BICKMORE & ASSOCIATES, INC. 2-2016

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Other Post -Employment Benefit Programs of the City of "" Actuarial Valuation as of July 1, 2015 D. Valuation Process The valuation has been based on employee census data and benefits initially submitted to us by the City in July 2015 and clarified in various related communications. A summary of the employee data is provided in Table 2 and a summary of the benefits provided under the Plan is provided in Table 3A. While individual employee records have been reviewed to verify that they are reasonable in various respects, the data has not been audited and we have otherwise relied on the City as to its accuracy. The valuation described below has been performed in accordance with the actuarial methods and assumptions described in Table 4. In projecting benefit values and liabilities, we first determine an ~expected premium or benefit stream over the employee's future retirement. Benefits mayj ,6Iude both direct employer payments (explicit subsidies) and/or an implicit subsidy, arising when retiree premiums are expected to be subsidized by active employee premiums. `The. projected benefit streams reflect assumed trends in the cost of those benefits and assumption's `as to the expected date(s) when benefits will end. We then apply assumptions regardirig • The probability that each individual employee will;.or will not wrttinue,m "service with the City to receive benefits. • To the extent assumed to retire from the City, the probability of various possible retirement dates for each retiree, based on current age,,.service. "and employee type; and • The likelihood that future retirees will or will not elect retiree coverage (and benefits) for themselves and/or their dependents. We then calculate a present value of these benefits by'discounting the value of each future expected benefit payment, multiplied by the assumed expectation that it will be paid, back to the valuation date using the discount rate. ;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 erripioyee is allocated as a level percent of payroll each year over the employee's career using tho entry age normal cost method and the amounts for each individual are then, summed to;'get the results for the entire plan. 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 for active employees in the -current year is referred to as the "normal cost". The remaining active cost to be assigned to future years is called the "present value of future normal costs", In summary: Actuarial Accrued Liability Past Years' Costs $ 126,756,944 plus Normal Cost Current Year's Cost 1,284,422 plus Present Value of Future Normal Costs Future Years' Costs 8,024.613 equals Present Value of Projected Benefits Total Benefit Costs $ 136,066,379 Where contributions have been made to an irrevocable OPEB trust, the accumulated value of trust assets is applied to offset the AAL. In this valuation, we set the Actuarial Value of Assets equal to the market value of assets invested in in the City's CERBT account. The market value reported as of June 30, 2015 was $26,019,812. The portion of the AAL not covered by assets is referred to as the unfunded actuarial accrued liability (URAL). Bickmore;5