New England Pension Consultants Oklahoma State Pension Commission Retirement System Summary of Actuarial Reports December, 2001

New England Pension Consultants 1 Retirement System Characteristics and Assumptions Based on July 1, 2001 Actuarial Valuation Reports from Actuary 1 Retirement System comprised of the seven plans (Teachers, PERS, Police, Firefighters, Law Enforcement, Judges, Wildlife) All plans employ similar funding method – Entry Age Normal Entry age normal is a conservative funding schedule All plans employ similar asset valuation method (smoothed value) Smoothing asset values allows Trustees to focus the investment program on the long term Investment return assumptions range from 7.5% to 8.0% Public Fund assumed investment return median is 8.3% 2 Therefore, this assumption is more conservative than average public fund All plans have in place long term schedules (15 years and longer) to fully fund all programs. Lets not lose focus of the long term nature of what were doing 1.Buck Consultants, William M. Mercer and Gabriel, Roeder, Smith & Company 2.Greenwich Associates survey based on preliminary data collected in September Dow breaks through 1,000 for first time 1974 Dow falls back below 1, Dow breaks through 1,000 for good Dow breaks through 4,000 Dow peaks above 11,000 Public funds significantly up their equity commitments

New England Pension Consultants 2 Funded Status History – Actuarial Value of Assets Teachers Fire PERs Police Wildlife Law Judges Source: R.V. Kuhns & Associates, Buck Consultants, William M. Mercer and Gabriel, Roeder, Smith & Company

New England Pension Consultants 3 Funded Status Source: R.V. Kuhns & Associates, Buck Consultants, William M. Mercer and Gabriel, Roeder, Smith & Company

New England Pension Consultants 4 Actuarial Accrued Liability and Assets( ) Source: R.V. Kuhns & Associates, Buck Consultants, William M. Mercer and Gabriel, Roeder, Smith & Company

New England Pension Consultants 5 Funded Status Source: Greenwich Associates, Fall 2001

New England Pension Consultants 6 Annual Cost as % of Payroll * Teachers includes state and legislated employers contributions only Teachers Fire PERs Police Wildlife Law Judges Source: R.V. Kuhns & Associates, Buck Consultants, William M. Mercer and Gabriel, Roeder, Smith & Company

New England Pension Consultants 7 Contributions NA = Not Available Source: R.V. Kuhns & Associates, Buck Consultants, William M. Mercer and Gabriel, Roeder, Smith & Company

New England Pension Consultants 8 Investment Return – Actuarial Value Source: R.V. Kuhns & Associates, Buck Consultants, William M. Mercer and Gabriel, Roeder, Smith & Company

New England Pension Consultants 9 Investment Return – Market Value Volatility Market Value Actuarial Value Source: R.V. Kuhns & Associates, Buck Consultants, William M. Mercer and Gabriel, Roeder, Smith & Company

New England Pension Consultants 10 Combined Plans (ex-Teachers) 1 - Projected Benefit Payments * Actual benefits paid for 7/1/ /30/2001 plan year 1. For the Teachers Plan, projection of benefit payments not provided in valuation report Source: Buck Consultants, William M. Mercer and Gabriel, Roeder, Smith & Company

New England Pension Consultants 11 Retirement System Investment Return Assumptions Based on July 1, 2001 Actuarial Valuation Reports from Actuary 1 The assumed investment return assumption ranges from 7.5% to 8.0% Public Fund assumed investment return median is 8.3% 2 Distribution of investment return assumptions for surveyed public funds below (September, 2001) 2 1.Buck Consultants and William M. Mercer and Gabriel, Roeder, Smith & Company 2.Greenwich Associates survey based on preliminary data collected in September %8.0%

New England Pension Consultants 12 Total Public Funds-Equity Commitment

New England Pension Consultants 13 Equity Return Outlook Lehman Bros. Aggregate Bond Index yield to maturity is 5.3% as of 9/30/2001 Assuming the fixed income portion of the portfolio returns 5.3% annually, Table below summarizes the required equity return to achieve an assumed investment rate of return under various equity commitment scenarios