TUOLUMNE UTILITIES DISTRICT

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1 TUOLUMNE UTILITIES DISTRICT Agenda Item No.III.7 AGENDA REQUEST FORM Board Meeting of October 13, 2015 Agenda Format Section: Regular Business Brief Description: Presentation of the Retiree Healthcare Plan June 30, 2015 GASB 45 Actuarial Valuation Submitted By: Steve Sheffield To Be Presented By: Doug Pryor, Bartel Associates, LLC Individual/Participants to be Informed: Doug Pryor, Bartel Associates, LLC Describe In Detail Item Under Consideration: The District provides medical insurance for retired employees subject to certain limitations. This was an existing benefit of the County Water District at the time of the formation of TUD in This type of employee benefit is referred to as Other Postemployment Benefits (OPEB). TUD is required to measure and disclose an amount for annual OPEB costs. Annual OPEB cost is determined by an actuarial valuation required every two years. Actuarial valuations involve estimates and assumptions about the probability of occurrence of events far into the future. GASB Statement No. 45 establishes standards for the measurement, recognition, and display of OPEB expense and related liabilities, note disclosures, and required supplementary information in the financial reports of local governmental employers. Doug Pryor will provide a presentation for your information and answer any questions you may have regarding how these Actuarial Valuations were calculated. Recommendation: Action Requested: Resolution (attached) and Motion (see below) X Review only Suggested Motion: Material to be Included for Information/Consideration: June 30, 2015 GASB 45 Actuarial Valuation Board Action: Resolution No. Motion by Second by Motion Motion by Second by Ayes: Absent: Noes: Abstained: Reagendized: Date: No Action Taken:

TUOLUMNE UTILITIES DISTRICT RETIREE HEALTHCARE PLAN June 30, 2015 GASB 45 Actuarial Valuation Preliminary Results Presented by Doug Pryor, Vice President Prepared by Wai Man Yam, Actuarial Analyst

2 TUOLUMNE UTILITIES DISTRICT RETIREE HEALTHCARE PLAN June 30, 2015 GASB 45 Actuarial Valuation Preliminary Results Presented by Doug Pryor, Vice President Prepared by Wai Man Yam, Actuarial Analyst Matt Childs, Actuarial Analyst Bartel Associates, LLC September 25, 2015 CONTENTS Topic Page Benefit Summary 1 Implied Subsidy 3 Data Summary 5 Actuarial Assumptions Highlights 9 Assets 13 Results 17 Bartel Associates GASB 45 Database 32 GASB Other Issues 35 Exhibits Premiums E - 1 Data Summary E - 5 Actuarial Assumptions E -15 Actuarial Methods E -18 Definitions E -19 o:\clients\tuolumne utilities district\projects\opeb\2015\report\ba tuolumne opeb preliminary results.docx

3 BENEFIT SUMMARY Eligibility Retire directly from District under CalPERS (Age 50 and 5 years of CalPERS service or disability) Terminate with 20 years District service under 100/90 formula Medical Benefits Hired < 3/1/06 (Union) < 12/1/05 (Non-Union) Cap (PERS Choice Non- Medicare Other Nor. Cal): Single $ $ Party 1, , Family 1, , Hired > 3/1/06 (Union) > 12/1/05 (Non-Union) Cap (100/90 formula)1: Single $ 655 $ Party 1,246 1,343 Family 1,605 1,727 Vesting schedule (5 years District service required): CalPERS Service Vesting 10 years 50% 11 years 55% : : 20 years 100% Hired > 5/1/13 PEMHCA minimum $122 in 2015 $125 in Board resolutions specify 2+ PERS Choice cap. September 25, BENEFIT SUMMARY Other Surviving Spouse Benefit Pay-As- You-Go Costs 2 No Dental/Vision/Life Insurance/Medicare reimbursement Benefit continues to surviving spouse based on CalPERS survivor annuity election. Year Amount 2014/15 $ 477, /14 497, /13 385, /12 338, /11 300, / , /09 258, /08 245, /07 194, /06 148, Administration costs not included. Reflects 2 month CalPERS premium holiday for PPO plans. September 25,

4 IMPLIED SUBSIDY For PEMHCA, employer cost for allowing retirees to participate at active rates. General trend: $800 $700 $600 $500 $400 Sample active age 40, retire age 60: $ Blended Premium Cost by Age Premiums $600 Active $600 Retiree PEMHCA $1,200 Cost of Benefits $500 Active $700 Retiree September 25, IMPLIED SUBSIDY GASB 45 defers to actuarial standards of practice. Prior Actuarial Standards of Practice No. 6 4 (ASOP 6) allowed community rated plans to value liability using premiums, resulting in no implied subsidy. In May 2014, Actuarial Standards Board released revised ASOP 6: Requires implied subsidy valued for community rated plans such as PEMHCA. Timing: effective with all valuations on or after March 31, 2015 AAL/ARC increase relative to current plan very large for PEMHCA minimum benefit June 30, 2015 valuation includes the implied subsidy. 4 Measuring Retiree Group Benefits Obligations and Determining Retiree Group Benefits Plan Costs or Contributions. September 25,

5 DATA SUMMARY Actives 6/30/08 6/30/10 5 6/30/11 5 6/30/13 6/30/15 Count Tier Tier Tier 3 n/a n/a n/a - 11 Total Average Age District Service Salary $58,200 $ 62,200 $ 64,200 $ 64,300 $ 65,600 Proj. Salary (000s) 4,538 4,599 4,903 4,502 4,459 5 Data as of approximately May September 25, DATA SUMMARY Retirees 6/30/08 6/30/10 6 6/30/11 6 6/30/13 6/30/15 Count < > Total Average Age Retirement Age 7 Service Disabled Data as of approximately May Excludes surviving spouses. September 25,

6 DATA SUMMARY Participant Reconciliation Actives Retirees Total June 30, Death/withdrawal (3) (5) (8) New Retirees (10) 10 - New Survivor New Hires June 30, September 25, DATA SUMMARY 80 Historical Counts /30/08 6/30/10 6/30/11 6/30/13 6/30/15 Actives Benefitting Retirees Ratio Active/Retiree September 25,

7 ACTUARIAL ASSUMPTIONS Assumption June 30, 2013 Valuation June 30, 2015 Valuation Valuation Date June 30, /15 & 2015/16 Funding Policy No additional pre-funding June 30, 2015 GASB 45 ARC and disclosure for 2016/17 & 2017/ year phase-in to full ARC: Pay Go + Percentage 9 x (ARC - PayGo) 14/15 & 15/16 based on GASB 45 ARC 16/17+ based on Full ARC (using 6.25% discount rate) 8 9 Financial reporting under GASB 75 will be required beginning with the 2017/18 fiscal year. This report does not provide GASB 75 information. See Discount Rate description below for percentages. September 25, ACTUARIAL ASSUMPTIONS Assumption June 30, 2013 Valuation June 30, 2015 Valuation Discount Rate Select & ultimate discount rates based on funded status: 2014/ % : : 2024/ % : : 2039/ % Sensitivity: 4.75% - No further prefunding with CERBT 7.25%/6.25% - Pre-funded with CalPERS diversified trust Option 1/Option 3 Select & ultimate discount rates: FYE Funding DR % 4.30% % 4.50% % 4.75% % 4.95% % 5.15% % 5.40% % 5.60% % 5.80% % 6.05% % 6.25% Same Sensitivity September 25,

8 ACTUARIAL ASSUMPTIONS Assumption June 30, 2013 Valuation June 30, 2015 Valuation Medical Trend Service Retirement Increase from Prior Year Non-Medicare Medicare Year HMO & PPO HMO & PPO 2012 Actual Premiums 2013 Actual Premiums 2014 Actual Premiums % 8.3% % 7.8% % 5.0% CalPERS Experience Study Benefit 10 ERA Increase from Prior Year Non-Medicare Medicare Year HMO & PPO HMO & PPO 2012 N/A 2013 N/A 2014 N/A 2015 Actual Premiums 2016 Actual Premiums % 7.2% % 6.7% % 5.0% CalPERS Experience Study Benefit 10 ERA Effective for new hires after 11/26/12 September 25, ACTUARIAL ASSUMPTIONS Assumption June 30, 2013 Valuation June 30, 2015 Valuation Mortality CalPERS Experience Study Projected with Scale AA Participation at Retirement Medicare Eligibility Currently covered 100% Currently waived 80% PEMHCA Minimum only 60% 100% CalPERS Experience Study Fully-generational mortality improvement Scale MP-14 converging to ultimate improvement rates in 2022 applied to post-retirement mortality Same Same September 25,

9 ASSETS Market Value (beginning of year) Market Value of Plan Assets 2009/ / / / / /15 $ - $ 1,967 $ 3,470 $ 3,927 $ 4,144 $ 4,671 Contributions 2,012 1, Benefit Payments Expenses (1) (3) (4) (6) (6) (5) Earnings (44) Market Value (end of year) 1,967 3,470 3,927 4,144 4,671 4,759 Approximate Return -4.9% 23.7% 0.0% 5.5% 12.7% -0.1% September 25, ASSETS Actuarial Value (beginning of year) Actuarial Value of Plan Assets 2009/ / / / / /15 $ - $ 2,060 $ 3,282 $ 3,940 $ 4,178 $ 4,485 Contributions 2,012 1, Benefit Payments Credited Return Actuarial Value (end of year) 2,060 3,282 3,940 4,178 4,485 4,841 Approximate Return 4.8% 9.9% 6.2% 6.0% 7.4% 5.8% September 25,

10 ASSETS $6,000 Historical Assets $5,000 $4,000 $3,000 $2,000 $1,000 $0 6/30/09 6/30/10 6/30/11 6/30/12 6/30/13 6/30/14 6/30/15 MVA AVA 80% MVA 120% MVA September 25, ASSETS 25% 20% 15% 10% 5% 0% (5%) (10%) Historical Asset Returns (15%) 09/10 10/11 11/12 12/13 13/14 14/15 MVA -4.9% 23.7% 0.0% 5.5% 12.7% -0.1% Expected Return 7.8% 7.8% 6.3% 6.3% 6.3% 6.3% AVA 4.8% 9.9% 6.2% 6.0% 7.4% 5.8% September 25,

11 RESULTS Funded Status 6/30/10 6/30/11 6/30/13 6/30/15 Present Value of Benefits Actives $ 8,623 $ 13,094 $ 12,735 $ 13,460 Retirees 5,776 7,196 7,597 9,703 Total 14,399 20,290 20,332 23,163 Actuarial Accrued Liability Actives 5,058 7,583 7,184 8,276 Retirees 5,776 7,196 7,597 9,703 Total 10,834 14,779 14,781 17,979 Actuarial Value of Assets 2,060 3,282 4,220 4,841 Unfunded Actuarial Accrued Liability 8,774 11,497 10,561 13,138 Normal Cost September 25, RESULTS $20,000 Funded Status $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 6/30/08 6/30/10 6/30/11 6/30/13 6/30/15 Retiree pay-go Retiree AAL less pay-go Active AAL AVA MVA September 25,

12 RESULTS Actuarial Liability (Gain)/Loss Analysis AAL Actual 6/30/13 AAL $ 14,781 Expected 6/30/15 AAL 16,704 Source Premiums > expected 515 CalPERS Experience Study 1,198 Implied Subsidy 1,658 Demographic/Other (715) Discount rate (1,381) Total 1,275 Actual 6/30/15 AAL 17,979 September 25, RESULTS This page intentionally blank September 25,

RESULTS ARC - $ Annual Required Contributions (ARC) 6/30/2013 Valuation 6/30/2015 Valuation 2014/15 2015/16 2016/17 2017/18 Normal Cost $ 735 $ 694 $ 679 n/a UAAL

13 RESULTS ARC - $ Annual Required Contributions (ARC) 6/30/2013 Valuation 6/30/2015 Valuation 2014/ / / /18 Normal Cost $ 735 $ 694 $ 679 n/a UAAL Amortization ,015 n/a Total 1,477 1,519 1,694 n/a Projected Payroll 4,502 4,648 4,604 n/a ARC - % Normal Cost 16.3% 14.9% 14.7% n/a UAAL Amortization 16.5% 17.7% 22.0% n/a Total 32.8% 32.7% 36.8% n/a September 25, RESULTS Annual Required Contributions (ARC) $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Normal Cost Amortization ,015 ARC 1,150 1,172 1,575 1,731 1,477 1,519 1,694 September 25,

14 RESULTS Outstanding Balance Amortization Bases 6/30/2013 Valuation 6/30/2015 Valuation 6/30/2014 6/30/2015 6/30/2016 6/30/2017 Initial UAAL $ 8,919 $ 8,752 $ 8,544 n/a (Gains)/Losses & Assumption Changes 2010 valuation n/a 2011 valuation 2,029 1,991 1,944 n/a 2013 valuation (2,477) (2,431) (2,373) n/a 2015 valuation n/a n/a 1,410 n/a Net OPEB Obligation 2,618 3,493 3,787 n/a Total 11,223 11,937 13,440 n/a September 25, RESULTS Amortization Payment Amortization Payments 6/30/2013 Valuation 6/30/2015 Valuation 2014/ / / /18 Initial UAAL $ 590 $ 609 $ 645 n/a (Gains)/Losses & Assumption Changes 2010 valuation n/a 2011 valuation n/a 2013 valuation (164) (169) (179) n/a 2015 valuation n/a n/a 107 n/a Net OPEB Obligation n/a Total ,015 n/a Avg Amortization Period n/a September 25,

15 RESULTS Estimated Net OPEB Obligation (NOO) Illustration 2014/ / / /18 NOO at Beginning of Year $ 2,282 $ 3,128 $ 3,787 n/a Annual OPEB Cost Annual Required Contribution 1,477 1,519 1,694 n/a Interest on NOO n/a Amortization of NOO (173) (237) (286) n/a Annual OPEB Cost 1,415 1,433 1,562 n/a Contributions Benefit Payments - Cash n/a Benefit Payments - Implied Subsidy n/a Trust Pre-Funding n/a Total Contribution ,077 n/a NOO at End of Year 3,128 3,787 4,273 n/a September 25, RESULTS Contribution Projection Begin Full Contribution Contrib Fiscal Year Year NOO ARC/ ADC Percent Benefit Pmts Pre- Funding Total Contrib Payroll % of Payroll 2016/17 $ 3,787 $1,646 30% $ 833 $ 244 $ 1,077 $ 4, % 2017/18 4,273 1,703 40% ,234 4, % 2018/19 n/a 1,762 50% ,372 4, % 2019/20 n/a 1,819 60% 1, ,506 5, % 2020/21 n/a 1,876 70% 1, ,636 5, % 2021/22 n/a 1,929 80% 1, ,762 5, % 2022/23 n/a 1,980 90% 1, ,894 5, % 2023/24 n/a 2, % 1, ,028 5, % 2024/25 n/a 2, % 1, ,068 5, % 2025/26 n/a 2, % 1, ,111 6, % September 25,

16 RESULTS Discount Rate Sensitivity 10-year phase-in Full Pre-Funding 6.25% 7.25% 6.25% 7.25% Present Value of Projected Benefits $ 23,163 $ 20,267 $ 21,665 $ 18,480 Funded Status Actuarial Accrued Liability 17,979 16,181 16,988 14,943 Actuarial Value of Assets 4,841 4,841 4,841 4,841 Unfunded Actuarial Accrued Liability 13,138 11,340 12,147 10, /17 Annual Required Contribution Normal Cost $ 679 $ 565 $ 643 $ 524 UAAL Amortization 11 1, , ARC 1,694 1,474 1,646 1,416 ARC % of Payroll 36.8% 32.0% 35.7% 30.8% 11 Amortized over 16 years. September 25, RESULTS Discount Rate Sensitivity Projected Contributions 10-year phase-in Full Pre-Funding Fiscal Year 6.25% 7.25% 6.25% 7.25% 2016/17 $ 1,077 $ 1,008 $ 1,646 $ 1, /18 1,234 1,138 1,655 1, /19 1,372 1,246 1,668 1, /20 1,506 1,348 1,686 1, /21 1,636 1,443 1,706 1, /22 1,762 1,533 1,727 1, /23 1,894 1,628 1,751 1, /24 2,028 1,724 1,779 1, /25 2,068 1,759 1,812 1, /26 2,111 1,797 1,847 1,605 September 25,

17 RESULTS Implied Subsidy Sensitivity June 30, 2015 Valuation Cash Subsidy Implied Subsidy Total Present Value of Projected Benefits 20,518 2,645 23,163 Funded Status Actuarial Accrued Liability 16,321 1,658 17,979 Actuarial Value of Assets 4,841-4,841 Unfunded Actuarial Accrued Liability 11,480 1,658 13, /17 Annual Required Contribution Normal Cost $ 566 $ 113 $ 679 UAAL Amortization ,015 ARC 1, ,694 ARC % of Payroll 31.5% 5.3% 36.8% September 25, RESULTS Benefit Payment Projection Fiscal Year Cash Subsidy Implied Subsidy Total 2015/16 $ 587 $ 99 $ / / / / , / , / , / , /24 1, , /25 1, ,262 September 25,

18 RESULTS Estimated 2016/17 Implied Subsidy Transfer for Medical Coverage Before Implied Subsidy Actives Retirees Total Total Premium 12 $ 1,300 $ 702 $ 2,002 Member Contribution 13 (195) (4) (199) Employer Contribution 1, ,803 After Implied Subsidy Actives Retirees Total Total Premium $ 1,300 $ 702 $ 2,002 Member Contribution (195) (4) (199) Implied Subsidy Transfer (135) Employer Contribution , Estimated premiums based on the 6/30/15 participant data. Assumes District pays 85% of active premiums. September 25, BARTEL ASSOCIATES OPEB DATABASE September 25,

19 BARTEL ASSOCIATES OPEB DATABASE September 25, GASB 75 OPEB accounting changes approved by GASB 6/2/15: Effective for 2017/18 fiscal year Fundamental changes Delinks contributions and accounting Unfunded liability recognition drives expense Major issues: Unfunded liability on balance sheet Lower discount rate if projected assets do not cover projected benefit payments Immediate recognition of: Service & interest cost Benefit changes Deferred recognition of: Gains/losses & assumption changes, over future working lifetime (average of active and inactive employees) closed period Asset gains/losses over 5 years Entry age normal cost method required September 25,

20 OTHER ISSUES Timing: Present preliminary results August 14, 2015 Updated results September 25, 2015 September 25, OTHER ISSUES This page intentionally blank September 25,

21 PREMIUMS 2014 PEMHCA Monthly Premiums Other Northern California Non-Medicare Eligible Medicare Eligible Plan Single 2-Party Family Single 2-Party Family Anthem Select $ $1, $1, $ $ $1, Anthem Traditional , , , Blue Shield , , Blue Shield NetValue , , Kaiser , , UnitedHealthcare , , PERS Choice , , PERS Select , , PERSCare , , September 25, 2015 E-1 PREMIUMS 2015 PEMHCA Monthly Premiums Other Northern California Non-Medicare Eligible Medicare Eligible Plan Single 2-Party Family Single 2-Party Family Anthem Select $ $1, $1, $ $ $1, Anthem Traditional , , , Blue Shield , , , Blue Shield NetValue , , , Kaiser , , UnitedHealthcare , , PERS Choice , , , PERS Select , , , PERSCare , , , September 25, 2015 E-2

22 PREMIUMS 2016 PEMHCA Monthly Premiums Other Northern California Non-Medicare Eligible Medicare Eligible Plan Single 2-Party Family Single 2-Party Family Anthem Select $ $1, $2, n/a n/a n/a Anthem Traditional , , n/a n/a n/a Blue Shield , , n/a n/a n/a Blue Shield NetValue , , n/a n/a n/a Kaiser , , $ $ $ UnitedHealthcare , , PERS Choice , , , PERS Select , , , PERSCare , , , September 25, 2015 E-3 PREMIUMS PEMHCA Monthly Premium Increases Other Northern California Non-Medicare Eligible Medicare Eligible Medical Plan Anthem Select n/a 3.2% 15.2% n/a 30.6% n/a Anthem Traditional n/a 9.3% 15.1% n/a 30.6% n/a Blue Shield (6.1%) 10.2% 9.4% 14.1% 18.3% n/a Blue Shield NetValue (7.5%) 22.8% 18.8% 14.1% 18.3% n/a Kaiser 11.0% (3.8%) 5.3% 2.3% 0.2% 0.6% UnitedHealthcare n/a 2.8% 17.3% n/a 38.3% 20.0% PERS Choice (1.3%) 2.3% 21.3% (5.7%) 10.5% 7.9% PERS Select 29.4% 5.3% 12.6% (5.7%) 10.5% 7.9% PERSCare (36.7%) 8.6% 22.1% (11.6%) 12.7% 10.7% September 25, 2015 E-4

23 DATA SUMMARY Medical Plan Participation Non-Waived Participants Retirees Medical Plan Actives < PERS Choice 64% 100% 83% PERS Select 3% 0% 0% PERSCare 33% 0% 17% Total 100% 100% 100% September 25, 2015 E-5 DATA SUMMARY Active Medical Coverage Medical Plan Single 2-Party Family Waived Total PERS Choice PERS Select PERSCare Waived Total September 25, 2015 E-6

24 DATA SUMMARY Retiree Medical Coverage Under Age 65 Medical Plan Region Single 2-Party Family Waived Total PERS Choice Bay Area North Out of State PERSCare North Out of State Waived Total September 25, 2015 E-7 DATA SUMMARY Retiree Medical Coverage Over Age 65 Medical Plan Region Single 2-Party Family Waived Total PERS Choice Bay Area North Out of State PERSCare North Out of State Waived Total September 25, 2015 E-8

25 DATA SUMMARY Actives by Age and District Service District Service Age < Total < Total September 25, 2015 E-9 DATA SUMMARY Active Age Distribution 15 6/30/13 Valuation 6/30/15 Valuation 10 Number 5 0 < Age September 25, 2015 E-10

DATA SUMMARY Active Service Distribution 30 6/30/13 Valuation 6/30/15 Valuation 20 Number 10 0 0-4 5-9 10-14 15-19

26 DATA SUMMARY Active Service Distribution 30 6/30/13 Valuation 6/30/15 Valuation 20 Number >25 Years of Service September 25, 2015 E-11 DATA SUMMARY This page intentionally blank September 25, 2015 E-12

27 DATA SUMMARY Retiree Medical Coverage by Age Group Age Single 2-Party Family Waived Total Under Over Total Average Age N/A 65.4 September 25, 2015 E-13 DATA SUMMARY Retiree Age Distribution 15 6/30/13 Valuation 6/30/15 Valuation 10 Number 5 0 < Age September 25, 2015 E-14

28 ACTUARIAL ASSUMPTIONS Assumption June 30, 2013 Valuation June 30, 2015 Valuation General Inflation 3.00% Same Cap Increase Healthcare trend Same Participation at Retirement Waived Retiree Re-Election Medical Plan at Retirement Currently covered 100% Currently waived 80% PEMHCA Minimum only 60% 20% re-elect at age 65 (1 waived retiree) Over 65 current plan Under 65 25% elect PERS Care at 65 Currently covered 100% Currently waived 80% PEMHCA Minimum only 60% n/a Same September 25, 2015 E-15 ACTUARIAL ASSUMPTIONS Assumption June 30, 2013 Valuation June 30, 2015 Valuation Marital Status at Retirement Spouse Age Actives: Currently Covered: same as current election Currently Waived: 80% married Retirees: current marital status Actives males 3 years older than females Retirees males 3 years older than females if spouse birth date not provided Surviving Spouse 100% participation Same Same Same September 25, 2015 E-16

29 ACTUARIAL ASSUMPTIONS Assumption June 30, 2013 Valuation June 30, 2015 Valuation Dependents at Retirement Non-District CalPERS Service 25% have family coverage until age 65 Retirees same as current coverage until age 65 ½ of working career prior to District hire, but after age 30, with another CalPERS agency Same Same September 25, 2015 E-17 ACTUARIAL METHODS June 30, 2013 Valuation Cost Method Entry Age Normal Same June 30, 2015 Valuation Amortization Actuarial Value of Assets Level percent of payroll 18-year fixed period Asset gains/losses recognized over 5 years Corridor: 80% & 120% of market value Level percent of payroll 16-year fixed period Same September 25, 2015 E-18

30 DEFINITIONS GASB 45 Accrual Accounting PayGo Cost Project future employer-provided benefit cash flows for current active employees and current retirees Discount projected cash flow to valuation date using discount rate (assumed return on assets used to pay benefits) and other actuarial assumptions to determine present value of projected future benefits (PVB) Allocate PVB to past, current, and future periods using the actuarial cost method Actuarial cost method used for this valuation is the Entry Age Normal Cost method which determines Normal Cost as a level percentage of payroll (same method used by CalPERS) Normal Cost is amount allocated to current fiscal year Actuarial Accrued Liability (AAL) is amount allocated to prior service with employer Unfunded AAL (UAAL) is AAL less plan assets pre-funded in a segregated and restricted trust Cash subsidy is the pay-as-you-go employer benefit payments for retirees Implied subsidy is the difference between the actual cost of retiree benefits and retiree premiums subsidized by active employee premiums September 25, 2015 E-19 DEFINITIONS Present Value of Benefits Present Value of Benefits (Without Plan Assets) Present Value of Benefits (With Plan Assets) Future Normal Costs Future Normal Costs Unfunded Actuarial Accrued Liability Normal Cost Unfunded Actuarial Accrued Normal Cost Assets September 25, 2015 E-20

31 DEFINITIONS Annual Required Contribution (ARC) Net OPEB Obligation (NOO) Annual OPEB Cost (AOC) Required contribution for the current period including: Normal Cost Amortization of: - Initial UAAL - AAL for plan, assumption, and method changes - Experience gains/losses (difference between expected and actual) - Contribution gains/losses (difference between ARC and contributions) ARC in excess of pay-as-you-go costs not required to be funded Net OPEB Obligation is the accumulated amounts expensed but not funded Net OPEB Asset if amounts funded exceed those expensed Expense for the current period including: ARC Interest on NOO Adjustment of NOO NOO adjustment prevents double counting of expense since ARCs include an amortization of prior contribution gains/losses previously expensed September 25, 2015 E-21

June 30, 2015 GASB 45 Actuarial Valuation

YOLO-SOLANO AIR QUALITY MANAGEMENT DISTRICT RETIREE HEALTHCARE PLAN June 30, 2015 GASB 45 Actuarial Valuation Doug Pryor, Vice President & Actuary Daniel Park, Actuarial Analyst Matthew Childs, Actuarial