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Proposal to Provide Actuarial Valuation of OPER Liabilities <br />For the City of Santa Ana <br />May 2016 <br />Having prepared the June 30, 2014 OPEB actuarial valuation for the City, we are familiar with the <br />OPEB provided by the City, as well as the provisions of the Subsidy Plans and the POA Benefit Trust. <br />It is our understanding that the requested actuarial services exclude any analysis with respect to the <br />Subsidy plans and the POA Benefit Trust. Accordingly, absent other changes, it appears the only <br />benefits to be analyzed related to PEMHCA required benefits and to the implicit subsidy liability, a <br />new requirement which is described briefly below. If our understanding of this is incorrect, please let <br />us know. <br />Implicit Subsidy Analysis Required; In general, GASB 45 requires that a public employer report <br />the value of projected retiree claims (not premiums) minus the projected value of the portion of <br />premiums that retirees are required to contribute. In developing the projected retiree claims, the <br />actuary is charged with considering how those retiree claims costs are likely to vary based on age. <br />Until now, GASB 45 included an exception for agencies whose membership in very large community <br />rated plans (such as CaIPERS) represented a very small percent of the total program membership. <br />This exception allowed the employer to report only the projected value of retiree premiums minus <br />the projected value of the portion of those premiums expected to be paid by the retirees. <br />This "community -rated plan" exception has been eliminated effective for valuations dated March <br />31, 2015 or later. Consequently, the June 30, 2016 OPEB valuation for the City should include this <br />implicit subsidy liability analysis. Please let us know if you would like additional background about <br />this new requirement. <br />Sickmore aryw) <br />