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I'art~cla flreruls-(Zing October 23, 2007 Page ? /. !~ Valuation Process Our valuation is a four step process consisting of ^ Gathering participant data ^ Meeting with the City to discuss valuation methods and assumptions ^ Valuation processing ^ Meeting with the City to discuss valuation results, including: • Annual Required Contribution • Annual OPEB Cost • Expected Net OPEB Obligation • I 0 years of projected benefit payments and Annual OPEB Cost We will provide the City a discussion outline and formal. report including the above information. When the City adopts GASB 45, the City may need us to prepare a draft GASB 4S footnote. Some agencies also request an Executive Summary, which provides a summary of the study results in an easily understandable format. If the City pre-funds using Ca1PERS Employers' Retiree Benefit Trust {CERBT}, the City will need additional information required by CaIPERS. Our Approach. We believe that there are two levels to a GASB 45 actuarial valuation. Tl~e first level is technical compliance with GASB 45. Same public employers may hire an actuary to assist only with technical compliance with the standard, limiting the scope of services to preparing the required financial reporting and disclosure. The second level goes beyond reporting and disclosure issues, and includes assisting management with an understanding of GASB 45, the actuarial assumptions and methods, the valuation results, the financial statement impact including a review of the plan design and cast. Our recommended approach to GASB 4S studies includes both consulting levels, meeting with managementtn person at least twice during tine valuation process. We would first meet with the City to review employee data, plan provisions, and actuarial methods and assumptions. This will assure that we have the proper information. to begin the valuation. We would meet a second time to review the valuation results and their financial impact. Eshma#ed Fees Our fees to prepare a GASB 45 and GASB I6 valuation will be approximately $23,500. The approximate cost of each project step is as follows: Pro~ec# Sten Es#imated Fees Actuarial Valuation (GASB 45 -Cash subsidy) $ l 1700 Actuarial Valuation (GASB I6 -Unused sick Leave) 5,000 Discount Rate Sensitivity {2 discount rates) g00 AB 2.544 tJnequaI Method Impact 500 Methods & Assumptions Meeting 1500 Preliminary Results Meeting I S00 Formal Valuation Report ~ 500 Total ~+ $23,500 25G-10