BICKMORE & ASSOCIATES, INC. 2-2016

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OPER Actuarial Valuation — Data Request benefits, then discounting them back to the present to establish a current value, The selection of the rate for the discounting is an important component in establishing the amount of the OPEB liability and annual OPEB cost. Selection of the discount rate is made by the employer providing the benefits and, per GASB 45, should be based on the long term expected return on assets from which benefits are likely to be paid. Higher discount rates are typically used where an agency is prefunding the liability through an irrevocable trust and lower rates used where not (i.e., where benefits are simply paid to retirees as they come due; this is typically referred to as "pay-as-you-go" funding). For a prefunding approach, the discount rate should reflect the expected long term rate of return for the trust, based on the specific investment policy, assets selected and the overall allocation of assets in different market sectors. CalPERS offers investment strategies based on 3 possible allocations and states the maximum assumed discount rate equal to the rate of return projected to be reached or exceeded 50% of the time. This means that there is also a 50% probability that the expected returns will be below these rates. CENT permits an agency to include some "Margin for Adverse Deviation" to lower the expected return and increase the probability that the assumed return will be met or exceeded over time. The maximum allowable (50% probable) long term returns are shown in the chart above. Summary of Other Postemployment Benefits As of July 1, 2014 The City's benefits were described in Table 3A of the previous valuation, copied in below. Please review this summary, correct and/or make updates as necessary. OPER provided: The City has indicated that the only OPER provided is medical coverage. Access to coverage: Medical coverage is currently provided through CaIPERS as permitted under the Public Employees' Medical and Hospital Care Act (PEMHCA). ➢ This coverage requires the employee to satisfy the requirements for retirement under CaIPERS, which requires attainment of age 50 (age 52, if a new miscellaneous member hired on or after January 1, 2013) with 5 years of State or public agency service or approved disability retirement. ➢ If an eligible employee is not already enrolled in the medical plan, he or she may enroll within 60 days of retirement or during any future open enrollment period. ➢ Coverage may be continued at the retiree's option for his or her lifetime. A surviving spouse and other eligible dependents may also continue coverage. ➢ The employee must commence his or her retirement warrant within 120 days of terminating employment with the City to be eligible to continue medical coverage through the City and be entitled to the employer subsidy described below. Benefits provided: As a PEMHCA employer, the City is obligated to contribute toward the cost of retiree medical coverage for the retiree's lifetime or until coverage is discontinued. PEMHCA resolution benefits are available for all retirees who are eligible for and elect to continue their