1. P 3 Actuaries you can understand 1 Member Contribution Rates - Changes to Calculation of COL Rates January 10, 2007 P

2. P 3 Actuaries you can understand 2 Syllabus Calculation Methodology Impact of Change Transition Options

3. P 3 Actuaries you can understand 3 Member Contributions BASIC Regular COLA BASIC Settlement COLA Valuation Based Statutory Nature

4. P 3 Actuaries you can understand 4 Basic Accumulation toward target benefit at target retirement age Based on: –Benefit structure –Salary increase assumption –Life expectancy at retirement –Rate of Return assumption Varies by Age at Entry

5. P 3 Actuaries you can understand 5 COL Contributions 31873. Any increases in contributions shall be shared equally between the county or district and the contributing members …

6. P 3 Actuaries you can understand 6 COL Contributions Prior Methodology –Same assumptions as Employer Contributions –Same funding methods as Employer Contributions –Required COL Contribution for all members allocated proportionally to Basic Contribution Same % for General & Safety Same % for all Tiers

7. P 3 Actuaries you can understand 7 COL Contributions Prior Methodology –Required COL Contribution = 50% of (NC + Amortization of UAAL) –Rate changes phased in (50% of change) when rates change by more than 10% –Delayed contributions added to UAAL

8. P 3 Actuaries you can understand 8 COL Contributions Proposed Methodology –Same assumptions as Employer Contributions –Same funding methods as Employer Contributions –Required COL Contribution for all members allocated proportionally to Basic Contribution Same % for General & Safety Same % for all Tiers

9. P 3 Actuaries you can understand 9 COL Contributions Proposed Methodology –Required COL Contribution = 50% of (NC + Amortization of Deferred NC) –Rate changes phased in (50% of change) when rates change by more than 10% –Delayed NC contributions paid by Members over amortization period

10. P 3 Actuaries you can understand 10 Member COL Contributions Paid July 2003 – Dec 2006 Member COL Contributions 2003/20042004/20052005/2006 2006/2007 (thru 12/4) General – Regular COL 6,389,838.28 5,958,152.04 5,758,414.95 3,642,854.23 Safety – Regular COL 1,710,568.57 2,262,719.31 2,252,902.33 1,163,070.38 General - Settlemnt COL 1,338,665.70 3,949,031.80 2,410,258.39 Safety - Settlemnt COL 233,598.04 543,984.84337,820.43 Total $8,100,406.85 $9,793,135.09 $12,504,333.92 $7,554,003.43

11. P 3 Actuaries you can understand 11 General Regular COL Rates

12. P 3 Actuaries you can understand 12 General Settlement COL Rates

13. P 3 Actuaries you can understand 13 Safety Regular COL Rates

14. P 3 Actuaries you can understand 14 Safety Settlement COL Rates

15. P 3 Actuaries you can understand 15 UAAL Paid – Percent of Pay

16. P 3 Actuaries you can understand 16 UAAL Paid - Dollars

17. P 3 Actuaries you can understand 17 Net COL UAAL Paid (with interest) FY 03/04FY 04/05FY 05/06FY 06/07 Total with Interest General Regular2,129,946.09 (2,936,517.79) 178,357.99 1,273,230.60 736,419.14 General Settlement0 (669,332.85) 113,914.38842,747.69195,621.47 Safety Regular 568,401.10 629,572.04 668,380.23493,906.602,630,649.95 Safety Settlement0 66,742.30 160,975.11142,566.42389,906.34

18. P 3 Actuaries you can understand 18 Net COL UAAL Paid (with interest) Delayed NC UAAL Contributions Total with Interest General Regular (3,369,246.81) 4,105,665.95 736,419.14 General Settlement (767,966.60) 963,588.07195,621.47 Safety Regular0.00 2,630,649.95 Safety Settlement0.00 389,906.34

19. P 3 Actuaries you can understand 19 Dealing with UAAL Should we treat past overpayments (UAAL contributions) the same as past underpayments (Delayed NC)? –Option 1 – Net UAAL Contributions against Delayed NC –Option 2 – Refund overpayments, amortize Delayed NC

20. P 3 Actuaries you can understand 20 FY 06/07 COL Rates Shared Repayment Spread over future working lifetime

21. P 3 Actuaries you can understand 21 Dealing with UAAL Should we share repayment of UAAL between General and Safety? Between Tiers? –Option A – Share charge (credit) for repayment of UAAL proportionally to ongoing contributions –Option B – Charge (credit) separately for Safety and General and within Tiers based on balance of UAAL paid

22. P 3 Actuaries you can understand 22 FY 06/07 COL Rates Separate Repayment of Net Payment Spread over future working lifetime

23. P 3 Actuaries you can understand 23 Dealing with UAAL Over what period should we amortize repayment of UAAL? –Option i – Future working lifetime of current employees –Option ii –Over three years –Option iii – One year

24. P 3 Actuaries you can understand 24 FY 06/07 COL Rates Separate Repayment of Net Repayment

25. P 3 Actuaries you can understand 25 Questions