SRP Retirement Plan Santa barbara Community College District PARS - PowerPoint PPT Presentation

Supplementary SRP Retirement Plan Santa barbara Community College District PARS Supplementary Retirement Plan (SRP) – Board of Trustees Meeting October 1 5 , 2019 Santa Barbara community college District ▎ 1

About PARS (Public Agency Retirement Services) Established in 1984 • 3 rd Largest Multiple Employer Public Retirement System in • California 1,000+ Member Agencies • Over 375,000 SRP Participants • 1,600+ Retirement Plans • Headquartered in Orange County • Assists in all phases of the program from plan design, analysis, • communication, implementation and ongoing plan administration Santa Barbara community college District ▎ 2

PARS CCD Clients U p d a t e d : O c t o b e r 2 0 1 9 Allan Hancock CCD Long Beach CCD Rio Hondo CCD Alvin CCD, TX Los Angeles CCD Riverside CCD Cerritos CCD Los Rios CCD San Bernardino CCD Chabot-Las Positas CCD Marin CCD San Joaquin Delta CCD Clarendon College, TX MiraCosta CCD San Luis Obispo County (Cuesta) CCD Coast CCD Mt San Antonio College Santa Clarita CCD Compton CCD Napa Valley CCD Santa Monica CCD Contra Costa CCD North Central Texas CCD, TX Solano CCD Desert CCD North Orange County CCD South Orange County CCD Foothill-De Anza CCD Palomar CCD Southwestern CCD Glendale CCD Palo Verde CCD State Center CCD Grossmont-Cuyamaca CCD Pasadena City College Victor Valley CCD Hartnell CCD Quincy College, MA Victoria College, TX Hill Junior College, TX Rancho Santiago CCD West Valley-Mission CCD Imperial CCD Yosemite CCD Lassen CCD Lone Star College System, TX Santa Barbara community college District ▎ 3

SRP Process and Steps Board approves a contingent plan offering to designated eligible • employees during two enrollment windows Interested employees submit irrevocable letters of resignation • during the enrollment periods. At the end of the enrollment periods, a fiscal analysis is • conducted to determine the savings (or cost) to District Based on results, Board determines if Plan proceeds or is • cancelled If Plan proceeds, employees resign • If Plan is canceled, the offer and resignation letters are • rescinded Santa Barbara community college District ▎ 4

Proposed Timeline PARS mails individual benefit illustration packets to October 25, 2019 Window #1 eligible employees (excluding Faculty) · Early November 2019 PARS holds orientation meetings · Early December 2019 PARS holds one-on-one employee workshop · December 4, 2019 Enrollment Window #1 closes · December 31, 2019 · Window #1 employees resign from District employment February 1, 2020 PARS benefit checks commence for Window #1 retirees · PARS mails individual benefit illustration packets to Mid-February 2020 · Window #2 eligible employees (including Faculty) Mid-March 2020 PARS holds orientation meetings · Late April 2020 PARS holds one-on-one employee workshop · May 1, 2019 Enrollment Window #2 closes · June 30, 2020 Window #2 employees resign from District employment · August 1, 2020 PARS Benefit Checks commence for Window #2 retirees · Santa Barbara community college District ▎ 5

Proposed Plan Design Plan offered through a tax-sheltered annuity program: Internal Revenue Code Section 403(b) Spend Amount 70% of Final Pay Post-Employment contributions funded over a period of five (5) years • following termination of employment District Contributions are used to fund the purchase of an annuity • through Pacific Life Insurance Co. Distribution options receive favorable tax treatment and may be • eligible for IRA rollovers Santa Barbara community college District ▎ 6

PARS Analysis Methodology Total Compensation Differential between Retiring Employee and Replacement Employee - Future Loss in Natural Attrition - Current Natural Attrition - Retirement Health Care Cost - Retirement Incentive Cost + Savings due to Non-Replacements = Net Savings (Cost) Santa Barbara community college District ▎ 7

Plan Assumptions (academic) Full-Time Faculty Educational Administrators Age 55 , 5 Years of Service Eligibility Requirements Age 50, 30 Years of Service Benefit Level 70% of Final Pay Resignation from June 30, 2020 December 31, 2019 or June 30, 2020 District employment Full-Time Faculty: $85,837 (Based on PARS 90.60% of Current Salary (Step 5) Replacement Salaries 3-Year New Hire Study) Adjunct Hourly Rate: $95.90 (Step 5 Credit Adjunct Rate) Total Adjunct Hours: 525 Adjunct Faculty Total Adjunct Faculty Salary: $50,348 Adjunct Faculty Health Care Cost: $3,607 (40% of Active Employee Cost) Active: $9,018 Pre-65 Retiree: $5,256 Health Care Costs Post-65 Retiree: $0 Health Care COLA: 0.00% Educational Administrators - Assumes that 50% of eligible employees will retire in Participation December and 50% of eligible employees will retire in June. PARS Plan Funding 5-Year Annuity purchased through Pacific Life Insurance Santa Barbara community college District ▎ 8

Plan Assumptions (classified) Classified Non-Management Classified Management & Confidential Eligibility Requirements Age 50 , 5 Years of Service Benefit Level 70% of Final Pay Resignation from December 31, 2019 or June 30, 2020 District employment Replacement Salaries 86.20% of Current Salary (Step 3) 90.60% of Current Salary (Step 5) Active: $9,018 Pre-65 Retiree: $6,331 Health Care Costs Post-65 Retiree: $0 Health Care COLA: 0.00% Classified Non-Management - Assumes that 40% of eligible employees will retire in December and 60% of eligible employees will retire in June. Participation Classified Management & Confidential - Assumes that 33% of eligible employees will retire in December and 67% of eligible employees will retire in June. PARS Plan Funding 5-Year Annuity purchased through Pacific Life Insurance Santa Barbara community college District ▎ 9

Full-time faculty Santa Barbara community college District ▎ 10

Fiscal Summary of Savings FULL-TIME FACULTY FISCAL IMPACT ASSUMES 100% ADJUNCT REPLACEMENT FOR YEAR 1 # of Projected Savings Projected Savings Projected Savings Projected Savings Replacement Scenario Positions in Mid-Year in Year 1 over 3 Years over 5 Years 2019-20 2020-21 2022-23 2024-25 Replaced 100% Replacement 0.00 $0 $1,007,683 $817,391 $497,825 90% Replacement 2.10 $0 $1,027,982 $1,101,195 $1,067,089 80% Replacement 4.20 $0 $1,048,280 $1,385,000 $1,636,352 70% Replacement 6.30 $0 $1,068,578 $1,668,804 $2,205,616 60% Replacement 8.40 $0 $1,088,877 $1,952,608 $2,774,879 50% Replacement 10.50 $0 $1,109,175 $2,236,413 $3,344,143 Santa Barbara community college District ▎ 11

Plan Eligibility FULL-TIME FACULTY 10 9 9 87 8 8 8 Eligible Employees 7 7 Avg Age: 63.1 6 6 6 6 6 6 # of Employees 5 5 5 5 4 3 3 2 1 1 1 1 1 1 1 1 0 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79+ Age Santa Barbara community college District ▎ 12

Plan Eligibility FULL-TIME FACULTY 50 45 40 35 30 Years of Service 25 20 15 10 5 0 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 Age Santa Barbara community college District ▎ 13

PARS Retirement Projections FULL-TIME FACULTY Projected Projected Total Projected # of Eligible Percentage Retirements in Retirements in Retirements Retirements Employees December 2019 June 2020 with PARS SRP 87 0 21 21 24.14% Santa Barbara community college District ▎ 14

CLASSIFIED NON-MANAGEMENT Santa Barbara community college District ▎ 15

Fiscal Summary of Savings CLASSIFIED NON-MANAGEMENT # of Projected Savings Projected Savings Projected Savings Projected Savings Replacement Scenario Positions in Mid-Year in Year 1 over 3 Years over 5 Years 2019-20 2020-21 2022-23 2024-25 Replaced 100% Replacement 0.00 ($37,355) ($92,808) ($288,006) ($531,229) 90% Replacement 1.90 ($5,265) $49,305 $94,398 $119,243 80% Replacement 3.80 $26,826 $191,418 $476,801 $769,715 70% Replacement 5.70 $58,916 $333,531 $859,205 $1,420,187 60% Replacement 7.60 $91,007 $475,644 $1,241,609 $2,070,658 50% Replacement 9.50 $123,097 $617,757 $1,624,013 $2,721,130 Santa Barbara community college District ▎ 16

Plan Eligibility CLASSIFIED NON-MANAGEMENT 12 11 112 10 10 9 Eligible Employees 8 Avg Age: 59.3 8 7 7 # of Employees 6 6 6 5 5 5 4 4 4 4 3 3 3 2 2 2 2 2 2 2 0 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 Age Santa Barbara community college District ▎ 17

Plan Eligibility CLASSIFIED NON-MANAGEMENT 40 35 30 25 Years of Service 20 15 10 5 0 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 Age Santa Barbara community college District ▎ 18

PARS Retirement Projections CLASSIFIED NON-MANAGEMENT Projected Projected Total Projected # of Eligible Percentage Retirements in Retirements in Retirements Retirements Employees December 2019 June 2020 with PARS SRP 112 8 11 19 16.96% Santa Barbara community college District ▎ 19

EDUCATIONAL ADMINISTRATORS Santa Barbara community college District ▎ 20