P 3 Actuaries you can understand 1 DRAFT Supplemental Benefits Issues and Options August 29, 2005 P

P 3 Actuaries you can understand 2 Syllabus Current Benefits –Quick Review –Funded Status Options Proposed –Quick Review –Cost Analysis Next Steps

P 3 Actuaries you can understand 3 Current Supplemental Benefits Two Pieces –Purchasing Power COLA –Dollars for Retiree Health

P 3 Actuaries you can understand 4 Regular COLA – Current New Retiree Year Basic $500 COLA$ 0$ 15$ 30$ 46$ 63$ 80 Total $500 $515$530$546$563$580 Inflation4.0% COLA3.0%

P 3 Actuaries you can understand 5 Regular COLA – Current New Retiree

P 3 Actuaries you can understand 6 Regular COLA – Current Long-time Retiree Year Basic $500 COLA$547$578$611$644$678$714 Total $1,047 $1,078$1,111$1,144$1,178$1,214 Inflation4.0% COLA3.0%

P 3 Actuaries you can understand 7 Regular COLA – Current Long-time Retiree

P 3 Actuaries you can understand 8 Supplemental COLA – Current (4% Inflation) Year Basic $500 COLA$547$578$611$644$678$714 Supplemental $141 $156$172$189$206$225 Total $1,188 $1,235$1,283$1,333$1,384$1,438 Inflation4.0%

P 3 Actuaries you can understand 9 Supplemental COLA - Current (4% Inflation)

P 3 Actuaries you can understand 10 Supplemental COLA – Current (2% Inflation) Year Basic $500 COLA$547$578$611$644$678$714 Supplemental $141 $135$128$120$112$103 Total $1,188 $1,213$1,238$1,264$1,290$1,317 Inflation2.0%

P 3 Actuaries you can understand 11 Supplemental COLA - Current (2% Inflation)

P 3 Actuaries you can understand 12 Current Retiree Health Benefits Two Pieces –Settlement Section 9 –Non-guaranteed benefits

P 3 Actuaries you can understand 13 Settlement Section 9 $3 per year of service Guaranteed Additional amounts when additional undistributed earnings are available

P 3 Actuaries you can understand 14 Non-Guaranteed Benefits If member prior to 1990 –$45 plus –$3.50 per year of service If member after 1989 –$5 per year of service

P 3 Actuaries you can understand 15 Current Features Paid to all annuitants Paid from the date of retirement Paid for life of member Same amount continues to spouse upon member’s death

P 3 Actuaries you can understand 16 Funded Percentage as of 6/30/2004 – Non-Valuation Benefits $ in Millions Purchasing Power Benefits Retiree Health Benefits Total Non- Valuation Benefits PVB $ 30.1$ 88.3$ Actuarial Assets $ 7.1$ 67.7$ 74.8 Unfunded Projected Liability $ 22.9$ 20.6$ 43.5 Funded Percentage 24%77%63% * After transfer of $5 Million for Supplemental COLA

P 3 Actuaries you can understand 17 Options Reviewed Purchasing Power COLA Retiree Health Alternatives requested by FCERA Board at meeting of July 22, 2005

P 3 Actuaries you can understand 18 Calculations Based on data and assumptions from June 30, 2004 Actuarial Valuation of FCERA Calculated as of June 30, 2005

P 3 Actuaries you can understand 19 Purchasing Power COLA Options Continue for only those receiving benefit –Fixed Dollar Amount –Purchasing Power Protection Continue for those close to receiving benefit

P 3 Actuaries you can understand 20 COLA Bank as of April 2005

P 3 Actuaries you can understand 21 Option 1A – Fixed Dollar COLA Benefits Only paid to those currently receiving it and their beneficiaries Dollar amount fixed in 2005 –Will not increase or decrease

P 3 Actuaries you can understand 22 Option 1A – Fixed Dollar COLA Benefits

P 3 Actuaries you can understand 23 Option 1A – Fixed Dollar COLA Benefits Estimated Present Value at 7/1/2005 $12 million

P 3 Actuaries you can understand 24 Option 1B – Purchasing Power Current Only Only paid to those currently receiving it and their beneficiaries Keep Purchasing Power at 75% –Will increase or decrease based on CPI

P 3 Actuaries you can understand 25 Option 1B – Purchasing Power Current Only

P 3 Actuaries you can understand 26 Estimated Present Value at 7/1/2005 $19 million Option 1B – Purchasing Power Current Only

P 3 Actuaries you can understand 27 Option 2 – Purchasing Power Current and Close Only paid to those currently receiving it and their beneficiaries Also will be paid to those who are close to receiving it –Retired in the 12-Month Period from 4/2/1981 to 4/1/1982 (Two retirees) Keep Purchasing Power at 75% –Will increase or decrease based on CPI

P 3 Actuaries you can understand 28 Option 2 – Purchasing Power Current and Close

P 3 Actuaries you can understand 29 Estimated Present Value at 7/1/2005 $19 million PV for additional retirees approx $3,000 Option 2 – Purchasing Power Current and Close

P 3 Actuaries you can understand 30 Retiree Health Options Current Retirees –Retain current benefit level Future Retirees –Three Categories of Active Employees –Must they retire from Fresno County? –What gets paid to beneficiaries? –How much can be paid?

P 3 Actuaries you can understand 31 Future Retirees Eligible to Retire now Vested, but not eligible to retire Not yet vested

P 3 Actuaries you can understand 32 Future Retirees Current Form –Paid to retiree and 100% continued to beneficiary Alternatives –Paid to retiree and 60% paid to spouse –Paid to retiree and 60% paid to beneficiary –Paid to retiree and beneficiary paid based on option selected

P 3 Actuaries you can understand 33 Current Retirees If member prior to 1990: –$45 plus –$3.50 per year of service If member after 1989: –$5 per year of service Maximum: $150

P 3 Actuaries you can understand 34 Current Retirees

P 3 Actuaries you can understand 35 Current Retirees Estimated Present Value at 7/1/2005 $49 million

P 3 Actuaries you can understand 36 Eligible to Retire Full Benefit Continue full amount to beneficiary

P 3 Actuaries you can understand 37 Eligible to Retire

P 3 Actuaries you can understand 38 Eligible to Retire PV Current Benefit (Millions) % Payable from $5 million Current$19.226% 60% Spouse$18.028% 60% Benef.$18.227% Option Elected$18.128%

P 3 Actuaries you can understand 39 All Vested

P 3 Actuaries you can understand 40 All Vested PV Current Benefit (Millions) % Payable from $5 million Current$34.614% 60% Spouse$32.415% 60% Benef.$32.615% Option Elected$32.415%

P 3 Actuaries you can understand 41 All Active Members

P 3 Actuaries you can understand 42 All Active Members PV Current Benefit (Millions) % Payable from $5 million Current$40.512% 60% Spouse$38.013% 60% Benef.$38.313% Option Elected$38.013%

P 3 Actuaries you can understand 43 Where do we go from here?