Minimum Qualifications

1. Extent of Actuarial Firm Prior Public Experience

   The firm provides actuarial services to approximately 80 retirement systems, including the California Public Employee Retirement System (CALPERS) and the Massachusetts Teachers’ Retirement System. Services to public sector clients have included primary actuarial valuations, parallel valuations to check the reports of other actuaries or staff, asset/liability studies, asset allocation studies, projection valuations, experience studies, and benefit design studies. The proposal claims that the current company, EFI, founded in 1990, has a client base limited to public sector defined benefit retirement and retiree healthcare programs. May have one or more subsidiaries or related companies (EFI Asset/Liability Management Services Incorporated is mentioned) providing related services.

2. Prior Public Experience of Assigned Personnel

   The supervising actuary is Edward Friend; the supporting actuary is Robert T. McCrory. Mr. Friend and Mr. McCrory have decades of experience as actuaries, providing a range of services/products to public and private sector clients including insurance actuarial services. Six other personnel who will assist in performing the work are named (Kari Frederickson, Chester Schneider, Laurie Byers, Ann Hutchison, A. Norman Crowder, and C. Elaine Stevens). Mr. Schneider and Mr. Crowder are actuaries. The roles and qualifications of the other individuals are unstated.

3. Commitment to Accessibility

   No clear statement of accessibility. While the firm has done considerable public sector work, it is unclear whether they have worked for a legislative employer and understand the short time frame in which a cost estimate or other work may be needed. The firm has actuarial service offices in Washington, DC, California, Seattle, New York, and Florida. If this company is retained by the Commission, the company would provide services from its Seattle and Washington, DC, offices, and pledges to establish a St. Paul office.

4. Capability and Sufficiency of Personnel to be Assigned

   While the lead actuary and supporting actuary have considerable experience, the roles and qualifications for many of the other individuals who will work on the account are not stated.

Actuarial Firm Information

1. Firm Structure, Operational Method, Communications

   Firm Structure: A privately held firm with five offices in the United States. Claims to have a dozen employees in total.

   Operational Method: Uses an office without walls structure, working as a single entity from its various locations across the country, selecting the individuals best suited to the project.

   Communications: Emphasizes effective communication with non-actuarial audiences. Prepared materials for the National Education Association entitled "How to Understand an Actuarial Valuation."

2. Recentness of Prior Public Experience of Firm; Involvement with Public Officials

   Firm claims to provide actuarial services to approximately 80 public retirement systems. A chart provided in the proposal, indicating a sampling of this work, suggests that many of these projects terminated in 2000, although this may be due to a failure to update the chart through the most recent period. Sponsors speakers at various public pension association meetings. Unclear whether the firm has worked directly with a legislative body and understands time requirements for benefit cost estimates.

3. Function of Assigned Personnel; Relation to Prior Experience

   Mr. Friend would attend any required meetings, with Mr. McCrory as backup if needed. Mr. Friend and Mr. McCrory will spend considerable time producing the actuarial valuations, along with support staff.

4. Five Major References

   Five references are provided:

   1. Mr. Robert Carlson, Vice President of the Board and Chair of the Audit Committee, CALPERS

   2. Mr. Tom Lussier, Executive Director, Massachusetts Teachers’ Retirement Board

   3. Mr. Robert North, Chief Actuary, New York City Retirement Systems

   4. Mr. Robert Palmer, Retirement Administrator, San Joaquin County Employees’ Retirement Association

   5. Mrs. Babette Heeftle, Fund Administrator, City of Portland Fire and Police Disability and Retirement System

5. Particulars of Firm’s Valuation System

   Uses a package developed by EFI, called the Visualization and Animation (V&A) Actuarial Model. Runs on personal computers using Microsoft Windows operating systems. System designed for public retirement systems, avoiding overhead and complications caused by private sector funding rules. System can display information graphically. System is capable of open group valuations, and can handle ancillary benefit calculations. System is backed up weekly and at conclusion of each project, with backup on CD-ROM and DVD-ROM. One set of backups is maintained off site.

Approach and Work Plan

1. Ability to Meet Service Timeframes

   The proposal indicates the process that the firm will follow in requesting data and processing data into final report, and presenting report to board. For a larger plan, estimated time per valuation is 152 hours; for a smaller plan estimated time is 93 hours. May be a 40 percent time reduction due to repetitive valuations and work component overlap. Unclear whether adequate time is projected for handling data problems that may occur. Also, proposal indicates that Mr. Friend and other staff members will be ready to begin intensive work on July 1, but historically, data from many of the funds may not be ready or available until later. Some question about whether timelines can be met given the limited number of staff at EFI and their time availability.

2. Organization of Assigned Staff

   Staff is headed by a primary actuary and primary support actuary, plus additional actuarial and non-actuarial support staff as needed.

3. Location and Accessibility of Primary Personnel

   Mr. Friend is located in Washington, DC, and will be available in St. Paul when needed. Not clear where Mr. McCrory is located. Unclear where production work will be performed.

4. Plan for Coordinating Services with Commission and Funds

   Coordination and presentation of results will be the responsibility of Mr. Friend.

5. Primary Contact Person and Replacement Personnel

   The primary contact person is Mr. Friend. If unavailable, his backup is Mr. A. Norman Crowder. Mr. McCrory’s backup is Mr. Chester Schneider. Mr. Friend and Mr. McCrory are responsible and accountable for project completion and deadlines.

Contacts and Fees

1. Proposed Costs

   1. Fixed Fee (Valuations; Experience Studies):

      Year 1	Year 2	Extension Year 1	Extension Year 2
      $200,000	$205,000*	$210,000*	$215,000*

      * The proposal indicates that above costs include annual experience study data collection and processing, but it is unclear whether cost of producing the experience study and reformulating assumptions is included.

   2. Actuarial Studies Preliminary to Consolidation:

      Year 1	Year 2	Extension Year 1	Extension Year 2
      $170/hour	$175/hour	$180/hour	$185/hour

       

   3. Hourly Fees:

      	Year 1	Year 2	Extension Year 1	Extension Year 2
      Cost Estimates	$200/hour	$205/hour	$210/hour	$215/hour
      Meeting Attendance	$300/hour	$307/hour	$315/hour	$323/hour
      Design and Funding Advice	$300/hour	$307/hour	$315/hour	$323/hour
      Special Studies	$200/hour	$205/hour	$210/hour	$215/hour
      Other

       

2. Additional Fee-Related Items

   1. Current hourly rates for other clients for firm personnel assigned to account:

      Overall responsible person	$300/hour
      Backup consultant/special advisor	$275/hour
      Other professional staff	$125-$250/hour
      Technicians and clerical	$75-$125/hour

       

   2. Charging of out-of-pocket expenses:

      • Travel expenses of $300 per visit if travel originates from offices outside of Minneapolis/St. Paul.

   3. Charging computer expenses:

      • No additional charges.

   4. Charging development costs:

      • $162,250 in first year to redo the prior valuations. Does not include the cost of reconciliation if that is necessary due to discrepancies with prior actuary.

   5. Billing procedures:

      • Monthly billing for work completed during the prior month.

Communication Skills – Examples of Prior Work Product

Provided copies of:

1. San Joaquin County Employees’ Retirement Association January 1, 2001, Actuarial Valuation.

2. Alameda-Contra Costa Transit District Retirement Board Non-Economic Experience Study Under the AC Transit Employee’s Retirement Plan, January 1, 1998-December 31, 2000.

3. Purchasing Power Protection Account Effectiveness Study, California Public Employees’ Retirement System, June 30, 1995.

4. CALPERS Final Actuarial Report for Contract 94-090.

Other Minnesota Public Pension Plan Relationships

None

Human Rights Affirmative Action Certificate

Exempt with less than 20 Minnesota employees.

Workers Compensation Coverage Compliance

Agrees to submit acceptable evidence of compliance before executing any contract with the state.