P 3 Actuaries you can understand 1 Non-Valuation Benefits Issues and Options June 7, 2006 P

P 3 Actuaries you can understand 2 Syllabus Review of Reserves Options Proposed Present Value Cash Flow

P 3 Actuaries you can understand 3 Undistributed Earnings AKA Excess Earnings –Earnings available after: Crediting regular interest Filling Contingency Reserve –Calculated on smoothed basis –Limited expectations for near future

P 3 Actuaries you can understand 4 Non-Valuation Reserves as of June 30, 2005 Market ValueActuarial Value Supplemental Cost of Living Reserve5,271,7695,163,168 Retiree Health Insurance Reserve (BOR)67,267,92165,882,165 Preliminary Total72,539,68971,045,333

P 3 Actuaries you can understand 5 Non-Valuation Reserves as of June 30, 2005 Market ValueActuarial Value Preliminary Total72,539,68971,045,333 Transfer to Member COL Reserve(3,956,853)(3,875,339) Remaining Total68,582,83667,169,994

P 3 Actuaries you can understand 6 Non-Valuation Reserves as of June 30, 2005 Market ValueActuarial Value Remaining Total68,582,83667,169,994 Match Liability for Supplemental COLA10,439,46010,224,402 Available for Retiree Health (BOR)58,143,37656,945,592

P 3 Actuaries you can understand 7 Current Retiree Health Benefits Two Pieces –Settlement Section 9 –Non-guaranteed benefits

P 3 Actuaries you can understand 8 Settlement Section 9 $3 per year of service Guaranteed Additional amounts when additional undistributed earnings are available

P 3 Actuaries you can understand 9 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 Maximum: $150

P 3 Actuaries you can understand 10 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 11 Options for Retiree Health Decrease payment to beneficiary not already receiving to 60% of retiree benefit Split between Current Retirees and Future Retirees

P 3 Actuaries you can understand 12 Current Retirees Proposed cut off dates –June 30, 2006 –June 30, 2007 –June 30, 2008 –June 30, 2009 –June 30, 2010 –No Cut Off

P 3 Actuaries you can understand 13 Calculations Based on data and assumptions from June 30, 2005 Actuarial Valuation of FCERA All Dollars in Millions

P 3 Actuaries you can understand 14 Projected Annual Payout 100% Continuance to Spouse

P 3 Actuaries you can understand 15 Projected Annual Payout 60% Continuance to Spouse

P 3 Actuaries you can understand 16 Present Value of Benefits at 8.16% 100% Continuance 60% Continuance Thru Thru Thru Thru Thru All Current Members

P 3 Actuaries you can understand 17 Retirees Thru June 30, % Continuance

P 3 Actuaries you can understand 18 Retirees Thru June 30, % Continuance

P 3 Actuaries you can understand 19 Retirees Thru June 30, % Continuance

P 3 Actuaries you can understand 20 Retirees Thru June 30, % Continuance

P 3 Actuaries you can understand 21 Retirees Thru June 30, % Continuance

P 3 Actuaries you can understand 22 All Current Members 100% Continuance

P 3 Actuaries you can understand 23 Years Reserves Expected to Last 100% Continuance 8.16%7.90%7.50%6.00%4.00% Thru Thru Thru Thru Thru All Current Members

P 3 Actuaries you can understand 24 Retirees Thru June 30, % Continuance

P 3 Actuaries you can understand 25 Retirees Thru June 30, % Continuance

P 3 Actuaries you can understand 26 Retirees Thru June 30, % Continuance

P 3 Actuaries you can understand 27 Retirees Thru June 30, % Continuance

P 3 Actuaries you can understand 28 Retirees Thru June 30, % Continuance

P 3 Actuaries you can understand 29 All Current Members 60% Continuance

P 3 Actuaries you can understand 30 Years Reserves Expected to Last 60% Continuance 8.16%7.90%7.50%6.00%4.00% Thru Thru Thru Thru Thru All Current Members

P 3 Actuaries you can understand 31 Where do we go from here?