The URL can be used to link to this page

Home My Public Portal About12) 7I Reso 12-4845 Retirement Health Care Plan TrustCity Council September 4, 2012 Page 2 5. On October 31, 2011, John Bartel presented a final Actuarial Valuation that included minor revisions to the September 14, 2011 Actuarial Valuation (Attachment "B"). 6. On January 31, 2012, the Public Agency Retirement Services (PARS) submitted a Proposal for Services for the Post-Retirement Healthcare Funding Trust Program (Trust Program) (Attachment "C"). 7. On February 10, 2012, then City Council Budget Ad Hoc Committee (i.e., Mayor Chavez and Mayor Pro Tern Yu) and City staff met with PARS to review their proposal. 8. On March 8, 2012, at a Speqial Meeting of the City Council, a pension obligation overview was presented by staff. As part of the overview, staff was directed to consider other agencies for trust services, including the Public Employees Retirement System (PERS). Mayor Pro Tern Yu also stated he would like to schedule a study session to review the actuarial report provided by John Bartel. 9. On May 25, 2012, the current members of the City Council Budget Ad Hoc Committee (i.e., Mayor Yu and Councilmember Blum) met with City staff and John Bartel for a thorough review of the Actuarial Valuation dated October 31, 2011. 10. On June 5, 2012, the City Council adopted Ordinance No. 12-953 adding a new Chapter to the Municipal Code entitled "Budget Reserve Fund Balance Requirements". The Budgeted Reserve Fund Balance Requirements staff report addressed the recommended reserve for OPEB of $1 ,000,000. 11. In July 2012, staff reviewed the informal Request for Proposal (RFP) process for the cities of Santa Clarita and Fountain Valley. ANALYSIS: Just as pension obligations are reported in the current financial statements of each government agency, it was GASB's determination that future obligations for OPEB is just as much a part of the reportable cost of providing public services today as pensions and should be included in the financial statements as well. For the City of Temple City, the obligations are related to health insurance coverage that is offered to employees once they have retired from service with the City. The provisions of GASB 45 may be applied prospectively and does not require public agencies to fund their OPEB plans, however there are significant consequences should the City choose not to fund the liability, such as the risk of not being able to fund future OPEB benefits and an increasing liability on the balance sheet of the Comprehensive Annual Financial Report (CAFR). In order to determine the value of the City's OPEB liability, an actuarial valuation was completed by staff for financial reporting purposes for the FY 2008-09. Since this was the only actuarial evaluation on file and the City was interested in pre-funding a portion City Council September 4, 2012 Page4 Care Plan Trust is recommended. The City Council, during their regular meeting of June 5, 2012, adopted an ordinance designating certain reserves, including an earmark in the amount of $1 ,000,000 to be placed in trust to reduce the liability of the postemployment benefits estimated at $9,142,000. Staff further indicated that they will return to the City Council with a recommendation for the Public Agency Retirement Services (PARS) to administer the Trust Fund. If the City does not set up and begin funding a trust, the pay-as-you-go approach would continue at a cost of approximately $155,000 annually that is anticipated to increase as health care premiums continue to rise. Further, the current liability of $9,142,000 would also continue to increase, creating an even larger unfunded liabilitly. Additional funding of this trust to meet future obligations will be considered on an annual basis as part of the budget process. When considering services for the Trust Program, an agreement with PARS is appropriate based on the following: staff's review and concurrence with the thorough and detailed Trust Program evaluation from City of Santa Clarita and City of Fountain Valley; the City's existing relationship with PARS; and the flexibility and multiple choices of investment options offered by PARS. Staff and members from both the current and prior City Council Budget Ad Hoc Committee, and the entire City Council have had multiple meetings and discussions on this issue and it is recommended that the City move forward with the funding of the OPES liability and contract with PARS for Trust Program services. FISCAL IMPACT: Adequate funds have been budgeted in the FY 2012-13 City Budget for these Trust Program Services. By previous action of the City Council establishing the Budget Reserve Fund Balance Requirements, it is recommended that $1,000,000 be deposited into the PARS Post- Retirement Health Care Plan Trust from the Reserve Fund Balance. ATTACHMENTS: A. Resolution No. 12-4845, authorizing participation in the Public Agency Retirement Services (PARS) Post-Retirement Health Care Plan Trust B. City of Temple City Retiree Healthcare Plan -June 30, 2011 GASB 45 Actuarial Valuation Results C. Proposal for Services-PARS Post Retirement Healthcare Funding Trust Program ATTACHMENT "A" RESOLUTION NO. 12-4845 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMPLE CITY AUTHORIZING PARTICIPATION IN THE PUBLIC AGENCY RETIREMENT SERVICES (PARS) POST -RETIREMENT HEALTH CARE PLAN TRUST WHEREAS it is determined to be in the best interest of the City of Temple City (the "City") to participate in the PARS Public Agencies Post-Retirement Health Care Plan Trust (the "Program") to fund post-employment benefits for its employees as specified in the City's policies, and WHEREAS the City is eligible to participate in the Program, a tax-exempt trust and plan performing an essential governmental function within the meaning of Section 115 of the Internal Revenue Code, as amended, and the Regulations issued thereunder, and is a tax-exempt trust under the relevant statutory provisions of the State of California. NOW THEREFORE, BE IT RESOLVED THAT: Section 1. The City Council hereby adopts the PARS Public Agencies Post- Retirement Health Care Plan Trust, including the PARS Public Agencies Post- Retirement Health Care Plan, as part of the City Retirement Program, effective August 21,2012;and Section 2. The City Council hereby appoints the Administrative Services Director, or his/her successor or his/her designee as the City's Plan Administrator for the Program; and Section 3. The City's Plan Administrator is hereby authorized to execute the PARS legal and administrative documents_ on behalf of the City and to take whatever additional actions are necessary to maintain the City's participation in the Program and to maintain compliance of any relevant regulation issued or as may be issued; therefore, authorizing him/her to take whatever additional actions are required to administer the City's PARS plan(s). SECTION 4. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED AND ADOPTED on this 4th day of September, 2012. Mayor ATTEST: City Clerk Resolution No. 12-4845 Page2 APPROVED AS TO FORM: City Attorney STATE OF CALIFORNIA) COUNTY OF LOS ANGELES) ss CITY OF TEMPLE CITY) I hereby certify that the foregoing resolution, Resolution No. 12-4845, was duly passed, approved and adopted by the City Council of the City of Temple City at a regular meeting held on the 4th day of September, 2012, by the following vote: AYES: NOES: ABSENT: ABSTAIN: Councilmember- Councilmember- Councilmember- Councilmember- City Clerk PARTICIPANT STATISTICS Participant Statistics ' ·-6/30/092 6/30/11 • Actives • Count 36 37 • Average Age n/a 45.8 • Average City Service n/a 7.9 • Average PERS Service n/a 11.0 • Average Pay $ 62,811 $ 64,128 • Total Pay (OOO's) 2,261 2,373 3 • Retirees • Service Retired n/a 20 • Disabled n/a 1 • Survivor _2_ 4 • Total Count 23 25 • Average Age n/a 71.4 • Average Retirement Age >-Service Retired n/a 60.8 >-Disabled n/a 52.1 2 Information from 6/30/09 AMM report by Milliman's "GASBhelp". 3 Bi-weekly salary as of 6/17/11 ($91,259 for 6/4/11-6/17/11) multiplied by 26 pay periods, awl ~ //-, October 31, 2011 " PARTICIPANT STATISTICS Covered Participants ' . 6/30/094 ,' 6/30/11 • Actives • Count n/a 37 • Waivers n/a __} • Covered n/a 34 • Covered% n/a 92% • Retirees < 65 • Count n/a 5 • Waivers n/a -- • Covered n/a 5 • Covered% n/a 100% • Retirees ~ 65 • Count n/a 20 • Waivers n/a _2_ • Covered n/a 18 • Covered% n/a 90% 4 Information from 6/30/09 AMM report by Milliman's "GASBhelp". dW4' 4 / -October31,2011 PARTICIPANT STATISTICS Medical Plan Participation Non-Waived Participants Retirees Medical Plan Actives < 65 Blue Shield 38% 0% Blue Shield NetValue 6% 20% Kaiser 38% 60% PERS Choice 9% 0% PERSCare 9% 20% Total 100% 100% 5 awl · i~ · October31,2011 PARTICIPANT STATISTICS Dental Plan Participation5 Non-Waived Participants >65 6% 0% 11% 6% 77% 100% .·. Retirees Dental Plan .Actives <65 >65 Delta Dental DPO 69% 60% 100% Delta Care 31% 40% 0% Total 100% 100% 100% Excludes self-pay and ineligible retirees. dW l-l. October 31, 2011 6 ACTUARIAL ASSUMPTIONS HIGHLIGHTS .. Assumption June 30, 2009AMMValuation6 · · June30, 2011Valuation • Valuation • June 30, 2009 • June 30, 2011 Date • 2008/09 & 2009110 ARCs • 2010/11,2011112 & 2012/13 • End of year valuation ARCs • End of year valuation • Funding • Pay-as-you-go • Same Policy • Discount • 2.00% • 4.00%-Not pre-funded, assets Rate in City investments • Retirement, • Retirement-average age 58 • CalPERS 1997-2007 Experience Mortality, • Mortality -RP 2000 Mortality Study Withdrawal, Table Projected 10 years Ret Ca!PERS Exp. Disability • Withdrawal -Standard Turnover Benefit Hire Age Ret Age Assumptions (GASB 45 Mise 2.5%@55 34.8 59;9 Paragraph 35b) • Disability -n/a 6 Information from 6/30/09 AMM report by Milliman's "GASBhelp". '&'l 7 \f}::lJOctober31,2011 ACTUARIAL ASSUMPTIONS HIGHLIGHTS ' .· . . . . . . Assum_I!_tion · June30,·2009AMM Valuation6 June 30,2011 Valuation • Payroll • 3.00% • Aggregate Increases~ 3.25% Increase • Merit Increases -CalPERS 1997-2007 Experience Study • Participation • 100% • Same at Retirement • Medical Increase from Prior Year Increase from Prior Year Trend Year Non-Medicare Medicare Year Non-Medicare Medicare 2009 Premiums 2009 n/a 2010 9.0% 9.0% 2010 n/a 2011 8.0% 8.0% 2011 Premiums 2012 7.0% 7.0% 2012 Premiums 2013 6.0% 6.0% 2013 9.0% 9.4% 2014 5.8% 5.8% 2014 8.5% 8.9% 2015 5.6% 5.6% 2015 8.0% 8.3% 2016 5.6% 5.6% 2016 7.5% 7.8% 2017 5.5% 5.5% 2017 7.0% 7.2% 2018 5.5% 5.5% 2018 6.5% 6.7% 2019+ 4.7% 4.7% 2019 6.0% 6.1% 2020 5.5% 5.6% 2021+ 5.0% 5.0% aw /4 October31,2011 8 ,, ' .. ' Assumption • Actuarial Load • Dental Trend • Vision Trend • Spousal Coverage at Retirement • Family Coverage at Retirement m:vl , / ' October31,2011 . ' __ .Assumption • Medical Plan at Retirement • Dental Plan at Retirement m=D4·· / October31,2011 ACTUARIAL ASSUMPTIONS HIGHLIGHTS · June.30, 2009AMM Valuation6 Julie 30,2011 Valuation • n/a • 5.0% load • PEMHCA PPO premium increases below per capita claims increases • 2010-4.00% • 4.50% • 2011-3.50% • 2012 and later-3.00% • 3.00% • Same • n/a • Currently covered-Same as current elections • Currently waived -80% elect spousal coverage • n/a • Current actives -10% until 65 • Current retirees -Same as current elections until 65 9 ACTUARIAL ASSUMPTIONS HIGHLIGHTS June30, 2009 AMM Valuation6 - • n/a • n/a 10 .. -· June 30,2011 ValuatiOn • Current actives -Weighted by current retiree non-Medicare eligible and Medicare eligible elections • Current retirees < 65: ~ Pre-65 -Same as current election ~ Post-65-Weighted by retiree Medicare eligible elections • Current retirees 2: 65 -Same as current election • Pre-65: ~ Currently covered-Same as current election ~ Currently waived-Weighted current retiree pre-65 elections • Post-65 -Delta Dental DPO ( i '~ ACTUARIAL METHODS Method June 30, 2009 AMM Valuation · June 30,2011 Valuation • Cost Method • Entry Age Normal • Same • Plan Assets • None • Same • Amortization • Level percent of payroll • Same Method • Amortization • 30-year fixed (closed) period for • Fresh Start-28-year fixed Period UAAL as of6/30/09 for (closed) period for UAAL as of 2008/09 ARC 6/30/11 for 2010/11 ARC • Future Method Changes, Assumption Changes and Gains/Losses-15-year fixed (closed) period • Maximum 30-year combined period m=u1 / · October 31, 2011 11 ACTUARIAL METHODS Method . June 30, 2009AMMValuation .I June 30,2011 Valuation • "Implied • Employer cost for allowing retirees to participate at active rates Subsidy" • Community rated plans are not required to value an implied subsidy if active rates are independent of number of retirees • PEMHCA is a community rated plan for most employers • Valuation does not include an implied subsidy • Future New • Valuation Results -Closed group, no new hires Entrants • Projections-Simplified open group projection: > Actives-Total pay increased in accordance with aggregate payroll assumption > Retirees-No additional retirees from new hires over 1 0-year projection period ~ October31,2011 12 RESULTS Actuarial Obligations (Amounts in OOO's) • Discount Rate • Present.Value of Benefits • Actives • Retirees • Total • Actuarial Accrued Liability • Actives • Retirees • Total • Actuarial Assets • Unfunded Actuarial Accrued Liability • Normal Cost • Pay-As-You-Go Cost8 7 Information from 6/30/09 AMM report by Milliman's "GASBhe1p". 8 Actual pay-go for 2008/09 and 2010111 provided by the City. ~ October31,2011 13 RESULTS 6/30/097 .··· 2.00% $ n/a n/a n/a n/a n/a 7,850 --- 7,850 785 129 Annual Required Contribution (ARC) (Amounts in OOO's) 6/30/11 4.00% $ 8,196 3,338 11,534 3,143 3,338 6,481 --- 6,481 511 143 6/30/09 Vahuition9 6/30/11 valuation .· 2008/09 2009/10 2010/11 2011112 2012/13 • :Oisci:nlnt Rate .· 2.00% 4.00% •ARC -$ • Normal Cost $ 785 $ 808 $ 511 $ 528 $ 545 • UAAL Amortization10 _m_ 295 240 291 347 • Total 1,016 1,103 751 819 892 • Projected Payroll 2,261 2,329 2,335 2,411 2,490 •ARC-% • Normal Cost -34.7% 34.7% 21.9% 21.9% 21.9% • UAAL Amortization 10.2% 12.7% 10.3% 12.1% 13.9% • Total 44.9% 47.4% 32.2% 34.0% 35.8% 9 Information from 6/30/09 AMM report by Milliman's "GASBhe1p". Results for 2009110 extrapolated based on 3% payroll increase assumption. 10 30-year amortization of2009 UAAL beginning 2008/09; 28 year Fresh Start amortization of2011 UAL beginning in 2010111. m=o 14 ._/ Ll October 31, 2011 Actuarial Actuarial· Value·of Valuation .Assets Date (a} 6/30/09 11 $ - 6/30111 - RESULTS Schedule of Funding Progress (Amounts in OOO's) Entry Age I Unfunded Actuarial Actuarial ·. A~cru~d .·.·· Accrued· Funded. Liability Liability Ratio . (b)· .. (h-a)··. (alb) $ 7,850 $ 7,850 0.0% 6,481 6,481 0.0% 11 Information from 6/30/09 AMM report by Milliman's "GASBhelp". dW . /l October31,2011 15 RESULTS Amortization Bases (Amounts in OOO's) UAALas ·Percentage · Covered of Covered Payroll· Payroll ·.· . (c) ((b;.a)/c) $2,261 347.2% 2,335 277.6% 6/30/09 Valuation 6/30/11 Valuation 6/30/09 6/30/10 6/30/11 6/30/12 6/30/13 • Outstanding Balance • Initial UAAL $7,850 $7,777 • Contribution Loss -887 -- • 2011 Fresh Start UAAL $6,113 $ 6,108 $6,094 • (Gains)/Losses & Assumption Changes -_Ql_Q 1,251 -- • Total 7,850 8,664 6 113 12 , 6,718 7,345 12 UAAL adjusted for contribution and normal cost since end of year valuation. /h':\4 16 \I:j.Lj) October31,2011 .· .. I I RESULTS II Estimated No Pre-Funding Illustration 4.00 % Discount Rate (Amounts in OOO's) ·Beginning Annual . Contribution ARC Contrib FYE ofYear 1 OPEB as as June NetOPEB Cost Benefit Pre,.. Ttital %of %of 30, Obligation ARC .(AOC) Pmts· Funding Contrib Payroll Payroll Payroll 2011 $ 1,786 $751 2012 2,395 819 2013 3,032 892 2014 3,700 971 2015 4,394 1,058 2016 5,117 1,152 2017 5,871 1,255 2018 6,656 1,368 2019 7,468 1,493 2020 8,311 1,629 m:v · / · October31,2011 I I $752 $ 143 $ -$ 143 799 163 163 848 180 180 898 203 203 950 228 228 1,004 249 249 1,060 275 275 1,118 306 306 1,179 336 336 1,241 365 365 19 RESULTS Discount Rate Sensitivity June 30, 2011 (Amounts in OOO's) CERBT $ 2,335 32.2% 6.1% 2,411 34.0% 6.8% 2,490 35.8% 7.2% 2,571 37.8% 7.9% 2,654 39.9% 8.6% 2,740 42.0% 9.1% 2,829 44.4% 9.7% 2,921 46.8% 10.5% 3,016 49.5% 11.1% 3,114 52.3% 11.7% ,a.,~ <e< "~ ... .,.~ II #1 • #2 #3 No Pre-:-Funding . .. • Discount Rate · 7.25% 6;75% 6.25% 4.00% 2.00%· • Present Value of Benefits $6,064 $ 6,618 $ 7,251 $ 11,534 $ 18,944 • Funded Status • Actuarial Accrued Liability 4,059 4,332 4,635 6,481 9,142 • Actuarial Value of Assets --------------- • Unfunded AAL 4,059 4,332 4,635 6,481 9,142 • ARC 2010/11 • Normal Cost 261 287 317 511 825 • UAAL Amortization 224 226 228 240 255 • Total 485 513 545 751 1,080 • ARC% ofPayroll 20.8% 22.0% 23.4% 32.2% 46.2% m:v ~"":... ~' f :.~ 20 ' ! / October31,2011 ~ CERBT INVESTMENT OPTIONS • Additional CERBT asset allocations and revised discount rate assumption • Agency selects one option effective July 1, 2011 • T t t 11 f arge asse a oca IOns Asset Classifications ', Option 1 ,,'', Option 2 Option3 Global Equity 66.0% 50.1% 31.6% US Nominal Bonds 18.0% 23.9% 42.4% REIT's 8.0% 8.0% 8.0% U.S. Inflation Linked Bonds 5.0% 15.0% 15.0% Commodities 3.0% 3.0% 3.0% Total 100.0% 100.0% 100.0% •c alPERS reported expected returns (20 year period): ,' Option I Option 2 Option 3 75% Confidence Limit18 5.80% 5.60% 5.25% 50% Confidence Limit 7.61% 7.06% 6.39% 25% Confidence Limit 9.43% 8.52% '7.47% Standard Deviation 11.73% 9.46% 7.27% 18 Confidence Limits-Actual Return will exceed the given rate with indicated probabilities, rates vary by year. (64) ' 21 , /-L October31,201J CERBT INVESTMENT OPTIONS • CalPERS discount rate development: • 1st 10 year expected returns-based on asset advisors 10 year projections • Significantly higher returns assumed after 10 years >-based on long term historical returns >-implies actuarial losses in 1st 10 years >-achievable? • Requirement that discount rate cannot be greater than 50% confidence limit rate • Bartel Associates Recommendation· select rate at 55% or 60% confidence limit Option! Option 2 Option 3 55% Confidence Limit Discount Rate 7.25% 6.75% 6.25% Maximum Discount Rate 7.61% 7.06% 6.39% Margin for Adverse Deviation (0.36%) (0.31 %) (0.14%) 60% Confidence Limit Discount Rate 7.00% 6.50% 6.00% Maximum Discount Rate 7.61% 7.06% 6.39% Margin for Adverse Deviation (0.61%) (0.56%) (0.39%) ~ October31,2011 22 BARTEL ASSOCIATES GASB 45 DATABASE GASB45 Retiree Medical Benefits Comparison Actuarial Accrued Liability 700% 600% 500% 1;' e:: 400% c ~ ~ 300% ~ 200% IOO'X. 0% 95th Percentile 75th Percentile 50th Percentile 25th Percentile 5th Percentile Percent of Pay Percentile - ~ ...... ·····•··· ZIT Miscellaneous 372% 232% 116% 36% 12% 261.8% 80.6% Discount Rate= 4.00% ~l \ I)i.IJ October 31,2011 25 OTHER ISSUES • GASB Pension Accounting • Exposure Draft for pension accounting changes issued 7/8/2011: >-Usually the last public document issued before issuing final statement >-Similar views expected for OPEB >-Comment deadline 9/30/11 >-Likely effective for 2013/14 fiscal year • Major issues: >-Unfunded liability on balance sheet > Lower discount rate if funding less than ARC > Immediate recognition of: o Service & Interest Cost o Benefit changes o Inactive gains/losses & assumption changes > Deferred recognition of: o Active gains/losses & assumption changes, over (future working lifetime) closed period o Asset gains/losses, over 5 years • Entry age normal cost method • National Health Care Reform-Too early to know impact ~ /~,. October 31,2011 26 OTHER ISSUES • Current Valuation-for 2010111, 2011112 & 2012/13 ARCs or for 2011112, 2012/13 & 2013/14 ARCs based on use of Milliman report • Timing: • Present preliminary results • Updated GASB 45 database m:D , /1, October31,2011 Topic Premiums Data Summary Actuarial Assumptions Definitions m:D4' / October31,2011 27 EXHIBITS 28 September 14, 2011 October 31, 2011 Page E-1 E-4 E-17 E-24 PREMIUMS Dental & Vision Monthly Premiums19 ·.· .· 2010/11 2011/12 " . .. .. . Dental Plan Single 2.:.Party ·Family Single 2-:Party Family Delta Dental DPO $40.93 $76.61 $125.43 $42.88 $80.27 $131.43 DeltaCare 16.93 27.92 41.28 16.93 27.92 41.28 ·. 2010/11 .· 2011/12 ·. 2-Party Family . .. 2--Party Vision Plan · Single· Smgle Family VSP 19.21 27.80 49.57 19.21 27.80 49.57 19 Renewal on 711 each year. dWt · /-• October31,2011 E-3 DATA SUMMARY Active Medical Coverage · MedicalPlan ··. Single .2:.Party Family Waived .Total Blue Shield 5 2 6 -13 Blue Shield NetValue --2 -2 Kaiser 5 1 7 -13 PERS Choice -3 --3 PERSCare 3 ---3 Waived - --3 3 Total 13 6 15 3 37 ~ . /} October31,2011 E-4 I I DATA SUMMARY II Active Dental & Vision Coverage ... · DentalPlan s· r ··· . mgle 2:.Party· .. Family Waived Total Delta Dental DPO 13 1 10 24 Delta Care 4 3 4 11 Waived 2 2 Total 17 4 14 2 37 I .• .. ·. ·. . .. · .. Vision Plan ·.Single 2-Party. Family Waived Total VSP 22 6 8 1 37 m=v E-5 ~ .1 October31, 2011 ~ . I I DATA SUMMARY II Retiree Medical Coverage Under Age 65 ····· Medical Ph'm Single ·•· 2-Party Family Waived Total Blue Shield Blue Shield NetValue 1 1 Kaiser 1 2 3 PERS Choice PERSCare 1 1 Waived Total 2 3 5 ~ /1 October 31,2011 E-6 DATA SUMMARY Retiree Dental & Vision Coverage Under Age 65 ,' Dental Plan ... Single Delta Dental DPO 1 DeltaCare 1 Ineligible - Total 2 ,, Vision Plan Single VSP 3 ~October 31, 2011 ,· . , , , : , MedicalPlan · Blue Shield Blue Shield NetValue Kaiser PERS Choice PERSCare Waived Total ~ /1 October 31, 2011 , 2":Party Family Self-Pay 2 -- 1 -- -- - 3 -- . , , , , , 2-'-Party· Family· .. Self~P~y·· 2 -- E-7 DATA SUMMARY Retiree Medical Coverage Age 65 & Over .,·, :• . Single , 2-Party Family· 1 -- --- 1 1 - -1 - 10 3 1 --- 12 5 1 E-8 Ineligible Total -3 -2 -- -5 Ineligible : Total -5 .Waived Total -1 -- -2 -1 -14 2 2 2 20 ACTUARIAL ASSUMPTIONS .· .. ··.· . . .· June 30, 2011 Valuation Assumption June30, 2009 AMM Valuation20 • Dental Trend • 2010-4.00% • 4.50% • 2011-3.50% • 2012 and later-3.00% • Vision Trend • 3.00% • Same • Service • n/a • CalPERS 1997-2007 Experience Retirement Study Ca!PERS Exp. Benefit Hire Age Ret Age Mise 2.5%@55 34.8 59.9 • Mortality, • Mortality -RP 2000 Mortality • CalPERS 1997-2007 Experience Withdrawal, Table for Males and Females Study Disability Projected 10 years • Withdrawal -Standard Turnover Assumptions (GASB 45 ' Paragraph 35b) • Disability -n/a (&4) · / 1 October 31,2011 E-19 ACTUARIAL ASSUMPTIONS Assumption· ·Juile30,2009AMM Valuation 20 · Jun~ 30,2011 Valuation .· • Medicare • n/a • 100% Eligibility • Everyone eligible for Medicare will elect Part B coverage • Participation • 100% • Same at Retirement • Waived • n/a • Pre-65 -n/a Retiree Re-• Post-65 -0% election (&4) · /l.-October 31, 20 11 E-20 ACTUARIAL ASSUMPTIONS Assumption June 30,2009 AMMValuation20 June 30, 2011 Valuation • Medical Plan • n/a • Current actives -Weighted at Retirement current retiree non-Medicare eligible and Medicare eligible elections • Current retirees < 65: > Pre-65 -Same as current elections > Post-65-Weighted current retiree Medicare eligible elections • Current retirees 2: 65 -Same as current elections m=ul , i , October31, 2011 E-21 ACTUARIAL ASSUMPTIONS Assumption ,, Jun~ 30, 2009AMMValuation20 June 30,2011 Valuation • Dental Plan • n/a • Pre-65: at Retirement > Currently covered-Same as • Spousal • n/a Coverage at Retirement • Spouse Age • n/a ~ October31,2011 E-22 current elections > Currently waived-Weighted current retiree pre-65 elections • Post-65 -Delta Dental DPO • Currently covered-Same as current elections • Currently waived -80% elect spousal coverage • Current actives -Males 3 years older than females • Current retirees -Males 3 years older than females if spouse birth date not available Assumption .. • Surviving Spouse Participation • Family Coverage at Retirement m:v October31,2011 • GASB 45 Accrual Accounting • PayGo Cost m:v / 1 October 31,2011 ACTUARIAL ASSUMPTIONS •. . .· . . .. . June 30, 2009 AMM Valuation20 June 30,20l1Valuation • n/a • 100% • n!a • Current actives -10% until 65 • Current retirees -Same as current elections until 65 E-23 DEFINITIONS • Project future employer-provided benefit cash flows for current active employees and current retirees • Discount projected cash flow to valuation date using discount rate (assumed return on assets used to pay benefits) and other actuarial assumptions to determine present value of projected future benefits (PVB) • Allocate PVB to past, current, and future periods using the actuarial cost method • Actuarial cost method used for this valuation is the Entry Age Normal Cost method which determines Normal Cost as a level percentage of payroll (same method used by CalPERS) • Normal Cost is amount allocated to current fiscal year • Actuarial Accrued Liability (AAL) is amount allocated to prior service with employer • Unfunded AAL (UAAL) is AAL less plan assets pre-funded in a segregated and restricted trust • Cash subsidy is the pay-as-you-go employer benefit payments for retirees • Implied subsidy is the difference between the actual cost of retiree benefits and retiree premiums subsidized by active employee premiums E-24 l . ~~