FROM: James D. Herberg, General Manager
Originator: Lorenzo Tyner, Assistant General Manager
SUBJECT:
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MEMORANDUM OF UNDERSTANDING WITH ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM REGARDING PAYMENT OF UNFUNDED ACTUARIAL ACCRUED LIABILITIES
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GENERAL MANAGER'S RECOMMENDATION
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RECOMMENDATION:
Adopt Resolution No. OCSD 19-20 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District authorizing the Execution of the Memorandum of Understanding with the Orange County Employees Retirement System establishing the terms to recognize and apply the Orange County Sanitation District's satisfaction of its Unfunded Accrued Actuarial Liability and deferred Unfunded Accrued Actuarial Liability.
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BACKGROUND
On September 9, 2019 and November 1, 2019, the Orange County Sanitation District (Sanitation District) made an Unfunded Accrued Actuarial Liability (UAAL) payment totaling $38,000,000 in its defined pension plan administered by the Orange County Employees Retirement System (OCERS), which paid off both the Sanitation District's UAAL and proportionate share of the deferred losses not yet recognized in the December 31, 2018 actuarial valuation (deferred investment loss). As a result of the Sanitation District paying off the UAAL, and making the additional payment on the deferred losses, OCERS' actuary recommended that a bookkeeping account be created because the deferred losses are not yet part of the UAAL as reported in the December 31, 2018 Actuarial Valuation. The bookkeeping account provides a mechanism to track the contributions made related to the deferred losses. The balance in the account will be used to offset UAAL as it is recognized in future valuations. The OCERS Board of Retirement approved the bookkeeping account at its October 21, 2019 meeting with direction to staff to memorialize the terms and conditions under which OCERS shall recognize and apply the balance in the new bookkeeping accou...
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