Memorandum

City of Lawrence

Finance Department

TO:	Dave Corliss, City Manager
FROM:	Ed Mullins, Finance Director
CC:	Debbie Van Saun, Assistant City Manager
Date:	November 17, 2006
RE:	Actuarial Consultant

Please place the following item on the City Commission agenda for consideration at their November 28, 2006 meeting:

Contract for professional services with EFI Actuaries to perform an actuarial study for post employment benefits.

BACKGROUND

The Government Accounting Standards Board has adopted two new standards, GASB 43 and 45. Both standards were adopted to address the accounting for other post employment benefits (OPEB) in addition to pensions.  The standards require that an actuarial study be done to determine the current and future liability of OPEB.  The first year of implementation of the new standards for the City of Lawrence is for the fiscal year ending December 31, 2007.

The Finance Department sent a request for proposal to actuary firms and posted the request on Demand Star on August 29, 2006.  On October 2, 2006, the department received nine responses.  The responses were reviewed by a committee consisting of the department’s Accountant, Management Analyst, Director and the independent auditor.  Telephone interviews were conducted between the committee and the four firms submitting the highest rated proposals.  Subsequent to the interviews, two firms were eliminated from further consideration.  The remaining two firms were discussed with the Administrative Services Director and one firm was recommended to perform the scope of services.

DISCUSSION

The scope of services will consist of determining the actuarial present value of the City’s OPEB and preparing the required material for reporting the liability in the annual financial report.  In addition optional services such as preparing a multi-year cash flow analysis and a sensitivity analysis to include different assumptions are included.  The actuary will also attend four meetings with city employees consisting of the introductory meeting, actuary committee meeting, benefits committee meeting, and city commission meeting.

RECOMMENDED ACTION

The recommend firm is EFI Actuaries, based on consultant qualifications, project approach, and quality of work experience with similar projects.  EFI was founded in 1990 and deals exclusively with the public sector.  The EFI personnel involved in this study are located in Pennsylvania, New York and Seattle.  The scope of services will require an estimated 67 hours of billed time at a cost of $17,575.  Funding will be provided in the 2006 Administrative Services budget.  After the initial results are presented, the City may want to engage the firm in additional services to include strategies for managing the OPEB liability such as plan modification and future funding designations.  Staff is requesting the City Commission to authorize the City Manager to enter into a contract for professional services at a cost of $17,575 to perform an actuarial study in 2007 to meet GASB 43 and 45 standards.