1. FCERA Dec. 16, 2009 Board Meeting Comparison of Different Amortization Methods and Periods Paul Angelo, FSA The Segal Company San Francisco 5061935v2

2. Slide 2 FCERA Dec. 16, 2009 Board Meeting Amortization of Unfunded Liability  FCERA uses multiple layers, decreasing periods to amortize UAAL as a level percentage of pay  Amortization periods:  UAAL through 6/30/03 valuation: 30 years (25 years remaining as of 6/30/08 valuation)  Actuarial gains/losses and assumption changes after 6/30/03 valuation: 15 years  Plan amendment: 30 years

3. Slide 3 FCERA Dec. 16, 2009 Board Meeting Amortization of Unfunded Liability  Total UAAL in 6/30/08 valuation: $618 million  About one-third ($212 million) is from 6/30/03 layer  Amortized over 25 years as of 6/30/08 valuation  The rest primarily amortized over 15-year layers  As with any amortization, the total interest cost payment for 6/30/03 layer depends on:  Method of amortization  Level dollar amount or level percent of pay amortization  Amortization period  Present value of future payments is the same

4. Slide 4 FCERA Dec. 16, 2009 Board Meeting Illustration of Amortization Methods ($000)

5. Slide 5 FCERA Dec. 16, 2009 Board Meeting Illustration of Amortization Methods ($000)

6. Slide 6 FCERA Dec. 16, 2009 Board Meeting Q U E S T I O N S