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Home My WebLink AboutRESPONSE - RFP - 8173 ACTUARIAL VALUATION STUDY ANNUALOctober 13, 2015 Mr. John Voss, Project Manager Mr. Gerry Paul, Purchasing Director Purchasing Division City of Fort Collins 215 North Mason Street, 2nd Floor Fort Collins, CO 80524 purchasing@fcgov.com RE: Annual Actuarial Valuation Study Proposal (No. 8173) Dear Mr. Voss and Mr. Paul: We are pleased to respond to your Request for Proposal for Annual Actuarial Valuation Study for the City of Fort Collins’ General Employees’ Retirement Plan (City). Milliman has a long and successful history of providing actuarial valuation and consulting services to the City. We look forward to the opportunity to renew our relationship with the City for its actuarial needs. The Milliman team is qualified, responsible, and capable of performing actuarial valuation services. We look forward to discussing our proposal in greater detail with you and continuing our work with the City. Please note that the submission of Milliman's proposal is not an acceptance of the City’s terms and conditions, and Milliman will not be obligated to perform any services until a mutually acceptable contract is executed. Sincerely, Joel Stewart, ASA, EA, MAAA Consulting Actuary joel.stewart@milliman.com +1 303 672 9003 1400 Wewatta Street Suite 300 Denver, CO 80202-5549 Tel +1 303 299 9400 Fax +1 303 299 9018 milliman.com Milliman Proposal 1400 Wewatta Street, Suite 300 Denver, CO 80202-5549 Tel +1 303 299 9400 Fax +1 303 299 9018 milliman.com City of Fort Collins General Employees’ Retirement Plan Proposal for Annual Actuarial Valuation Study (No. 8173) October 13, 2015 Submitted by: Joel Stewart, ASA, EA, MAAA Consulting Actuary joel.stewart@milliman.com +1 303 672 9003 Proposal for Annual Actuarial Valuation Study (No. 8173) October 13, 2015 Milliman Proposal TABLE OF CONTENTS Executive Summary .................................................................................................................................... 1 Understanding of Work .............................................................................................................................. 3 Observations ............................................................................................................................................... 4 Approach...................................................................................................................................................... 5 Service Team ............................................................................................................................................... 6 References ................................................................................................................................................... 8 Fee Schedule ............................................................................................................................................... 9 Background ............................................................................................................................................... 11 Statement of Sustainability ...................................................................................................................... 14 Appendix 1. Proposed Contract Exceptions 2. Current Professional Services Agreement Proposal for Annual Actuarial Valuation Study (No. 8173) 1 October 13, 2015 Milliman Proposal Executive Summary Milliman is pleased to provide the City of Fort Collins (City) this proposal for annual actuarial valuation studies of its General Employees’ Retirement Plan (GERP) for your review and consideration. Milliman is the industry expert in terms of providing actuarial services for public sector retirement plans, including utility districts, school districts, law enforcement agencies, hospital districts, transportation authorities, municipalities, state retirement systems, and federal agencies. We have served the public sector since our founding in 1947, when the newly formed Washington State Employees’ Retirement System hired our founder, Wendell Milliman, to provide actuarial consulting services. Adhering to the highest professional standards, we provide objective analysis and unbiased advice. Our recommendations are made solely in the best interest of our clients. Your Relationship Manager and Lead Actuary, Joel Stewart, will continue to lead the same team of retirement plan professionals that has worked over the past 15 years to earn the City’s trust. Choosing Milliman for professional actuarial services presents a number of advantages:  The City will choose to work with a local, Denver-based team that has served the City for more than 15 years, and has experience with your plan and organizational culture. Members of the Milliman team have worked with the City since 2000 and our services have remained consistent, attentive, competent, and reasonable in cost. We are able to add historical context to past considerations or decisions that were made by the City. Being local, we are available on short notice to meet in person as needed. In addition, our team values your time and works with your schedule to always deliver on time.  The City will choose to work with a team that goes beyond the development and certification of the many required numbers. The Milliman team combines our public sector expertise, actuarial skills and sound business judgment to anticipate issues and opportunities, suggest solutions, and proactively present these to the City, such as: » Presenting and fully explaining the conclusions and implications of our work. » Monitoring the actuarial experience of the plan and recommending changes in assumptions when plan experience and actuarial judgment on future trends indicate the need. » Communicating issues with probable cash flow patterns and potential impact on the investment and funding policy. » Monitoring current practices and developing trends in benefit planning and presenting possible changes. » Fully supporting the accounting requirements of the Governmental Accounting Standards Board (GASB) Statement Nos. 67 and 68. Specifically, Milliman has worked with the City on modeling the projected assets and cash flows of the GERP in order to determine the plan’s solvency. These projections were then used to help establish the supplemental funding necessary in order to maintain plan assets and pay all benefits promised under the plan, if future experience follows assumptions, there are no changes to assumptions, plan provisions or funding policy, and the policy contributions are made each year. The City has since implemented a supplemental funding policy with the stated goal of improving the plan’s funded status and maintain plan solvency. Proposal for Annual Actuarial Valuation Study (No. 8173) 2 October 13, 2015 Milliman Proposal  The City will choose to work with an employee-owned and managed firm that is able to make decisions for the long-term benefit of our clients. Our employee ownership structure encourages strong local commitments, as evidenced by virtually non-existent turnover at the management actuary levels. Each client we gain or lose impacts each of our incomes; therefore, each employee has a vested interest in the satisfaction of every client, large or small. The services we deliver are performed exceptionally well because our flexible internal structure allows us to: » Use the appropriate level of staff, consistently deliver high quality, cost effective, local service » Assemble collaborative project teams with specialized public-sector expertise nationwide The Milliman team understands the budget constraints facing the City in the public sector. Our proposed fees for professional actuarial services are based on our experience with the City and we look forward to working towards mutually agreeable compensation for our services for the scope of this RFP. Milliman has a long list of satisfied public clients in Colorado, as well as across the United States. As an industry leader for more than 60 years, the entire Milliman team looks forward to continuing to bring value to the City and exceed your expectations. We are committed to timeliness, flexibility, a proactive approach, and above all else, high quality work and attention to details. Proposal for Annual Actuarial Valuation Study (No. 8173) 3 October 13, 2015 Milliman Proposal Understanding of Work We understand that the City is seeking a qualified actuarial firm to provide the following services:  Annual actuarial valuation study, including GASB 67/68 disclosure information, completed by April 15th,  Attendance at specific GERP Committee meetings in preparation of actuarial deliverables,  Annual personal retirement planning statements delivered in time to be sent to members by April 30th,  Annual report of projected contributions, benefits payments, and market value of assets completed by April 15th,  Ad hoc consulting services. Your Denver-based Milliman team is willing, able and committed to provide the services requested. Having partnered with the City for 15 years, members of the City’s staff and Committee are familiar with the quality and innovative solutions that Milliman’s local, actuarial consulting team delivers. The annual actuarial valuation study provides an update of the funded status of the plan. Plan experience and detailed gain/loss analysis is reviewed each year to determine whether or not the actuarial assumptions remain appropriate. The annual valuation also provides the basis for preparing the financial reporting disclosures and provides a baseline for funding projections and plan design analysis. We provide a separate GASB 67/68 disclosure report containing all of the required footnote disclosures and Required Supplementary Information as part of the valuation process, allowing you to prepare your financial statements in a timely fashion. Milliman prides itself in our approach to client valuation work. Our unique approach differentiates us from our competitors.  All work and analysis is completed in Denver. We do not have national or regional computer processing centers. The actuaries programming the valuations and benefit variations and presenting the valuation results are the same consultants who work directly with you. This means your actuaries have a deep understanding of the workings of your plans.  Our mandatory pre-release peer review program increases the quality of the work produced. This ensures that you have a high quality work product that you can rely upon. Peer review will be conducted out of the Portland, Oregon office.  Our gain/loss processing is extensive, and the best in the industry. We, as a routine process, complete computer runs to identify the sources of demographic gains or losses. The client is given a detailed description of increases and decreases in the liabilities. Further, an in depth gain/loss analysis gives us a secondary check on our data quality and allows us to monitor new trends in experience. This means that you will have a deep understanding of the factors that change your liabilities each year. Additionally, we will skillfully prepare and provide the other requested deliverables. The annual personal retirement planning statements, including estimates of accrued and projected GERP pension benefits, will be delivered in time to be sent to members by April 30th of each year. The annual report of projected contributions, benefits payments, and market value of assets will be researched, analyzed, compiled and delivered to the City in advance of April 15th. Should the City require additional consulting work, mutually agreed upon project scope and fees will be determined on an ad hoc basis. Proposal for Annual Actuarial Valuation Study (No. 8173) 4 October 13, 2015 Milliman Proposal Observations Closed Plan The GERP is a closed plan with continued benefit accruals for the active population. Closed plans face a decline in the number of active participants with decreasing future working lifetimes. This unique demographic leads to a number of issues such as:  Declining Contributions - Contributions are based on a percentage of pay. As the active population terminates employment, the contributions will decline. Contributions should cover annual benefit accruals as well as payoff a portion of the unfunded accrued actuarial liability. The payroll contributions are not large enough to pay for both accruals and the unfunded accrued actuarial liability. Through the development and annual update of our solvency projections, the City has established an annual supplemental contribution designed to overcome this shortfall. The City will want to maintain this process in order to ensure adequate funding for the benefit promises made to current and past employees.  Investment Policy - As the population moves from active to retired, the GERC may wish to consider modifying the investment policy. Thought should be given to risk tolerance when future contributions are declining and investment losses are more difficult to recoup. In addition, cash flow matching and/or other de-risking measures such as annuity purchases may be a helpful tool when most participants are receiving monthly benefits. Funding and Budget Constraints Like many other retirement plans, the GERP experienced poor investment returns during 2008. The impact of the asset losses and underfunding of the accruals have created a substantial unfunded accrued actuarial liability. Milliman will continue to assist the City in evaluating methods to manage the annual cost using asset liability models and revisions in the contribution pattern. Assumptions Assumptions are classified into two categories, demographic and economic. Assumptions are not based solely on past experience, but rather a blend of past experience and expectations of future events. It is important to review assumptions annually to make sure that the assumptions and actual experience are reasonably related. Periodic comprehensive experience studies may be warranted if expectations are not being met. Proposal for Annual Actuarial Valuation Study (No. 8173) 5 October 13, 2015 Milliman Proposal Approach Milliman actuaries are experienced with the unique challenges faced by public pension plans. Given our long history of working with the City and deep understanding of the GERP, our approach has been carefully tailored to you. As evidenced throughout our longstanding relationship, your service team goes above and beyond to ensure a timely delivery of each step in the process, even when deadlines shift. The following sets forth Milliman’s approach to completing the annual actuarial valuation: Step 1: Data collection and review The first step in our funding valuation process is the collection and verification of data. We perform numerous data screens and tests to identify potential problem areas, and then follow up with detailed questions if necessary. Step 2: Process data in valuation systems and compile results The following steps are completed during this stage:  Verify assumptions remain reasonable, and discuss potential recommended changes if necessary.  The final verified data is run through the valuation program with custom assumptions, plan provisions and/or any plan variations.  Compile all results, including the liabilities, contribution determination and accounting requirements for the valuation year. Step 3: Peer review Peer review is an ongoing process in our valuation. We review and check our work at every step. Our internal peer review processes provide assurances that the highest quality standards are being maintained at all times. Each valuation, study, or projection is reviewed by at least two consultants. These are high level consultants with many years of experience. Reviews are periodically performed by other offices to ensure high quality accuracy. The peer reviewers review the assumptions, methods, and results for reasonableness, and ensure that we are complying with actuarial standards set by the American Academy of Actuaries. Step 4: Deliver draft funding and accounting reports We will provide draft reports to the City and the GERP Committee by the requested deadline, allowing you to meet all internal budgeting and audit timelines. Step 5: Attend meetings and present reports The final step in the valuation process is to present and explain the valuation results to the GERP Committee. We work very hard to craft our communications to be more than merely technically understandable. When communicating, we strive to use language that is free of real or even perceived bias by a wide variety of stakeholders who will be reading or hearing our analysis from vastly differing points of view. Although we cannot avoid numeric presentations, we try to convert as much of the technical actuarial material as we can into graphs and charts, in order to explain complex actuarial concepts. Proposal for Annual Actuarial Valuation Study (No. 8173) 6 October 13, 2015 Milliman Proposal Service Team Several members of the Milliman service team have served the City since 2000 and will continue to play key roles under a renewed contract. Below are short bios of the Milliman personnel. Joel Stewart, ASA, EA, MAAA Joel will continue to serve as relationship manager and lead actuary. He will be the primary contact for the City and will oversee the entire team and all aspects of Milliman’s deliverables. He is a consulting actuary in the Denver office of Milliman. He joined the firm in 1999 with three years of prior experience. Joel’s area of expertise is in defined benefit pension plans. He specializes in valuations and administration, including benefit calculations, special studies for benefit changes, funding valuations, and FASB and GASB valuations. Joel is the defined benefit practice leader for the Denver office, and has primary responsibility for the Denver office’s public sector, corporate and multiemployer clients. Joel also serves on Milliman’s GASB 67/68 Taskforce, which was established as a resource center and tool development to assist Milliman offices in the implementation of the new accounting standards. Client projects have included ongoing plan valuation and administration, expense projections, asset/liability studies, development of simulation models for the redesign of benefit plans, and plan termination administration. He also performs replication audits, both externally for clients who have hired Milliman to audit their current actuary, and internally as part of Milliman’s stringent peer review process. Professional Designations  Associate, Society of Actuaries  Enrolled Actuary under ERISA  Member, American Academy of Actuaries Education  BS, Mathematics with Actuarial Option, Pennsylvania State University Katie Antoline, ASA, MAAA Katie will continue to provide technical support to the City. She is an Associate Actuary in the Denver office of Milliman. She joined the firm in 2013 with four and a half years of prior experience. Katie’s area of expertise is in defined benefit pension plans. She has provided actuarial services for corporate, public, and multiemployer plans. Katie has experience in actuarial valuations, financial reporting, benefit calculations, and cost and liability projections. Professional Designations  Associate, Society of Actuaries  Member, American Academy of Actuaries Education  BS, Actuarial Science, The Ohio State University  BS, Economics, The Ohio State University Proposal for Annual Actuarial Valuation Study (No. 8173) 7 October 13, 2015 Milliman Proposal Francine Moyer, ASA, MAAA Francine will continue to provide technical support and benefit administration services. She is an Associate Actuary in the Denver office of Milliman and joined the firm in 1996 with three years of prior experience. Francine’s area of expertise is in pension plans. She specializes in valuations and administration, including benefit calculations, special studies for benefit changes, funding valuations, and FASB and GASB valuations. Professional Designations  Associate, Society of Actuaries  Member, American Academy of Actuaries Education  BS, Actuarial Science, University of Illinois at Urbana-Champaign Matt Larrabee, FSA, EA, MAAA Matt will provide quality assurance and peer review. Matt is a principal and consulting actuary with Milliman’s Portland, Oregon office and has 20 years of consulting experience in pension and retiree medical programs sponsored by governmental and corporate entities. He worked for the firm from 1998 to 2001 and rejoined in 2012 after serving as the Portland retirement practice leader of a major national competitor for six years. Matt has consulted with a variety of public plan types and sponsors. Of particular note, Matt serves as the consulting actuary for both the Oregon Public Employees Retirement System (OPERS) and the Florida Retirement System (FRS). Professional Designations  Fellow, Society of Actuaries  Enrolled Actuary under ERISA  Member, American Academy of Actuaries Education  BS, Mathematics, University of Utah  BS, Electrical Engineering, University of Utah Affiliations  Member, American Academy of Actuaries Public Plans Subcommittee  Member of Milliman’s Strategic Planning Group for Public Sector Plans Proposal for Annual Actuarial Valuation Study (No. 8173) 8 October 13, 2015 Milliman Proposal References The following are client references who have received services similar to those requested by the City. Though you know our work well, we invite the City to contact any and all of these clients to gain further insights into our client service and deliverables. System Address Contact Metro Wastewater Reclamation District 6450 York Street Denver, CO 80229 Mr. Mark Barela Director of Administrative Services +1 303 286 3327 Northern Colorado Water Conservancy District 220 Water Avenue Berthoud, CO 80513 Ms. Minerva Lee Head of Human Resources +1 970 622 2212 City of Fort Collins 215 N. Mason Street Fort Collins, CO 80524 Mr. John Voss Finance Director +1 970 221 6772 Additionally, Milliman has longstanding relationships for ongoing actuarial services with many major public sector clients. The following is a partial list: Public Employee Retirement Systems First Year Retained Milliman Idaho Public Employees Retirement System 1965 Tacoma Employees’ Retirement System 1976 California State Teachers’ Retirement System 1985 Seattle City Employees’ Retirement System 1991 Los Angeles County Employees Retirement Association 1999 Texas County & District Retirement System 1999 San Mateo County Employees’ Retirement Association 2006 Santa Barbara County Employees’ Retirement System 2007 City of Portland Fire & Police Disability & Retirement 2012 Oregon Public Employees Retirement System 2012 Proposal for Annual Actuarial Valuation Study (No. 8173) 9 October 13, 2015 Milliman Proposal Fee Schedule Deliverable Annual Due Date 2016 2017 2018 2019 2020 Comments Optional Contract Terms Actuarial Report April 15th $18,500 $19,000 $19,500 $20,000 $20,500 Includes annual meeting with the GERC Projection Contributions, Benefit Payments, Market Value April 15th 750 775 790 810 830 Personal Retirement Planning Statement April 30th 1,800 1,850 1,900 1,950 2,000 Total Annual $21,050 $21,625 $22,190 $22,760 $23,330 Please note: The Actuarial Report fee quoted above includes attendance at three (3) meetings (February, March and April) of the GERP Committee to prepare for and review the annual actuarial valuation report, as well as one (1) meeting with the Council Finance Committee to review the annual actuarial valuation results, as requested in the Scope of Services. Prior agreements itemized monthly meetings on an individual basis. In addition, the Annual Report fee includes the disclosure report containing the information necessary for the City to meet the reporting requirements of GASB Statements Nos. 67 and 68. Proposal for Annual Actuarial Valuation Study (No. 8173) 10 October 13, 2015 Milliman Proposal Hourly Rates for Ad Hoc Consulting The following summarizes the billing rates by individual applicable for 2015. Billing rates are reviewed annually, and adjusted for items such as inflation, merit increases and promotions due to advancement in professional status. The allocation of staff on any special project will be designed to balance the skills of the Milliman staff with the need for the lowest possible fee. Some projects may, by their nature, require that substantially all of the time be provided by the consulting actuaries, but others may be heavily weighted by lower level actuarial staff and clerical staff. When special projects arise we would be happy to provide an estimate of the additional fee involved and if the project is well-defined, to provide a not to exceed fee. Consulting (as required) 2015 Rate Joel Stewart, ASA, EA, MAAA Consulting Actuary $300 Katie Antoline, ASA, MAAA Associate Actuary $200 Francine Moyer, ASA, MAAA Associate Actuary $215 Matt Larrabee, FSA, EA, MAAA Principal & Consulting Actuary $420 Proposal for Annual Actuarial Valuation Study (No. 8173) 11 October 13, 2015 Milliman Proposal Background Milliman is among the world’s largest independent actuarial and consulting firms. Primary practice areas include actuarial services, employee benefits, communication, compensation, risk management and economic consulting. We provide services strictly on a fee-for- service basis to nearly 9,000 public and private sector clients, including over 4,500 pension clients. We are known for our client-centered approach and technical expertise. Milliman was founded in 1947 as a firm of actuarial consultants focused on the needs of the public sector. Our founders, Wendell Milliman and Stuart Robertson, made independence, leading edge professional expertise and quality control the firm’s guiding principles. Today, Milliman employs over 3,000 people, including a professional staff of over 1,400 qualified actuaries and consultants. Milliman is wholly owned and managed by approximately 400 principals, who have been elected in recognition of their technical, professional and business achievements. Our sole business is providing independent consulting services. We are not affiliated with any public accounting or brokerage firms. The consultants of the firm are not permitted to own stock in client organizations. In these ways, Milliman is able to provide analyses and opinions that are totally independent and objective. Milliman’s expertise in the field of public pensions provides the backbone for this proposal. For more than 60 years, our involvement with public pensions has told the story of our successful consulting experience with complex retirement problems. Public pension plans present unique problems that can only be solved by experts with decades of public pension experience. For this reason, many of our public plan clients have retained us for more than 25 years. Your service team has worked with the City for 15 years, and holds intimate knowledge of the plan. The Milliman team serving the City will continue to be led by Joel Stewart (main point of contact) with primary services performed out of our Denver office (pictured left). Joel Stewart, ASA, EA, MAAA Consulting Actuary 1400 Wewatta Street, Suite 300 Denver, CO 80202-5549 Tel: +1 303 672 9003 Email: joel.stewart@milliman.com Proposal for Annual Actuarial Valuation Study (No. 8173) 12 October 13, 2015 Milliman Proposal Public Sector Expertise and Resources Our consultants who specialize in public pension plans are members of a public-focused, nationwide committee that holds frequent conference calls to discuss public plan issues. In addition, members of this committee represent Milliman at major public plan organizational meetings and have worked as part of several task forces formed by the Governmental Accounting Standards Board. Since 1986, Milliman has also maintained an employee benefits research department in the Washington, D.C. office. The Employee Benefits Research Group monitors and keeps Milliman consultants abreast of all federal developments affecting employee benefits, including legislation, regulations, and judicial rulings. The Group’s extensive knowledge base covers issues in the full spectrum of retirement and health plans, as well as compensation practices, and across the private, public, not-for-profit, and multinational sectors. In addition, the Group prepares many of the publications distributed to clients, providing timely summaries and analyses of key issues of concern to employee benefit plan sponsors. Two of the publications pertinent to the City are listed below: PERiScope is a Milliman publication that focuses on current issues faced by public employee retirement systems and other state and local governmental employee benefit plans. An example is the series regarding GASB reporting requirements. The series can be found at http://us.milliman.com/GASB6768/ Perspectives is a quarterly publication offering critical insight and information on current employee benefits issues. Perspectives Update is a supplemental newsletter published on an as-needed basis covering important breaking news and timely information regarding new or proposed laws and tax changes, which could affect employers. In addition to the consultants working directly with the City, Milliman’s Research Department based in Washington, D.C. is staffed by actuaries, attorneys, and other professionals whose sole function is to keep our consultants and clients current on regulatory developments and to lend assistance on specific projects involving new or complex changes in the legal environment. Our research professionals closely monitor and analyze legislative and regulatory activity and pronouncements of the Internal Revenue Service, the Federal Courts, the Securities and Exchange Commission, the Financial Accounting Standards Board, the Governmental Accounting Standards Board, the Equal Employment Opportunity Commission, and many other government and regulatory bodies. They are responsible for providing Milliman consultants and clients with timely, in-depth, technical and legal research. Proposal for Annual Actuarial Valuation Study (No. 8173) 13 October 13, 2015 Milliman Proposal Milliman’s Complementary Service Offerings To complement the full range of actuarial services we provide to our clients, Milliman also provides services in the areas of Employee Benefits & Investment Consulting, Healthcare, Property & Casualty Insurance, as well as Life Insurance & Financial Services. Within the Employee Benefits practice, Milliman provides full administration to both defined benefit and defined contribution plans. Firmwide, Milliman provides pension administration services to 242 plans and over 1,170,330 participants1. Defined benefit plans are administered through our proprietary tool, the Milliman Actuarial Retirement Calculator (MARC). MARC is both a powerful pension administration system and overall retirement program communication system. MARC helps employers save time and money by centralizing numerous functions quickly and simply. A distinct advantage of MARC is the increased visibility of the retirement program. MARC can be set up to calculate retirement benefits based on your plan provisions as well as certain assumptions. In addition, a website can be made available for your employees so that they can download plan information and run benefit projections (including total retirement income calculations that combine many aspects of retirement income). For more information, please visit www.milliman.com/MARC. One of our fastest growing market segments is the defined contribution plan market. Milliman currently administers and performs recordkeeping services for 848 defined contribution plans of all sizes and a total of over $28 billion in assets1. Milliman’s defined contribution administration services feature ready-to- use tools for both plan sponsor and participants including retirement readiness reports and the PlanAhead for Retirement Calculator. Many of our clients have found great success streamlining their actuarial and administration services through Milliman. 1 As of December 31, 2014 Proposal for Annual Actuarial Valuation Study (No. 8173) 14 October 13, 2015 Milliman Proposal Statement of Sustainability Milliman prides itself on being a responsible member of the communities in which we operate through the promotion of sustainable business practices, such as the following:  Subsidizing the cost of public transportation for employees  Office recycling programs  Green and Leeds building initiatives that promotes conservation and energy efficiency  Secure File Transfer Protocols (SFTP) for efficient and safe file transfers  Usage of dual computer monitors by employees to help avoid excessive printing  Use of Webex and Microsoft Lync for online meetings and training sessions  Option for clients to pay bills using electronic funds transfer Throughout the West region is our employee-driven and initiated Green Team that seeks opportunities to reduce our company’s environmental impact. Milliman’s Green Team has local utilities conduct facility assessments for our offices, providing recommendations for conserving energy. The team puts up signage to provide information on new recycling guidelines, gives presentations to staff on green practices and paper usage statistics, and has purchased water coolers to eliminate the need for bottled water. Milliman Corporate IT adopted practices firmwide to save power and reduce paper use, such as implementing Microsoft SharePoint for cross-collaboration, switching to two-sided printing and recommending auto shut-off for desk computers. Our responsible business practices reach well beyond the region as well. All over the world, Milliman and its employees make significant contributions in response to the needs of the communities in which we operate. One example is the establishment of Milliman MicroAssist, a volunteer program that matches the expertise of Milliman consultants with organizations that are working to bring financial security to vulnerable populations across the globe. The program helps develop economic solutions that protect against health, lifecycle, financial, and natural disaster risks. One hundred consultants and staff from 35 Milliman offices in 16 countries are participants in MicroAssist. The effort is funded by contributions from Milliman executives and a 50% match of corporate funds. Recent MicroAssist projects include:  Review of large insurer’s health business practices in Kenya  Health microinsurance program in Nigeria  Insurance workshop in Ethiopia  Microinsurance market study in China  Solar lighting project in Ghana  Healthcare system design at Mozambique University  Livestock insurance pricing manual in India  Crop insurance pilot project in Ghana Proposal for Annual Actuarial Valuation Study (No. 8173) October 13, 2015 Milliman Proposal Appendix 1. Proposed Contract Exceptions We are submitting this proposal with the understanding that we would perform the included services under terms substantially the same as those we have previously agreed upon. The following contract exceptions are consistent with the current agreement with the City, a copy of which can be found under Appendix 2. Exceptions to City of Fort Collins’ RFP #8173 The submission of this proposal in response to the RFP may constitute Milliman’s acceptance of the City’s contract terms should the changes to the provisions below, or the addition of the new provisions below, be accepted. Milliman shall not be bound by any contract terms or obligated to perform the services described in this proposal until a mutually acceptable written agreement is signed by the parties. Section Page Exception Purpose IV. Sample Agreement Section 6. 11 Design, Project Insurance and Insurance Responsibility. In accordance with the applicable performance standards contained in the Special Provisions attached as Exhibit “F” (the “Special Provisions”), Tthe Professional shall be responsible for the professional quality, technical accuracy, timely completion and the coordination of all services rendered by the Professional, including but not limited to designs, plans, reports, specifications, and drawings and shall, without additional compensation, promptly remedy and correct any errors, omissions, or other deficiencies. Subject to the Limitation of Liability contained in the Special Provisions, Tthe Professional shall indemnify, save and hold harmless the City its officers and employees, in accordance with Colorado law, from all damages whatsoever claimed by third parties against the City and for the City's costs and reasonable attorney’s fees arising directly or indirectly out of the Professional's negligent performance of any of the services furnished under this Agreement. The Professional shall maintain insurance in accordance with Exhibit “D”, consisting of one (1) page, attached hereto and incorporated herein. Changed to include new Exhibit F. Added to include new language in Exhibit F. IV. Sample Agreement Section 7. 11 Compensation. In consideration of services to be performed pursuant to this Agreement, the City agrees to pay Professional on a time and reimbursable direct cost basis designated in Exhibit "BC", consisting of ( ) page(s), attached hereto and incorporated herein by this reference. Changed to include new Exhibits added below. IV. Sample Agreement Section 8. 11 City Representative. The City will designate, prior to commencement of work, its project representative (the “City Representative”) who shall make, within the scope of his or her authority, all necessary and proper decisions with reference to the project. Creation of a defined term already used in the Agreement. IV. Sample Agreement Section 9. 12 Delete in its entirety. Not applicable to the type of work Insurance Requirements Section 1. acceptable to the City, the insurance coverage designated hereinafter and pay all costs. Before commencing work under this bid, the Professional shall furnish the City with certificates of insurance showing the type, amount, class of operations covered, effective dates and date of expiration of policies, and containing substantially the following statement: “The insurance evidenced by this Certificate will not reduce coverage or limits and will not be cancelled, except after thirty (30) days written notice has been received by the City of Fort Collins.” In case of the breach of any provision of the Insurance Requirements, the City, at its option, may take out and maintain, at the expense of the Professional, such insurance as the City may deem proper and may deduct the cost of such insurance from any monies which may be due or become due the Professional under this Agreementterminate this Agreement. The City, its officers, agents and employees shall be named as additional insureds on the Professional's general liability and automobile liability insurance policies for any claims arising out of work performed under this Agreement. yearly, and cannot permit its clients to have a say in what companies are used. We can agree to meet certain minimum standards (i.e. AM Best A- VII) if that would provide some security to the City. The insurance company will only supply notice in the case of cancellation. Milliman does not permit its clients to take out coverage in its name. In the extremely unlikely event that Milliman suffered a lapse in coverage, termination is an appropriate remedy. Exhibit E Confidentiality Opening Paragraph 20 IN CONNECTION WITH SERVICES provided to the City of Fort Collins (the “City”) pursuant to this Confidentiality Agreement (the “Confidentiality Agreement”), the Professional hereby acknowledges that it has been informed that the City has established policies and procedures with regard to the handling of confidential information and other sensitive materials. Changed to differentiate between the Agreement and this Exhibit which is attached to the Agreement. Exhibit E Confidentiality Second Paragraph 20 In consideration of access to certain information, data and of confidentiality at the time of the City’s communication thereof to the Professional; (c) is developed by the Professional completely independent from the Confidential Information of the City; or (d) is required by law, regulation or court order to be disclosed, provided that the request for such disclosure is proper and the disclosure does not exceed that which is required. In the event of any disclosure under (bd) above, the Professional shall furnish a copy of this Confidentiality Agreement to anyone to whom it is required to make such disclosure and shall, if legally permissible to do so, promptly advise the City in writing of each such disclosure. the information considered to be confidential. We should not be held responsible to protect information that is not actually confidential or otherwise protected by law. Exhibit E Confidentiality Fifth Paragraph 20 In the event that the Professional ceases to perform services for the City, or the City so requests for any reason, the Professional shall promptly return to the City any and all iInformation described hereinabove, including all copies, notes and/or summaries (handwritten or mechanically produced) thereof, in its possession or control or as to which it otherwise has access. Notwithstanding the foregoing, Professional may retain one copy of the Information as necessary to comply with all applicable archival and professional work product documentation standards, subject to Professional’s continued compliance with its confidentiality obligations herein. Milliman requires its consultants to retain one copy of any information that it uses to generate work product, in order to be able to defend its work in the unlikely event of a claim against Milliman. *New Exhibit F Special Provisions 21- 22 EXHIBIT F SPECIAL PROVISIONS The parties agree to add the following provisions: Limitation of Liability. The Professional will perform all services in accordance with applicable Professional standards and shall correct or re-perform any services found to be defective. The parties agree that the Professional shall not be liable to City for damages in any tort or contract claim, including, but not limited to, claims for Professional’s negligence, malpractice or breach of contract, where such damages exceed $5,000,000. In no event shall the Professional be liable for any incidental or consequential damages. The foregoing limitations shall not apply in the event of the parties who receive this work." The City agrees to provide full page copies, including such footer, to any third parties who are provided a copy of the Professional's work product, or when posting the Professional's work product to an intranet site. Dispute Resolution (a) Mediation. In the event of any dispute arising out of or relating to the engagement of the Professional by the City, the parties agree first to try in good faith to settle the dispute voluntarily with the aid of an impartial mediator who will attempt to facilitate negotiations. A dispute will be submitted to mediation by written notice to the other party or parties. The mediator will be selected by agreement by the parties. If the parties cannot agree on a mediator, a mediator will be designated by the American Arbitration Association at the request of a party. The mediation will be treated as a settlement discussion and therefore will be confidential. Any applicable statute of limitations will be tolled during the pendency of the mediation. Each party will bear its own costs in the mediation. The fees and expenses of the mediator will be shared equally by the parties. (b) Arbitration. If the dispute has not been resolved within 60 days after the written notice beginning the mediation process (or a longer period, if the parties agree to extend the mediation), the mediation will terminate, and the dispute will be resolved by final and binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association. The arbitration will take place in Denver, Colorado, before a panel of three arbitrators. Within 30 days of the commencement of the arbitration, each party will designate in writing a single neutral and independent arbitrator. The two arbitrators designated by the parties will then select a third arbitrator. The arbitrators will have a sufficient background in either employee benefits, actuarial science, or law to reasonably prepare them to decide a dispute. The arbitrators will have the authority to permit limited discovery, including depositions, prior to the arbitration hearing, and such discovery will be conducted consistent with the Federal Rules of Civil Procedure. The arbitrators will have no power or authority to award punitive or exemplary damages. The arbitrators may, in their discretion, award the cost of the arbitration, including reasonable attorney fees, to the prevailing party. Any award made may be confirmed in any court having jurisdiction. Any arbitration shall be confidential, and except as required by law, neither party may disclose the content or results of any arbitration hereunder without the prior written consent of the other parties, except that disclosure is permitted to a party's auditors and legal advisors. Dispute resolution via arbitration by arbitrators with applicable background is our preferred method. Milliman has found that due to the very complex nature of its services, the issues are also very complex and require an experienced adjudicator who understands what actuaries do. Proposal for Annual Actuarial Valuation Study (No. 8173) October 13, 2015 Milliman Proposal Appendix 2. Current Professional Services Agreement intentional fraud or willful misconduct of the Professional. The provisions of this Section will survive the expiration or termination of the Agreement. No Third Party Distribution The Professional's work product is prepared for the use and benefit of the City in accordance with its statutory and regulatory requirements. The Professional recognizes that materials it delivers to the City may be public records, subject to disclosure to third parties. However, the Professional does not intend to benefit and assumes no duty or liability to any third parties. The Professional intends to include a footer on each page of its work product as follows: "This work product was prepared solely to provide assistance to the City of Fort Collins. It may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other The City has previously agreed to the addition of the following provisions in its current contract with Milliman. Milliman requires that its potential risk exposure be limited, to allow it to continue to provide reasonably priced services to its clients. Milliman’s risk management policies require that Milliman mitigate risks by controlling the delivery of its work to only the client with whom Milliman has direct contractual obligations and rights. The delivery of Milliman’s work product to third parties is restricted unless the distribution is based on the limited exception listed. material (hereinafter individually and collectively, regardless of nature, referred to as “iInformation”) that are the property of and/or relate to the City or its employees, customers or suppliers, which access is related to the performance of services that the Professional has agreed to perform, the Professional hereby acknowledges and agrees as follows: Capitalization of a defined term. Exhibit E Confidentiality Third Paragraph 20 That iInformation that has or will come into its possession or knowledge in connection with the performance of services for the City may be confidential and/or proprietary. The Professional agrees to treat as confidential (a) all iInformation that is owned by the City, or that relates to the business of the City, or that is used by the City in carrying on business, and (b) all iInformation that is proprietary to a third party (including but not limited to customers and suppliers of the City). The Professional shall not disclose any such iInformation to any person not having a legitimate need-to-know for purposes authorized by the City. Further, the Professional shall not use such iInformation to obtain any economic or other benefit for itself, or any third party, except as specifically authorized by the City. Changed to be consistent with the defined term. Exhibit E Confidentiality Fourth Paragraph 20 The foregoing to the contrary notwithstanding, the Professional understands that it shall have no obligation under this Confidentiality Agreement with respect to information and material that (a) becomes generally known to the public by publication or some means other than a breach of duty of this Confidentiality Agreement, or (b) was in the Professional’s possession free of any obligation Change made to reflect earlier edits. Milliman also requests a few additional standard exclusions to provided under this Agreement. IV. Sample Agreement Section 14 (Previously Section 15) 12- 13 Each and every term and condition hereof shall be deemed to be a material element of this Agreement. In the event either party should fail or refuse to perform according to the terms of this aAgreement, such party may be declared in default. Capitalized “A” in second usage of defined term “Agreement”. IV. Sample Agreement Section 19. (Previously Section 20.) 14 Special Provisions. Special provisions or conditions relating to the services to be performed pursuant to this Agreement are set forth in Exhibit "E" - Confidentiality, consisting of one (1) pages, and Exhibit “F” – Special Provisions, consisting of two (2) pages, attached hereto and incorporated herein by this reference. Changed to include new Exhibits added below. Exhibit B Scope of Services 17 [To be included in the executed Agreement.] Reserved for negotiation post- award. Exhibit C Fee Schedule 18 [To be included in the executed Agreement.] Reserved for negotiation post- award. Exhibit D 19 The Professional will provide, from insurance companies Milliman obtains its coverage