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HomeMy WebLinkAboutR-2004-068 Milliman USA, Inc. AgreementRESOLUTION NO. R-2004-68 A RESOLUTION authorizing the City Manager of the City of Yakima to execute a Consulting Services Agreement with Milliman USA, Inc., for actuarial and financial consulting services related to the City's Firefighters' Pension Fund and Police Relief and Pension Fund. WHEREAS, the City requires actuarial and financial consulting services related to the City's Firefighters' Pension Fund and Police Relief and Pension Fund. WHEREAS, Milliman_ USA, Inc., represents that it has the expertise and experience necessary and is willing to perform said consulting services required by the City in accordance with the terms and conditions of the attached Agreement. WHEREAS, the City Council deems it to be in the best interest of the City of Yakima to authorize execution of the attached consulting services agreement with Milliman USA, Inc., now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager of the City of Yakima is hereby authorized and directed to execute the attached and incorporated "Consulting Services Agreement" with Milliman USA, Inc., for actuarial and financial consulting services related to the City's Firefighters' Pension Fund and Police Relief and Pension Fund. ADOPTED BY THE CITY COUNCIL this 20th day of April, 2004. ATTEST: Ka..AA- City Clerk Paul P. George, Mayor CONSULTING SERVICES AGREEMENT THIS CONSULTING SERVICES AGREEMENT (hereinafter "Agreement") is made and entered into by and between the City of Yakima, a Washington municipal corporation (hereinafter the "City"), and Milliman USA, Inc., a professional corporation (hereinafter "Milliman"). WHEREAS, the City requires actuarial and financial consulting services related to the City's Firefighters' Pension Fund and Police Relief and Pension Fund. WHEREAS, Milliman represents that it has the expertise and experience necessary and is willing to perform said consulting services required by the City in accordance with the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements set forth herein, it is agreed by and between the City and Milliman as follows: 1. Scope of Services. Milliman shall provide the City with actuarial and financial consulting services related to the City's Firefighters' Pension Fund and Police Relief and Pension Fund. Specifically, Milliman shall provide the City with an actuarial valuation of pension liability relative to said Pension Funds. 2. Time Period for Performance of Services. The term of this Agreement shall commence upon full execution hereof and shall terminate at the time of completion of all services/tasks required hereunder, or unless the Agreement is earlier terminated by either party under Section 21 of this Agreement. Milliman shall proceed with such services in a timely and diligent manner but shall not be responsible for delays beyond Miiliman's control or which the parties could not have reasonably foreseen. 3. Compensation. a. Fees for Services. Milliman shall be paid for the services provided under this Agreement in accordance with the fee schedule attached hereto as Exhibit A and incorporated herein by this reference. b. Maximum Fee for Services. Milliman's total compensation for the performance of the services set forth in Exhibit A shall not exceed the amount of Ten Thousand Seven Hundred and Twenty Five Dollars ($10,725.00) without additional authorization from the City. c. Renegotiation of Maximum Fee. Milliman reserves the right to renegotiate the maximum fee specified if the scope of services described in Exhibit A is changed by the City or if conditions beyond the control of the parties shall cause Milliman to incur additional costs and expenses in providing the services required under Exhibit A. In either event, Milliman shall promptly notify the City in writing of the anticipated 1 additional fees or reduction of fees. Thereafter, and unless otherwise agreed by the parties, Milliman shall not proceed with the modified/changed services until the parties agree in writing to the renegotiated maximum fee. d. Payment of Compensation. Milliman shall submit monthly invoices to the City. Said invoices shall itemize all services rendered during the preceding monthly period. Payment shall be due and payable upon receipt of Milliman's invoice by the City. All payments are expressly conditioned upon Milliman's providing services hereunder which are satisfactory to the City. In the event the City disputes any invoice item, the City shall give Milliman written notice of such disputed item within ten (10) business days after receipt of such invoice and shall pay to Milliman the undisputed portion of the invoice according to the provisions hereof. e. Payment in the Event of Termination. In the event that either party terminates this Agreement under Section 19, Milliman shall be compensated in accordance with the above terms for all satisfactory services provided to the City up to the effective termination date. f. Maintenance of Financial Records/Documents. Milliman shall make the cost records, accounts and related financial documents pertaining to this Agreement available for inspection by representatives of the City during the term of this Agreement and for a period of three (3) years following the final payment to Milliman by the City. In the event that any audit or inspection identifies any discrepancy in such financial records, Milliman shall provide the City with appropriate clarification and/or financial adjustments within thirty (30) calendar days of notification of the discrepancy. 4. Standard of Performance. Milliman shall perform all work and services required under this Agreement in a manner consistent with that degree of care and skill ordinarily exercised by members of the same profession practicing in similar circumstances, and shall be responsible for the technical soundness and accuracy of all work and services furnished pursuant to this Agreement. 5. Limitation of Liability. The parties agree that Milliman shall not be liable to the City, whether in tort, contract or otherwise, for any damages in excess of five (5) times the total professional fees to be paid to Milliman under Section 3 of this Agreement. In no event shall Milliman be liable for lost profits of the City or any other type of incidental or consequential damages. The foregoing limitations shall not apply in the event of intentional fraud and/or willful misconduct by Milliman. The provisions of this Section shall survive the expiration or termination of this Agreement. 6. Tool Development. Milliman shall retain all rights, title and interest (including, without limitation, all copyrights, patents, service marks, trademarks, trade secret and other intellectual property rights) in and to all technical or internal designs, methods, ideas, concepts, know-how, techniques, generic documents and templates that have been previously developed by Milliman or developed during the course of the provision of services hereunder provided such generic documents or templates do not contain any confidential information or proprietary data of the City. Rights and ownership by Milliman of original technical designs, methods, ideas, concepts, know- how, and techniques shall not extend to or include all or any part of the City's 2 proprietary data or confidential information. To the extent that Milliman may include in the materials any pre-existing Milliman proprietary information or other protected Milliman materials, Milliman agrees that the City shall be deemed to have a fully paid up license to make copies of Milliman-owned materials as part of this Agreement for its internal business purposes and provided that such materials cannot be modified or distributed outside the City without the written permission of Milliman. 7. No Third Party Distribution. Milliman's work is prepared solely for the internal business use of the City. Milliman's work may not be provided to third parties without Milliman's prior written consent. We understand that the City may wish to distribute some of Milliman's reports to its auditors in connection with preparation of the financial statements related to City pension funds or of the City in general. We consent to such distribution as long as each work product is distributed in its entirety. Milliman does not intend to benefit any third party recipient of its work product, including the auditor, and does not intend to create any legal duty from Milliman to the auditor even if Milliman's work product is so distributed. In the event that any audit reveals any error or inaccuracy in the data underlying this report, Milliman requests that the auditor notify Milliman as soon as possible. Milliman's work may include the preparation of certain government forms. Milliman consents to the release of these forms to the applicable agency. Any additional release of any Milliman work product by the City requires Miliman's prior written consent. 8. Handling of Data and Other Confidential Information. Milliman shall use reasonable efforts to identify errors in data and obtain corrections to erroneous data, but Milliman cannot warrant the correctness of data supplied by the City or other parties, nor can Milliman be responsible for data not provided in a timely manner. Any information received from the City shall be considered "Confidential Information." However, information received from the City will not be considered Confidential Information if (a) the information is or comes to be generally available to the public during the course of Milliman's work; (b) the information was independently developed by Milliman without resort to information from the City; or (c) Milliman receives the information from another source who is not under an obligation of confidentiality to the City. Milliman agrees that Confidential Information shall not be disclosed to any third party. 9. Status of Milliman. Milliman and the City understand and expressly agree that Milliman is an independent contractor in the performance of each and every part of this Agreement. Milliman shall have sole judgment of the means, mode or manner of the actual performance of work/services required under this Agreement. Milliman, as an independent contractor, assumes the entire responsibility for carrying out and accomplishing the work/services required under this Agreement. Additionally, and as an independent contractor, Milliman and its employees shall make no claim of City employment nor shall claim against the City any related employment benefits, social security, and/or retirement benefits. Further, Milliman shall not be deemed to be a "named fiduciary" or "plan administrator" as these terms are defined under ERISA or any similar or successor law. 3 10. Taxes and Assessments. Milliman shall be solely responsible for compensating its employees and for paying all related taxes, deductions, and assessments, including but not limited to, federal income tax, FICA, social security tax, assessments for unemployment and industrial injury, and other deductions from income which may be required by law or assessed against either party as a result of this Agreement. In the event the City is assessed a tax or assessment as a result of this Agreement, Milliman shall pay the same before it becomes due. 11. Nondiscrimination Provision. During the performance of this Agreement, Milliman shall not discriminate on the basis of race, age, color, sex, religion, national origin, creed, marital status, political affiliation, or the presence of any sensory, mental or physical handicap. This provision shall include but not be limited to the following: employment, upgrading, demotion, transfer, recruitment, advertising, layoff or termination, rates of pay or other forms of compensation, selection for training, and the provision of services under this Agreement. 12. Compliance With Law. Milliman agrees to perform all work/services under and pursuant to this Agreement in full compliance with any and all applicable laws, rules, and regulations adopted or promulgated by any governmental agency or regulatory body, whether federal, state, local, or otherwise. 13. Professional Liability Insurance. On or before the date this Agreement is fully executed by the parties, Milliman shall provide the City with a certificate of insurance as evidence of Professional Errors and Omissions Liability Insurance with coverage of at least One Million Dollars ($1,000,000.00) per occurrence and an annual aggregate limit of at least One Million Dollars ($1,000,000.00). The certificate shall clearly state who the provider is, the amount of coverage, the policy number, and when the policy and provisions provided are in effect. The insurance coverage shall remain in effect during the term of this Agreement and for a minimum of three (3) years following the termination of this Agreement. 14. Delegation of Professional Services. The services provided for herein shall be performed by Milliman, and no person other than regular associates or employees of Milliman shall be engaged upon such work or services except upon written approval of the City. 15. Assignment. This Agreement, or any interest herein, or claim hereunder, shall not be assigned or transferred in whole or in part by Milliman to any other person or entity without the prior written consent of the City, except that it may be assigned without such consent to a related entity, an affiliate or wholly owned subsidiary of either party. In the event that such prior written consent to an assignment is granted, then the assignee shall assume all duties, obligations, and liabilities of Milliman stated herein. 16. No Conflict of Interest. Milliman represents that it or its employees do not have any interest and shall not hereafter acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of this Agreement. 4 Milliman further covenants that its Seattle Pension Practice will not hire anyone or any entity having such a conflict of interest during the performance of this Agreement. 17. Severabilitv. a. If a court of competent jurisdiction holds any part, term or provision of this Agreement to be illegal or invalid in whole or in part, the validity of the remaining provisions shall not be affected, and the parties' rights and obligations shall be construed and enforced as if the Agreement did not contain the particular provision held to be invalid. b. If any provision of this Agreement is in direct conflict with any statutory provision of the State of Washington, except for Section 5 regarding the enforcement of the Limits of Liability, that provision which may conflict shall be deemed inoperative and null and void insofar as it may conflict and shall be deemed modified to conform to such statutory provision. Section 5 shall be governed by the substantive contract law of the State of New York, without regard to its conflict of laws provisions. c. Should the City determine that the severed portions substantially alter this Agreement so that the original intent and purpose of the Agreement no longer exist, the City may, in its sole discretion, terminate this Agreement. 18. Non -Waiver. The waiver by either the City or Milliman of the breach of any provision of this Agreement by the other party shall not operate and/or be construed as a waiver of any subsequent breach by either party or prevent either party thereafter enforcing such provision. 19. Termination. The City or Milliman may terminate this Agreement, with or without cause, by giving the other party thirty (30) calendar days' written notice of termination. 20. Notices. Unless stated otherwise herein, all notices and demands shall be in writing and sent or hand delivered to the parties to their addresses as follows: TO CITY: Rita Anson, Director City of Yakima Finance Department 129 North Second Street Yakima, WA 98901 TO MILLIMAN: Karen Steffen, Principal and Consulting Actuary Milliman USA 1301 Fifth Avenue — Suite 3800 Seattle, WA 98101-2605 or to such other addresses as the parties may hereafter designate in writing. Notices and/or demands shall be sent by registered or certified mail, postage prepaid, or hand delivered. Such notices shall be deemed effective when mailed or hand delivered at the addresses specified above. 5 21. Drafting of Agreement. Both Milliman and the City have participated in the drafting of this Agreement. As such, it is agreed by the parties that the general contract rule of law that ambiguities in the contract language shall be construed against the drafter of a contract shall have no application to any legal proceeding, arbitration and/or action in which this Agreement and its terms and conditions are being interpreted and/or enforced. 22. Integration. This written document constitutes the entire agreement between the City and Milliman. There are no other oral or written Agreements between the parties as to the subjects covered herein. No changes or additions to this Agreement shall be valid or binding upon either party unless such change or addition be in writing and executed by both parties. 23. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington, except for Section 5 regarding the enforcement of the Limits of Liability which shall be governed by the substantive contract law of the State of New York, without regard to its conflict of laws provisions. 24. Venue. The venue for any action to enforce or interpret this Agreement shall lie in the Superior Court of Washington for Yakima County, Washington. CITY OF YAKIMA By: R. A. Zais, Jr. City Manager DATE: 117.°7'1 y 1 ATTEST: aih.;,‘J /Qcr%NG City Clerk City Contract No. a,2g1-- ,1 Resolution No. R- W-aDD*/- 6 MILLIMAN USA, INC. By: Karen Steffen Principal and Consulting Actuary DATE: Fee Worksheet Fee Schedule For Valuing Police Officers' Relief and Pension Funds Fees Our fee schedule for valuing Pension Funds is shown below. This schedule is subject to change if we are retained for a valuation more than three months from now. Our fee basis assumes that no personal presentation of the report is necessary. If you would like a personal presentation to interested parties, an additional charge would be made in accordance with our normal hourly fees. If you have any questions, please let us know. Actuarial Valuation of Base Fee: $3,500 Pension Benefits Plus: $25 per member i� a._, nn _i'_. St icei11Pr IVIr�i7ya1 ��i➢ y Long -Term Care Study , m > cnn 2.4;_, U P Plus: $25 per member Total Fee: $3,500 (Assumes Retiree Medical Study is also completed) Cash Flow Projections Total Fee: $500 (When performed in conjunction with a $36 o, 1775. $ 612:75.60 valuation. Note that the standard valuation report includes a 20 -year projection.) GASB Updates Total Fee: $500 annually Will charge at time of service Meetings Billed for actual time and expense Will charge at time of service (An estimate can be provided) Other* Billed for actual time and expense Will charge at time of service ($150 - $350 per hour) TOTAL $ 512-75 , o * Our fees above allow for approximately one hour to review data. Additional charges could result from time spent in excess of one hour identifying and correcting unusual data issues, or for implementing nonstandard funding methods, etc. fpfa0637.doc- 14 12 003 FPF 98 / I2.003.FPF 60.98.2002.0 / CIH/mlc Fee Worksheet Fee Schedule For Valuing Firefighters' Relief and Pension Funds Fees Our fee schedule for valuing Pension Funds is shown below. This schedule is subject to change if we are retained for a valuation more than three months from now. Our fee basis assumes that no personal presentation of the report is necessary. If you would like a personal presentation to interested parties, an additional charge would be made in accordance with our normal hourly fees. If you have any questions, please let us know. Actuarial Valuation of Base Fee: $3,500 $ 3500 Pension Benefits Plus: $25 per member jqs®. Retiree viedicnl Study BaseFee: $3,500 ij Plus: $25 per member Long -Term Care Study Total Fee: $3,500 (Assumes Retiree Medical Study is also completed) Cash Flow Projections Total Fee: $500 (When performed in conjunction with a $5-5,o0 valuation. Note that the standard valuation report includes a 20 -year projection.) GASB Updates Total Fee: $500 annually Will charge at time of service Meetings Billed for actual time and expense Will charge at time of service (An estimate can be provided) Other* Billed for actual time and expense Will charge at time of service ($150 - $350 per hour) TOTAL $ C/5o , 0 0 * Our fees above allow for approximately one hour to review data. Additional charges could result from time spent in excess of one hour identifying and correcting unusual data issues, or for implementing nonstandard funding methods, etc fpfa0637.doc - 7 12 003 FPF 98 / 12 003.FPF.60.98.2002.0 / CIH/mic Professional Consultants Insurance Company, Inc. P.O. Box 1750 Burlington, VT 05402-1750 Tel: (802) 860-1958 Fax: (802) 863-2198 CERTIFICATE OF INSURANCE Certificate No. Certificate Holder: Insured: Milliman USA per Schedule B to Policy No. PO 202 Period: July 1, 2002 to July 1, 2005 12:01 a.m. standard time at assured's address Form: Claims Made Type of Coverage: Professional Liability/Errors and Omissions Limits: Not less than US $5,000,000 per claim Excess of : US$ 1,000,000 Self Insured Retention Subject to the terms, conditions, exclusions and limitations of the Policy and self-insurance by the Assured for percentages of the limit not insured. Notice of Cancellation: 30 days subject to the terms of the policy. This document is furnished as a matter of information only. The issuance of this document does not make the person or organization to whom it is issued an additional Assured, nor does it modify in any manner the contract of insurance between the Assured and the Underwriters. Any amendment, change or extension of such contract can only be affected by specific endorsement attached thereto. Issued at Burlington, Vermont Date: Evidence of Insurance BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. / 3 For Meeting Of April 20, 2004 ITEM TITLE: Consideration of a resolution executing an agreement with Milliman USA, Inc. for pension actuarial services SUBMITTED BY: Cindy Epperson, Financial Services Manager CONTACT PERSON/'TELEPHONE: Cindy Epperson, 575-6070 C' SUMMARY EXPLANATION: The City has the legal responsibility to provide for pension, disability and medical benefits to retired police officers and firefighters hired prior to 3/1/70. On that date, the Washington Law Enforcement Officers' and Firefighters' System (LEOFF 1) was established. Under the terms of the governing law, active members of the City's retirement program are entitled to payment from the City of the excess of benefits calculated under the pre-existing law over those calculated under the LEOFF law. The pension funds also pay the entire pensions of those members retired prior to March 1, 1970 and their survivors. Accounting regulations recommend that an actuarial valuation of the pension liability be calculated at least every 5 years. The City's last valuation was performed in 1998, so this information should now be updated. Milliman USA has performed these valuations for the City periodically since the accounting regulations were first enacted. Currently, 149 retirees/employees are eligible for pension benefits, and included in this study. The total cost of this service is $10,725 to be split between the Police and Fire pensions, and was contemplated in the respective budgets. It should be noted that this is only a study of the pension liability—the City is also legally responsible for medical costs of these pensioners, but an analysis of this future liability is not being proposed at this time, as the City is on a "pay-as-you-go" basis for these benefits. The attached resolution authorizes the actuarial study for both police and fire pensions. Resolution X Ordinance Contract X Other (Specify) Funding Source General Fund/Fire Pension Fund Property Taxes APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Adopt resolution BOARD/COMMISSION RECOMMENDATION: COUNCIL ACTION: Resolution adopted. RESOLUTION NO. R-2004-68