HomeMy WebLinkAboutPR 17891: CONTRACT SERVICES OF GABRIEL ROEDER SMITH & CO. City of Port Arthur
Memorandum
To: Floyd T. Johnson, City Manager
From: Deborah Echols, Director of Finance MAU
Date: August 28, 2013
Re: PR 17891
I recommend that the City Council adopt Proposed Resolution 17891 which authorizes a
consulting services contract with Gabriel Roeder Smith & Co., Consultants & Actuaries, related to
the City's Other Post Employment Benefit (OPEB), Retiree Health Insurance Plan.
P.R. 17891
ask: 8/28/13
RESOLUTION NO.
A RESOLUTION AUTHORIZING A CONSULTING
CONTRACT FOR THE SERVICES OF GABRIEL
ROEDER SMITH & CO., CONSULTANTS &
ACTUARIES (GRS) RELATED TO THE CITY'S OTHER
POST EMPLOYMENT BENEFIT (OPEB), RETIREE
HEALTH INSURANCE PLAN IN AN AMOUNT NOT TO
EXCEED $10,000. ACCOUNT NO. 614-1701-583.52-00
WHEREAS, an updated actuarial study is required in 2013; and
WHEREAS, GRS is a professional company whose business is to perform
actuarial services and provide employee benefits analysis; and
Whereas, the City of Port Arthur can receive services from GRS under the Shared
Services arrangement provided by GRS and North Central Texas Council of Governments, as
described in exhibit A -1, at a substantial savings to the City.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
PORT ARTHUR:
THAT the City Manager of the City of Port Arthur is hereby authorized and directed to
execute on behalf of the City of Port Arthur a consulting contract between the City and Gabriel
Roeder Smith & Co. to perform actuarial services related to the City's Other Post Employment
Benefit (OPEB); and
THAT a copy of said scope of services is attached hereto and made a part hereof as
Exhibit "A "; and,
THAT a copy of the caption of this resolution be spread upon the Minutes of the City
Council.
READ, ADOPTED, AND APPROVED, this day of September, 2013 A.D., at
a Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote:
AYES: Mayor:
Council members:
NOES:
Deloris Prince, Mayor
ATTEST:
Sherri Bellard, City Secretary
APPROVED AS TO FORM:
AA
Val Tizen of Ci At e rney
APPROVED FOR ADMINISTRATION:
Floyd T. Johnson, City Manager
APPROVED AS TO AVAILABILITY OF FUNDS:
A t/PM/a
Deborah Echols, Finance Director
EXHIBIT "A"
STATE OF TEXAS *
*
COUNTY OF JEFFERSON *
PROFESSIONAL SERVICES CONTRACT
This instrument is a contract between Gabriel Roeder Smith & Co., 5605 N. MacArthur Blvd,
Suite 870, Irving, TX 75038 telephone number 469 -524 -0000, whose business is to perform
actuarial services and provide employee benefits analysis hereinafter denoted as "Professional ",
and the City of Port Arthur, hereinafter denoted as "City ".
SCOPE OF SERVICES /PRICE:
This contract authorizes Professional to perform professional services as described in Exhibit "A-
1". The compensation for the Professional shall not exceed the estimated costs $10,000.
TERM:
The maximum term of this agreement shall be the lesser of (a) three months, (b) when the project
described in Exhibit "A -1" is completed or (c) when the professional is terminated under the
"Termination of Professional" clause.
PROGRESS REPORTS:
The professional shall provide progress reports as reasonably requested by the City's
Representative.
PERSONNEL OF PROFESSIONAL:
DESIGNATION OF OWNER (CITY'S) REPRESENTATIVE AND DUTIES THEREOF:
a. The City Manager or his designee shall act as City's Representative.
b. The City's Representative shall use his best efforts to provide City
records for professional's usage on this project.
STANDARDS OF PERFORMANCE:
a. The Professional shall perform all services under this Agreement in
accordance with the standards of the profession specializing in the scope
of services as described in Exhibit "A -1 ".
b. Codes and Standards
Professional agrees the services it provides as an experienced
and qualified provider will reflect the professional standards,
procedures, and performances common in the industry.
SCHEDULE:
The Professional shall not proceed with the project or any stage thereof until written notice
to proceed is provided by the City's representative. The project schedule will commence as
detailed in Exhibit "A-1".
INSURANCE:
A. The Professional shall procure and maintain insurance in the amounts listed
below for protection from claims under Worker's Compensation, claims for
damages because of bodily injury, including personal injury, and from claims or
damages because of injury to or destruction of property including loss of use
resulting therefrom. The Professional shall provide a copy of the insurance
certificate to the City.
Coverage Limit of Liability
Worker's Compensation Statutory for Worker's
Compensation
Employer's Liability Bodily Injury by Accident
$1,000,000 (Each Accident)
Bodily Injury by Disease
$1,000,000 (Policy Limit)
Bodily Injury by Disease
$1,000,000 (Each Employee)
Commercial General: Bodily Injury and
Including Broad Form Property Damage, Combined
Coverage, Contractual Limits of $500,000 each
Liability, Bodily and Occurrence and $1,000,000
Personal Injury, and aggregate (defense costs
Completed Operations excluded from face amount
of policy)
b. The Professional shall maintain professional liability (errors and
omissions /malpractice) insurance in the amount of $1,000,000. The Professional
shall provide a copy of his insurance policy to the City within 10 days of contract
execution or this contract shall be null and void. A deductible is acceptable for
professional liability insurance.
c. The Professional shall give the City thirty (30) days notice prior to any change or
cancellation of these insurance policies.
LIABILITY:
The Professional shall be liable only for the services performed by the Professional and
shall be responsible for only the negligent acts or omissions that the Professional has direct
control over.
SUB - CONSULTANTS AND SUB - CONTRACTORS:
The Professional shall receive written approval of the City's Representative prior to the use
of sub - consultants and /or sub - contractors.
TERMINATION OF PROFESSIONAL:
The City retains the right to terminate the contract "at will" and to pay only for the
professional services and sub - consultant's and subcontractor's costs that were provided for
and /or that were committed to and that were City approved prior to the termination.
RECORDS:
At the City's request, the City will be entitled to review and receive a copy of all
documents that indicate work on the project.
BILLINGS:
The City will process interim progress billings and shall have up to thirty (30) days to pay
bills. All bills must demonstrate in detail the services completed.
REPUTATION IN THE COMMUNITY:
The Professional shall asserts that there is no pending litigation that would impact its
ability to provide professional services to the City.
PAYROLLS AND BASIC RECORDS:
a. The Professional shall maintain payrolls and basic payroll records during the course
of the contract work and shall preserve them for a period of three years from the
completion of the contract for all personnel working on the contract.
b. The records to be maintained under paragraph (a) of this clause shall be made
available by the Professional for inspection, copying, or transcription by the City or
their authorized representatives. The Professional shall permit such representatives
to interview employees during working hours on the job. The city will review such
records for billing reconciliation purposes as needed.
DEFAULT OF PROFESSIONAL:
a. If the Professional refuses or fails to prosecute the work or any separable part, with
the diligence that will insure its completion within the time specified in this contract, or fails to
complete the work within this time, the City may, by written notice to the Professional, terminate
the right to proceed with the work (or the separable part of the work) that has been delayed. In this
event, the City may take over the work and complete it by contract or otherwise, and may take
possession of and use any records necessary for completing the work. The Professional shall be
liable for any damage to the City resulting from the Professional's refusal or failure to complete the
work within the specified time, whether or not the Professional's right to proceed with the work is
terminated. This liability includes any increased costs incurred by the City in completing the
Professional's work.
b. The Professional shall not be charged with damages under this clause if,
(1) The delay in completing the work arises from unforeseeable causes beyond
the control and without the fault or negligence of the Professional.
Examples of such causes include (i) acts of God or of the public enemy, (ii)
acts of the Government in either its sovereign or contractual capacity, (iii)
acts of another contractor or Professional in the performance of a contract
with the Government, and /or extended review or approvals by government
agencies out of the control of the Professional, (iv) acts of fire, (v) floods,
(vi) epidemics, (vii) quarantine restrictions, (viii) strikes, (ix) freight
embargoes, (x) unusually severe weather, or (xi) delays of subcontractors or
suppliers at any tier arising from unforeseeable causes beyond the control
and without the fault or negligence of the Professional; and
(2) The Professional, within 10 days from the beginning of any delay
(unless extended by the City's Representative), notifies the City's
Representative in writing of the causes of delay. The City's Representative
shall ascertain the facts and the extent of delay. If, in the judgment of the
City's Representative, the findings of fact warrant such action, the time for
completing the work shall be extended. The findings of the City's
Representative shall be final and conclusive on the parties, but subject to
appeal to City Council.
c. The rights and remedies of the City in this clause are in addition to any other rights
and remedies provided by law or under this contract.
APPLICABLE LAW:
This contract has been made under and shall be governed by the laws of the State of Texas. The
parties agree that performance and all matters related thereto shall be in Jefferson County, Texas.
NOTICES:
Notices shall be mailed to the addresses designated herein or as may be designated in writing by
the parties from time to time and shall be deemed received when sent postage prepaid U.S. Mail to
the following addresses:
CITY:
City of Port Arthur
Attention: Deborah Echols
Director of Finance
P. O. Box 1089
Port Arthur, Texas 77641
PROFESSIONAL:
Gabriel Roeder Smith & Company
5605 N. MacArthur Blvd.
Suite 870
Irving, TX 75038
WAIVER:
No waiver by either party hereto of any term or condition of this agreement shall be deemed or
construed to be a waiver of any other term or condition or subsequent waiver of the same term or
condition.
This Agreement represents the entire and integrated agreement between City and
Professional and supersedes all prior negotiations, representations or agreements, either written or
oral. This agreement may only be amended by written instrument approved and executed by the
parties. The City of Port Arthur and Professional, accept and agree to these terms.
SIGNED ON THE day of , 2013.
BY:
Attest:
SIGNED ON THE day of , 2013.
CITY OF PORT ARTHUR, TEXAS
BY:
Floyd T. Johnson, City Manager
Attest:
Sherri Bellard
City Secretary
Exhibit A -1
G Gabriel Roeder Smith & Company 5605 N. MacArthur Blvd. 469.524.0000 phone
Consultants tic Actuaries Suite 870 469.524.0003 fax
Irving, TX 75038 2631 www.gabrielroeder.com
Aug 05, 2013
Ms. Deborah Echols
Finance Director
City of Port Arthur
444 4th Street
Port Arthur, TX 77640
Re: Engagement Letter for GASB OPEB Valuation for City of Port Arthur
Dear Ms. Echols,
You have requested a pricing quote for a GASB 45 actuarial valuation under the Shared Services
arrangement provided by Gabriel, Roeder, Smith & Co (GRS) and North Central Texas Council of
Governments (NCTCOG).
Based on the information you provided, the estimated cost of services for City of Port Arthur is
$9,500. The total fee including the $125 NCTCOG administration fee will equal $9,625. This price
is based on receiving data in the standard GRS format and using the following assumptions:
Number of Participants 500 - 999
Claims Analysis Required Yes
Retirement Plans 1. TMRS
2. Firefighter's Pension Plan
Health Plans 1. City of Port Arthur Health Plan
Annual, Biennial, or Triennial Biennial
Pricing Discount Eligible
Additional fees may also apply if the data is not received in the requested GRS data format.
If other assumptions are identified, a revised proposal letter will be prepared by GRS.
Basic Services
Basic services provided through the Shared Services program will include:
• Actuarial valuation of employer OPEB in compliance with the requirements of paragraphs
•
11 -27 of GASB 45. Valuations can be performed annually or biennially and will include:
> A measurement of the actuarial liability, present value of projected benefits and
normal cost as of the valuation date
Ms. Deborah Echols
Aug 05, 2013
Page 2
> The estimated actuarially determined contribution for the applicable fiscal years
> The estimated annual required contribution and accounting expense for the
applicable fiscal years as required under GASB Statement Nos. 43 and 45
> Information needed to complete the "Notes to the Financial Statement" and
"Required Supplementary Information" as defined in paragraphs 30 and 31 of GASB
No. 43
> Information needed to complete the "Notes to the Financial Statement" and
"Required Supplementary Information" as defined in paragraphs 24, 25 and 26 of
GASB No. 45
> Sensitivity analysis for health care trend rates, providing valuation results based on a
higher and a lower health care trend
> A hypothetical set of actuarial results using an alternative discount rate based on
pre - funding
• Two in person or conference call meetings as mutually agreed upon by City of Port Arthur
and GRS. Out of pocket travel expenses for governments located 100 miles or more from
DFW Airport will be charged to the government.
Billing Schedule
GRS pricing assumes 20% paid upon acceptance by the government of the engagement, 50% upon
receipt of the draft report and 30% upon acceptance of the final report. For Biennial or Triennial
valuations, GRS will provide the OPEB cost for the off year(s) and will walk forward the Net
OPEB Obligation.
The GRS prices discussed above will be adjusted annually in January based on changes in the
Consumer Price Index, All Urban Consumers, on a December over December basis.
GRS billing will also include an administrative fee of $125 per valuation cycle payable to the
NCTCOG.
Options Study
It is anticipated that City of Port Arthur may want to consider what the options are for mitigating
their OPEB liability. These Options studies would include alternative discount rates, alternative
healthcare trend rates, benefit capitations, and changes in retiree cost sharing. The cost for a basic
Options study will be $1,200 per study.
More complicated studies may not be covered under the fixed fee amount above. If a study is not
included in the fixed fee pricing, the hourly rates shown in "Additional Services" below will apply
Gabriel Roeder Smith& Company
Ms. Deborah Echols
Aug 05, 2013
Page 3
or fixed fee amounts will be negotiated. GRS will provide written documentation of our
understanding of the service(s) requested, the estimated number of hours by employee class, total
costs and project timeline.
Additional Services
Fees for additional consulting services not included under Basic Services or included in the fixed
fee Options studies will be priced separately upon request and will be based on the following hourly
rates:
Hourly
GRS Resource Classification Rates
Senior Consultant $395
Consultants $310
Senior Analysts $200
Actuarial Analysts $170
Systems Analysts and Programmers $230
Administrative Support Staff $125
A copy of this engagement letter will be made a part of the master agreement between City of Port
Arthur and GRS.
If you have any questions or need additional information please don't hesitate to e mail us at
NCTCOG. sharedservices@gabrielroede or call either Mehdi Riazi at 469 -524 -1343 or Brad
Stewart at 469 -524 -1805.
Thank you for your interest in the Shared Services program.
Gabriel, Roeder, Smith & Company
Gabriel Roeder Smith & Company
INTERLOCAL AGREEMENT
FOR
COOPERATIVE PURCHASING
FOR
ACTUARIAL SHARED SERVICES
THIS INTERLOCAL AGREEMENT ( "Agreement "), made and entered into pursuant to the Texas Interlocal
Cooperation Act, Chapter 791, Texas Government Code (the "Act "), by and between the North Central Texas
Council of Governments, hereinafter referred to as "NCTCOG," having its principal place of business at 616 Six
Flags Drive, Arlington, Texas 76011, and ,a local government, created and operated to
provide one or more governmental functions and services, hereinafter referred to as "Participant," having its
principal place of business at
WITNESSETH
WHEREAS, NCTCOG is a regional planning commission and political subdivision of the State of Texas operating
under Chapter 391, Texas Local Government Code; and
WHEREAS, pursuant to the Act, NCTCOG is authorized to contract with eligible entities to perform governmental
functions and services, including the development of a standard approach for acquiring actuarial services; and
WHEREAS, in reliance on such authority, NCTCOG has a cooperative purchasing program under which it
contracts with eligible entities under the Act; and
WHEREAS, NCTCOG extended the original agreement with Gabriel, Roeder, Smith and Company to provide such
services to until September 30, 2014; and
WHEREAS, the Participant has represented that it is an eligible entity under the Act that by Administrative Action
has authorized this Agreement on , and that it desires to contract with NCTCOG
on the terms set forth below;
NOW, THEREFORE, NCTCOG and the PARTICIPANT do hereby agree as follows:
ARTICLE 1: LEGAL AUTHORITY
The Participant represents and warrants to NCTCOG that (1) it is eligible to contract with NCTCOG under the Act
because it's a local government, as defined in the Act, and (2) it possesses adequate legal authority to enter into this
Agreement.
ARTICLE 2: APPLICABLE LAWS
NCTCOG and the Participant agree to conduct all activities under this Agreement in accordance with all applicable
rules, regulations, and ordinances and laws in effect or promulgated during the term of this Agreement.
ARTICLE 3: WHOLE AGREEMENT
This Agreement and any attachments, as provided herein, constitute the complete contract between the parties
hereto, and supersede any and all oral and written agreements between the parties relating to matters herein.
ARTICLE 4: BILLINGS
Billings will be generated for the Actuarial Shared Services through Gabriel Roeder Smith & Company based upon
Administrative Fee of $125 per valuation cycle (effective October 1, 2012). Each party paying for the performance
of said functions of government shall make those payments from current revenues available to the paying party.
ARTICLE 5: CHANGES AND AMENDMENTS
This Agreement may be amended only by a written amendment executed by both parties, except that any alterations,
additions, or deletions to the terms of this Agreement which are required by changes in Federal and State law or
regulations are automatically incorporated into this Agreement without written amendment hereto, and shall become
effective on the date designated by such law or regulation.
NCTCOG reserves the right to make changes in the scope of services offered through the Cooperative Purchasing
Program to be performed hereunder.
THIS INSTRUMENT HAS BEEN EXECUTED IN TWO ORIGINALS BY THE PARTIES HERETO AS
FOLLOWS:
*Denotes required fields
NOTE: Facsimile copies of this document shall not be acceptable as ORIGINALS. Interstate vl rev. 10/05
* North Central Texas Council of Governments
Name of Participant (local government, agency, or non-profit 616 Six Flags Drive, Arlington, Texas 76011
corporation)
* *By:
Mailing Address Signature of Authorized Official
•
*
City State ZIP Code *Monte Mercer
Typed Name of Authorized Official
*By:
Signature of Authorized Official *Deputy Executive Director
Typed Title of Authorized Official Date
*
Typed Name of Authorized Official
*
Typed Title of Authorized Official Date
G J S Gabriel Roeder Smith & Company
Consultants 8c Actuaries 5605 N. MacArthur Blvd. 469.524.0000 phone
Suite 870 469.524.0003 fax
Irving, TX 75038 -2631 www.gabrielroeder.com
MASTER AGREEMENT
Pursuant to the award of Joint Actuarial Services by the North Central Texas Council of
Governments (NCTCOG), this agreement confirms the terms under which the
(name of government)
hereinafter referred to as `CONTRACTING GOVERNMENT" has engaged Gabriel,
Roeder, Smith & Co. hereinafter referred to as "GRS" to perform actuarial consulting
services. In as much as this relationship will involve several actuarial reviews and other
services that will be governed by the Request for Proposal issued by NCTCOG on May
31, 2006 and our subsequent response to that proposal, we have agreed to establish this
"master agreement" defining the general terms and conditions for all work performed.
This agreement will not, by itself, authorize the performance of any services. Rather
specific services will be authorized through a separate engagement letter that references
this master agreement and details the services to be provided and the timeframe and fees
required. In the event of an inconsistency between this master agreement and an
individual engagement letter, the master agreement will be followed.
As described in the above referenced Request for Proposal the following terms apply:
A. Tax Exempt Entities. CONTRACTING GOVERNMENT is exempt from
manufacturer's federal excise tax and states sales tax. Tax exemption certificates
will be issued upon request.
B. Role of NCTCOG. NCTCOG has served as a facilitator to the RFP and award
process but the contractual relationship is between GRS and the CONTRACTING
GOVERNMENT.
C. Aggregate Information. GRS agrees to supply NCTCOG with the specified
results from the valuations and to aggregate that information with that of other
governments for the purpose of benchmarking.
D. Fees. GRS agrees to follow the attached pricing schedule ( "Attachment A ") for
pricing of its services.
E. Review of Charges. CONTRACTING GOVERNMENT has the right to review
the supporting documentation for any hourly charges or out of pocket expenses
assessed to the CONTRACTING GOVERNMENT under the fee schedule.
F. Termination. Both CONTRACTING GOVERNMENT and GRS will have the
right to terminate this agreement through written notice. CONTRACTING
GOVERNMENT will pay any charges or prorate fees incurred to the date the
termination notice is received and actuary will cease any in progress work unless
specific stopping points are provided in the letter.
G. Work Product. The final work product will be the property of the
CONTRACTING GOVERNMENT to be used as stated in the specific engagement
letter. Ancillary use of the product is permitted but GRS is not responsible for the
reliability of those projections. It is understood that all reports are subject to the
open records laws of the State of Texas and the contracting jurisdiction.
H. Independent Contractor. All the services provided by GRS will be as an
independent contractor. None of the terms in the engagement letter will be
interpreted to create an agency or employment relationship.
Term. The term of this master agreement will be governed by the afore referenced
NCTCOG RFP and will expire on September 30, 2014.
J. Complete Agreement. This letter combined with the specific engagement letter
and as clarified by the RFP and Proposal set forth the entire agreement between the
CONTRACTING GOVERNMENT and GRS.
K. Indemnification. GRS covenants and agrees to indemnify and hold harmless and
defend and does hereby indemnify, hold harmless, and defend CONTRACTING
GOVERNMENT, its officers and employees, from and against any and all suits or
claims for damages or injuries, including death, to persons or property, whether real
or asserted, arising out of any negligent act or omission on the part of the
contractor, its officers, agents, servants, employees, or subcontractors, and the
contractor does hereby assume all liability for injuries, claims or suits for damages
to persons, property, or whatever kind of character, whether real or asserted,
occurring during or arising out of the performance of this contract as a result of any
negligent act or omission on the part of the contractor, its officers, agents, servants,
employees, or subcontractors to the extent permitted by law. Please review this
master agreement letter and the attached schedules and indicate your acceptance by
having an official of CONTRACTING GOVERNMENT sign below.
L. Force Majeure. A force majeure event shall be defined to include governmental
decrees or restraints, acts of God (except that rain, wind, flood or other natural
phenomena normally expected for the locality, shall not be construed as an act of
God), work stoppages due to labor disputes or strikes, fires, explosions, epidemics,
riots, war, rebellion, and sabotage. If a delay or failure of performance by either
party to this contract results from the occurrence of a force majeure event, the delay
shall be excused and the time fixed for completion of the work extended by a period
equivalent to the time lost because of the event.
Gabriel Roeder Smith & Company
M. Professional Standards. GRS will provide qualified personnel for each
engagement and follow all professional standards ascribed by the American
Academy of Actuaries and the Governmental Accounting Standards Board.
GABRIEL, ROEDER, SMITH & CO.
By: Date:
Title:
CONTRACTING GOVERNMENT
By Date:
Title:
Gabriel Roeder Smith & Company
Attachment A
Pricing of Services — Calendar Year 2013
The price of the valuation is based on the following components:
a) Number of participants:
Participant Count Base Fee
Less than 100 $4,500
100 — 199 $4,500
200 — 499 $5,200
500 — 999 $5,500
1,000 — 2,499 $6,400
Over 2,500 $7,000
b) Number of retirement plans:
There is no additional charge if the employees participate in only one retirement plan. For
each additional retirement plan, the valuation fee is increased by $1,600.
c) Number of health plans:
There is no additional charge if the participants are covered under only one health plan.
For each additional health plan, the valuation fee is increased by $1,000.
d) Annual, biennial or triennial valuation:
The valuation fee is increased by $1,200 for valuations which are intended to be used for
two fiscal years and by $2,400 for valuations which are intended to be used for three
fiscal years.
e) Claims analysis:
The valuation fee is increased by $2,000 if claims experience is required.
f) Pricing discount:
Employers with very simple plans may be eligible for an $800 price reduction. The
engagement agreement will specify whether the pricing discount applies.
Gabriel Roeder Smith & Company
❖ Pricing assumes 20% paid upon acceptance by the government of the engagement, 50%
upon receipt of the draft report and 30% upon acceptance of the final report.
❖ Fees for additional services and optional services that are not determined as `basic' will
be based on the following rates:
GRS Position Title Hourly Rates
Senior Consultant $395
Consultants $310
Senior Analysts $200
Actuarial Analysts $170
Systems Analysts and Programmers $230
Administrative Support Staff $125
*Prices will be adjusted annually beginning in January 2014 based on changes in the Consumer
Price Index, All Urban Consumers, on a December over December basis. Current rates for your
plan are reflected in the engagement agreement sent with this document.
Gabriel Roeder Smith & Company
GRS Gabriel Roeder Smith & Company
Consultants & Actuaries 5605 N. MacArthur Blvd. 469.524.0000 phone
Suite 870 469.524.0003 fax
Irving, TX 75038 2631 www.gabrielroeder.com
Aug 05, 2013
Ms. Deborah Echols
Finance Director
City of Port Arthur
444 4th Street
Port Arthur, TX 77640
Re: Engagement Letter for GASB OPEB Valuation for City of Port Arthur
Dear Ms. Echols,
You have requested a pricing quote for a GASB 45 actuarial valuation under the Shared Services
arrangement provided by Gabriel, Roeder, Smith & Co (GRS) and North Central Texas Council of
Governments (NCTCOG).
Based on the information you provided, the estimated cost of services for City of Port Arthur is
$9,500. The total fee including the $125 NCTCOG administration fee will equal $9,625. This price
is based on receiving data in the standard GRS format and using the following assumptions:
Number of Participants 500 - 999
Claims Analysis Required Yes
Retirement Plans 1. TMRS
2. Firefighter's Pension Plan
Health Plans 1. City of Port Arthur Health Plan
Annual, Biennial, or Triennial Biennial
Pricing Discount Eligible
Additional fees may also apply if the data is not received in the requested GRS data format.
If other assumptions are identified, a revised proposal letter will be prepared by GRS.
Basic Services
Basic services provided through the Shared Services program will include:
• Actuarial valuation of employer OPEB in compliance with the requirements of paragraphs
11 -27 of GASB 45. Valuations can be performed annually or biennially and will include:
> A measurement of the actuarial liability, present value of projected benefits and
normal cost as of the valuation date
Ms. Deborah Echols
Aug 05, 2013
Page 2
> The estimated actuarially determined contribution for the applicable fiscal years
> The estimated annual required contribution and accounting expense for the
applicable fiscal years as required under GASB Statement Nos. 43 and 45
> Information needed to complete the "Notes to the Financial Statement" and
"Required Supplementary Information" as defined in paragraphs 30 and 31 of GASB
No. 43
> Information needed to complete the "Notes to the Financial Statement" and
"Required Supplementary Information" as defined in paragraphs 24, 25 and 26 of
GASB No. 45
> Sensitivity analysis for health care trend rates, providing valuation results based on a
higher and a lower health care trend
> A hypothetical set of actuarial results using an alternative discount rate based on
pre- funding
• Two in person or conference call meetings as mutually agreed upon by City of Port Arthur
and GRS. Out of pocket travel expenses for governments located 100 miles or more from
DFW Airport will be charged to the government.
Billing Schedule
GRS pricing assumes 20% paid upon acceptance by the government of the engagement, 50% upon
receipt of the draft report and 30% upon acceptance of the final report. For Biennial or Triennial
valuations, GRS will provide the OPEB cost for the off year(s) and will walk forward the Net
OPEB Obligation.
The GRS prices discussed above will be adjusted annually in January based on changes in the
Consumer Price Index, All Urban Consumers, on a December over December basis.
GRS billing will also include an administrative fee of $125 per valuation cycle payable to the
NCTCOG.
Options Study
It is anticipated that City of Port Arthur may want to consider what the options are for mitigating
their OPEB liability. These Options studies would include alternative discount rates, alternative
healthcare trend rates, benefit capitations, and changes in retiree cost sharing. The cost for a basic
Options study will be $1,200 per study.
More complicated studies may not be covered under the fixed fee amount above. If a study is not
included in the fixed fee pricing, the hourly rates shown in "Additional Services" below will apply
Gabriel Roeder Smith & Company
Ms. Deborah Echols
Aug 05, 2013
Page 3
or fixed fee amounts will be negotiated. GRS will provide written documentation of our
understanding of the service(s) requested, the estimated number of hours by employee class, total
costs and project timeline.
Additional Services
Fees for additional consulting services not included under Basic Services or included in the fixed
fee Options studies will be priced separately upon request and will be based on the following hourly
rates:
Hourly
GRS Resource Classification Rates
Senior Consultant $395
Consultants $310
Senior Analysts $200
Actuarial Analysts $170
Systems Analysts and Programmers $230
Administrative Support Staff $125
A copy of this engagement letter will be made a part of the master agreement between City of Port
Arthur and GRS.
If you have any questions or need additional information please don't hesitate to e mail us at
NCTCOG. sharedservices @,gabrielroeder.com or call either Mehdi Riazi at 469 -524 -1343 or Brad
Stewart at 469 -524 -1805.
Thank you for your interest in the Shared Services program.
Gabriel, Roeder, Smith & Company
Gabriel Roeder Smith & Company