To: Board of County Commissioners
Through: Rich Harris, Chairperson, Arapahoe County Retirement Board
Prepared By:
prepared
Ben Colussy, Retirement Plan Administrator
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presenter
Presenter: Dana Woolfrey, Chief Actuary, Gabriel Roeder Smith
Rich Harris, Arapahoe County Retirement Board Chair
Ben Colussy, Retirement Plan Administrator
Cindy Birley, Chief Legal Counsel, Davis Graham & Stubbs
Andy Fiegel, Investment Consultant, Captrust
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Subject:
title
2:00 PM *Annual Arapahoe County Retirement Plan Update
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Purpose and Request:
recommended action
The purpose of this study session is to provide the Board of County Commissioners with an update regarding the Plan’s financial status. The Plan’s actuary, Gabriel, Roeder, Smith, and Company (GRS) will provide a presentation showing the updated results as of January 1, 2025. The actuaries study and quantify the plan’s liabilities (benefit obligations).
In addition, the Plan’s Chairman of the Board, Investment Consultant, Legal Counsel, and Retirement Plan Administrator will attend to answer any questions from the Board of County Commissioners as appropriate.
The purpose of the actuarial presentation is to bring all participants up to date with the financial health of the Plan. This past year, the contribution level increased by .25% with the County providing the .25% increased contribution. The employee contribution remained at 9.0%. Investment experience was positive in 2024, making the last 4 out of 5 years positive for investment performance. The 5-year investment performance is above the actuarial assumed rate of return 7.25%. However, investing in the market involves risk. Reliance on investment performance alone is not the best approach for this Plan to improve its financial position. The Plan funding only increased from 61.8% to 62.8%. Thus, there needs to be continued discussion for increased contributions, including possibly implementing a step increase at 0.25% a year, with the goal of increasing the employer contribution rates to 10.75% in 2029 (for a combined contribution rate of 19.75%).
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Background and Discussion: Offering a 401(a) Defined Benefit Pension is a unique and valuable benefit for County employees. Instead of accumulating an account balance, eligible employees who are vested receive a monthly lifetime benefit upon reaching retirement age, (paycheck for life).
There are 5 counties out of 64 in the state that provide a traditional Defined Benefit Pension to employees. They are Adams, Arapahoe, El Paso, Pueblo, and Weld County. (See attached table for the current contribution rates of these 5 counties). When compared to the other 4 counties, the Arapahoe County contributions are the lowest and will remain the lowest, even if the matching contributions were to increase to 10.75% by 2029. As it stands today, 10.75% would still be the lowest of the 5 Counties.
The increased contribution rates (specifically the County contributions) have proved to be the most effective way in helping the Plan’s situation. Due to the continued support of a .25% increase per year in County contributions, in addition to the active population growth from new positions and employees, the contribution shortfall continued to go down from 2.29% in 2023, 1.3% in 2024, and now 0.51% in 2025. With your continued support, we are likely to begin paying down the unfunded liability in 2026.
Although the Retirement Board feels the combined employee/employer 18.75% contribution rate has been helpful for the Plan’s funded status, it is believed that the Plan should make strides to incrementally increase the total combined employee/employer contribution rate to 19.75% over the next four years. This would be accomplished over a four-year period by increasing the employer contribution rates a quarter of one percent (0.25%) per year, culminating in 2029 at
a 10.75% contribution rate for employer and 9% for each eligible employee.
Fiscal Impact: Estimated $570,000 - $600,000 in 2026 if the County contribution is increased by .25%.
Alternatives: N/A
Alignment with Strategic Plan:
☒Be fiscally sustainable
☒Provide essential and mandated service
☐Be community focused
Staff Recommendation: N/A
Concurrence: N/A