VACo/VML Pooled OPEB Trust Annual Report of the Program Administrator 2010

VACo/VML Pooled OPEB Trust 2 VACo/VML OPEB Trust Accounts Alexandria City Public Schools Chesapeake Public Schools Chesterfield County Chesterfield County Public Schools City of Roanoke City of Salem City of Suffolk City of Virginia Beach Fairfax County Fairfax County Public Schools Fauquier County & Public Schools Fluvanna County Health Care Commission of Chesterfield Henrico County Henry County Henry County Public Service Authority Henry County Schools Henry County/Martinsville Social Services Loudoun County Newport News Redevelopment & Housing Authority Newport News Public Schools Rappahannock Area Community Services Board Richmond Metropolitan Authority Roanoke County Salem City Schools Southeastern Cooperative Educational Programs Stafford County Stafford County Public Schools Staunton City & Public Schools Suffolk Public Schools Town of Ashland Town of Blacksburg Town of Leesburg Virginia Beach City Public Schools

VACo/VML Pooled OPEB Trust 3 Assets $ Millions $220.1 MM $91.0 MM $156.6 MM

VACo/VML Pooled OPEB Trust 4 Key Board Actions  Added 5% allocation (Portfolio I) to Hedge Fund of Funds – selected Grosvenor Multi-Strategy Fund  Added 23% allocation to Active Fixed Income Manager – selected PIMCO Total Return Fund  Conducted Fund Manager due diligence interviews with CS McKee and Artio Global Investors  Created a second investment portfolio

VACo/VML Pooled OPEB Trust 5 Second Portfolio Added  Porfolio II provides another option for Local Finance Boards to consider in investing their OPEB assets.  Expected rates of return: Portfolio I – 7.5% Portfolio II – 6.5%  Portfolio II is constructed with an alternatively weighted asset allocation but drawing from the same fund components as Portfolio I.  Transfers between Portfolios are allowed once a year. Local Finance Boards must provide notice by April 1. Transfer is effective on July 1.

VACo/VML Pooled OPEB Trust 6 Education & outreach  Staff has conducted briefings with dozens of localities in past year.  Larger, stronger credits have generally decided to address their OPEB liabilities  Smaller, less strong credits are beginning to address:  “Phase 3” localities must report liabilities as of June 30, 2010  Economic conditions make funding a challenge  Yet, cumulative liability starts out small, grows larger and more difficult to address if funding is postponed

VACo/VML Pooled OPEB Trust 7 Actions to assist smaller localities  Alternate fee schedule  Offers lower upfront membership fee  Designed especially for localities with Annual Required Contributions of $150,000 or less  GASB Help – Online Actuarial Services  Provides an online alternative to commissioning a complete actuarial study – especially for employers with < 100 plan participants  Provided by Milliman Inc.  Fees start at $1,500 for two-years of access

VACo/VML Pooled OPEB Trust 8 Actuarial Services  VML/VACo Finance is partnering with Milliman Inc. to provide deeply discounted actuarial studies.  VML/VACo Finance provides a no-obligation fee quote in advance. Request form may be accessed on website.  An RFP is not required.

VACo/VML Pooled OPEB Trust 9 Actuarial Services Clients Alexandria City Public SchoolsGiles CountyNelson County Schools Alleghany County Public SchoolsGreene CountyNorthumberland County Amherst CountyHampton Roads PDCNorthumberland County Schools AshlandHampton Roads Regional JailNorthwestern CSB Brunswick SchoolsHarrisonburg-Rockingham CSBPatrick County Caroline CountyKing & Queen County & SchoolsPurcellville, Town Caroline County SchoolsKing George County Public SchoolsRadford City Public Schools Charles City CountyKing William CountyRappahannock Area CSB City of BedfordKing William County Public SchoolsRichmond County Danville-Pittsylvania Comm ServLunenburg Co Public SchoolsRoanoke Regional Airport Commision Dickenson County Public SchoolsMathews CountySouthwest VA Regional Jail Dinwiddie CountyMathews County Public SchoolsSurry County Dinwiddie County SchoolsMecklenburg CountyTown of Wise Front RoyalMiddlesex County Public SchoolsVinton Giles Co Public SchoolsNelson CountyWestmoreland County Public Schools