Cavanaugh Macdonald. The experience and dedication you deserve

Transcription

1 Cavanaugh Macdonald C O N S U L T I N G, L L C The experience and dedication you deserve June 5, 2018 Ms. Koren L. Holden, FCA, EA, MAAA Senior Project Manager Public Employees Retirement Association of Colorado 1301 Pennsylvania Street Denver, CO Dear Koren: Per your request, we have attached the Fiduciary Net Position (FNP) projections used to determine the discount rate in accordance with Governmental Accounting Standards Board (GASB) Statement No. 74 and Statement No. 75 for the Health Care Trust Fund (Plan) as of December 31, 2017 (the Measurement Date). Please refer to our report, GASB Statements No. 74 & 75 - Report for the Public Employees Retirement Association of Colorado Health Care Trust Fund Prepared as of December 31, 2017 for context and all underlying methods and assumptions. As stated in the above-mentioned report, the FNP projections are based upon the Health Care Trust Fund s financial status on the Prior Measurement Date, the indicated set of methods and assumptions, and the requirements of GASB 74 and GASB 75. As such, the FNP projections are not reflective of the cash flows and asset accumulations that would occur on an ongoing Plan basis, reflecting the impact of future members. Therefore, the results of this test do not necessarily indicate whether or not the fund will actually run out of money, the financial condition of the Health Care Trust Fund, or the Health Care Trust Fund s ability to make benefit payments in future years. Cavanaugh Macdonald Consulting, LLC. (CMC) is supplying the FNP projections to the Public Employees Retirement Association of Colorado (PERA) for the express purpose of providing the information to the auditors of PERA participating employers in their review of the applicable accounting disclosures. No third party recipient of this information should rely upon CMC s work product for any other purpose than its intended use. If we can provide any further details regarding these calculations, please do not hesitate to contact us. The undersigned are members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. Sincerely yours, Edward A. Macdonald, ASA, FCA, MAAA President Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary Jeffrey Gann, FSA, EA, MAAA Senior Actuary 3550 Busbee Pkwy, Suite 250, Kennesaw, GA Phone (678) Fax (678) Offices in Kennesaw, Off GA Bellevue, NE

2 Colorado PERA - HCTF Contribution Projection Payroll for Payroll for Total Purchase Employer Employer Contributions Related Year Current Future Employee Service Contribution Contributions for to Payroll of Total Beginning Employees Employees Payroll Transfers Rate Current Employees Future Employees Contributions Jan 1 (a) (b) (c) = (a)+(b) (d) (e) (f) = (a)*(e) (g) (h) = (d)+(f)+(g) ,079,523, ,928,277 8,399,451,371 6,240, % 82,411,136 2,431,455 91,082, ,410,475,804 1,282,956,365 8,693,432,169 5,803, % 75,586,853 9,750,468 91,140, ,966,440,401 2,031,261,894 8,997,702,295 5,397, % 71,057,692 15,437,590 91,892, ,596,429,669 2,716,192,206 9,312,621,875 5,019, % 67,283,583 20,914,680 93,217, ,266,489,690 3,372,073,951 9,638,563,641 4,667, % 63,918,195 25,964,969 94,551, ,956,295,577 4,019,617,791 9,975,913,368 4,341, % 60,754,215 31,353,019 96,448, ,660,287,193 4,664,783,143 10,325,070,336 4,037, % 57,734,929 36,385,309 98,157, ,367,212,605 5,319,235,193 10,686,447,798 3,754, % 54,745,569 42,021, ,522, ,079,170,332 5,981,303,139 11,060,473,471 3,632, % 51,807,537 47,252, ,692, ,795,129,726 6,652,460,316 11,447,590,042 3,739, % 48,910,323 53,219, ,869, ,516,487,565 7,331,768,128 11,848,255,693 4,486, % 46,068,173 58,654, ,208, ,244,838,025 8,018,106,617 12,262,944,642 5,329, % 43,297,348 64,946, ,573, ,979,983,051 8,712,164,653 12,692,147,704 4,936, % 40,595,827 70,568, ,100, ,721,442,114 9,414,930,760 13,136,372,874 4,617, % 37,958,710 77,202, ,778, ,467,935,261 10,128,210,664 13,596,145,925 5,283, % 35,372,940 83,051, ,708, ,217,886,618 10,854,124,414 14,072,011,032 5,426, % 32,822,444 90,089, ,338, ,973,238,945 11,591,292,473 14,564,531,418 5,198, % 30,327,037 96,207, ,733, ,736,495,893 12,337,794,125 15,074,290,018 4,579, % 27,912, ,637, ,129, ,509,536,689 13,092,353,480 15,601,890,169 5,504, % 25,597, ,975, ,077, ,289,086,957 13,858,869,368 16,147,956,325 5,075, % 23,348, ,800, ,224, ,076,379,286 14,636,755,510 16,713,134,796 4,466, % 21,179, ,412, ,057, ,872,624,179 15,425,470,335 17,298,094,514 4,203, % 19,100, ,659, ,963, ,681,509,332 16,222,018,490 17,903,527,822 4,376, % 17,151, ,509, ,037, ,499,336,678 17,030,814,618 18,530,151,296 4,915, % 15,293, ,168, ,377, ,327,218,466 17,851,488,125 19,178,706,591 4,614, % 13,537, ,307, ,460, ,163,186,531 18,686,774,791 19,849,961,322 4,645, % 11,864, ,443, ,953, ,008,788,433 19,535,921,535 20,544,709,968 4,709, % 10,289, ,916, ,914, ,886,407 20,395,888,410 21,263,774,817 4,731, % 8,852, ,483, ,067, ,778,383 21,267,228,553 22,008,006,936 5,197, % 7,555, ,278, ,031, ,350,286 22,152,936,893 22,778,287,179 5,228, % 6,378, ,161, ,768, ,630,499 23,051,896,731 23,575,527,230 5,452, % 5,341, ,467, ,260, ,795,171 23,965,875,512 24,400,670,683 5,464, % 4,434, ,692, ,592, ,658,247 24,898,035,910 25,254,694,157 5,866, % 3,637, ,082, ,586, ,372,285 25,850,236,167 26,138,608,452 6,044, % 2,941, ,237, ,223, ,701,121 26,823,758,627 27,053,459,748 6,185, % 2,342, ,096, ,624, ,865,586 27,820,465,253 28,000,330,839 6,429, % 1,834, ,166, ,430, ,870,742 28,841,471,676 28,980,342,418 6,626, % 1,416, ,341, ,384, ,688,988 29,887,965,415 29,994,654,403 6,841, % 1,088, ,969, ,899, ,471,556 30,962,995,751 31,044,467,307 7,065, % 831, ,859, ,756, ,865,605 32,069,158,058 32,131,023,663 7,313, % 631, ,036, ,980, ,627,280 33,208,982,211 33,255,609,491 7,568, % 475, ,843, ,888, ,817,009 34,384,738,814 34,419,555,823 7,833, % 355, ,778, ,967, ,762,419 35,598,477,858 35,624,240,277 8,108, % 262, ,065, ,436, ,834,799 36,852,253,888 36,871,088,687 8,391, % 192, ,725, ,310, ,621,053 38,147,955,738 38,161,576,791 8,685, % 138, ,590, ,415, ,670,614 39,487,561,365 39,497,231,979 8,989, % 98, ,183, ,271,288 Page 1 of 9

3 Colorado PERA - HCTF Contribution Projection Payroll for Payroll for Total Purchase Employer Employer Contributions Related Year Current Future Employee Service Contribution Contributions for to Payroll of Total Beginning Employees Employees Payroll Transfers Rate Current Employees Future Employees Contributions Jan 1 (a) (b) (c) = (a)+(b) (d) (e) (f) = (a)*(e) (g) (h) = (d)+(f)+(g) ,691,284 40,872,943,814 40,879,635,098 9,304, % 68, ,205, ,578, ,467,486 42,305,954,840 42,310,422,326 9,629, % 45, ,675, ,351, ,809,539 43,788,477,568 43,791,287,107 9,966, % 28, ,990, ,986, ,631,565 45,322,350,591 45,323,982,156 10,315, % 16, ,562, ,894, ,834 46,909,468,697 46,910,321,531 10,676, % 8, ,639, ,325, ,625 48,551,795,160 48,552,182,785 11,050, % 3, ,242, ,296, ,764 50,251,349,418 50,251,509,182 11,437, % 1, ,387, ,826, ,549 52,010,243,454 52,010,312,003 11,837, % ,298, ,136, ,477 53,830,645,446 53,830,672,923 12,251, % ,774, ,026, ,368 55,714,737,107 55,714,746,475 12,680, % ,861, ,542, ,818 57,664,759,784 57,664,762,602 13,124, % ,581, ,706, ,683,028,508 59,683,029,293 13,583, % 8 572,957, ,540, ,771,935,219 61,771,935,318 14,059, % 1 593,010, ,069, ,933,953,051 63,933,953,054 14,551, % 0 620,159, ,710, ,171,641,411 66,171,641,411 15,060, % 0 641,864, ,925, ,487,648,860 68,487,648,860 15,587, % 0 664,330, ,917, ,884,716,570 70,884,716,570 16,133, % 0 687,581, ,715, ,365,681,650 73,365,681,650 16,698, % 0 711,647, ,345, ,933,480,508 75,933,480,508 17,282, % 0 736,554, ,837, ,591,152,326 78,591,152,326 17,887, % 0 762,334, ,221, ,341,842,657 81,341,842,657 18,513, % 0 797,150, ,663, ,188,807,150 84,188,807,150 19,161, % 0 825,050, ,211, ,135,415,400 87,135,415,400 19,832, % 0 853,927, ,759, ,185,154,939 90,185,154,939 20,526, % 0 883,814, ,340, ,341,635,362 93,341,635,362 21,244, % 0 914,748, ,992, ,608,592,600 96,608,592,600 21,988, % 0 946,764, ,752, ,989,893,341 99,989,893,341 22,757, % 0 979,900,955 1,002,658, ,489,539, ,489,539,608 23,554, % 0 1,014,197,488 1,037,751, ,111,673, ,111,673,494 24,378, % 0 1,060,405,568 1,084,784, ,860,582, ,860,582,066 25,232, % 0 1,097,519,762 1,122,751, ,740,702, ,740,702,438 26,114, % 0 1,135,932,954 1,162,047, ,756,627, ,756,627,023 27,029, % 0 1,175,690,608 1,202,719, ,913,108, ,913,108,969 27,975, % 0 1,216,839,779 1,244,814, ,215,067, ,215,067,783 28,954, % 0 1,259,429,171 1,288,383, ,667,595, ,667,595,155 29,967, % 0 1,303,509,192 1,333,476, ,275,960, ,275,960,985 31,016, % 0 1,349,132,014 1,380,148, ,045,619, ,045,619,619 32,101, % 0 1,396,351,634 1,428,453, ,982,216, ,982,216,306 33,225, % 0 1,445,223,941 1,478,449, ,091,593, ,091,593,877 34,388, % 0 1,495,806,779 1,530,195, ,379,799, ,379,799,663 35,592, % 0 1,548,160,017 1,583,752, ,853,092, ,853,092,651 36,837, % 0 1,618,530,927 1,655,368, ,517,950, ,517,950,894 38,127, % 0 1,675,179,509 1,713,307, ,381,079, ,381,079,175 39,461, % 0 1,733,810,792 1,773,272, ,449,416, ,449,416,946 40,842, % 0 1,794,494,169 1,835,336, ,730,146, ,730,146,539 42,272, % 0 1,857,301,465 1,899,573, ,230,701, ,230,701,668 43,752, % 0 1,922,307,017 1,966,059,308 Page 2 of 9

4 Colorado PERA - HCTF Contribution Projection Payroll for Payroll for Total Purchase Employer Employer Contributions Related Year Current Future Employee Service Contribution Contributions for to Payroll of Total Beginning Employees Employees Payroll Transfers Rate Current Employees Future Employees Contributions Jan 1 (a) (b) (c) = (a)+(b) (d) (e) (f) = (a)*(e) (g) (h) = (d)+(f)+(g) Total ,958,776, ,958,776,226 45,283, % 0 1,989,587,762 2,034,870, ,922,333, ,922,333,394 46,867, % 0 2,059,223,334 2,106,091, ,129,615, ,129,615,063 48,508, % 0 2,131,296,151 2,179,804, ,589,151, ,589,151,590 50,206, % 0 2,205,891,516 2,256,098, ,309,771, ,309,771,896 51,963, % 0 2,283,097,719 2,335,061, ,300,613, ,300,613,912 53,782, % 0 2,363,006,139 2,416,788, ,571,135, ,571,135,399 55,664, % 0 2,445,711,354 2,501,375, ,131,125, ,131,125,138 57,613, % 0 2,531,311,251 2,588,924, ,990,714, ,990,714,518 59,629, % 0 2,619,907,145 2,679,536, ,160,389, ,160,389,526 61,716, % 0 2,711,603,895 2,773,320, ,651,003, ,651,003,159 63,876, % 0 2,806,510,032 2,870,386,209 Page 3 of 9

5 Colorado PERA - HCTF Projection of Fiduciary Net Position Year Beginning Jan Projected Beginning Projected Projected Projected Projected Projected Ending Fiduciary Net Total Benefit Administrative Investment Fiduciary Net Position Contributions Payments Expense Earnings Position (a) (b) (c) (d) (e) (f) = (a)+(b)-(c)-(d)+(e) 260,228,470 91,082, ,700, ,259, ,870, ,870,007 91,140, ,703, ,137, ,445, ,445,244 91,892, ,015, ,805, ,128, ,128,083 93,217, ,444, ,279, ,180, ,180,717 94,551, ,645, ,569, ,656, ,656,117 96,448, ,784, ,693, ,013, ,013,474 98,157, ,916, ,658, ,913, ,913, ,522, ,839, ,472, ,069, ,069, ,692, ,586, ,160, ,334, ,334, ,869, ,067, ,752, ,889, ,889, ,208, ,108, ,312, ,301, ,301, ,573, ,816, ,906, ,964, ,964, ,100, ,289, ,538,686 82,314,501 82,314, ,778, ,913, ,213,606 64,393,243 64,393, ,708, ,337, ,028,604 48,792,781 48,792, ,338, ,343, ,048,314 36,836,065 36,836, ,733, ,904, ,306,437 27,971,388 27,971, ,129, ,871, ,840,741 24,070,262 24,070, ,077, ,394, ,767,373 26,521,045 26,521, ,224, ,169, ,185,360 36,761,137 36,761, ,057, ,874, ,127,559 54,072,053 54,072, ,963, ,322, ,658,307 81,370,982 81,370, ,037, ,442, ,896, ,862, ,862, ,377, ,090, ,963, ,112, ,112, ,460, ,593, ,958, ,937, ,937, ,953, ,578, ,961, ,274, ,274, ,914, ,465, ,114, ,838, ,838, ,067, ,924, ,463, ,444, ,444, ,031, ,196, ,218, ,499, ,499, ,768, ,185, ,538, ,621, ,621, ,260,765 96,226, ,545,843 1,007,201,340 1,007,201, ,592,732 91,059, ,407,882 1,219,142,755 1,219,142, ,586,674 86,046, ,197,638 1,459,880,176 1,459,880, ,223,396 80,931, ,164,604 1,734,336,199 1,734,336, ,624,541 76,029, ,496,355 2,042,427,371 2,042,427, ,430,641 71,147, ,279,199 2,386,989,563 2,386,989, ,384,115 66,442, ,803,043 2,773,734,693 2,773,734, ,899,465 61,829, ,302,628 3,203,107,120 3,203,107, ,756,293 57,389, ,898,213 3,678,372,223 3,678,372, ,980,402 53,141, ,826,734 4,203,038,302 4,203,038, ,888,111 49,176, ,447,671 4,784,197,919 4,784,197, ,967,096 45,483, ,063,299 5,422,744,856 5,422,744, ,436,699 42,072, ,843,053 6,122,951,952 6,122,951, ,310,048 38,898, ,098,608 6,889,461,893 6,889,461, ,415,295 35,911, ,293,004 7,731,259,066 7,731,259, ,271,288 33,107, ,833,811 8,650,256,959 Page 4 of 9

6 Colorado PERA - HCTF Projection of Fiduciary Net Position Year Beginning Jan Projected Beginning Projected Projected Projected Projected Projected Ending Fiduciary Net Total Benefit Administrative Investment Fiduciary Net Position Contributions Payments Expense Earnings Position (a) (b) (c) (d) (e) (f) = (a)+(b)-(c)-(d)+(e) 8,650,256, ,578,129 30,476, ,980,708 9,652,338,885 9,652,338, ,351,524 28,002, ,161,337 10,743,849,597 10,743,849, ,986,092 25,680, ,979,032 11,936,134,128 11,936,134, ,894,713 23,500, ,976,746 13,232,504,912 13,232,504, ,325,443 21,451, ,533,469 14,640,912,260 14,640,912, ,296,632 19,524, ,076,226,497 16,169,911,298 16,169,911, ,826,694 17,710, ,187,676,938 17,828,704,692 17,828,704, ,136,585 16,011, ,308,722,140 19,632,551,932 19,632,551, ,026,339 14,419, ,440,136,164 21,587,294,804 21,587,294, ,542,417 12,931, ,582,507,157 23,704,412,835 23,704,412, ,706,225 11,547, ,736,668,077 25,996,239,785 25,996,239, ,540,941 10,260, ,903,514,092 28,476,034,281 28,476,034, ,069,873 9,070, ,084,007,219 31,158,040,534 31,158,040, ,710,907 7,974, ,279,389,502 34,064,166,235 34,064,166, ,925,590 6,968, ,490,840,604 37,204,963,596 37,204,963, ,917,985 6,050, ,719,327,890 40,598,158,632 40,598,158, ,715,115 5,217, ,966,137,477 44,262,793,567 44,262,793, ,345,364 4,465, ,232,650,961 48,219,323,965 48,219,323, ,837,224 3,792, ,520,352,403 52,489,721,119 52,489,721, ,221,527 3,193, ,830,835,853 57,097,585,100 57,097,585, ,663,464 2,664, ,166,078,628 62,076,662,366 62,076,662, ,211,938 2,202, ,528,007,480 67,446,679,278 67,446,679, ,759,094 1,801, ,918,310,000 73,236,946,436 73,236,946, ,340,662 1,458, ,339,112,526 79,478,941,229 79,478,941, ,992,586 1,166, ,792,698,500 86,206,465,350 86,206,465, ,752, , ,281,519,939 93,455,815,281 93,455,815,281 1,002,658, , ,808,209, ,265,963, ,265,963,356 1,037,751, , ,375,594, ,678,754, ,678,754,897 1,084,784, , ,987,059, ,750,176, ,750,176,997 1,122,751, , ,645,979, ,518,591, ,518,591,780 1,162,047, , ,355,472, ,035,878, ,035,878,858 1,202,719, , ,119,304, ,357,732, ,357,732,345 1,244,814, , ,941,512, ,543,937, ,543,937,283 1,288,383,707 86, ,826,433, ,658,668, ,658,668,248 1,333,476,741 60, ,778,722, ,770,807, ,770,807,319 1,380,148,427 41, ,803,374, ,954,289, ,954,289,142 1,428,453,621 28, ,905,752, ,288,467, ,288,467,152 1,478,449,498 18, ,091,610, ,858,508, ,858,508,442 1,530,195,231 12, ,367,125, ,755,816, ,755,816,981 1,583,752,064 8, ,738,926, ,078,487, ,078,487,643 1,655,368,696 5, ,214,655, ,948,506, ,948,506,237 1,713,307,103 3, ,802,120, ,463,930, ,463,930,332 1,773,272,331 2, ,508,943, ,746,144, ,746,144,033 1,835,336,862 1, ,343,927, ,925,406, ,925,406,870 1,899,573, ,316,517, ,141,497, ,141,497,682 1,966,059, ,436,851, ,544,408,484 Page 5 of 9

7 Colorado PERA - HCTF Projection of Fiduciary Net Position Year Beginning Jan Projected Beginning Projected Projected Projected Projected Projected Ending Fiduciary Net Total Benefit Administrative Investment Fiduciary Net Position Contributions Payments Expense Earnings Position (a) (b) (c) (d) (e) (f) = (a)+(b)-(c)-(d)+(e) 436,544,408,484 2,034,870, ,715,806, ,295,085, ,295,085,248 2,106,091, ,165,052, ,566,228, ,566,228,461 2,179,804, ,797,113, ,543,145, ,543,145,871 2,256,098, ,625,426, ,424,670, ,424,670,831 2,335,061, ,664,411, ,424,143, ,424,143,313 2,416,788, ,929,537, ,770,469, ,770,469,003 2,501,375, ,437,403, ,709,248, ,709,248,450 2,588,924, ,205,819, ,503,992, ,503,992,413 2,679,536, ,253,892, ,437,420, ,437,420,825 2,773,320, ,602,123, ,812,863, ,812,863,912 2,870,386, ,272,507, ,955,757,177 Total Page 6 of 9

8 Colorado PERA - HCTF Actuarial Present Value of Projected Benefit Payments Year Beginning Jan Projected Benefit Payments Actuarial Present Values of Projected Benefit Payments Projected Beginning Projected "Funded" "Unfunded" Present Value of Present Value of Present Value of Benefit Fiduciary Net Benefit Portion of Portion of "Funded" "Unfunded" Payments using the Year Position Payments Benefit Payments Benefit Payments Benefit Payments Benefit Payments Single Discount Rate (a) (b) (c) (d) (e) (f) = (d)/(1.0725)^[(a)-1/2] (g) = (e)/(1.0343)^[(a)-1/2] (h) = (c)/(1.0725)^[(a)-1/2] 1 260,228, ,700, ,700, ,619, ,619, ,870, ,703, ,703, ,175, ,175, ,445, ,015, ,015, ,108, ,108, ,128, ,444, ,444, ,219, ,219, ,180, ,645, ,645, ,247, ,247, ,656, ,784, ,784, ,344, ,344, ,013, ,916, ,916, ,556, ,556, ,913, ,839, ,839, ,767, ,767, ,069, ,586, ,586, ,021, ,021, ,334, ,067, ,067, ,289, ,289, ,889, ,108, ,108, ,514, ,514, ,301, ,816, ,816, ,779, ,779, ,964, ,289, ,289, ,147, ,147, ,314, ,913, ,913, ,391, ,391, ,393, ,337, ,337, ,800, ,800, ,792, ,343, ,343, ,300, ,300, ,836, ,904, ,904, ,897, ,897, ,971, ,871, ,871, ,559, ,559, ,070, ,394, ,394, ,347, ,347, ,521, ,169, ,169, ,188, ,188, ,761, ,874, ,874, ,264, ,264, ,072, ,322, ,322, ,518, ,518, ,370, ,442, ,442, ,928, ,928, ,862, ,090, ,090, ,463, ,463, ,112, ,593, ,593, ,181, ,181, ,937, ,578, ,578, ,010, ,010, ,274, ,465, ,465, ,015, ,015, ,838, ,924, ,924, ,137, ,137, ,444, ,196, ,196, ,405, ,405, ,499, ,185, ,185, ,797, ,797, ,621,086 96,226,354 96,226, ,347, ,347, ,007,201,340 91,059,199 91,059, ,012, ,012, ,219,142,755 86,046,891 86,046, ,821, ,821, ,459,880,176 80,931,976 80,931, ,736, ,736, ,734,336,199 76,029,724 76,029, ,776, ,776, ,042,427,371 71,147,648 71,147, ,912, ,912, ,386,989,563 66,442,028 66,442, ,148, ,148, ,773,734,693 61,829,666 61,829, ,467, ,467, ,203,107,120 57,389,403 57,389, ,866, ,866, ,678,372,223 53,141,057 53,141, ,337, ,337, ,203,038,302 49,176,164 49,176, ,880, ,880, ,784,197,919 45,483,458 45,483, ,483, ,483, ,422,744,856 42,072,657 42,072, ,142, ,142, ,122,951,952 38,898,714 38,898, ,846, ,846, ,889,461,893 35,911,126 35,911, ,589, ,589, ,731,259,066 33,107,207 33,107, ,366, ,366,403 Page 7 of 9

9 Colorado PERA - HCTF Actuarial Present Value of Projected Benefit Payments Year Beginning Jan Projected Benefit Payments Actuarial Present Values of Projected Benefit Payments Projected Beginning Projected "Funded" "Unfunded" Present Value of Present Value of Present Value of Benefit Fiduciary Net Benefit Portion of Portion of "Funded" "Unfunded" Payments using the Year Position Payments Benefit Payments Benefit Payments Benefit Payments Benefit Payments Single Discount Rate (a) (b) (c) (d) (e) (f) = (d)/(1.0725)^[(a)-1/2] (g) = (e)/(1.0343)^[(a)-1/2] (h) = (c)/(1.0725)^[(a)-1/2] 47 8,650,256,959 30,476,911 30,476, ,172, ,172, ,652,338,885 28,002,148 28,002, ,004, ,004, ,743,849,597 25,680,594 25,680, , , ,936,134,128 23,500,675 23,500, , , ,232,504,912 21,451,563 21,451, , , ,640,912,260 19,524,091 19,524, , , ,169,911,298 17,710,238 17,710, , , ,828,704,692 16,011,485 16,011, , , ,632,551,932 14,419,631 14,419, , , ,587,294,804 12,931,543 12,931, , , ,704,412,835 11,547,352 11,547, , , ,996,239,785 10,260,538 10,260, , , ,476,034,281 9,070,839 9,070, , , ,158,040,534 7,974,708 7,974, , , ,064,166,235 6,968,832 6,968, , , ,204,963,596 6,050,839 6,050, , , ,598,158,632 5,217,657 5,217, , , ,262,793,567 4,465,927 4,465, , , ,219,323,965 3,792,472 3,792, , , ,489,721,119 3,193,399 3,193, , , ,097,585,100 2,664,826 2,664, , , ,076,662,366 2,202,506 2,202, , , ,446,679,278 1,801,937 1,801, , , ,236,946,436 1,458,395 1,458, , , ,478,941,229 1,166,965 1,166, , , ,206,465, , , , , ,455,815, , , , , ,265,963, , , , , ,678,754, , , , , ,750,176, , , , , ,518,591, , , , , ,035,878, , , ,357,732, , , ,543,937,283 86,606 86, ,658,668,248 60,413 60, ,770,807,319 41,539 41, ,954,289,142 28,161 28, ,288,467,152 18,830 18, ,858,508,442 12,424 12, ,755,816,981 8,094 8, ,078,487,643 5,209 5, ,948,506,237 3,314 3, ,463,930,332 2,086 2, ,746,144,033 1,300 1, ,925,406, ,141,497, Page 8 of 9

10 Colorado PERA - HCTF Actuarial Present Value of Projected Benefit Payments Year Beginning Jan 1 Total Projected Benefit Payments Actuarial Present Values of Projected Benefit Payments Projected Beginning Projected "Funded" "Unfunded" Present Value of Present Value of Present Value of Benefit Fiduciary Net Benefit Portion of Portion of "Funded" "Unfunded" Payments using the Year Position Payments Benefit Payments Benefit Payments Benefit Payments Benefit Payments Single Discount Rate (a) (b) (c) (d) (e) (f) = (d)/(1.0725)^[(a)-1/2] (g) = (e)/(1.0343)^[(a)-1/2] (h) = (c)/(1.0725)^[(a)-1/2] ,544,408, ,295,085, ,566,228, ,543,145, ,424,670, ,424,143, ,770,469, ,709,248, ,503,992, ,437,420, ,812,863, ,683,219,315-1,683,219,315 Page 9 of 9

11 GASB STATEMENTS NO. 74 & 75 REPORT FOR THE PUBLIC EMPLOYEES RETIREMENT ASSOCIATION OF COLORADO HEALTH CARE TRUST FUND PREPARED AS OF DECEMBER 31, 2017

12 Cavanaugh Macdonald C O N S U L T I N G, L L C The experience and dedication you deserve June 6, 2018 The Board of Trustees Public Employees Retirement Association of Colorado 1301 Pennsylvania Street Denver, CO Ladies and Gentlemen: Presented in this report is information to assist the Public Employees Retirement Association of Colorado (PERA) in meeting the requirements of the Governmental Accounting Standards Board (GASB) Statement No. 74 and Statement No. 75 for the Health Care Trust Fund (HCTF). This report has been prepared by PERA s actuary, Cavanaugh Macdonald Consulting (CMC) as of December 31, 2017 (the Measurement Date). GASB Statement No. 74 (GASB 74) is the accounting standard that applies to the financial reports issued by systems that sponsor postemployment benefit plans other than pension plans, and is effective for fiscal years beginning after June 15, GASB Statement No. 75 (GASB 75) establishes accounting and financial reporting requirements for governmental employers who provide postemployment benefits other than pensions to their employees through a collective trust, and is effective for fiscal years beginning after June 15, The information contained in this report is intended to be used by PERA, PERA s auditors, and PERAaffiliated employers and their auditors for financial reporting purposes and its use for funding or other purposes may not be appropriate. Calculations for purposes other than satisfying the requirements of GASB 74 and GASB 75 may produce significantly different results. The annual actuarial valuation used as a basis for much of the information presented in this report was performed as of December 31, 2016 and reflects the 2016 experience analysis and other expert input, as adopted by the PERA Board of Trustees on November 18, 2016, to update the economic and demographic actuarial assumptions. The valuation was based upon data, furnished by the PERA staff, concerning active, inactive and retired members, plan provisions, and contribution figures, along with pertinent financial information. The supplied information was not audited by CMC, but it was reviewed for reasonableness and consistency. As a result, we have no reason to doubt the substantial accuracy or completeness of the information and believe that it is reliable for the purposes stated herein. The results and conclusions contained in this report depend on the integrity of this information, and if any of the supplied information or analyses change, our results and conclusions may be different and this report may need to be revised. Likewise, this report may need to be revised to reflect any significant event that affects the HCTF subsequent to the Measurement Date. The results contained in this report were prepared by qualified actuaries according to generally accepted actuarial principles and practices, as well as in conformity with Actuarial Standards of Practice issued by the Actuarial Standards Board. The financial accounting information provided in this report reflects our current understanding of Government Accounting Standard Statement Nos. 74 and 75 ( GASB accounting rules ), including any applicable guidance provided by PERA or its audit partners as of the date of this report Busbee Pkwy, Suite 250, Kennesaw, GA Phone (678) Fax (678) Offices in Kennesaw, Off GA Bellevue, NE

13 Board of Trustees June 6, 2018 Page 2 The calculations are based on the plan provisions as detailed in Colorado Statute as of December 31, 2017, and on actuarial assumptions other than discount rates under GASB accounting rules that are internally consistent and individually reasonable based on the actual experience of the Plan. Discount rates for financial accounting purposes are determined based on the methods prescribed by GASB accounting rules. The actuarial cost and amortization methods are prescribed by PERA and/or GASB accounting rules. In addition, we believe that the calculations comply with all applicable laws governing the Plan, policies and procedures issued by PERA, and requirements described in GASB 74 and GASB 75. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: retiree group benefits program experience differing from that anticipated by the assumptions; changes in assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period); and changes in retiree group benefits program provisions or applicable law. Retiree group benefits models necessarily rely on the use of approximations and estimates, and are sensitive to changes in these approximations and estimates. Small variations in these approximations and estimates may lead to significant changes in actuarial measurements. This report does not consider all possible scenarios. The funded status measurements included in this report are based on the assumptions and methods used to determine the Plan s obligations and asset values as of the valuation and/or measurement date under GASB accounting rules. Funded status measurements for financial accounting purposes may not appropriate for assessing the sufficiency of plan assets to cover the estimated cost of settling the plan s benefit obligations. Likewise, funded status measurements for financial accounting purposes may not be appropriate for assessing the need for or the amount of future actuarially determined contributions. CMC does not provide legal, investment, or accounting advice. Thus, the information in this report is not intended to supersede or supplant the advice and interpretations of PERA or its legal, investing, or accounting partners. The undersigned are familiar with the near-term and/or long-term aspects of other postemployment benefit plan valuations and collectively meet the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions contained in this report. All sections of this report, including any appendices and attachments, are considered an integral part of the actuarial opinions. Respectfully submitted, Edward A. Macdonald, ASA, FCA, MAAA President Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary Jeffrey Gann, FSA, EA, MAAA Senior Actuary EAM/EJK/JG S:/ 2017/Colorado PERA/ Health/ GASB/ / GASB 74 and 75 Report HCTF.docx

14 TABLE OF CONTENTS Section Item Page No. I Summary of Principal Results 1 II Introduction 2 III Financial Statement Notes GASB 74 5 IV Required Supplementary Information GASB V Financial Statement Notes and Required Supplementary 27 Information GASB 75 VI OPEB Expense GASB Schedule A Required Supplementary Information 39 B Summary of Principal Plan Provisions as of December 31, C Statement of Actuarial Assumptions and Methods as of December 31, D Actuarial Cost Method as of December 31, E Colorado PERA Defined Benefit OPEB Plan Funding Policy 77 F Balances of Deferred Outflows of Resources and Deferred 83 Inflows of Resources

15 REPORT OF THE ANNUAL GASB STATEMENTS NO. 74 & 75 REQUIRED INFORMATION FOR THE PUBLIC EMPLOYEES RETIREMENT ASSOCIATION OF COLORADO HEALTH CARE TRUST FUND PREPARED AS OF DECEMBER 31, 2017 SECTION I SUMMARY OF PRINCIPAL RESULTS ($ IN THOUSANDS) Valuation Date (VD): December 31, 2016 Prior Measurement Date: December 31, 2016 Measurement Date (MD): December 31, 2017 Membership Data as of December 31, 2016: Inactive Members or Beneficiaries Currently Receiving Benefits 55,789 Inactive Members Assumed Eligible for a Potential Benefit at Future 24,909 Retirement Dates Inactive Members Assumed Not to Receive Benefits N/A Active Members Assumed Eligible for a Potential Benefit at Future 190,741 Retirement Dates Total Membership 271,439 Single Equivalent Interest Rate (SEIR): Long-Term Expected Rate of Return 7.25% Municipal Bond Index Rate at Prior Measurement Date N/A Municipal Bond Index Rate at Measurement Date N/A Year in which Fiduciary Net Position is Projected to be Depleted Prior Measurement Date N/A Measurement Date N/A Single Equivalent Interest Rate at Prior Measurement Date 7.25% Single Equivalent Interest Rate at Measurement Date 7.25% Net OPEB Liability: Total OPEB Liability (TOL) $ 1,575,822 Fiduciary Net Position (FNP) 276,222 Net OPEB Liability (NOL = TOL FNP) $ 1,299,600 FNP as a percentage of TOL 17.53% Collective OPEB Expense: $ 101,835 Collective Deferred Outflows of Resources on the MD: $ 6,146 Collective Deferred Inflows of Resources on the MD: $ (21,742) Page 1

16 SECTION II INTRODUCTION This report, prepared as of December 31, 2017 (the Measurement Date or MD), presents information to assist the Public Employees Retirement Association of Colorado (PERA) Health Care Trust Fund (HCTF), in meeting the requirements of the Governmental Accounting Standards Board Statement No. 74 (GASB 74), Financial Reporting For Postemployment Benefit Plans Other Than Pension Plans, and Statement No. 75 (GASB 75), Accounting and Financial Reporting For Postemployment Benefits Other Than Pensions. Colorado HCTF (Plan) is a cost-sharing multiple employer defined benefit OPEB plan. Much of the material provided in this report is based on the data, assumptions and results of the annual actuarial valuation of the HCTF, as of December 31, 2016 (the Valuation Date or VD). The results of that valuation were detailed in a report dated June 8, GASB 74 requires disclosure and reporting elements for systems that sponsor postemployment benefit plans which may or may not be consistent with the basis used for funding the Plan. PERA has implemented GASB 74 based on the approach described in paragraph 61. As a result, the HCTF will not restate results for any period prior to December 31, GASB 74 requires the determination of the Total OPEB Liability (TOL) utilizing the Entry Age Normal (EAN) actuarial cost method. If the valuation date used to determine the TOL occurs before the Measurement Date, as is the case here, the TOL must be projected ( rolled forward ) from the valuation date to the measurement date. The Net OPEB Liability (NOL) as of the Measurement Date is equal to the rolledforward TOL minus the plan s Fiduciary Net Position (FNP) (the market value of assets as of the Measurement Date). The plan provisions reflected in the calculation of the TOL are summarized in Schedule B. The development of the rolled-forward TOL as of December 31, 2017 is shown in the table on page 15. Among the items needed for the liability calculation is the discount rate, as defined by GASB, or a Single Equivalent Interest Rate (SEIR). To determine the SEIR, the FNP must be projected into the future for as long as there are anticipated benefits payable under the Plan s provisions applicable to the actual and expected Plan members and their beneficiaries on the Measurement Date. Future contributions were projected to be made in accordance with contribution rates as defined in Colorado Statute as of December 31, If the FNP is not projected to be depleted at any point in the future, the long term expected rate of return on Plan investments expected to be used to finance the benefit payments may be used as the SEIR. If, however, at a future measurement date the FNP is projected to be depleted, the SEIR is determined as the single rate that will generate a present value of benefit payments equal to the sum of the present value determined by discounting all projected benefit payments through the date of depletion by the long-term expected rate of return, and the present value determined by discounting those benefits after the date of depletion by a 20-year tax-exempt municipal bond (rating AA/Aa or higher) rate (Municipal Bond Index Rate). The Municipal Bond Index Rate used, if necessary, for this purpose is the average of the Bond Buyer General Obligation 20-year Municipal Bond Index Rates during the month of December published at the end of each week by The Bond Buyer ( Our calculations indicated the FNP is not projected to be depleted, so the Municipal Bond Index Rate is not used in the determination of the SEIR. Please see Paragraphs 35(b) and 35(c) in Section III (Financial Statement Notes GASB 74) for more information concerning the development of the SEIRs. Page 2

17 The FNP projections are based upon the HCTF s financial status on the Prior Measurement Date, the indicated set of methods and assumptions, and the requirements of GASB 74 and 75. As such, the FNP projections are not reflective of the cash flows and asset accumulations that would occur on an ongoing plan basis, reflecting the impact of future members. Therefore, the results of this test do not necessarily indicate whether or not the fund will actually run out of money, the financial condition of the HCTF, or the HCTF s ability to make benefit payments in future years. The Funding Policy, as adopted by PERA s Board, is shown in Schedule E of this report. The Funding Policy includes the determination of an Actuarially Determined Contribution (ADC) to be used as a benchmark against which to gauge the employer contribution rates set forth in Colorado Statutes. GASB 75 requires disclosure and reporting elements for participating employers of the Plan that may or may not be consistent with the basis used for funding the Plan. In fact, GASB 75 paragraph B10 states: The Board concluded that it is not within the scope of its activities to set standards that establish a specific method of financing OPEB (that being a policy decision for government officials or other responsible authorities to make) or to regulate a government s compliance with the financing policy or method it adopts. Accordingly, the Board established standards in this Statement within the context of accounting and financial reporting, not within the context of the funding of OPEB. Based on the approach described in paragraph 244, the HCTF will not restate results for any period prior to December 31, 2016 for purposes of Section V of this report. GASB 75 requires participating employers to recognize a proportionate share, as appropriate, of the Collective NOL and the Collective OPEB Expense (OE) in financial statements prepared using the economic resources measurement and accrual basis of accounting. The OE may bear little relationship to the employer s funding requirements and actually may result in a negative expense item in some years. OE includes amounts for Service Cost (the Normal Cost under EAN for the year), interest on the TOL, active member contributions, administrative expenses, and other cash flows during the year, recognition of increases/decreases in the TOL due to changes in benefit structure, actuarial experience, actuarial assumption changes, and recognition of investment gains/losses. Changes in benefit terms, including any assumption changes that might be needed to reflect those amendments, are recognized immediately. Differences resulting from actuarial experience and changes of assumptions and other inputs are recognized over the average expected remaining service life of the plan membership at the beginning of the measurement period, and investment gains/losses are recognized over five years. The development of the OE is shown in Section VI. The unrecognized portions of each year s experience, assumption changes and investment gains/losses are used to develop the Collective Deferred Outflows of Resources and Collective Deferred Inflows of Resources, the proportionate share of which, as appropriate, also must be included on the Statement of Net Position for participating employers that are subject to the requirements of GASB 75. Page 3

18 The sections that follow provide the results of all the necessary calculations, presented in the order laid out in GASB 74 and GASB 75, for note disclosure and Required Supplementary Information (RSI). A separate schedule will be provided to PERA reporting agencies by PERA regarding the allocation percentages determined under GASB 75. This will allow the individual reporting agencies to calculate their proportionate share of the Collective NOL, OE and Collective Deferred Outflows of Resources and Collective Deferred Inflows of Resources, and, if necessary, to roll-up the shares or further allocate them as appropriate. Page 4

19 SECTION III FINANCIAL STATEMENT NOTES GASB 74 The material presented herein will follow the order presented in GASB 74. Paragraph numbers are provided for ease of reference. As stated previously, since PERA has implemented GASB 74 based on the approach described in paragraph 61, the HCTF will not restate results for any period prior to December 31, Paragraphs 34(a) (1)-(3): The information required is to be supplied by PERA. Paragraph 34(a) (4): The data required to be reported for the membership of the Public Employees Retirement Association of Colorado (PERA), Health Care Trust Fund (HCTF), were furnished by PERA. The following table summarizes the membership of the Plan as of the December 31, 2016 Valuation Date. Membership as of December 31, 2016 Inactive Members or Beneficiaries Currently Receiving Benefits Inactive Members Assumed Eligible for a Potential Benefit at Future Retirement Dates Inactive Members Assumed Not to Receive Benefits Active Members Assumed Eligible for a Potential Benefit at Future Retirement Dates Number 55,789 24,909 N/A 190,741 Total Membership 271,439 Paragraph 34(a) (5): Title 24, Article 51, Part 12 of the C.R.S. as amended, grants administrative authority to the PERA Board and sets forth the benefit provisions of the Plan. On July 1, 1985, employer contributions to the HCTF commenced. Plan coverage and premium subsidy payments began on July 1, The employer contribution rates of the State, School, Local Government, and Judicial Divisions include the contribution of 1.02% of PERA covered payroll allocated to the HCTF. The assets held in the HCTF are for the purpose of paying administrative costs incurred and premium subsidies earned on behalf of eligible PERA benefit structure benefit recipients and Denver Public Schools (DPS) benefit structure retirees who worked for an employer in the State, School, Local Government, and Judicial Divisions who enroll in PERACare. The following individuals are eligible to enroll in PERACare: Anyone receiving a monthly PERA benefit (benefit recipient). If the benefit recipient is enrolled in PERACare, the following dependents may be enrolled: spouses (including civil union partners recognized under Colorado law), domestic partners, unmarried dependent children under age 25, certain mentally or physically incapacitated adult children, and dependent parents. Guardians of children receiving PERA survivor benefits, if children are receiving health care benefits. PERA retirees temporarily not receiving PERA benefits. Surviving spouses of deceased retirees who are not receiving PERA benefits but were enrolled in PERACare at the time when death occurred. Page 5

20 Divorced spouses of retirees who are not receiving PERA benefits, but were receiving health care benefits when the divorce occurred. Eligible benefit recipients under the PERA benefit structure and retirees under the DPS benefit structure enrolled in PERACare receive a monthly premium subsidy. The following monthly amounts are based upon the benefit structure elected, date of retirement, Medicare eligibility, and credited service: PERA Benefit Structure Benefit Recipients: $5.75 per month per year of credited service (up to a maximum of 20 years of service) if age 65 or older or eligible for Medicare Part B. $11.50 per month per year of credited service (up to a maximum of 20 years of service) if not yet age 65 or not eligible for Medicare Part B. DPS Benefit Structure Retirees: $5.75 per month per year of credited service (up to a maximum of 20 years of service) if age 65 or older and eligible for premium-free Medicare Part A. $11.50 per month per year of credited service (up to a maximum of 20 years of service) if not yet age 65, or if age 65 or older and not eligible for premium-free Medicare Part A. This subsidy is used to determine member premiums, which are the projected full cost of coverage less the premium subsidy. The full costs for claims, administration, premiums, etc., are allocated and paid by the PERA HCTF and the DPS HCTF. For those benefit recipients under the PERA benefit structure who are age 65 or older, the full cost of coverage is considered to be based on the full cost of coverage assuming eligibility for premium-free Medicare Part A. This is independent of actual eligibility for premium-free Medicare Part A. Under the PERA benefit structure, an additional subsidy is paid for those members not eligible for premiumfree Medicare Part A benefits. This amount is the difference in premiums charged for those without Medicare Part A and for those enrolled in Medicare Part A. Under the DPS benefit structure, an additional subsidy is paid for those members not eligible for premiumfree Medicare Part A coverage. For these members, the additional subsidy is equal to a fixed-dollar amount of $5.75 per month for each year of credited service (up to a maximum of 20 years of service). This premium subsidy is only available to those enrolled in PERACare and who meet the requirements defined by the benefit structure under which they retire. No postemployment benefit changes are associated with the subsidy amounts described above, including automatic or ad hoc cost-of-living adjustments. Page 6