City of Palo Alto (CA) Staff Report: Retiree Health Care Costs/Liabilities

8/3/2019 City of Palo Alto (CA) Staff Report: Retiree Health Care Costs/Liabilities

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City of Palo Alto (ID # 2432)City Council Staff Report

Report Type: Action ItemsMeeting Date: 1/30/2012

January 30, 2012 Page 1 of 2

(ID # 2432)

Summary T itle: Retiree Medical Discussion

Title: Retiree Medical Actuarial Report Discussion

From: City Manager

Lead Department: Administrative Services

Recommendation

Staff recommends that Council:

Review, discuss and provide feedback on the attached actuarial valuation results (see

Attachment A).

Council Review and Recommendations

On November 28, 2011, Council approved staffs recommendation to review and accept the

updated retiree medical actuarial study with valuation dates as of January 1 and June 30, 2011.

The actuarial study results are required by the Government Accounting Standards Board (GASB)

Statement No. 45, Accounting and Financial Reporting by Employers for Post Employment

Benefits other Than Pensions.

Included in their approval, Council directed staff to schedule a Council meeting, prior to the

midyear budget, with the actuarial consultant who prepared the retiree medical actuarial study,Bartel and Associates. The meeting is scheduled for January 30, 2012. Council requested the

meeting in order to have an in-depth discussion on several of the assumptions included in the

actuarial study and its conclusions. Among the assumptions up for discussion are the closed

amortization period (versus open) and the assumed rate of return on investments going

forward and the medical trend assumptions. A listing of all assumptions appears in Attachment

A.

Council asked for the investment rate of return in the California Employers Retiree Benefit

Trust (CERBT) for the Citys trust investment since its inception in March 2008. The rate of

return (money-weighted) for the Citys trust investment for the period March 17, 2008 throughJune 30, 2011 is 3.62 percent. The rate of return (time-weighted) for the CERBT, overall, for the

period of June 1, 2007 (trust inception) through June 30, 2011 is 1.24 percent.

Attached to this memo are the related staff reports from the Finance Committee discussion on

October 18, 2011 and the Council discussion on November 28, 2011.


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January 30, 2012 Page 2 of 2

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Attachments:

Attachment A: Retiree Medical Report (ID 2345) (PDF)

Attachment B: Excerpt from Finance Committee meeting of November 28, 2011 (PDF)

Prepared By: David Ramberg, Assistant Director

Department Head: Lalo Perez, Director

City Manager Approval: ____________________________________

James Keene, City Manager


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City of Palo Alto (ID # 2345)City Council Staff Report

Report Type: Consent Calendar Meeting Date: 11/28/2011

November 28, 2011 Page 1 of 2

(ID # 2345)

Summary T itle: City Council to Approve Retiree Medical

Title: Finance Committee Recommendation that the Council Approve and

Accept the Updated Retiree Medical Actuarial Study

From: City Manager


Recommendation

The Finance Committee recommends that the Council approve and accept the updated retireemedical actuarial study (Attachment A).

Committee Review and Recommendations

On October 18, 2011, the Finance Committee voted unanimously to accept staffs

recommendation to review and accept the updated retiree medical actuarial study with

valuation dates as of January 1 and June 30, 2011. The actuarial study results are required by

the Government Accounting Standards Board (GASB) Statement No. 45, Accounting and

Financial Reporting by Employers for Post Employment Benefits Other Than Pensions.

The updated study results in an increase of $3.8 million (39%) in the Citys retiree medical

liability between 2009 and 2011. The result is that the Citys cost for retiree medical goes from$9.8 million to $13.6 million annually. The reasons for the cost increase are based on changes

to actuarial assumptions and demographic changes and other changes as discussed in detail in

Attachment A.

Staff will provide funding recommendations as part of the FY2012 mid-year budget process and

as part of the FY2013 proposed budget. In addition, staff will include the revised costs in the

long range financial forecast, which will be presented to the Finance Committee in early 2012.

Attachments:

Attachment A: Retiree Medical Study (PDF)

Attachment B: Finance Committee minutes 10/18/2011 (PDF)

Attachment C: Staff Presentation(PDF)

Attachment D: At places memo (PDF)


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November 28, 2011 Page 2 of 2

(ID # 2345)

Prepared By: David Ramberg, Assistant Director


City Manager Approval: James Keene, City Manager


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City of Palo Alto (ID # 2180)Finance Committee Staff Report

Report Type: Meeting Date: 10/18/2011

October 18, 2011 Page 1 of 5

(ID # 2180)

Council Priority: City Finances

Summary Title: Retiree Medical Study

Title: Review and Acceptance of Updated Retiree Medical Actuarial Study -

Valuation Date January 1, 2011 and Valuation Date June 30, 2011

From: City Manager


EXECUTIVE SUMMARY

This report provides the City Council with the actuarial study results required by the

Government Accounting Standards Board's (GASB) Statement No. 45, Accounting and Financial

Reporting by Employers for Post Employment Benefits Other Than Pensions. The results of the

study as compared to the 2009 study show a fairly dramatic increase in Citywide costs. See

Attachment B, slide 31 for a summary of the study results.

RECOMMENDATION

Staff recommends that the Council review and approve the attached actuarial valuation results

(see Attachment A).

BACKGROUND

Per GASB Statement No. 45, beginning in Fiscal Year 2008, like other governmental entities, the

City of Palo Alto was required to recognize in its financial statements any unfunded, earned

retiree medical costs including those for current active employees. GASB 45 also requires the

City to complete an actuarial study on a biennial basis, to determine the retiree medical liability

and how much the City should be setting aside each year to fund that liability, the annual

required contribution (ARC).

In Fiscal Year 2008, the City established an irrevocable trust with California Employers Retirees

Benefit Trust (CERBT) for retiree medical benefits. In Fiscal Year 2008, the City transferred $33.8million to the trust. As of January 1, 2011, the trust was valued at $40.2 million, and as of June

30, 2011, it was valued at $44.8 million. Of course, recent market volatility may have a

downward effect on future figures, not included in this study.

DISCUSSION

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Bartel and Associates completed an actuarial valuation for the City on October 11, 2011 with

two valuation dates: January 1, 2011 and June 30, 2011. The reason for the two valuation

dates goes back to a new regulation pertaining to members of the CERBT (trust). All the Citys

past valuations have used a January 1 valuation date. However, beginning FY 2012, members of

the CERBT are required by GASB 57 to switch to a common valuation date of June 30.

Therefore for this study only, the City opted to utilize both the January 1 and June 30 valuationdates. The January 1, 2011 valuation determines the Actuarially Required Contribution (ARC)

for FY 2012; the June 30, 2011 valuation determines the ARC for FY 2013 and FY 2014.

January 1, 2011 Valuation Date

The actuarial study using a valuation date of January 1, 2011 valued the City's unfunded retiree

medical liability at $134.7 million, compared to the unfunded liability of $105.0 million on

January 1, 2009 a 28% increase.

The Annual Required Contribution (ARC) associated with the January 1, 2011 valuation is

$13.6 million for Fiscal Year 2012. This is an increase of $3.8 million (39%) over the ARC of

$9.8 million associated with the January 1, 2009 valuation . The dramatic increase in the Citys

retiree medical liability between the 2009 and 2011 studies is attributable to several

differences in assumptions used by the respective actuarial firms (Milliman and Associates

performed the 2009 study, and Bartel and Associates performed the current study). Those

differences are as follows (Attachment A, page 7 also summarizes the assumption changes and

their impact on the Citys liability):

1. New CalPERS Decrements. The most recent CalPERS experience study which gathers

demographic information throughout the state noted increasing lifespans of retirees,

decreasing average retirement age, and other factors, all of which increase the Citys

projected unfunded liability by approximately $8 million.

2. Recent Spike in Palo Alto Retirements as cost-sharing and wage freezes have been

implemented, many people have accelerated their retirement plans. There were more

than the projected retirements between 2009 and 2011. All of the retirements since the

last study added $2.7 million to the Citys unfunded liability.

3. Medical Trend Assumptions The table below shows the difference in medical premium

growth rates assumed in the respective studies. Milliman assumed a slow but steady

increase in rates ranging from 6.5% in the early years and settling at 5.85% from 2018

on. On the other hand, Bartel assumes that the rate of increase will be more front-loaded, starting at 9% and settling to 5% per year starting in 2021. Cumulative increases

assumed in the more recent report are higher than those assumed in 2009. (See

Attachment B, slide 10 for a comparison of specific medical trend assumptions in the

two studies, and Attachment C for PERS Medical Plan rate changes 2002-2012.) This

added $4.8 million to the Citys unfunded liability.

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4. Actuarial Load This is a 2% premium applied to assumed costs based on the premise

that PERS Preferred Provider (PPO) Medical Plan premiums have been increasing at a

slower rate than have claim costs. PERS has been funding the difference from reserves,

but Bartel believes that eventually rate increases will need to bounce upward to more

evenly match the increased costs. This anticipated bounce adds $3.4 million to the

Citys unfunded liability.

5. Cost Sharing by Miscellaneous Group This change in benefits was implemented after

the 2009 study and caused the Citys unfunded liability to decrease by $14.2 million.

Note that the impact of any public safety group concessions is not included in this study.

6. Migration of Retirees to More Expensive Medical Plans While 13% of actives are

enrolled in PERS PPO plans, that percentage rises to 32% for retirees under 65, and to

54% of retirees over 65. This seems to be due to the increased portability of the PPO

plans for retirees who move out of the area. The last study may not have recognized

this trend, which adds $7.7 million to the Citys unfunded liability. (See Attachment B,

slide 7 for enrollment statistics for active and retired employees.)

7. Asset Smoothing Bartel recommends smoothing gains and losses in the trust balance

over 5 years, to avoid volatility in the Citys ARC. For example, the year-end 2010 Trust

balance was $40.2 million, an increase of 26% over the year-end 2009 balance of $32.0

million. With asset smoothing, the actuarial value of the trust assets for year-end 2010

would be $35.3 million, since that 26% gain is spread over the next five years. By saving

some of the market gain for subsequent years when there may be losses, the City

assumed an additional $4.6 million in unfunded liability.

8. Closed Amortization Period Rather than continually re-up the 30-year amortizationperiod, which would never actually completely pay off the liability, Bartel recommends

amortizing over the remaining 28 years of the 30-year period beginning 2009. The

impact of this change on the Citys unfunded liability is included in that of the

Demographic and Other Factors discussed below.

9. Demographic and Other Factors These are ways in which the City's actual experience

differs from what is assumed in the CalPERS experience study. For example, to the

extent that City employees retire earlier or later than average, or go out on disability

more or less than the statewide average, this affects the liability. In our case these

factors add $12.4 million to our unfunded liability. (See Attachment B, slide 5 forstatistics on active and retired employees included in the study.)

The General Funds share of the citywide ARC totals approximately $9.5 million annually for

FY 2012, an increase of $2.7 million from the amount budgeted for FY 2012 based on the

January 1, 2009 valuation. That amount can be funded from the CERBT trust, if needed. Staff

will provide more precise figures for the General Fund portion by the October 18 Finance

Committee meeting. (See Attachment D: Results by Fund.)

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June 30, 2011 Valuation Date

The actuarial study using a valuation date of June 30, 2011 valued the City's unfunded liability

at $139.7 million, which is an increase of $5.0 million over the January 1 valuation date. The

ARC associated with this valuation is $14.4 million for Fiscal Year 2013, and projected at $14.8

million for 2014. (Again, see Attachment B, slide 31.) The $0.8 million jump in the ARCbetween FY 2012 and FY 2013 is primarily due to the decrease in assumed discount rate from

7.75% to 7.25%.

The reasons for the respective discount rate assumptions are:

The January 1, 2011 valuation assumed a discount rate of 7.75% as mandated by CERBT.

Beginning Fiscal Year 2013, CERBT requires that each member agency employ a discount rate

no higher than 7.61%, as applicable to its selected asset allocation. The trust offers three

possible asset allocations, of which Option 1 the Citys chosen option - has the highest

projected yield. CERBTs expected return over a 20-year period for Option 1 Asset

Classifications is 7.61%, with a 50% confidence limit. Bartel recommends dropping the assumed

rate to 7.25% to achieve a 60% confidence limit.

The General Fund portion of the FY 2013 and FY 2014 ARCs is $10.0 million and $10.3 million,

respectively. Again, staff will provide more precise figures for the General Fund portion of the

FY 2013 and 2014 ARCs by the October 18 Council meeting.

RESOURCE IMPACT

The FY 2012 budget allocated $9.8 million towards the ARC for all funds, but this amount was

an estimate before the actuarial study was completed. The ARC contained in the actuarial study

was $13.6 million, representing an increase of $3.8 million across all City funds. The GeneralFund portion of the increase is $2.3 million for FY 2012, which may be drawn from the trust, if

needed. Future years ARC funding will need to be incorporated into those years budgets. Staff

will provide funding recommendations during the Mid-Year or FY 2013 proposed budget

process.

ENVIRONMENTAL REVIEW

The action recommended is not a project for the purposes of the California Environmental

Quality Act.

Attachments:

-a: Attachment A: Executive Summary (PDF)

-b: Attachment B: Revised Preliminary Results (PDF)

-c: Attachment C: 2002-2012 PEMHCA Premiums (PDF)

-d: Attachment D: Results by Fund (PDF)

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Prepared By: Nancy Nagel, Senior Financial Analyst


City Manager Approval: ____________________________________

James Keene, City Manager

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City of Palo Alto

Retiree Healthcare PlanJanuary 1, 2011 & June 30, 2011 Actuarial ValuationsExecutive Summary

October 11, 2011

Bartel Associates, LLC

411 Borel Avenue, Suite 101

San Mateo, California 94402Phone: 650-377-1600Email: [email protected]

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O:\Clients\City of Palo Alto\OPEB\2011 val\Reports\BA PaloAltoCi 11-10-11 OPEB 6-30-11 Valuation Executive Summary.doc

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City of Palo Alto Retiree Healthcare Plan

January 1, 2011 & June 30, 2011 Actuarial Valuations

Executive Summary

October 11, 2011

Governmental Accounting Standards Board Statement No. 45 (GASB 45), Accounting and FinancialReporting by Employers for Postemployment Benefits Other Than Pensions provides standards for thefinancial reporting of the Citys Retiree Healthcare Plan. The City implemented GASB 45 for the2007/08 fiscal year. The January 1, 2011 actuarial valuation provides the financial reporting informationfor the Citys 2011/12 fiscal year and the June 30, 2011 actuarial valuation provides the financialreporting information for the Citys 2012/13 and 2013/14 fiscal years.

VALUATION RESULTS

Participants: The same participant data was used to prepare both the January 1, 2011 and June 30, 2011actuarial valuations. A summary of this data as of June 30, 2011 is:

Participants 6/30/11

Actives Number 923 Average Age 44.7 Average City Service 10.8 Average PERS Service 13.7 Average Pay $86,007 Total Payroll (000s) $79,384

Retirees Number 860 Average Age 67.0 Average Retirement Age 55.5

Plan Assets: Assets must be set aside in a trust that cannot legally be used for any purpose other than topay retiree healthcare benefits in order to be considered plan assets for GASB 45 purposes. The City'sretiree healthcare plan is currently funded with the CalPERS Trust (CERBT).

The City began prefunding the plans obligations during 2007/08. The Citys intention is to fund the fullARC each year. Investment gains and losses relative to the assumed net rate of return are spread over a 5-year period by using an Actuarial Value of Assets rather than the Market Value of Assets to determine theplans costs and funded status. This helps smooth any volatility in the Market Value of Assets and providesan element of stability for the plan expense and City contributions. The Actuarial Value of Assets is keptwithin a corridor of 80% to 120% of the Market Value to make sure it does not diverge significantly fromthe Market Value of Assets.

The Market Value of Assets was $40,213,000 and the Actuarial Value of assets was $35,294,000 on January1, 2011. The Market Value of Assets was $44,774,000 and the Actuarial Value of assets was $40,222,000on June 30, 2011. The following table shows how the Market Value of Assets changed through 6/30/11 andis projected to change during 2011/12.

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January 1, 2011 & June 30, 2011 Actuarial Valuations Executive Summary

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Plan Assets

(Amounts in 000s) 2009 2010

1/1/11-

6/30/11

Projected

2011/12

Market Value at Beginning of Year $ 24,616 $ 32,042 $ 40,213 $ 44,774

Contributions 700 3,532 2,448 5,165 Benefit Payments - - - - Administrative Expenses (23) (34) (41) - Investment Earnings 6,749 4,674 2,155 3,246 Market Value at End of Year 32,042 40,213 44,774 53,185 Actuarial Value at End of Year 35,294 40,222 49,279 Annualized Investment Return Market Value 26.9% 13.7% 5.3% 7.3% Actuarial Value 11.6% 11.9% 7.0% 9.7%

Funded Status: A plans funded status is measured by comparing the Actuarial Accrued Liability (seedefinitions and assumptions section below) with Plan Assets. A plan is considered funded when PlanAssets equal the Actuarial Accrued Liability. As the Citys retiree healthcare plan had not been fundedprior to GASB 45 implementation in 2007/08, the City established a contribution policy that would fundbenefits as earned for each future year and would fund the Unfunded Actuarial Accrued Liability over a30-year period.

GASB 45 requires the discount rate used to determine the present value of future benefit payments be basedon the source of funds used to pay the benefits. This is the expected long-term net earnings rate on planassets for funded plans and the expected long-term net earnings rate on an agencys investment fund forunfunded plans. A 7.75% and 7.25% discount rate was used for the Citys January 1, 2011 andJune 30, 2011 valuations, respectively, representing the long-term expected net return for the CERBT. See

page 5 in the Definitions and Assumptions Section for a discussion of the discount rates used in thevaluations.

The plan was approximately 21% funded as of January 1, 2011, and 22% funded as of June 30, 2011:

1/1/11 Valuation 6/30/11 Valuation

Funded Status

(Amounts in 000s)7.75%

Discount Rate

7.25%

Discount Rate

Actuarial Accrued Liability (AAL) Actives $ 51,179 $ 57,479 Retirees 118,800 122,444 Total 169,979 179,923

Actuarial Value of Plan Assets (AVA) 35,294 40,222 Unfunded AAL (UAAL) 134,685 139,701 Funded Percentage (AVA/AAL) 21% 22%

Annual Required Contribution (ARC): The Annual Required Contribution is the Normal Cost plus anamortization payment toward the Unfunded Actuarial Accrued Liability. The Normal Cost is the value ofbenefits allocated to the current fiscal year for service worked during that year. The Unfunded Liability is

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amortized as a level percent of payroll over a period of 28 years as of June 30, 2011 (27 years remainingas of June 30, 2012).

The Citys Annual Required Contributions for 2011/12, 2012/13 and 2013/14 are as follows:

7.75% 7.25%Annual Required Contribution

(Amounts in 000s) 2011/12 2012/13 2013/14

Normal Cost $ 4,937 $ 5,609 $ 5,791 Unfunded Liability Amortization 8,666 8,769 9,054 Annual Required Contribution 13,603 14,378 14,845 Estimated Payroll 80,664 83,285 85,992 ARC as a % of Payroll 16.9% 17.3% 17.3% Amortization Period 28 Yrs 27 Yrs 26 Yrs

Net OPEB Obligation (NOO): The Citys Net OPEB Obligation is the historical difference since GASB

45 implementation between actual contributions made and Annual Required Contributions. Benefits paidfor current retirees directly from City assets are considered contributions. The Net OPEB Obligationwould be zero for an agency that always contributed the Annual Required Contributions. An agency thatcontributed more than the ARC would have a Net OPEB Asset (NOA).

Annual OPEB Cost (AOC): The Annual OPEB Cost is the plans fiscal year expense. It is equal to theAnnual Required Contribution plus expected interest on the Net OPEB Obligation less an amortization ofthe Net OPEB Obligation. It is different from the Annual Required Contribution because the AnnualRequired Contribution may include a provision for amounts not yet funded that have been expensed inprior Annual OPEB Costs. The Annual OPEB Cost equals the Annual Required Contribution when theNet OPEB Obligation at the beginning of the year is zero.

7.75% 7.25%Annual OPEB Cost

(Amounts in 000s) 2011/12 2012/13 2013/14

Annual Required Contribution $ 13,603 $ 14,378 $ 14,845 Interest on Net OPEB Obligation (1,781) (1,687) (1,705) Amortization of Net OPEB Obligation 1,483 1,451 1,498 Annual OPEB Cost 13,305 14,141 14,638 Amortization Period 28 Yrs 27 Yrs 26 Yrs

The Citys expected Net OPEB Obligations for 2011/12, 2012/13 and 2013/14 are:

7.75% 7.25%Estimated Net OPEB Obligation

(Amounts in 000s) 2011/12 2012/13 2013/14

Net OPEB Obligation (Asset) at Begin. of Yr $ (22,977) $ (23,275) $ (23,511) Annual OPEB Cost 13,305 14,141 14,638 Estimated Contributions 13,603 14,378 14,845 Net OPEB Obligation (Asset) at End of Yr (23,275) (23,511) (23,718)

The Citys actual June 30, 2012, June 20, 2013 and June 30, 2014 Net OPEB Obligations will differ fromthose shown above because actual contributions may differ from those estimated.

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Projection: The following table shows the projected Net OPEB Obligation, Annual RequiredContribution, Annual OPEB Contribution, and City Contribution (including benefit payments paiddirectly by the City) over the next 10 years.

Full ARC Pre-Funding Projection7.25% Discount Rate1

(Amounts in 000s)

ContributionFiscal

Year

Ending

Begin

Year

NOO ARC

Annual

OPEB

Cost

(AOC)

Benefit

Pmts

Pre-

Funding

Total

Contrib Payroll

Contrib

% of

Payroll

2012 $(22,977) $13,603 $13,305 $8,438 $5,165 $13,603 $80,664 16.9%

2013 (23,275) 14,378 14,141 8,988 5,390 14,378 83,285 17.3%

2014 (23,511) 14,845 14,638 9,986 4,859 14,845 85,992 17.3%

2015 (23,718) 15,327 15,155 10,929 4,398 15,327 88,787 17.3%

2016 (23,891) 15,825 15,690 11,945 3,880 15,825 91,672 17.3%2017 (24,026) 16,340 16,247 12,940 3,400 16,340 94,652 17.3%

2018 (24,119) 16,871 16,825 13,832 3,039 16,871 97,728 17.3%

2019 (24,165) 17,419 17,425 14,692 2,727 17,419 100,904 17.3%

2020 (24,159) 17,985 18,049 15,574 2,412 17,985 104,183 17.3%

2021 (24,095) 18,570 18,697 16,460 2,110 18,570 107,569 17.3%

DEFINITIONS AND ASSUMPTIONS

Present Value of Benefits: When an actuary prepares an actuarial valuation, he or she first gathersparticipant data (active employees, retirees, and beneficiaries) as of the valuation date. Using this dataand appropriate actuarial assumptions, the actuary projects the future benefit payments. The actuarialassumptions estimate when employees will retire, terminate, die or become disabled, as well as salaryincreases, inflation, and net investment earnings. The expected future benefit payments are discountedback to the valuation date using the expected net investment return or discount rate. This discountedvalue is the Present Value of Benefits. It represents the funds the plan needs as of the valuation date topay all expected future benefits if all assumptions are realized and no additional contributions are madeby the City. The Citys January 1, 2011 and June 30, 2011 Present Value of Benefits were $204.3 millionand $219.2 million, respectively.

Actuarial Accrued Liability: The Actuarial Accrued Liability is the portion of the Present Value ofBenefits that has been allocated to prior service through the valuation date. The Citys January 1, 2011and June 30, 2011 Actuarial Accrued Liabilities were $170.0 million and $179.9 million, respectively

Normal Cost: The Normal Cost is the portion of the Present Value of Benefits allocated to the currentfiscal year. The plans Normal Costs for the 2011/12 and 2012/13 fiscal years are $4.9 million and $5.6million, respectively.

1 Fiscal year ending 2012 based on prior valuation with 7.75% discount rate.

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Actuarial Cost Method: The actuarial cost method determines how benefits are allocated to each year ofservice. It has no effect on the Present Value of Benefits but has significant effect on the ActuarialAccrued Liability and Normal Cost. The Citys January 1, 2011 and June 30, 2011 retiree healthcare

valuations were prepared using the Entry Age Normal cost method. Under the Entry Age Normal costmethod, the Plans Normal Cost is developed as a level percent of payroll over the participants workinglifetimes.

Actuarial Assumptions: Under GASB 45, an actuary must follow current actuarial standards of practice.These standards generally call for the use of explicit assumptions which means that each individualassumption must represent the actuary's best estimate for that assumption.

For the January 1, 2011 valuation, a discount rate of 7.75% was used, as required by CalPERS for plansfunded in the CERBT. In March 2011, the CalPERS Board approved the following changes to the CERBT:

created 3 different asset allocation strategies, each with different expected returns and volatility, revised the discount rate assumption from a mandated rate (7.75%) to provide agencies and their

actuaries with the flexibility to select the discount rate (up to a maximum rate based on the selectedasset allocation).

For each investment option, CalPERS maximum discount rate is the median return2, with lower rates alsobeing acceptable. The following table shows CERBT target asset allocation strategies and CalPERSmaximum discount rates:

Option 1 Option 2 Option 3

Asset Allocation Global Equity 66.0% 50.1% 31.6% Global Real Estate 8.0% 8.0% 8.0% Commodities 3.0% 3.0% 3.0%

Inflation Linked Bonds5.0% 15.0% 15.0%

U.S. Nominal Bonds 18.0% 23.9% 42.4% Total 100.0% 100.0% 100.0%

Maximum Discount Rate 7.61% 7.06% 6.39%Bartel Associates recommends a lower discount rate than the maximum to build in some level ofconservatism, so the assumption is expected to be realized (or exceeded) approximately 55% to 60% ofthe time. This results in the following discount rates:

Option 1 Option 2 Option 3

60% Realization 7.00% 6.50% 6.00%

55% Realization 7.25% 6.75% 6.25%

For the June 30, 2011 actuarial valuation, the City chose the Option 1 asset allocation strategy, and agreedthat it would be prudent to build in a margin for conservatism when choosing a discount rate. The discountrate for the June 30, 2011 valuation is 7.25%, which represents an estimated 55% confidence level thatactual future returns will be at least that high. The change in discount rate from 7.75% to 7.25% between

2 The median return represents the return at which of the returns are expected to be higher and lower.

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these two valuations results in a $10.6 million actuarial loss.

The January 1, 2009 Milliman valuation used actual premiums for 2009, and then used a healthcare inflationrate of 6.5% from 2010-2014, 6.0% from 2015-2017, and 5.85% for each year thereafter. In the January 1,

2011 valuation, actual premiums were used for 2011 and 2012. The healthcare inflation rate for non-Medicare eligible participants starts at 9.0% (the increase in 2013 premiums over 2012 premiums) andgrades down to 5% after 8 years. The healthcare inflation rate for Medicare eligible participants starts 0.4%higher and also grades down to 5% after 8 years. This change in medical trend leads to a $4.8 millionincrease in the Actuarial Accrued Liability. This is partially offset by a $3.9 million gain, because of thedifference between actual 2011 and 2012 premiums and projected 2011 and 2012 premiums from theJanuary 1, 2009 valuation.

A 2% load was added in the January 1, 2011 valuation, to take into account that recent PEMHCA PPOpremium increases are believed to be below per capita claims increases. This load results in a $3.4 millionincrease in the Actuarial Accrued Liability.

Retirement, disability, termination, and mortality assumptions were changed from the CalPERS 97-02Experience Study in the January 1, 2009 valuation to the CalPERS 97-07 Experience Study in the January 1,2011 and June 30, 2011 valuations. This change results in a $7.9 million increase in the Actuarial AccruedLiability.

Another key January 1, 2011 valuation assumption change is the assumed medical plan at retirement. Webelieve the 2009 valuation assumed each active participant remained in the same plan at retirement andMedicare eligibility (at age 65). The January 1, 2011 valuation assumes percentages, as shown below, basedupon actual participation of current retirees, which differs substantially from the participation of currentactives. This change increased the Actuarial Accrued Liability by approximately $7.7 million.

Medical Plan at Retirement

Miscellaneous Safety


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Changes From January 1, 2009 Valuation to January 1, 2011 Valuation

AAL (AVA) UAAL

Actual 1/1/09 $129,661 $(24,616) $105,045 Expected 6/30/11 150,971 (42,322) 108,649 Assumption Changes

Medical Trend 4,840 4,840 New CalPERS Decrements 7,916 7,916 Actuarial Load 3,421 3,421 Medical Plan at Retirement 7,740 7,740 Medicare Eligibility 2,625 2,625

Asset Smoothing 4,552 4,552 Contribution Loss (2,452) (2,452) Plan Change Cost Sharing (14,194) (14,194) Experience (Gains)/Losses

Caps/Premiums < Expected (3,917) (3,917) New Retirees 2,700 2,700 Demographic & Other 12,383 - 12,383

Total (Gain)/Loss 23,514 2,100 25,614 Projected 6/30/11 174,485 (40,222) 134,263

Changes From January 1, 2011 Valuation to June 30, 2011 Valuation

AAL (AVA) UAAL

Actual 1/1/11 $169,979 $(35,294) $134,685 Projected 6/30/11 174,485 (40,222) 134,263 Expected 6/30/12 182,840 (49,279) 133,561 Assumption Changes

Discount Rate 10,613 10,613 Experience (Gains)/Losses

Demographic & Other (3,510) (3,510) Total (Gain)/Loss 7,103 - 7,103 Projected 6/30/12 189,943 (49,279) 140,663

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RETIREE HEALTHCARE BENEFITS

Eligibility Retire directly from the City under CalPERS (age 50 and 5 years ofCalPERS service or disability)

Retiree Medical(Hired 1/1/074 Same as above but premium limited to 2nd most expensive Basic

medical plan in the Bay Area Region

For non-Safety Mgmt/Conf, SEIU and UMPAPARetired > 4/1/115, all premium increases starting 1/1/11 shared evenly

between City and employee, up to 10% Retiree Medical

(Hired>1/1/046) Vesting schedule (based on all CalPERS Service)7:

Years of Service %< 10 0%10 50%

> 20 100%

Vesting applies to 100/90 formula amounts:2011 2012

Single $ 542 $ 566

2-Party 1,030 1,074Family 1,326 1,382

Police and Fire with 20 years City service do not need to retire directlyfrom City

For Mgmt/Conf, SEIU and UMPAPA Retired > 4/1/118, all premiumincreases starting in 1/1/11 shared evenly between City and employee, upto 10%

Dental, Vision &Life

None

3 1/1/05 for SEIU and 1/1/06 for PAPOA4 1/1/08 for PAPOA5 2/1/10 for SEIU6 1/1/05 for SEIU and 1/1/06 for PAPOA7 Minimum 5 years City Service. 100% vested for disability retirement8 2/1/10 for SEIU

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Surviving SpouseBenefit

100% of retiree benefit continues to surviving spouse if retiree electsCalPERS survivor allowance

Benefit Changesfrom PriorValuation

New Benefit Provision: cost sharing of future premium increases forMgmt/Conf, SEIU and UMPAPA retiring after 4/1/2011

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CITY OF PALO ALTORETIREE HEALTHCARE PLAN

January 1, 2011 and June 30, 2011GASB 45 Actuarial Valuations

Revised Preliminary Results

Presented by John E. Bartel, President

Prepared by Deanna Van Valer, Assistant Vice President & ActuaryAdam Zimmerer, Actuarial AnalystBartel Associates, LLC

October 11, 2011

Agenda

O:\Clients\City of Palo Alto\OPEB\2011 val\Reports\BA PaloAltoCi 11-10-11 OPEB 6-30-11 Revised Preliminary Val Results.doc

Topic PageBenefit Summary 1

Participant Statistics 5

Actuarial Assumptions Highlights 9

Actuarial Methods 15

Assets 17

Results January 1, 2011 Valuation 19

Results June 30, 2011 Valuation 29CERBT Investment Options 41

Bartel Associates GASB 45 Database 43

Other Issues 46

Exhibits 48

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BENEFIT SUMMARY

Eligibility Retire directly from the City under CalPERS (age 50 and 5 years ofCalPERS service or disability)

MedicalProvider

CalPERS health plans (PEMHCA) Non-Safety PEMHCA resolution provides only for PEMHCA

minimum (additional benefits paid by City)

Retiree Medical(Hired 1/1/072 Same as above but premium limited to 2nd most expensive Basic

medical plan in the Bay Area Region

For non-Safety Mgmt/Conf, SEIU and UMPAPARetired > 4/1/113, all premium increases starting 1/1/11 sharedevenly between City and employee, up to 10%

11/1/05 for SEIU and 1/1/06 for PAPOA

2 1/1/08 for PAPOA3 2/1/10 for SEIU

October 11, 2011 2

BENEFIT SUMMARY

Retiree Medical(Hired>1/1/044)

Vesting schedule (based on all CalPERS Service)5:Years of Service %

< 10 0%10 50%

> 20 100%

Vesting applies to 100/90 formula amounts:2011 2012

Single $ 542 $ 5662-Party 1,030 1,074

Family 1,326 1,382 Police and Fire with 20 years City service do not need to retire

directly from City

For Mgmt/Conf, SEIU and UMPAPA Retired > 4/1/116, allpremium increases starting in 1/1/11 shared evenly between Cityand employee, up to 10%

4 1/1/05 for SEIU and 1/1/06 for PAPOA5 Minimum 5 years City Service. 100% vested for disability retirement6

2/1/10 for SEIU

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BENEFIT SUMMARY

Dental, Vision& Life

None Surviving

Spouse Benefit 100% of retiree benefit continues to surviving spouse if retiree

elects CalPERS survivor allowance

BenefitChanges fromPrior Valuation

New Benefit Provision: cost sharing of future premium increasesfor Mgmt/Conf, SEIU and UMPAPA retiring after 4/1/2011

Pay-As-You-Go ($000s)

FY 2011/12 (Est) $8,142 FY 2010/11 $6,216 FY 2009/10 $5,519 FY 2008/09 $5,204 FY 2007/08 $4,646

October 11, 2011 4

BENEFIT SUMMARY

ImpliedSubsidy

Non-Medicare eligible retirees pay active rates instead of actual cost Active employee premiums subsidize retiree cost

Single Retiree Medical Cost

0

200

400

600

800

1,000

30 35 40 45 50 55 60 65

Age

MonthlyCost

PremiumMale CostFemale Cost

GASB 45 includes active implied subsidy with retiree cost Community rated plans not required to value implied subsidy PEMHCA is a community rated plan for most employers Valuation does not include an implied subsidy

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PARTICIPANT STATISTICS

Participant StatisticsJune 30, 2011

7 1 retiree with missing birth date assumed to retire at average retirement age8 Excludes 3 retirees with missing retirement date

Miscellaneous Police Fire Total

Actives Count 737 82 104 923 Average Age 45.7 38.2 43.4 44.7 Average City Service 10.4 10.8 14.0 10.8 Average PERS Service 13.8 11.4 15.0 13.7 Average Salary $78,762 $117,924 $112,185 $86,007 Total Salary (000s) $58,047 $9,670 $11,667 $79,384

Retirees: Count 659 87 114 860 Average Age7 67.5 63.0 67.2 67.0 Average Retirement Age8 57.2 47.9 52.1 55.5

October 11, 2011 6


Participant Statistics9January 1, 2009

9From 1/1/09 Milliman report

Miscellaneous Police Fire Total

Actives Count n/a n/a n/a 955 Average Age n/a n/a n/a 45.3 Average City Service n/a n/a n/a 11.2 Average Salary n/a n/a n/a $103,602 Total Salary (000s) n/a n/a n/a $98,940

Retirees: Count n/a n/a n/a 710 Average Age n/a n/a n/a 67.2 Average Retirement Age n/a n/a n/a n/a

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Medical Plan ParticipationNon-Waived Participants

Retirees

Medical Plan Actives < 65 65 Total

Blue Shield 44% 34% 21% 27%

Blue Shield NetValue 0% 0% 0% 0%

Kaiser 34% 25% 24% 25%

PERS Choice 13% 21% 18% 19%

PERSCare 0% 11% 36% 25%

PORAC 9% 10% 1% 5%

Total 100% 100% 100% 100%

October 11, 2011 8


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ACTUARIAL ASSUMPTIONS HIGHLIGHTS

January 1, 2009 Valuation10January 1, 2011 &

June 30, 2011 Valuations

Valuation Date January 1, 2009 Fiscal Years 2009/10 &

2010/11 ARCs (end of year)

January 1, 2011 Fiscal Year 2011/12 ARC (end

of year)

June 30, 2011

Fiscal Years 2012/13 &2013/14 ARCs (end of year)

Funding Policy Full Pre-funding throughCalPERS trust (CERBT)

Same Discount Rate 7.75% 1/1/11 7.75%

6/30/11 7.25% Payroll

Increases Aggregate Increases 3.25% Merit Increases CalPERS

1997-2002 Experience Study

Aggregate Increases 3.25% Merit Increases CalPERS


10 From 1/1/09 Milliman report

October 11, 2011 10


January 1, 2009 Valuation10 January 1, 2011 &June 30, 2011 Valuations

Medical TrendYear

Increase fromPrior Year

2009 Premiums2010 6.50%2011 6.50%2012 6.50%2013 6.50%2014 6.50%2015 6.00%2016 6.00%

2017 6.00%2018+ 5.85%

Increase from Prior YearYear Non-Medicare Medicare2009 n/a2010 n/a2011 Premiums2012 Premiums2013 9.0% 9.4%2014 8.5% 8.9%2015 8.0% 8.3%2016 7.5% 7.8%

2021+ 5.0% 5.0%

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Actuarial Load n/a 2.0% load PEMHCA PPO premium

increases below per capitaclaims increases

Retirement,Mortality,Termination,Disability

CalPERS 1997-2002Experience Study

Misc Fire Police

Benefit 2.7%@55 3%@50 3%@50


Misc Fire Police

Benefit 2.7%@55 3%@50 3%@50

2%@6011

ERA 57.5 54.5 54.0

Participation atRetirement

n/a DOH < 1/1/04: 100% DOH > 1/1/04: 95% Employees with cost sharing:

reduce above %s by 5%

11 Applies to employees hired after July 17, 2010

October 11, 2011 12



Medical Plan atRetirement

n/a Miscellaneous:


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MedicareEligible Rate

n/a Actives hired < 4/1/86: Miscellaneous 80% Safety 90%

Actives hired > 4/1/86: 100% Retirees < 65: 90% Everyone eligible for

Medicare will elect Part Bcoverage

Missing PERSGroup

n/a Retirees missing PERS groupassumed to be Misc unlessfund designates Police or Fire

October 11, 2011 14



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ACTUARIAL METHODS

Method January 1, 2009 Valuation12January 1, 2011 &


Cost Method Entry Age Normal Level % ofPay

Same Unfunded

LiabilityAmortization

30 years open period 28 years (closed period) FreshStart for total 6/30/2011 UAAL(27 years remaining on 6/30/12)

15 years (closed period) forfuture gains and losses

Maximum 30-year combinedperiod

12 From 1/1/09 report by Milliman.

October 11, 2011 16

ACTUARIAL METHODS

Method January 1, 2009 Valuation12 January 1, 2011 &June 30, 2011 Valuations

ActuarialValue ofAssets

Market Value of Assets Investment gains and lossesspread over a 5-year rollingperiod

Not less than 80% nor more than120% of market value

Same as CalPERS, but shorterperiod

ImpliedSubsidy

Employer cost for allowing retirees to participate at active rates

Community rated plans are not required to value an implied subsidyif active rates are independent of number of retirees

PEMHCA is a community rated plan for most employers Valuation does not include an implied subsidy

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ASSETS

Market Value of Plan Assets(amounts in 000s)

2009 20101/1/11-6/30/11

Projected2011/12

MVA (Beg. of Year) $ 24,616 $ 32,042 $ 40,213 $ 44,774 Contributions 700 3,532 2,448 5,165 Benefit Payments13 - - - - Admin. Expenses (23) (34) (41) - Investment Return 6,749 4,674 2,155 3,24614

MVA (End of Year) 32,042 40,213 44,774 53,185Approx. Annual Return 26.9% 13.7% 5.3% 7.3%

13 Benefit Payments made outside of trust by City. Refer to Slide 3 for fiscal year amounts.14 Investment return based on 7.25% net of expenses

October 11, 2011 18

ASSETS

Actuarial Value of Plan Assets(amounts in 000s)

2009 20101/1/11-6/30/11

Projected2011/12

AVA (Beg. of Year) $ 24,616 $ 28,209 $ 35,294 $ 40,222 Contributions 700 3,532 2,448 5,165 Benefit Payments15 - - - - Exp. Inv. Return 1,935 2,323 1,342 2,916

Exp. AVA (End of Year) 27,251 34,064 39,084 48,303Preliminary AVA 28,209 35,294 40,222 49,279

Min AVA (80% MVA) 25,633 32,170 35,819 42,548 Max AVA (120% MVA) 38,450 48,255 53,729 63,822

AVA (End of Year) 28,209 35,294 40,222 49,279Approx. Annual Return 11.6% 11.9% 7.0% 9.7%

15

Benefit Payments made outside of trust by City. Refer to Slide 3 for fiscal year amounts.

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RESULTS JANUARY 1,2011VALUATION

Funded Status 7.75% Discount Rate(Amounts in 000s)

1/1/0916 1/1/11Projected

6/30/11 Present Value of Benefits

Actives $ 78,831 $ 85,476 Retirees 78,384 118,800 Total 157,215 204,276

Actuarial Accrued Liability Actives 51,277 51,179 Retirees 78,384 118,800 Total 129,661 169,979 $ 174,485

Actuarial Value of Assets (AVA) 24,616 35,294 40,222 Unfunded AAL 105,045 134,685 134,263 Funded Ratio 19% 21% Normal Cost 3,478 4,937 Pay-As-You-Go Cost 6,075 8,438

16 From 1/1/09 report by Milliman.

October 11, 2011 20


Actuarial Gain/Loss 7.75% Discount Rate(000s Omitted)

AAL (AVA) UAALActual 1/1/09 $129,661 $(24,616) $105,045Expected 6/30/11 150,971 (42,322) 108,649Assumption Changes

Medical Trend 4,840 4,840 New CalPERS Decrements 7,916 7,916 Actuarial Load 3,421 3,421 Medical Plan at Retirement 7,740 7,740 Medicare Eligibility 2,625 2,625

Asset Smoothing 4,552 4,552Contribution Loss (2,452) (2,452)Plan Change Cost Sharing (14,194) (14,194)Experience (Gains)/Losses

Caps/Premiums < Expected (3,917) (3,917) New Retirees 2,700 2,700 Demographic & Other 12,383 - 12,383

Total (Gain)/Loss 23,514 2,100 25,614Projected 6/30/11 174,485 (40,222) 134,263

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Annual Required Contribution (ARC) 7.75% Discount Rate(Amounts in 000s)

1/1/09 Valuation 1/1/11 ValuationAnnual Required Contribution 2009/10 2010/11 2011/12

ARC - $ Normal Cost $ 3,478 $ 3,591 $ 4,937 UAAL Amortization 6,308 6,757 8,666 Total 9,786 10,348 13,603

Projected Payroll 98,940 102,156 80,664 ARC - % Pay

Normal Cost 3.5% 3.5% 6.1% UAAL Amortization 6.4% 6.6% 10.7% Total 9.9% 10.1% 16.9%

October 11, 2011 22


Estimated Net OPEB Obligation (NOO) Illustration 7.75% Discount Rate(Amounts in 000s)

Estimated Net OPEB Obligation(Asset)

CAFR2009/10

Estimate2010/11

Estimate2011/12

NOO at Beginning of Year $(26,352) $(23,242) $(22,977) Annual OPEB Cost

Annual Required Contribution 9,786 10,349 13,603 Interest on NOO (2,042) (1,801) (1,781) NOO Adjustment 2,585 2,213 1,483 Annual OPEB Cost 10,329 10,760 13,306

Contributions Benefit Payments Outside Trust17 5,519 6,216 8,438 Trust Funding 1,70018 4,280 5,165 Total Contributions 7,219 10,496 13,603

NOO at End of Year (23,242) (22,977) (23,275)

17 Estimated cash payments shown for years after 2010/11. Actual cash payments should be used for OPEB footnote.18

Shortly after year end, the City contributed another $1.832 million to the trust

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Amortization Bases 7.75% Discount Rate(000s Omitted)


6/30/2009 6/30/2010 6/30/2011

Outstanding Balance 2009 UAAL $ 105,045 $ 106,878 $ n/a 2010 Gains & Losses - 2,567 n/a 2011 Fresh Start UAAL - - 134,263 Total 105,045 109,445 134,263

October 11, 2011 24


Amortization Payments 7.75% Discount Rate(000s Omitted)


2009/10 2010/11 2011/12

Amortization Payment - $ 2009 UAAL19 $ 6,308 $ 6,513 $ n/a 2010 Gains & Losses - 244 n/a 2011 Fresh Start UAAL20 - - 8,666 Total 6,308 6,757 8,666

19 Amortized over 30 years beginning 2009/1020

Amortized over 28 years beginning 2011/12

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Actuarial Obligations 7.75% Discount RateJanuary 1, 2011(Amounts in 000s)

Benefits Age 65

Total

Present Value of Benefits Actives $ 45,464 $ 40,013 $ 85,476 Retirees 37,577 81,223 118,800 Total 83,041 121,236 204,276

Actuarial Accrued Liability Actives 26,106 25,074 51,179 Retirees 37,577 81,223 118,800 Total 63,683 106,297 169,979

Normal Cost 2,711 2,226 4,937

October 11, 2011 26



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Actuarial Obligations 7.75% Discount RateJanuary 1, 2011(Amounts in 000s)

Misc Police Fire Total Present Value of Benefits

Actives $ 54,725 $ 12,832 $ 17,919 $ 85,476 Retirees 86,109 14,722 17,969 118,800 Total 140,834 27,554 35,888 204,276

Actuarial Accrued Liability Actives 33,204 6,496 11,479 51,179 Retirees 86,109 14,722 17,969 118,800 Total 119,313 21,218 29,448 169,979

Actuarial Value of Assets21 24,774 4,406 6,114 35,294 Unfunded AAL 94,539 16,812 23,334 134,685 Normal Cost 3,381 719 836 4,937 Pay-As-You-Go Cost 6,285 935 1,218 8,438

21 Allocated in proportion to the Actuarial Accrued Liability.

October 11, 2011 28


Annual Required Contribution (ARC) 7.75% Discount Rate2011/12 Fiscal Year

(Amounts in 000s)

Misc Police Fire Total

ARC - $ Normal Cost $ 3,381 $ 719 $ 836 $ 4,937 UAAL Amortization22 6,072 1,087 1,507 8,666 ARC 9,453 1,807 2,344 13,603

Projected Payroll 58,983 9,826 11,855 80,664 ARC - %

Normal Cost 5.7% 7.3% 7.1% 6.1% UAAL Amortization 10.3% 11.1% 12.7% 10.7% ARC 16.0% 18.4% 19.8% 16.9%


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RESULTS JUNE 30,2011VALUATION

Actuarial Obligations(Amounts in 000s)


1/1/11Projected

6/30/11 6/30/11Projected

6/30/12

7.75% 7.25% Present Value of Benefits Actives $ 85,476 $ 96,769 Retirees 118,800 122,444 Total 204,276 219,213

Actuarial Accrued Liability Actives 51,179 57,479 Retirees 118,800 122,444 Total 169,979 $ 174,485 179,923 $ 189,943

Actuarial Value of Assets 35,294 40,222 40,222 49,279 Unfunded AAL 134,685 134,263 139,701 140,663 Funded Ratio 21% 22% Normal Cost 4,937 5,609 Pay-As-You-Go Cost 8,438 9,986

October 11, 2011 30


Actuarial Gain/Loss(000s Omitted)

AAL (AVA) UAALActual 1/1/11 $169,979 $(35,294) $134,685Projected 6/30/11 174,485 (40,222) 134,263Expected 6/30/12 182,840 (49,279) 133,561Assumption Changes

Discount Rate 10,613 10,613Experience (Gains)/Losses

Demographic & Other (3,510) (3,510)Total (Gain)/Loss 7,103 - 7,103Projected 6/30/12 189,943 (49,279) 140,663

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Annual Required Contribution (ARC)(Amounts in 000s)

1/1/11 Valuation 6/30/11 ValuationAnnual Required Contribution 2011/12 2012/13 2013/14

7.75% 7.25%

ARC - $ Normal Cost $ 4,937 $ 5,609 $ 5,791 UAAL Amortization 8,666 8,769 9,054 Total 13,603 14,378 14,845

Projected Payroll 80,664 83,285 85,992 ARC - %Pay

Normal Cost 6.1% 6.7% 6.7% UAAL Amortization 10.7% 10.6% 10.6% Total 16.9% 17.3% 17.3%

October 11, 2011 32



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Amortization Bases(000s Omitted)


6/30/2011 6/30/2012 6/30/2013

7.75% 7.25%

Outstanding Balance 2011 Fresh Start UAAL $ 134,263 $ 140,663 $ 142,093 Total 134,263 140,663 142,093

October 11, 2011 34


Amortization Payments(000s Omitted)


2011/12 2012/13 2013/14

7.75% 7.25%

Amortization Payment - $ 2011 Fresh Start UAAL23 $ 8,666 $ 8,769 $ 9,054 Total 8,666 8,769 9,054

23Amortized over 28 years beginning 2011/12

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Estimated Net OPEB Obligation (NOO) Illustration(Amounts in 000s)

1/1/11 Valuation 6/30/11 ValuationEstimated Net OPEB Obligation

(Asset)Estimate2011/12

Estimate2012/13

Estimate2013/14

NOO at Beginning of Year $(22,977) $(23,275) $(23,511) Annual OPEB Cost Annual Required Contribution 13,603 14,378 14,845 Interest on NOO (1,781) (1,687) (1,705) NOO Adjustment 1,483 1,451 1,498 Annual OPEB Cost 13,305 14,141 14,638

Contributions Benefit Payments Outside Trust24 8,438 8,988 9,986 Trust Funding 5,165 5,390 4,859 Total Contributions 13,603 14,378 14,845

NOO at End of Year (23,275) (23,511) (23,718)

24 Estimated cash payments shown for all years. Actual cash payments should be used for OPEB footnote.

October 11, 2011 36


Estimated Full ARC Funding Projection 7.25% Discount Rate25(Amounts in 000s)

ContributionFiscalYearEnd

BeginYearNOO ARC

AnnualOPEBCost

(AOC)BenefitPmts

Pre-Funding

TotalContrib Pay

Contrib% of

Payroll

2012 $(22,977) $13,603 $13,305 $8,438 $5,165 $13,603 $80,664 16.9%

2013 (23,275) 14,378 14,141 8,988 5,390 14,378 83,285 17.3%

2014 (23,511) 14,845 14,638 9,986 4,859 14,845 85,992 17.3%

2015 (23,718) 15,327 15,155 10,929 4,398 15,327 88,787 17.3%2016 (23,891) 15,825 15,690 11,945 3,880 15,825 91,672 17.3%

2017 (24,026) 16,340 16,247 12,940 3,400 16,340 94,652 17.3%

2018 (24,119) 16,871 16,825 13,832 3,039 16,871 97,728 17.3%2019 (24,165) 17,419 17,425 14,692 2,727 17,419 100,904 17.3%

2020 (24,159) 17,985 18,049 15,574 2,412 17,985 104,183 17.3%

2021 (24,095) 18,570 18,697 16,460 2,110 18,570 107,569 17.3%

25Fiscal year ending 2012 based on prior valuation with 7.75% discount rate.

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Actuarial Obligations 7.25% Discount RateJune 30, 2011

(Amounts in 000s)

Benefits Age 65

Total

Present Value of Benefits Actives $ 49,568 $ 47,201 $ 96,769 Retirees 36,082 86,361 122,444 Total 85,650 133,562 219,213

Actuarial Accrued Liability Actives 28,139 29,340 57,479 Retirees 36,082 86,361 122,444 Total 64,221 115,701 179,923

Normal Cost 2,978 2,631 5,609

October 11, 2011 38


Actuarial Obligations 7.25% Discount RateJune 30, 2011

(Amounts in 000s)

Misc Police Fire Total Present Value of Benefits

Actives $ 61,777 $ 14,823 $ 20,168 $ 96,769 Retirees 88,563 15,240 18,641 122,444 Total 150,340 30,063 38,809 219,213

Actuarial Accrued Liability Actives 37,268 7,445 12,766 57,479 Retirees 88,563 15,240 18,641 122,444 Total 125,831 22,685 31,407 179,923

Actuarial Value of Assets26 28,129 5,071 7,021 40,222 Unfunded AAL 97,702 17,614 24,386 139,701 Normal Cost 3,823 825 960 5,609 Pay-As-You-Go Cost 7,385 1,132 1,469 9,986


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Annual Required Contribution (ARC) 7.25% Discount Rate2012/13 Fiscal Year

(Amounts in 000s)

Misc Police Fire Total

ARC - $ Normal Cost $ 3,823 $ 825 $ 960 $ 5,609 UAAL Amortization27 6,111 1,116 1,541 8,769 ARC 9,934 1,941 2,501 14,378

Projected Payroll 60,900 10,145 12,240 83,285 ARC - %

Normal Cost 6.3% 8.1% 7.8% 6.7% UAAL Amortization 10.0% 11.0% 12.6% 10.5% ARC 16.3% 19.1% 20.4% 17.3%


October 11, 2011 40



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CERBTINVESTMENT OPTIONS

Additional CERBT asset allocations and revised discount rate assumption Agency selects one option effective July 1, 2011

Target asset allocationsAsset Classifications Option 1 Option 2 Option 3Global 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%

CalPERS reported expected returns (20 year period):Option 1 Option 2 Option 3

75% Confidence Limit28 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%

28 Confidence Limits Actual Return will exceed the given rate with indicated probabilities, rates vary by year.

October 11, 2011 42

CERBTINVESTMENT 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 rateBartel Associates Recommendation: select rate at 55% or 60% confidence limit

Option 1 Option 2 Option 355% 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 LimitDiscount 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%)

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October 11, 2011 43

BARTEL ASSOCIATES GASB45DATABASE

50% of 90% of 100% of

results results results

are are are

within within within

this this this

range range range

0th Percentile

GASB 45

50th Percentile

100th Percentile

Sample Percentile Graph

Retiree Medical Benefits Comparison

95th Percentile

5th Percentile

75th Percentile

25th Percentile

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

PercentofPay

October 11, 2011 44


Miscellaneous

NC ARC NC ARC

95th Percentile 11.7% 31.4% 11.9% 32.2%

75th Percentile 7.5% 19.4% 7.0% 20.5%

50th Percentile 3.6% 8.9% 2.9% 10.2%

25th Percentile 1.3% 3.3% 1.4% 3.6%

5th Percentile 0.6% 1.3% 0.7% 1.8%

Percent of Pay 6.3% 16.3% 8.0% 19.9%

Percentile 67% 67% 82% 73%

Safety

Discount Rate = 7.25%, Amortization Period = 27 Years

GASB 45


Normal Cost & Annual Required Contribution

-10%

0%

10%

20%

30%

40%

50%

60%

PercentofPay

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October 11, 2011 45


95th Percentile 251% 275%





Percent of Pay 207% 242%

Percentile 89% 92%

Miscellaneous Safety

Discount Rate = 7.25%

GASB 45


Actuarial Accrued Liability

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

500%

Percento

fPay

October 11, 2011 46

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:

Service & Interest Cost Benefit changes Inactive gains/losses & assumption changes

Deferred recognition of: Active gains/losses & assumption changes, over (future working lifetime)

closed period Asset gains/losses, over 5 years

Entry age normal cost methodNational Health Care Reform Too early to know impact

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October 11, 2011 47

OTHER ISSUES

Timing:Present preliminary results September 26, 2011Present revised preliminary results October 11, 2011

October 11, 2011 48

EXHIBITS

Topic Page

Premiums E- 1

Data Summary E- 3

Actuarial Assumptions E-29

Definitions E-36

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October 11, 2011 E-1

PREMIUMS

2011 PEMHCA Monthly PremiumsBay Area

Non-Medicare Eligible Medicare Eligible

Medical Plan Single 2-Party Family Single 2-Party Family

Blue Shield $675.51 $1,351.02 $1,756.33 $337.88 $675.76 $1,013.64

Blue Shield NetValue 581.24 1,162.48 1,511.22 337.88 675.76 1,013.64

Kaiser 568.99 1,137.98 1,479.37 282.30 564.60 846.90

PERS Choice 563.40 1,126.80 1,464.84 375.88 751.76 1,127.64

PERS Select 492.68 985.36 1,280.97 375.88 751.76 1,127.64

PERSCare 893.95 1,787.90 2,324.27 433.66 867.32 1,300.98

PORAC 527.00 987.00 1,254.00 418.00 833.00 1,331.00


PREMIUMS

2012 PEMHCA Monthly PremiumsBay Area

Non-Medicare Eligible Medicare Eligible

Medical Plan Single 2-Party Family Single 2-Party Family

Blue Shield Access+ $711.10 $1,422.20 $1,848.86 $337.99 $675.98 $1,013.97

Blue Shield NetValue 611.59 1,223.18 1,590.13 337.99 675.98 1,013.97

Kaiser 610.44 1,220.88 1,587.14 277.81 555.62 833.43

PERS Choice 574.15 1,148.30 1,492.79 383.44 766.88 1,150.32

PERS Select 487.39 974.78 1,267.21 383.44 766.88 1,150.32

PERSCare 1,029.23 2,058.46 2,676.00 432.43 864.86 1,297.29

PORAC 556.00 1,041.00 1,323.00 418.00 833.00 1,331.00

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DATA SUMMARY

Active Medical CoverageBay Area Plans

Medical Plan Single 2-Party Family Waived Total

Blue Shield 90 68 210 - 368

Blue Shield NetValue 2 1 1 - 4

Kaiser 74 65 151 - 290

PERS Choice 22 39 47 - 108

PERSCare - - 1 - 1

PORAC 12 7 54 - 73

Waived - - - 79 79

Total 200 180 464 79 923


DATA SUMMARY

Retiree Medical Coverage - Under Age 65Plan Region Single 2-Party Family Total

Bay Area 48 42 25 115

Los Angeles 1 - - 1

Northern CA - 1 1 2

Sacramento 4 3 1 8

Blue Shield

Southern CA - 1 - 1

Bay Area 37 26 11 74

Northern CA 2 1 3 6

Out of State - 5 1 6

Sacramento 3 3 - 6

Kaiser

Southern CA 2 1 1 4

Bay Area 22 19 7 48

Northern CA 3 2 - 5

Out of State 7 13 2 22

Sacramento 1 - - 1

PERS Choice

Southern CA 2 - - 2

Bay Area 11 5 2 18

Northern CA 1 2 - 3

Out of State 13 2 - 15

Sacramento 2 - 1 3

PERSCare

Southern CA 1 - - 1

PORAC 10 14 12 36

Total 170 140 67 377

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DATA SUMMARY

Retiree Medical Coverage - Over Age 65

Plan Region Single 2-Party Family Total

Bay Area 53 40 2 95

Northern CA - 2 - 2

Sacramento 1 - - 1

Blue Shield

Southern CA 2 3 - 5

Blue Shield NetValue Southern CA 1 - - 1

Bay Area 44 42 6 92

Northern CA 2 2 - 4Out of State 4 3 - 7

Sacramento 6 6 1 13

Kaiser

Southern CA 1 - - 1

Bay Area 14 21 - 35

Los Angeles 1 - - 1

Northern CA 3 5 1 9


Sacramento 1 3 - 4

PERS Choice

Southern CA 4 1 - 5

Bay Area 47 34 - 81

Northern CA 9 7 - 16


Sacramento 3 4 - 7

PERSCare

Southern CA 5 3 - 8

PORAC 1 1 1 3

Total 255 213 15 483


DATA SUMMARY

Medical Plan ParticipationNon-Waived Participants

Retirees

Medical Plan Actives < 65 65 Total

Blue Shield 44% 34% 21% 27%

Blue Shield NetValue 0% 0% 0% 0%

Kaiser 34% 25% 24% 25%

PERS Choice 13% 21% 18% 19%

PERSCare 0% 11% 36% 25%

PORAC 9% 10% 1% 5%

Total 100% 100% 100% 100%

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DATA SUMMARY

Retiree Medical Coverage by Age GroupMiscellaneous

Age Single 2-Party Family Total

Under 50 2 - 2 4

50-54 20 17 8 4555-59 55 38 17 110

60-64 61 62 14 137

65-69 58 68 5 131

70-74 55 41 1 97

75-79 32 23 - 55

80-84 24 15 1 40

Over 85 28 12 - 40

Total 335 276 48 659

Average Age 68.7 67.4 59.5 67.5


DATA SUMMARY

Retiree Age Distribution

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80

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120

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DATA SUMMARY

Retiree Medical Coverage by Age GroupPolice


Under 50 5 3 1 9

50-54 6 3 4 1355-59 8 5 4 17

60-64 8 6 2 16

65-69 6 3 1 10

70-74 5 1 - 6

75-79 4 2 - 6

80-84 4 4 - 8

Over 85 2 - - 2

Total 48 27 12 87

Average Age 64.8 62.7 56.5 63.0

October 11, 2011 E-10

DATA SUMMARY


Police

0

2

4

6

8

10

12

14

16

18


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October 11, 2011 E-11

DATA SUMMARY

Retiree Medical Coverage by Age GroupFire


Under 50 1 1 3 5

50-54 1 2 10 1355-59 5 2 4 11

60-64 7 8 3 18

65-69 4 8 2 14

70-74 11 16 - 27

75-79 5 8 - 13

80-84 4 4 - 8

Over 85 4 1 - 5

Total 42 50 22 114

Average Age 70.6 69.8 55.0 67.2

October 11, 2011 E-12

DATA SUMMARY


Fire

0

5

10

15

20

25

30


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October 11, 2011 E-13

DATA SUMMARY

Actives by Age and ServiceMiscellaneous

City Service

Age < 1 1-4 5-9 10-14 15-19 20-24 25 Total

< 25 1 2 1 - - - - 4

25-29 9 22 11 2 - - - 44

30-34 7 39 23 16 4 - - 89

35-39 6 25 25 23 3 - - 82

40-44 3 24 21 31 14 3 - 96

45-49 4 31 17 46 34 23 5 160

50-54 7 20 23 31 23 15 14 133

55-59 1 13 11 25 11 10 4 75

60-64 - 8 4 13 8 7 - 40

65 - - 2 3 4 1 4 14Total 38 184 138 190 101 59 27 737

October 11, 2011 E-14

DATA SUMMARY


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October 11, 2011 E-15

DATA SUMMARY

Active Age Distribution

Miscellaneous

0

20

40

60

80

100

120

140

160

180

25

Service

Number

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October 11, 2011 E-17

DATA SUMMARY

Actives by Age and ServicePolice

City Service

Age < 1 1-4 5-9 10-14 15-19 20-24 25 Total

< 25 - 2 - - - - - 2

25-29 1 6 2 - - - - 9

30-34 1 10 9 1 - - - 21

35-39 - 3 6 7 2 1 - 19

40-44 - - 3 1 4 1 - 9

45-49 - - 1 2 6 4 4 17

50-54 - 1 1 1 - 1 1 5

55-59 - - - - - - - -

60-64 - - - - - - - -

65 - - - - - - - -Total 2 22 22 12 12 7 5 82

October 11, 2011 E-18

DATA SUMMARY


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October 11, 2011 E-19

DATA SUMMARY


Police

0

5

10

15

20

25

25

Service

Number

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October 11, 2011 E-21

DATA SUMMARY

Actives by Age and ServiceFire

City Service

Age < 1 1-4 5-9 10-14 15-19 20-24 25 Total

< 25 1 2 - - - - - 3

25-29 - 3 2 - - - - 5

30-34 2 3 4 - - - - 9

35-39 - 4 4 10 1 - - 19

40-44 - - 4 9 3 1 - 17

45-49 - 1 4 7 6 13 2 33

50-54 - - - 2 - 5 7 14

55-59 - - - 1 - - 1 2

60-64 - - - - - 1 1 2

65 - - - - - - - -Total 3 13 18 29 10 20 11 104

October 11, 2011 E-22

DATA SUMMARY


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October 11, 2011 E-23

DATA SUMMARY


Fire

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Service

Number

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October 11, 2011 E-25

DATA SUMMARY

Actives by Age and ServiceTotal

City Service

Age < 1 1-4 5-9 10-14 15-19 20-24 25 Total

< 25 2 6 1 - - - - 9

25-29 10 31 15 2 - - - 58

30-34 10 52 36 17 4 - - 119

35-39 6 32 35 40 6 1 - 120

40-44 3 24 28 41 21 5 - 122

45-49 4 32 22 55 46 40 11 210

50-54 7 21 24 34 23 21 22 152

55-59 1 13 11 26 11 10 5 77

60-64 - 8 4 13 8 8 1 42

65 - - 2 3 4 1 4 14Total 43 219 178 231 123 86 43 923

October 11, 2011 E-26

DATA SUMMARY


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October 11, 2011 E-27

DATA SUMMARY


Total

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100

150

200

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Service

Number

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October 11, 2011 E-29

ACTUARIAL ASSUMPTIONS



Valuation Date January 1, 2009 Fiscal Years 2009/10 &


January 1, 2011 Fiscal Year 2011/12 ARC (end

of year)

June 30, 2011 Fiscal Years 2012/13 &


Funding Policy Full Pre-funding throughCalPERS trust (CERBT)

Same General

Inflation 3.00% Same

Discount Rate 7.75% 1/1/11 7.75% 6/30/11 7.25%

29 From 1/1/09 Milliman report

October 11, 2011 E-30



PayrollIncreases





Medical TrendYear

Increase fromPrior Year

2009 Premiums2010 6.50%2011 6.50%2012 6.50%

2013 6.50%2014 6.50%2015 6.00%2016 6.00%2017 6.00%2018+ 5.85%

Increase from Prior YearYear Non-Medicare Medicare2009 n/a2010 n/a2011 Premiums2012 Premiums

2013 9.0% 9.4%2014 8.5% 8.9%2015 8.0% 8.3%2016 7.5% 7.8%2017 7.0% 7.2%2018 6.5% 6.7%2019 6.0% 6.1%2020 5.5% 5.6%2021+ 5.0% 5.0%

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October 11, 2011 E-31




Actuarial Load n/a 2.0% load PEMHCA PPO premium

increases below per capitaclaims increases

Mortality,Termination,Disability



Retirement CalPERS 1997-2002Experience Study

Misc Fire Police

Benefit 2.7%@55 3%@50 3%@50


Misc Fire Police

Benefit 2.7%@55 3%@50 3%@50

2%@6030

ERA 57.5 54.5 54.0

30 Applies to employees hired after July 17, 2010

October 11, 2011 E-32



Participation atRetirement

n/a Hired < 1/1/04: 100% Hired > 1/1/04: 95% Employees with cost sharing:

reduce above %s by 5%

Medical Plan atRetirement

n/a Miscellaneous:


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October 11, 2011 E-33




MedicareEligible Rate

n/a Actives hired < 4/1/86: Miscellaneous 80% Safety 90%

Actives hired > 4/1/86: 100% Retirees < 65: 90% Everyone eligible for

Medicare will elect Part Bcoverage

SpousalCoverage atRetirement

Actives: 60% Retirees: based on current

elections

Currently covered: based oncurrent elections

Currently waived: 80% Family

Coverage at

Retirement

Actives: 18% until age 65 Retirees: based on current

elections until age 65

Actives Misc : 10% until age 65 Safety : 20% until age 65

Retirees: based on currentelections until age 65

October 11, 2011 E-34



Missing PERSGroup

n/a Retirees missing PERS groupassumed to be Misc unlessfund designates Police or Fire

MissingBargainingUnit

n/a Retirees missing bargainingunit assumed to be SEIUunless fund designates Police(PAPOA) or Fire (IAFF)

MissingDepartment

n/a Retirees missing departmentassumed to be 80% GF,10% Elec, and 10% WWT

Missing Fund n/a People assumed to be 80% GFfrom above assumption placedin Unknown Fund

SurvivingSpouseParticipation

n/a 100%

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October 11, 2011 E-35




Spouse Age Actives Males 3 years olderthan females

Retirees Males 3 yearsolder than females if spousebirth date not available

Same

Future NewParticipants

None Closed Group Same

October 11, 2011 E-36

DEFINITIONS

GASB 45AccrualAccounting

Project future employer-provided benefit cash flows for current activeemployees and current retirees

Discount projected cash flow to valuation date using discount rate (assumedreturn on assets used to pay benefits) and other actuarial assumptions todetermine present value of projected future benefits (PVB)

Allocate PVB to past, current, and future periods using the actuarial costmethod

Actuarial cost method used for this valuation is the Entry Age Normal Costmethod which determines Normal Cost as a level percentage of payroll (samemethod 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 segregatedand restricted trust

PayGo Cost 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

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October 11, 2011 E-37

DEFINITIONS

Present Value of Benefits


(With Plan Assets)

Unfunded

Actuarial Accrued

Future

Normal

Costs

Normal Cost

Assets


(Without Plan Assets)

Unfunded Actuarial

Accrued Liability

Future

Normal

Costs

Normal Cost

October 11, 2011 E-38

DEFINITIONS

AnnualRequiredContribution(ARC)

Required contribution for the current period including: Normal Cost Amortization of:

- Initial UAAL- AAL for plan, assumption, and method changes- Experience gains/losses (difference between expected and actual)- Contribution gains/losses (difference between ARC and contributions)

ARC in excess of pay-as-you-go costs not required to be fundedNet OPEB

Obligation

(NOO)

Net OPEB Obligation is the accumulated amounts expensed but not funded Net OPEB Asset if amounts funded exceed those expensed

Annual OPEBCost (AOC)

Expense for the current period including: ARC Interest on NOO Adjustment of NOO

NOO adjustment prevents double counting of expense since ARCs include anamortization of prior contribution gains/losses previously expensed

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Blue Shield 23.35% 17.95% 23.71% 9.11% 13.80% 10.06% 5.19% 2.99%

Blue Shield NetValue 3.61% 0.98%

Kaiser 23.33% 17.83% 16.13% 9.78% 10.73% 9.16% 7.99% 4.77%

PERS Choice 18.88% 18.04% 5.82% 9.43% 12.50% 6.00% 0.00% 5.44%

PERS Select -3.00% 4.80%

PERSCare 22.05% -0.59% 13.80% 9.76% 13.09% -2.56% 0.00% 15.78%

WHA 15.00% 34.23% 15.00% 9.80% 11.80%

PORAC 21.25% 9.91% 1.65% 0.00% 9.97% 2.99% 6.99% 0.00%

Blue Shield 4.00% 17.95% -10.06% -0.45% 11.33% 7.05% 0.00% -12.27%

Blue Shield NetValue 0.00% -1.68%

Kaiser 55.60% 31.90% -11.19% -10.13% 32.52% -5.63% 2.49% 6.50%

Kaiser/OOS 13.21% 36.39% 8.96% -19.53% 29.43% 9.89% 6.75% 0.16%

PERS Choice 5.08% -1.40% -8.53% 15.18% 6.12% 2.15% 0.00% 2.00%

PERS Select 0.00% 2.00%

PERSCare 5.92% -1.16% -13.91% 20.01% 7.05% 8.86% 0.00% 1.48%

PORAC 21.30% 5.42% 0.00% 0.00% 0.00% -9.33% 7.03% 10.00%

WHA 12.08% 55.09% 0.00% -1.00% 7.00%

Medicare - All Regions

Percent

Change

Percent

Change

Percent

Change

Percent

Change

Percent

Change

Percent

Change

Percent

Change

Bay Area

CalPERS 2002-2012 Health Premiums - Regional

2003-04

Percent

Change

2004-05

Percent

Change

Medicare PercentChange

2009-10

Percent

Change

2007-08

Percent

Change

2008-09

Percent

Change

2005-06

Percent

Change

2006-07

Percent

Change

Basic2002-03

Percent

Change

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RESULTS BY FUND

Actuarial Accrued Liability (AAL)(Amounts in 000s)

January 1, 2009 January 1, 2011 June 30, 2011

7.75% 7.75% 7.25%

CIP $ 1,564 $ 2,409 $ 2,572 Elec1,2 13,214 16,325 17,225 Gas1 4,589 6,227 6,668 GF3 91,488 118,946 125,564 ISF - Technology 2,226 2,079 2,257 ISF - Vehicle 1,225 1,411 1,510 Refuse 3,063 4,931 5,256 Storm Drain 494 1,478 1,565 Water1 4,673 5,189 5,539 WWC1 2,013 2,103 2,313 WWT 5,112 8,881 9,454 Total 129,661 169,979 179,923

1Assets for Fiber Optics Fund appropriated to Elec due to no Fiber Optics employees in data

2 AAL for UTL employees allocated to Elec, Gas, Water, and WWC in proportion to each Funds AAL3 Assets for Printing & Mailing Fund appropriated to GF due to no Printing & Mailing employees in data

October 12, 2011 2

RESULTS BY FUND

Annual Required Contribution (ARC)(Amounts in 000s)

1/1/09

Valuation

1/1/11

Valuation 6/30/11 Valuation

Annual Required Contribution 2009/10 2011/12 2012/13 2013/14

7.75% 7.75% 7.25%

CIP $ 142 $ 220 $ 237 $ 245 Elec1,2 953 1,164 1,235 1,275 Gas1 344 390 515 532 GF3 6825 9,510 10,018 10,344 ISF - Technology 214 229 245 253 ISF - Vehicle 95 126 132 136 Refuse 245 402 420 434 Storm Drain 36 112 118 121 Water1 386 428 464 479 WWC1 169 200 223 230 WWT 377 730 771 796 Total 9,786 13,603 14,378 14,845

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Excerpt from Finance Committee minutes of October 18, 2011.

2. Review and Acceptance of Updated Retiree Medical Actuarial Study Valuation Date January 1, 2011 and Valuation Date June 30, 2011

Director of Administrative Ser

City of Palo Alto (CA) Staff Report: Retiree Health Care Costs/Liabilities

Documents

Transcript of City of Palo Alto (CA) Staff Report: Retiree Health Care Costs/Liabilities