Item 9 Preliminary Official Statment Dated February 25, 1994

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NOTES TO THE FINANCIAL STATEMENTS (Continued) determine employer•eontributions. The PBO is the portion of the actuarial present value of projected pension benefits (including projected future salary increases) estimated to be payable in the future as a result of employees' service to date. The pension benefit obligation was computed as part of an actuarial valuation performed as of June 30, 1992. Significant assumptions used in the valuation include (1) a rate of return on the investment of present and future assets of 8.75% a year compounded annually, (2)projected salary increases of 4.50% compounded annually attributable to inflation, (3) additional salary increases of 0.75% attributable to across the board salary increases, (4) 1.75% and 2% a year for the miscellaneous and safety categories respectively, attributable to merit raises, and (5) no post retirement benefit increases. The total unfunded pension benefit obligation applicable to the employees was$19,229,680 at June 30, 1992, as follows: Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits. $ 113,639,723 Current employees: Accumulated employee contributions including allocated investment earnings 72,475,710 Employer-finance vested 119,796,919 Employer-finance non-vested 4.486.503 Total pension benefit obligation 310,398,855 Net assets available for benefits, at cost (market value: $328,438,829) 291.169.175 Unfunded pension benefit obligation $ 19,229,680 From June 30, 1991, no changes were made on benefit provisions and actuarial assumptions. (D) Actuarially Determined Contribution Requirements and Contribution made: PERS uses the Entry Age Normal Actuarial Cost Method which is a projected benefit cost method. That is,it takes into account those benefits that are expected to be earned in the future as well as those already accrued. According to this method, the normal cost for an employee pension benefit obligation is the level amount which would fund the projected benefit if it were paid annually from date of employment until retirement. PERS uses a modification of Entry Age Cost Method in which the employer's total normal cost is expressed as a level percentage of payroll. PERS also uses the level percentage of payroll method to amortize any unfunded actuarial liabilities. The amortization period of the unfunded actuarial liability ends by June 30, 2000. The significant actuarial assumptions used to compute the actuarially determined contribution requirement are the same as those used to compute the pension benefit obligation, as previously described.