HomeMy WebLinkAboutContract 29292-WO1 AONAon Consulting
Employee Benefits
Consulting Group
May 18, 2010
Ms. Margaret Wise CITY SECRETARY
Assistant Director, Human Resources
City of Fort Worth CONTRACT NO. aq 1
1000 Throckmorton St.
Fort Worth,TX 76102
Re: GASB 45 Baseline Valuation -September 30, 2009
Dear Ms. Wise,
Aon Consulting welcomes the opportunity to work with the City of Fort Worth to help
evaluate the impact of retiree health liability as of September 30, 2009. As dictated by
Statement 45 of the Governmental Accounting Standards Board, the City will be required
to reflect the liability for post-employment benefits other than pensions (OPEB) for fiscal
years beginning after December 15, 2006.
Scone and Approach
Aon's approach is structured to provide value to the City through the application of an
integrated series of diagnostics and analyses, in order to meet benefit objectives, budget
restrictions, and maximize potential savings. Aon performed a complete valuation for the
City for the fiscal year ending September 30, 2008. We plan to use the results of this
study, along with our knowledge of subsequent changes to plan design, claims cost,
contributions, and regulations to provide the City with a fully compliant valuation report,
including all required disclosures.
GASB Liability Study
Aon will calculate the actuarial valuation and provide the appropriate documentation on
the baseline program. Your baseline program will be defined by the same plan and
assumptions as the prior study, adjusted for known changes since its completion. Aon
will request updated data elements from the City, including census and other relevant
information that may have changed from the prior valuation.
The funding strategy and the asset investment strategy of the City will impact the actual
discount rate used to determine the present value of liabilities. Therefore, it is important
to understand the impact of a change in the discount rate on expenses. Medical inflation
also plays a critical role in the GASB liability. Since plan design and contribution
strategy can influence the real rate of medical inflation it is important to understand the
impact of medical inflation on the ultimate GASB liability. -- -
�7-14- 10 A10 : 33 IN
AON Aon Consulting
Employee Benefits
Consulting Group
Proposed Timing and Fees
It is our understanding that the City wishes to have final valuation results in early August.
With that deadline in mind, we will request that the City deliver the necessary data
elements to us no later than Friday, June 4. We will commit to an eight week project
timeline, beginning upon receipt of complete and accurate data
The cost will not exceed $30,000 and results will be completed for a presentation to the
City and any legislative bodies, as directed by the Benefits Administrator. Aon's fees
will be based on actual time and expense charges with the not to exceed limit described
above. Consistent with prior proposals, any funds not utilized for this project will not be
paid to Aon. Additional estimations, scenarios, or meetings beyond those described
above will be charged separately and another Letter of Engagement will be submitted to
the City.
In Closing
We appreciate the opportunity to submit our proposal. If you agree with the terms set
forth, please sign and date as indicated below and return a copy to me. In the meantime,
if you have any questions, please do not hesitate to call me at(303) 782-3324.
Sincerely,
OFFICIAL RECORDI
L.C. (Trey) Sarsfield III, ASA, MAAA CITY SECRETARY
Assistant Vice President FT WORTH, TX
cc: Lenee L. Goyette, Aon Consulting
Andrea Silva, Aon Consulting
Brian Were, Aon Consulting ENO M&C REQUIRED
Accepted by:
A/
Karen L. Montgomery U Date
Assistant City Manager
City of Fort Worth �a�4OR��_��
Attested by: ��O0000000 4 �,`,
APPROVED AS TO a eta
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AND LEGALITY:
Marty Hendri , City Secretary o
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ASSISTa T CITY ATTORNEY �� ����0000