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

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

3. 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

4. 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

5. 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

6. 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

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

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

9. 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

10. 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

11. 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

12. 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

13. 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

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

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

16. P 3 Actuaries you can understand 16 Present Value of Benefits at 8.16% 100% Continuance 60% Continuance Thru 200654.552.1 Thru 200757.254.8 Thru 200859.957.4 Thru 200962.960.3 Thru 201065.462.7 All Current Members90.485.8

17. P 3 Actuaries you can understand 17 Retirees Thru June 30, 2006 100% Continuance

18. P 3 Actuaries you can understand 18 Retirees Thru June 30, 2007 100% Continuance

19. P 3 Actuaries you can understand 19 Retirees Thru June 30, 2008 100% Continuance

20. P 3 Actuaries you can understand 20 Retirees Thru June 30, 2009 100% Continuance

21. P 3 Actuaries you can understand 21 Retirees Thru June 30, 2010 100% Continuance

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

23. 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 200699 341813 Thru 20073527221612 Thru 20082321191411 Thru 20091918161311 Thru 20101716151210 All Current Members12 11109

24. P 3 Actuaries you can understand 24 Retirees Thru June 30, 2006 60% Continuance

25. P 3 Actuaries you can understand 25 Retirees Thru June 30, 2007 60% Continuance

26. P 3 Actuaries you can understand 26 Retirees Thru June 30, 2008 60% Continuance

27. P 3 Actuaries you can understand 27 Retirees Thru June 30, 2009 60% Continuance

28. P 3 Actuaries you can understand 28 Retirees Thru June 30, 2010 60% Continuance

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

30. 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 200699 2114 Thru 200799 311713 Thru 20083226221612 Thru 20092220181411 Thru 20101918161311 All Current Members13 12119

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