BICKMORE & ASSOCIATES, INC.-2014

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Actuarial Valuation of Other Post - Employment Benefit Programs as of April 1, 2012 for the City of Sample Citv D. Valuation Process The valuation has been based on employee census data initially submitted to us by the City in December 2012 and clarified in various related communications. Summaries of that data are provided in Table 2. While the individual employee records have been reviewed to verify that it is reasonable in various respects, the data has not been audited and we have otherwise relied on the City as to its accuracy. A summary of the benefits provided under the Plan is provided in Table 3, based on information supplied to Bickmore by the City. The valuation described below has been performed in accordance with the actuarial methods and assumptions described in Table 4. In the specific development of the projected benefit values and liabilities, we first determine an expected premium or benefit stream over the employee's future retirement. We then calculate a present value of these benefits as of the valuation date. • These present value determinations discount the value of each future expected benefit payment back to the valuation date, using the discount rate. The present value calculations also reflect assumptions for the likelihood that an employee may not continue in service with the City to receive benefits. • For those that do, appropriate assumptions are made to reflect the probability of retirement at various ages. • After reduction for the probability an employee may not receive a benefit, for the remaining probability he or she does, those benefits reflect assumptions as to whether they will elect coverage for themselves and /or dependents. • The cost of benefits payable, once they begin for each employee, reflect expected trends in the cost of those benefits and the assumptions as to the expected date(s) those benefits will cease. • These benefit projections and liabilities have a very long time horizon. The final payments for currently active employees may not be made for 70 years or more. The resulting present value for each employee is allocated as a level percent of payroll each year over the employee's career using the entry age normal cost method. This creates a cost expected to increase each year as payroll increases. Amounts attributed to prior fiscal years form the "actuarial accrued liability" (AAL). The amount of future OPEB cost allocated to the current year is referred to as the "normal cost ". The remaining cost to be assigned to future years is called the "present value of future normal costs ". In summary: Actuarial Accrued Liability Past Years' Costs plus Normal Cost Current Year's Cost plus Present Value of Future Normal Costs Future Years' Costs equals Present Value of Future Benefits Total Benefit Costs Where contributions have been made to an irrevocable OPEB trust, the accumulated value of trust assets is applied to offset the AAL. The value of assets invested in the City's PARS account on April 1, 2012 was reported to be $5,761,456. The portion of the AAL not covered by assets is referred to as the unfunded actuarial accrued liability (UAAL). Bickmore _