 -966,346 39,698,602 20.00%20204,636,6476,826,986-2,190,33939,698,602317.20%2021 4,636,647 6,852,674 -2,216,027 39,698,602317.26%20222,661,0166,207,7524-3,546,73635,014,171517.73%2023 2,661,016 2,815,0086-153,992 35,014,17178.04% See accompanying notes to this schedule on next page.1Includes an interest adjustment to the middle of the year. 2The calculation consists of adding the Normal Cost of the plan to an amortization payment. The amortization payment is included.3Payroll for measurement dates June 30, 2021 and June 30, 2020 were estimated based on the payroll for the June 30, 2019 measurement date provided by the City, increased by the payroll growth assumption, offset by the anticipated decline in the active group. 4The employer contributions of $6,207,752 consists of $4,640,002 in trust contributions plus $1,567,750 of benefits paid by the City with its own assets ($4,640,002 in total benefit payments paid by the City minus trust reimbursements of $3,072,252). 5Payroll for measurement date June 30, 2022 was estimated based on salaries provided for the June 30, 2021 valuation. 6The employer contributions of $2,815,008 consists of $1,480,250 in trust contributions plus $1,334,758 of benefits paid by the City with its own assets ($3,398,008 in total benefit payments paid by the City minus trust reimbursements of $2,063,250). 7Payroll for measurement date June 30, 2023 was estimated based on the salaries provided for the June 30, 2021 valuation. Because the plan is closed to new entrants, the same covered payroll is used during roll forward measurements.
Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202325 Notes to Schedule: Methods and assumptions used to establish “actuarially determined contribution” rates: Valuation date:Actuarially determined contributions are based on the beginning of the applicable period. For example, the ADC for period ended June 30, 2022 was based on unfunded actuarial accrued liability and normal cost calculated as of July 1, 2021. Once calculated, the same ADC is used for two consecutive reporting periods. Actuarial cost method: Projected Unit Credit Amortization method: 30-year closed, level dollar payment Remaining amortization period: 15 years (declining) for outstanding balance as of June 30, 2022 unfunded OPEB liability. Asset valuation method: Market value. Actuarial Assumptions: Discount rate 4.75% Other assumptions Same as those used in the June 30, 2021 GASB 74/75 actuarial valuation dated October 13, 2022.
Section 2: GASB 74/75 Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202326 Actuarially Determined Contribution (ADC)Fiscal Year Ending June 30, 2022 and June 30, 2023 Fiscal Year Ending June 30, 2020 and June 30, 2021 Discount Rate4.75% 5.00% 1. Normal Cost$721,211 $793,166 2. Actuarial Accrued Liability111,294,315 123,750,336 3. Assets92,259,963 79,590,815 4. Unfunded Actuarial Accrued Liability (3) – (2)19,034,352 44,159,521 Years Remaining on Amortization Schedule116 18 5. Amortization of Unfunded Actuarial Accrued Liability1,646,954 3,730,392 6. Expected administrative expense2231,118 N/A 7. Adjustment for timing to the middle of fiscal year 61,733 113,089 8. Total Actuarially Determined Contribution (1) + (5) + (6) + (7)$2,661,016 $4,636,647 The Actuarially Determined Contribution is equal to the sum of (1) the Normal Cost and administrative expenses of the plan, plus (2) the amortization payment related to the Unfunded Actuarial Accrued Liability. The normal cost is the annual contribution related to benefits being earned by the active employees and the UAAL amortization is designed to fund benefits attributable to past service. The ADC is determined during each full valuation and is used for two consecutive reporting periods. 116 years for outstanding balance as of June 30, 2021 unfunded OPEB liability; 18 years for outstanding balance as of June 30, 2019 unfunded OPEB liability. 2Beginning July 1, 2021, administrative expenses were included in the calculation of the ADC.
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202327 Section 3: Supporting InformationExhibit I: Summary of Participant Data As of June 30, 20211Number of retirees 524 Average age of retirees 67.38 Number of spouses 162 Average age of spouses 64.74 Number of surviving spouses 68 Average age 76.37 Number of actives 428 Average age 50.17 Average service 20.73 1The June 30, 2022 measurement was based on the June 30, 2021 valuation rolled forward to June 30, 2022.
Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202328 Exhibit II: Actuarial Assumptions and Actuarial Cost MethodData:Detailed census data, premium data and/or claim experience, and summary plan descriptions for OPEB were provided by the employer. Roll Forward Techniques:The results as of June 30, 2022 were based on the results for the City in the GASB Statement 75 ActuarialValuation Review of OPEB as of June 30, 2021, dated October 13, 2022, completed by Segal, adjusted forward using standard actuarial techniques and also adjusted for the changes in assumptions described below. Actuarial Cost Method:Entry Age NormalAsset Valuation Method: Market Value Measurement Date:June 30, 2022Actuarial Valuation Date:June 30, 2021Discount Rate: 4.75% Inflation Rate2.30%Payroll Growth2.80%Salary Increases: Wage inflation rate (2.80%) plus merit and promotional increases. Rate (%) Service Miscellaneous Rate* Safety Police Rate Safety Fire Rate0 9.0113.3118.293 6.61 7.65 8.935 5.555.706.1110 4.06 4.35 4.23153.824.304.0420 3.63 4.25 3.88253.474.213.7430 3.34 4.16 3.62* Based on an average entry age of 32.
Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202329 Demographic Assumptions:Mortality, Turnover, Disability, Retirement, Inflation Rate and Salary Scale assumptions are based on the December 2021 experience study performed by the CalPERS actuary derived from the data collected during fiscal years 2000 to 2019. A review of the demographic assumptions is beyond the scope of this assignment; however, we have no reason to doubt the reasonableness of the assumptions. The remaining demographic assumptions, such as enrollment elections, percent married, and relative age of spouses, were based on the experience of the Plan and professional judgment. Post-retirement Mortality Rates: Rate (%) Applied to Healthy and Disabled Lives Age Male Female 500.270.1955 0.38 0.32600.580.4665 0.86 0.61701.330.9775 2.35 1.73804.293.3485 8.14 6.109014.3711.0295 24.40 20.2210035.7731.34105 51.80 44.45110100.00100.00The mortality rates reflect a 2017 base table, using experience described above from the CalPERS experience study, and then were projected generationally with 80% of the Scale MP2020 to the measurement date. The resulting tables above reasonably reflect the projected mortality experience of the Plan as of the measurement date. The mortality tables were then adjusted to future years using generational projection and 80% of the Scale MP2020 to reflect future mortality improvement between the measurement date and those years.
Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202330 Pre-retirement Mortality Rates: Rate (%)GeneralSafetyAge Male Female Male Female 20 0.04 0.01 0.00 0.00 25 0.04 0.01 0.00 0.00 300.050.020.010.0035 0.07 0.03 0.01 0.00400.080.040.010.0145 0.10 0.05 0.01 0.01500.130.080.010.0155 0.19 0.12 0.01 0.01600.290.180.030.0265 0.41 0.25 0.04 0.02700.590.390.070.0475 0.91 0.67 0.12 0.08801.481.130.220.15The mortality rates reflect a 2017 base table, using experience described above from the CalPERS experience study, and then were projected generationally with 80% of the Scale MP2020 to the measurement date. The resulting tables above reasonably reflect the projected mortality experience of the Plan as of the measurement date. The mortality tables were then adjusted to future years using generational projection and 80% of the Scale MP2020 to reflect future mortality improvement between the measurement date and those years.
Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202331 Disability Rates: Rate (%)GeneralSafety PoliceSafety FireAttained Age Male Female Male Female Male Female 20 0.01 0.00 0.00 0.00 0.00 0.00 30 0.02 0.03 0.48 0.48 0.06 0.06 400.100.121.101.100.230.2350 0.16 0.19 1.85 1.85 2.08 2.08600.120.096.026.024.384.3870 0.10 0.05 8.55 8.55 8.22 8.22 Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202332 Termination Rates before Retirement:Rate (%) for General EmployeesMale*FemaleService With RefundWith Vested Benefit Total With RefundWith Vested Benefit Total0 15.76 0.00 15.76 17.94 0.00 17.94 1 12.00 0.00 12.00 14.37 0.00 14.37 2 9.08 0.00 9.08 11.33 0.00 11.33 3 6.77 0.00 6.77 8.69 0.00 8.69 4 4.87 0.00 4.87 6.37 0.00 6.37 5 3.31 3.48 6.80 4.38 4.40 8.79 6 2.15 3.34 5.49 2.87 4.33 7.20 7 1.40 3.14 4.54 1.90 4.13 6.02 8 1.00 2.92 3.92 1.38 3.84 5.22 9 0.83 2.71 3.54 1.15 3.53 4.69 10 0.76 2.50 3.26 1.04 3.23 4.28 15 0.00 1.60 1.60 0.00 1.97 1.97 200.000.970.970.001.131.1325 0.00 0.56 0.56 0.00 0.63 0.63300.000.330.330.000.390.3935 0.00 0.38 0.38 0.00 0.41 0.41* Based on an average entry age of 32.
Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202333 Termination Rates before Retirement (continued):Rate (%) for Safety Police EmployeesMale*FemaleService With RefundWith Vested Benefit Total With RefundWith Vested Benefit Total0 12.98 0.00 12.98 13.89 0.00 13.89 1 7.89 0.00 7.89 9.04 0.00 9.04 2 4.64 0.00 4.64 5.66 0.00 5.66 3 2.74 0.00 2.74 3.43 0.00 3.43 4 1.70 0.00 1.70 2.06 0.00 2.06 5 1.13 1.56 2.69 1.28 2.72 4.00 6 0.80 1.46 2.26 0.87 2.56 3.43 7 0.60 1.37 1.97 0.68 2.40 3.08 8 0.47 1.29 1.76 0.59 2.25 2.84 9 0.38 1.21 1.59 0.53 2.11 2.65 10 0.32 1.13 1.45 0.47 1.98 2.46 15 0.00 0.83 0.83 0.00 1.44 1.44 200.000.600.600.001.051.0525 0.00 0.42 0.42 0.00 0.73 0.73300.000.210.210.000.370.3735 0.00 0.00 0.00 0.00 0.00 0.00* Based on an average entry age of 32.
Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202334 Termination Rates before Retirement (continued):Rate (%) for Safety Fire EmployeesMale*FemaleService With RefundWith Vested Benefit Total With RefundWith Vested Benefit Total0 10.22 0.00 10.22 13.17 0.00 13.17 1 6.86 0.00 6.86 10.07 0.00 10.07 2 4.41 0.00 4.41 7.43 0.00 7.43 3 2.72 0.00 2.72 5.24 0.00 5.24 4 1.61 0.00 1.61 3.49 0.00 3.49 5 0.92 0.89 1.81 2.14 2.24 4.38 6 0.52 0.84 1.36 1.17 2.10 3.27 7 0.32 0.79 1.11 0.52 1.97 2.49 8 0.22 0.74 0.96 0.14 1.86 2.00 9 0.17 0.70 0.87 0.00 1.74 1.74 10 0.15 0.66 0.81 0.00 1.64 1.64 15 0.00 0.48 0.48 0.00 1.20 1.20 200.000.350.350.000.880.8825 0.00 0.24 0.24 0.00 0.61 0.61300.000.120.120.000.310.3135 0.00 0.00 0.00 0.00 0.00 0.00* Based on an average entry age of 32.
Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202335 Retirement Rates:Rate (%) for General Employees (CalPERS Public Agency Miscellaneous 3% @ 60)Attained AgeYears of Service5 10 15 20 25 30 35501.502.002.503.904.004.404.4051 4.10 3.40 3.20 4.10 3.60 3.70 3.7052 2.40 2.00 2.20 3.90 4.00 4.104.1053 1.80 2.40 3.20 4.70 4.80 5.70 5.7054 3.30 3.30 3.50 5.10 4.90 5.205.2055 13.70 4.30 5.10 6.50 7.60 10.80 13.605617.303.805.407.508.5011.7013.9057 1.90 3.50 5.90 8.80 11.10 13.40 14.70581.104.007.0010.5013.3016.2017.8059 19.40 5.60 6.40 8.10 11.30 16.30 19.0060 8.10 8.50 13.30 21.50 28.00 33.3037.8061 8.00 9.00 13.40 17.00 22.30 29.20 32.706213.7015.3020.1025.0027.8028.8030.6063 12.80 14.00 18.30 22.70 25.10 26.00 27.506417.4014.7017.3022.4023.9026.4031.0065 15.20 20.10 26.20 29.90 32.30 32.30 32.306627.2027.3031.7035.5038.0038.0038.0067 21.80 23.70 26.80 27.40 28.40 28.40 28.406820.0022.8026.9028.5029.9029.9029.9069 25.00 25.00 25.00 25.00 25.00 25.00 25.007024.5024.5024.5024.5024.5024.5024.5071 24.50 24.50 24.50 24.50 24.50 24.50 24.507224.5024.5024.5024.5024.5024.5024.5073 24.50 24.50 24.50 24.50 24.50 24.50 24.507424.5024.5024.5024.5024.5024.5024.5075 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202336 Retirement Rates (continued):Safety Employees (CalPERS Public Agency Police 3% @ 50)Attained AgeYears of Service5 10 15 20 25 30 355012.4010.3011.3014.3024.4037.6043.8051 6.00 8.10 8.70 12.50 20.70 29.40 34.1052 1.60 5.50 11.10 14.80 19.20 23.5026.0053 7.20 7.40 9.80 14.20 18.90 23.70 26.4054 1.80 4.90 10.50 12.30 18.70 27.1029.6055 6.90 7.40 8.10 11.30 20.90 30.50 33.60566.4010.8011.3012.5019.0028.8034.7057 5.60 10.90 16.00 18.20 21.00 21.00 21.005810.8012.9017.3018.9021.4021.4021.4059 9.30 14.40 20.40 22.90 26.20 26.20 26.2060 34.30 18.00 15.90 18.80 24.70 24.7024.7061 22.10 22.10 22.10 22.10 22.10 22.10 22.106221.3021.3021.3021.3021.3021.3021.3063 23.30 23.30 23.30 23.30 23.30 23.30 23.306423.4023.4023.4023.4023.4023.4023.4065 100.00 100.00 100.00 100.00 100.00 100.00 100.0066100.00100.00100.00100.00100.00100.00100.0067 100.00 100.00 100.00 100.00 100.00 100.00 100.0068100.00100.00100.00100.00100.00100.00100.0069 100.00 100.00 100.00 100.00 100.00 100.00 100.0070100.00100.00100.00100.00100.00100.00100.0071 100.00 100.00 100.00 100.00 100.00 100.00 100.0072100.00100.00100.00100.00100.00100.00100.0073 100.00 100.00 100.00 100.00 100.00 100.00 100.0074100.00100.00100.00100.00100.00100.00100.0075 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202337 Retirement Rates (continued):Safety Employees (CalPERS Public Agency Fire 3% @ 50)Attained AgeYears of Service5 10 15 20 25 30 35509.504.805.309.3013.4017.5019.6051 1.60 3.20 5.30 8.50 11.70 14.90 16.5052 1.30 3.20 5.40 8.70 12.00 15.4017.0053 8.50 4.40 4.90 8.90 12.90 17.00 19.0054 3.80 6.50 7.40 10.50 13.60 16.7018.2055 4.20 4.30 4.90 8.50 13.20 21.50 27.205613.3010.307.5011.3015.1020.9026.1057 6.20 4.80 6.00 12.40 17.20 21.30 23.805812.409.709.2015.3019.4022.7025.0059 9.20 7.10 7.80 14.40 19.20 23.30 25.9060 5.60 4.40 6.10 13.10 18.60 23.3026.2061 28.20 21.90 15.80 19.80 23.30 26.00 28.106229.2022.7016.4020.5024.1026.9029.1063 19.60 19.60 19.60 19.60 19.60 19.60 19.606419.7019.7019.7019.7019.7019.7019.7065 100.00 100.00 100.00 100.00 100.00 100.00 100.0066100.00100.00100.00100.00100.00100.00100.0067 100.00 100.00 100.00 100.00 100.00 100.00 100.0068100.00100.00100.00100.00100.00100.00100.0069 100.00 100.00 100.00 100.00 100.00 100.00 100.0070100.00100.00100.00100.00100.00100.00100.0071 100.00 100.00 100.00 100.00 100.00 100.00 100.0072100.00100.00100.00100.00100.00100.00100.0073 100.00 100.00 100.00 100.00 100.00 100.00 100.0074100.00100.00100.00100.00100.00100.00100.0075 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202338 Unknown Data for Participants:Same as those exhibited by members with similar known characteristics. If not specified, members are assumed to be male. Participation and Coverage Election:75% of employees eligible to retire and receive subsidized postretirement welfare coverage are assumed to elect medical coverage. We assume actives will stay with their current carrier upon retirement, and all retirees will receive the maximum subsidy to which they are entitled. When an active or current non-Medicare retiree becomes eligible for Medicare, we assume the following: Retirees under age 65 on valuation date and active employees Medical Plan Assumed Election Percent at Age 65 Blue Shield PPO60%Kaiser Senior Advantage 40%Blue Shield Medicare Advantage0%Dependents:For future retirees, husbands are assumed to be three years older than their wives. For future retirees who elect to continue their health coverage at retirement, 35% are assumed to have an eligible spouse who also opts for health coverage at that time. Implicit Subsidy: Premiums are underwritten for retirees only. Therefore, no implicit subsidy cost exists. Per Capita Cost Development for Special Contribution: Per capita costs were based on 42% of the PPO premium. Actuarial factors were applied to the premium to estimate individual retiree and spouse costs by age, gender and Medicare integration. Per Capita Costs for Special Contribution:The annual per capita Special Contribution costs, are shown in the table below for retirees and for spouses at selected ages. RetireesSpouseAge Male Female Male Female50$4,963$5,654$3,467$4,53955 5,895 6,086 4,639 5,254 607,000 6,560 6,211 6,094 64 8,031 6,959 7,840 6,859 653,067 2,607 3,067 2,607 70 3,555 2,809 3,555 2,809 753,831 3,024 3,831 3,024 80 4,125 3,260 4,125 3,260 Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202339 Health Care Subsidy Trend Rates:Health care subsidy trend measures the anticipated overall rate at which health plan subsidy are expected to increase in future years. The rates shown below are “net” and are applied to the net per capita subsidies shown above. The trend shown for a particular plan year is the rate that is applied to that year’s subsidies to yield the next year’s projected subsidies. Rate (%) 42% Special ContributionFiscal Year City “Years of Service” Formula Non-Medicare Medicare 2022 2.25 5.45 6.28 2023 8.31 8.98 5.6120247.007.006.502025 6.75 6.75 6.25 20266.506.506.002027 6.25 6.25 5.752028 6.00 6.00 5.50 2029 5.75 5.75 5.2520305.505.505.002031 5.25 5.25 4.752032 5.00 5.00 4.502033 4.75 4.75 4.502034 & Later 4.50 4.50 4.50The trend rate assumptions were developed using Segal’s internal guidelines, which are established each year using data sources such as the Segal Health Trend Survey, internal client results, trends from other published surveys prepared by the S&P Dow Jones Indices, consulting firms and brokers, and CPI statistics published by the Bureau of Labor Statistics. The trend assumptions shown above for 2021-2022 and 2022-2023 were based on known calendar year 2022 and 2023 premiums. Medicare Part D Subsidy Assumption:GASB guidelines prohibit the offset of OPEB obligations by the future value of Medicare Part D subsidies. Therefore, these calculations do not include an estimate for retiree prescription drug plan federal subsidies that the Plan's Full Name may be eligible to receive for plan years beginning in 2006. Administrative Expenses:No administrative expense load is added in developing the benefit obligations.
Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202340 Plan Design:Development of plan liabilities was based on the substantive plan of benefits in effect as described in Exhibit III.Models:Segal accounting results are based on proprietary actuarial modeling software. The accounting valuation models generate a comprehensive set of liability and cost calculations that are presented to meet accounting standards and client requirements. Our Actuarial Technology and Systems unit, comprising both actuaries and programmers, is responsible for the initial development and maintenance of these models. The models have a modular structure that allows for a high degree of accuracy, flexibility and user control. The client team programs the assumptions and the plan provisions, validates the models, and reviews test lives and results, under the supervision of the responsible actuary. The blended discount rate used for calculating total pension liability is based on a model developed by our Actuarial Technology and Systems unit, comprised of both actuaries and programmers. The model allows the client team, under the supervision of the responsible actuary, control over the entry of future expected contribution income, benefit payments and administrative expenses. The projection of fiduciary net position and the discounting of benefits is part of the model. Our claims costs assumptions are based on proprietary modeling software as well as models that were developed by others. These models generate per capita claims cost calculations that are used in our valuation software. Our Health Technical Services Unit, comprised of actuaries and programmers, is responsible for the initial development and maintenance of our health models. They are also responsible for testing models that we purchase from other vendors for reasonableness. The client team inputs the paid claims, enrollments, plan provisions and assumptions into these models and reviews the results for reasonableness, under the supervision of the responsible actuary. Health Care Reform Assumption:The valuation does not reflect the potential impact of any future changes due to prior or pending legislation.Assumption Changes:The first and second year trend rates for health costs were updated based on actual premium renewals.
Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202341 Exhibit III: Summary of PlanThis exhibit summarizes the major benefit provisions as included in the valuation. To the best of our knowledge, the summary represents the substantive plans as of the measurement date. It is not intended to be, nor should it be interpreted as, a complete statement of all benefit provisions. Eligibility:Employees who are at least age 50 and retired with a minimum of 15 or 20 years of service, depending on the date of hire as noted below are eligible for benefits, unless retirement is due to disability (in which case the minimum age requirement does not apply). Safety hired prior to April 1, 1998 and all other employees hired prior to April 1, 1996 require a minimum of 15 years of service. Safety hired between April 1, 1998 and May 24, 2006 and all other hired between April 1, 1996 and February 22, 2006 require a minimum of 20 years of service to qualify for coverage. New hires starting after February 22, 2006 (May 24, 2006 for police and May 5, 2006 for fire) are not eligible to participate in retiree health program. Benefit Types: Non-Medicare retirees have three medical plan options to choose from – Blue Shield PPO, Kaiser HMO and Kaiser High Deductible Health Plan. Retirees enrolled in Kaiser receive vision benefits through Medical Eye Services (MES). Medicare eligible retirees have two Medicare Advantage options – Blue Shield Medicare Advantage HMO and Kaiser Senior Advantage HMO and are also eligible to participate in the Blue Shield PPO plan. In addition, retirees are eligible for dental benefits from United Concordia at full cost to the retiree. Since these benefits are fully paid by the retirees, they have been excluded from this valuation. Duration of Coverage:Lifetime, subject to continuing support by the City Council.Dependent Benefits:Same as retirees.Dependent Coverage:Benefits are available for dependents. However, the City does not subsidize coverage for dependents unless they are eligible for the Special Contribution for the Blue Shield PPO plan.
Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202342 Retiree Contributions:Contribution formulas and conditions for participation in the City’s retiree medical plans may vary depending on the employee bargaining unit and the employee labor agreements. In general, City contributes a minimum of the single employer rate for the active HMO (currently Kaiser HDHP) multiplied by 3% times the number of years of service up to maximum contribution of 90% of the single employee rate for the active HMO or the actual contract rate for medical vision, and mental health. In addition, retirees who elect the Blue Shield PPO plan are eligible to receive a Special Contribution of 42% of the PPO rate tier selected by the retiree. This additional subsidy does not apply to Safety hired after April 1, 1998 and others hired after April 1, 1996. Miscellaneous hired after February 22, 2006, Fire hired after May 5, 2006, and Safety hired after May 24, 2006 are not eligible for 3% per year of service subsidy. Maximum Medicare Part B premium reimbursement per eligible person of $42.50 for any excess of the 3% per year service subsidy over the Kaiser Senior Advantage or Blue Shield Medicare Advantage premiums. Premiums: Non – Medicare Retiree: Monthly Single Medical PremiumsCalendar Year Blue Shield PPO including Mental Health Kaiser HMO Under 65 MES Vision Total Kaiser + MES Kaiser Deductible MES Vision Total Kaiser Ded + MES 2022 $1,051.48$1,647.01$2.30$1,649.31$1,421.65$2.30$1,423.952023 $1,166.09 $1,805.72 $3.13 $1,808.85 $1,558.65 $3.13 $1,561.78Medicare Retiree: Monthly Single Medical PremiumsCalendar Year Blue Shield Medicare Plan Kaiser Senior Advantage 2022$355.11$208.842023 $370.78 $184.84 Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202343 Employer Subsidy Costs: Maximum Monthly City SubsidyCalendar Year Special Contribution Single Party Coverage* Special Contribution Two Party Coverage City Formula** (30 years) Medicare Part B Premium Maximum Reimbursement (Per Person)*** 2022$441.62$883.19$267.60$42.502023 $465.69 $979.46 $293.95 $42.50* Special Contribution Represents 42% of the PPO rate. Not applicable to Miscellaneous employees hired after April 1, 1996, or Safety employees hired after April 1, 1998. ** Formula for those employees eligible for the years of service contributions: 3% of the sum of the lowest Active HMO rate and vision rate to a maximum of 30 years. The credit per year of service was $8.92 in 2022 and is $9.80 for 2023. ***Medicare part B premium reimbursement will pay for excess, if any, of City Formula amount over Medicare Risk Plan premium. Medicare Integration Rule for PPO Plan: Full coordination of benefits method in which the plan benefit is defined as the lesser of that determined without regard to Medicare, and the excess of health charges over the amounts paid by Medicare. Plan Changes Since Prior Valuation:None Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202344 Appendix A: Definition of TermsDefinitions of certain terms as they are used in Statement 75. The terms may have different meanings in other contexts. Actuarially Determined Contribution: A target or recommended contribution to an OPEB plan for the reporting period based on the most recent measurement available. Assumptions or Actuarial Assumptions:The estimates on which the cost of the Plan is calculated including:a) Investment return — the rate of investment yield that the Plan will earn over the long-term future; b) Mortality rates — the death rates of employees and pensioners; life expectancy is based on these rates; c) Retirement rates — the rate or probability of retirement at a given age; d) Turnover rates — the rates at which employees of various ages are expected to leave employment for reasons other than death, disability, or retirement. Covered Payroll:The payroll of the employees that are provided OPEB benefitsDiscount Rate:The single rate of return, that when applied to all projected benefit payments results in an actuarial present value that is the sum of the following: 1) the actuarial present value of projected benefit payments projected to be funded by plan assets using a long term rate of return, and 2) the actuarial present value of projected benefit payments that are not included in (1) using a yield or index rate for 20 year tax exempt general obligation municipal bonds with an average rating of AA/Aa or higher Entry Age Actuarial Cost Method:An actuarial cost method where the present value of the projected benefits for an individual is allocated on a level basis over the earnings or service of the individual between entry age and assumed exit age Healthcare Cost Trend Rates:The rate of change in per capita health costs over timeNet OPEB Liability:The Total OPEB Liability less the Plan Fiduciary Net PositionPlan Fiduciary Net Position:Market Value of AssetsReal Rate of Return:The rate of return on an investment after removing inflationService Cost:The amount of contributions required to fund the benefit allocated to the current year of service.Total OPEB Liability:Present value of all future benefit payments for current retirees and active employees taking into account assumptions about demographics, turnover, mortality, disability, retirement, health care trends, and other actuarial assumptions. Valuation Date:The date at which the actuarial valuation is performed Section 3: Supporting Information
City of Bakersfield GASB 74/75 Valuation Measured at June 30, 2022, for Employer Reporting for Period Ending June 30, 202345 Appendix B: Accounting RequirementsThe Governmental Accounting Standards Board (GASB) issued Statement Number 74 – Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and Statement Number 75 – Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. Under these statements, all state and local government entities that provide other post-employment benefits are required to report the cost of these benefits on their financial statements. The accounting standards supplement cash accounting, under which the expense for postemployment benefits is equal to benefit and administrative costs paid on behalf of retirees and their dependents (i.e., a pay-as-you-go basis). The statements cover postemployment benefits of medical, prescription drugs, dental, vision and life insurance coverage for retirees; long-term care coverage, life insurance and death benefits that are not offered as part of a pension plan; and long-term disability insurance for employees. The benefits valued in this report are limited to those described in Exhibit III of Section 4, which are based on those provided under the terms of the substantive plan in effect at the time of the valuation and on the pattern of sharing costs between the employer and plan members. The projection of benefits is not limited by legal or contractual limits on funding the plan unless those limits clearly translate into benefit limits on the substantive plan being valued. The new standards prescribe an accrual-basis accounting requirement, thereby recognizing the employer cost of postemployment benefits over an employee’s career. The standards also prescribe a consistent accounting requirement for both pension and non-pension benefits. The total cost of providing postemployment benefits is projected, taking into account assumptions about demographics, turnover, mortality, disability, retirement, health care trends, and other actuarial assumptions. These assumptions are summarized in Exhibit II of Section 3. This amount is then discounted to determine the Total OPEB Liability. The Net OPEB Liability (NOL) is the difference between the Total OPEB Liability and market value of assets in the Plan, called the Plan Fiduciary Net Position. Once the NOL is determined, the Annual OPEB Expense is determined as the change in NOL from the prior year with deferred recognition of certain elements. In addition, Required Supplementary Information (RSI) must be reported, including historical information about the Net OPEB Liability and the contributions made to the Plan. Appendix A of Section 3 contains a definition of terms. The calculation of an accounting obligation does not, in and of itself, imply that there is any legal liability to provide the benefits valued, nor is there any implication that the Employer is required to implement a funding policy to satisfy the projected expense. Actuarial calculations reflect a long-term perspective, and the methods and assumptions use techniques designed to reduce short-term volatility in accrued liabilities and the actuarial value of assets, if any. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future, and the actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. 5793263v2/10632.016