1. P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

2. P 3 Actuaries you can understand 2 Overview Overall impression Areas of Agreement Issues for Discussion

3. P 3 Actuaries you can understand 3 Overall Impression Audit is a useful part of actuarial process Valuation results were accurate, but not perfect –Assumptions reasonable –Segal methodology produces higher employer contribution –Questions about member contribution rates

4. P 3 Actuaries you can understand 4 Areas of Agreement Mistakes Process Refinements Reporting and Documentation

5. P 3 Actuaries you can understand 5 Mistakes Recommend adjusting with June 30, 2006 valuation –Safety retirement rates –Safety salary increase assumptions used in calculation of member contribution rates for members with less than 8 years of service –Vested Reciprocal Terminated Members over age 63 (55 for Safety) –Active member death benefit

6. P 3 Actuaries you can understand 6 Process Refinements Review in next experience analysis –COLA Timing –Salary Increase Timing Add to information collected –Temporary Annuity Option Survivor Continuance

7. P 3 Actuaries you can understand 7 Reporting and Documentation Add to valuation report –Average member contribution rates –Development of member COL contributions Reserve allocation UAAL amortization Explanation of process

8. P 3 Actuaries you can understand 8 Reporting and Documentation Minimum Amortization under GASB Statement 27 –Fixed in June 30, 2005 actuarial valuation

9. P 3 Actuaries you can understand 9 Issues for Discussion Member Contribution Rates Cost Allocation

10. P 3 Actuaries you can understand 10 Member Contribution Rates Regular Basic – OK Regular COL –Question about UAAL Settlement Basic – OK Settlement COL –Question about UAAL –Question about estimating UAAL

11. P 3 Actuaries you can understand 11 Cost Allocation Both approaches calculate costs based on current membership P 3 approach assumes contributions for all employees there at beginning of each year. Segal approach assumes contributions for all employees there at end of each year.

12. P 3 Actuaries you can understand 12 Questions