C250213_Exhibit_A_SOW.pdf

RFP 250213

EXHIBIT A

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Actuarial Valuation Services Scope of Work

The Orange County Transportation Authority (OCTA) is seeking actuarial valuations of Supplemental Retirement Benefits and Other Post-employment Benefits (OPEB) plans.

OCTA is a special district governmental entity. As such, OCTA produces annual financial statements in compliance with standards issued by the Governmental Accounting Standards Board (GASB). OCTA operates on a fiscal year (FY) basis ending June 30th.

OCTA employs approximately 1,400 people. Approximately 800 are covered by collective bargaining agreements, 600 are administrative employees, and 20 are Board of Directors.

OCTA offers two (2) retirement benefits in addition to a defined benefit plan administered by the Orange County Employees Retirement Plan.

This valuation service study is intended to provide the necessary information to ensure proper financial reporting for OPEB plan in the audited financial statements for FY 2025-26; FY 2026-27; FY 2027-28; FY 2028-29; and FY 2029-30 and to determine the actuarially required contribution rate for the supplemental retirement benefit plan.

OCTA implemented all the GASB statements related to new accounting guidance for pension and OPEB.

Plans

The following two (2) plans are the subject of this engagement:

➢ Retiree Health Insurance (post-employment healthcare benefits)

- This plan is considered qualified OPEB plan under the GASB 75

➢ Additional Retiree Benefit Account (ARBA) (Supplemental Retirement Benefits)

- This plan is not considered a qualified pension plan under the GASBs 68 or 73

Retiree Healthcare Program (OPEB)

OCTA sponsors and administers a single-employer defined-benefit postemployment healthcare plan (Plan) to provide medical insurance benefits to eligible retired employees.

Effective July 1, 2018, Coach Operators became eligible to participate in the OPEB plan sponsored and administered by OCTA. Previously, only Unrepresented Administrative (Admin) Employees and Transportation Communications International Union (TCU) employees were eligible to continue participating in the group healthcare insurance program after retirement until age 65 and/or a Kaiser Senior Advantage group plan for age 65 and over for retirees who retire directly from OCTA. Admin employees and TCU Employees in Orange County Employees Retirement System (OCERS) Plan A and B must be at a minimum of age 50 with at least ten (10) years of OCTA service and OCERS Plan U members must be at a minimum of

Page 2/3 age 52 with at least five (5) years of OCTA service to meet eligibility requirements. Coach Operators in OCERS Plan A and B must be at a minimum of age 55 with at least ten (10)-years of OCTA service and OCERS Plan U members must be at a minimum of age 55 with at least five (5) years of OCTA service for eligibility. The retiree pays the full premium for retiree, spouse, and dependents. OCTA does not provide any cash subsidy towards retiree medical benefits.

Because of the nature of the implied subsidy, OCTA funds the benefits on a pay-as-you-go basis. No assets are accumulated in a trust. OCTA allows retirees to participate in the same medical plan as active employees at the same premium rates.

Because the rate is a “blended rate”, payments for the active employees include an implied subsidy of what would normally be a higher rate for retirees if the retirees were in an individual health plan.

ARBA

On January 1, 1995, OCTA established the ARBA, a defined benefit retirement plan. The

ARBA plan is administered for OCTA through the OCERS. The ARBA plan provides a supplemental retirement benefit to individuals who retire from OCTA on or after age fifty

(50) with at least ten (10) years of service with OCTA. For retirees prior to July 1, 2023, the plan provides a lifetime monthly annuity equal to $10 times the number of years of

OCTA continuous service prior to retirement with a maximum of $150.00 per month. For employees retiring from OCTA on or after July 1, 2023, the plan provides a lifetime monthly annuity equal to $35 times the number of years of OCTA continuous service prior to retirement with a maximum of $525.00 per month.

The ARBA plan requires no employee contributions, and it does not pay termination, disability or death benefits. Currently 879 retirees are receiving this benefit. As of June 30, 2023, there were 1,278 active employees earning service credits under the plan.

OCTA currently funds ARBA through bi-weekly payroll contributions based on a percentage of pay as determined by the previous actuarial valuation. ARBA is considered as a supplemental retirement plan.

Objective

Consultant shall provide an actuarial valuation for both retirement plans as of January 1, 2026; January 1, 2028, and January 1, 2030, that provides the information required for accounting and financial reporting purposes by GASB and the actuarial determined contribution rate for budget purposes, including current year expense information as well as any OPEB liability information. Consultant shall provide all supplementary information necessary to comply with all applicable GASB standards.

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Tasks – Report Deliverables and Time Schedules

Task 1: Actuarial Valuation Draft Reports

Consultant shall complete the actuarial studies and submit to OCTA draft reports within five months of the calendar year-end. The reports shall comprehensively document consultant’s work, assumptions, methodology, analysis and findings.

Deliverables – Draft Valuation Reports – Five (5) months from calendar year-end

Task 2: Roll forward Draft Reports

Consultant shall complete the roll forward reports of OPEB plan and submit to OCTA draft reports within four weeks of fiscal years ending June 30, 2026; June 30, 2027;

June 30, 2028; June 30, 2029; and June 30, 2030.

Deliverables – Draft reports for fiscal year 2026 – 4 weeks from fiscal year-end Draft reports for fiscal year 2027 – 4 weeks from fiscal year-end

Draft reports for fiscal year 2028 – 4 weeks from fiscal year-end Draft reports for fiscal year 2029 – 4 weeks from fiscal year-end Draft reports for fiscal year 2030 – 4 weeks from fiscal year-end

Task 3: Final Reports

Consultant shall submit final reports, reflecting changes and elaborations requested by OCTA, within two weeks following return of the draft reports. Formal hard copies of the valuation and roll forward reports of both plans will be required for OCTA’s external auditors. Also required are electronic copies (PDF) of the valuation and roll forward reports.

Deliverables – Final Actuarial Valuation Reports – 2 weeks from acceptance Final roll forward reports for fiscal year 2026 – 2 weeks from acceptance Final roll forward reports for fiscal year 2027 – 2 weeks from acceptance

Final roll forward reports for fiscal year 2028 – 2 weeks from acceptance Final roll forward reports for fiscal year 2029 – 2 weeks from acceptance Final roll forward reports for fiscal year 2030 – 2 weeks from acceptance

Task 4: Oral Presentation and Availability

Consultant shall make an oral presentation of the final reports’ findings and recommendations to OCTA management. Furthermore, consultant shall be available for any questions OCTA may have about the contents of the reports.

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LIMITATION ON GOVERNMENTAL DECISIONS

Nothing contained in this scope of work permits Consultant personnel to authorize or direct any actions, votes, appoint any person, obligate, or commit OCTA to any course of action or enter into any contractual agreement on behalf of OCTA. In addition, Consultant’s personnel shall provide information, an opinion, or a recommendation for the purpose of affecting a decision without significant intervening substantive review by OCTA personnel, counsel, and management.