University Of California Retiree Health Benefit Program. Actuarial Valuation as of July 1, 2009

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1 University Of California Retiree Health Benefit Program Actuarial Valuation as of July 1, 2009

2 Table of Contents Table of Contents Section Description Page Actuarial Valuation Certification... ii I. Executive Summary... 1 II. Background and Comments... 3 III. Summary of Actuarial Valuation Results... 6 IV. Development of Unfunded Actuarial Accrued Liability V. Summary of Assets VI. Determination of Annual Required Contribution VII. Actuarial Experience VIII. GASB Statement No. 45 Notes to the Financial Statements and RSI IX. 10-Year Projection of Employer Benefit Payments X. Summary of Plan Provisions XI. Summary of Actuarial Methods and Assumptions XII. Summary of Demographic Information XIII. Assumption Sensitivity XIV. Glossary i

3 Actuarial Valuation Certification Actuarial Valuation Certification This report presents results of the actuarial valuation of the University of California Retiree Health Benefit Program ( the Plan ) as of July 1, The University of California provided the participant data, financial information and plan descriptions used in this valuation. The actuary has checked the data for reasonableness, but has not independently audited the data. The actuary has no reason to believe the data is not complete and accurate, and knows of no further information that is essential to the preparation of the actuarial valuation. Actuarial information under Government Accounting Standards Board Statement No. 45 (GASB 45) is for purposes of fulfilling employer financial accounting requirements. The results have been made on a basis consistent with GASB 45 and are based upon assumptions prescribed by the University of California. Determinations for purposes other than meeting employer financial accounting requirements may be significantly different from the results reported herein. In our opinion, all costs, liabilities, rates of interest, and other factors under the Plan have been determined on the basis of actuarial assumptions and methods that are each reasonable (or consistent with authoritative guidance), taking into account the experience of the Plan and future expectations and that, when combined, represent our best estimate of anticipated experience under the Plan. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operations of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Our scope for this actuarial valuation did not include analyzing the potential range of such future measurements, and we did not perform that analysis. ii

4 Actuarial Valuation Certification The undersigned with actuarial credentials collectively meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. Any tax advice included in this written communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed by any governmental taxing authority or agency. Deloitte Consulting LLP Tim O Beirne, ASA, MAAA Specialist Leader Michael de Leon, FCA, EA, MAAA Senior Manager iii

5 Section I Executive Summary Governmental Accounting Requirements and Report Purposes Executive Summary The Governmental Accounting Standards Board released the Statement of Governmental Accounting Standards No. 43 ( GASB 43 ) and No. 45 ( GASB 45 ) in These statements require trusts (GASB 43) and employers (GASB 45) to accrue the cost of post-employment benefits other than pensions while eligible employees are providing services to the employer. The University of California ( the University or UC ) adopted GASB 45 for the fiscal year beginning July 1, The purposes of this actuarial valuation report are to: 1) measure the retiree health benefit plan s accrued liabilities and normal cost, 2) provide GASB 45 disclosure information for the University s financial reporting, and 3) project expected cash flows (pay-as-you-go costs). Summary of Results For the Campuses and Medical Centers, the key measures for the July 1, 2009 retiree health actuarial valuation are: The July 1, 2009 Unfunded Actuarial Accrued Liability (UAAL) is $14.5 billion. The Annual Required Contribution (ARC) for Fiscal Year 2009/2010 is $1,751 million ($1.75 billion), consisting of: A normal cost of $635 million, approximately 8.3% of University of California Retirement Plan ( UCRP ) covered payroll, and An amortization cost of $1,116 million, approximately 14.6% of UCRP covered payroll. Under governmental accounting rules, the ARC is not required to be funded but will be a component of the retiree health benefit expense recorded in the University s financial statements. As of July 1, 2009, the funded ratio for retiree health benefits was 0.5%, given the University s current policy of funding only projected pay-as-you-go cash costs (as described on the following page). Projected contributions for 2009/2010 are $242 million. This represents the projected pay-as-you-go costs of the retiree benefits funded by a system-wide retiree health assessment. These results reflect the contribution policy changes made for calendar year 2010; the effect of these changes are shown in the report. Page 1

6 Section I Executive Summary Executive Summary (cont.) Funding Policy On July 1, 2007, the University of California Retiree Health Benefit Trust ( UCRHBT ) was created. The UCRHBT was established to allow certain University locations and affiliates (primarily Campuses and Medical Centers) that share the risks, rewards, and costs of providing for retiree health benefits to fund such benefits on a cost-sharing basis and accumulate funds on a tax-exempt basis under an arrangement segregated from University assets. Currently, the University does not pre-fund retiree health benefits and instead provides for benefits on a pay-as-you-go basis. If pre-funding occurs in the future, the UCRHBT will be used as the vehicle for those assets. There is a balance in the UCRHBT as of July 1, 2009 of $74 million. This balance was created by a combination of one-time initial funding for cash flow purposes to facilitate administration and the difference between the amount collected from locations via the retiree health assessment and the actual pay-as-you-go benefit plan costs since inception. Page 2

7 Section II Background and Comments Background and Comments Overview of Plans The University of California s current policy is to provide a continuation of the active health benefit program for eligible retirees, including a choice of medical, dental and wellness benefits. Depending on an employee s service at retirement, the University of California will pay up to 100% of the maximum University contribution determined for each year. The contribution will not exceed the gross premium for selected coverage; however, the contribution can be used to reimburse all or a portion of an eligible member s Medicare Part B premiums. Spouses/eligible domestic partners and dependents of retirees are also eligible for post-employment health coverage. A summary of the current substantive plan benefits are described in Section X of this report. Changes from the Previous Actuarial Valuation In September 2009, the University of California revised the policy for determining the maximum University contribution for calendar year In prior years, the maximum University contribution was set at the same dollar amount contributed for employees in contribution Pay Band 2 (annual salary between $46,001 and $92,000). Beginning January 1, 2010, the University will determine the maximum contribution as a percentage of retiree premiums that is more closely aligned to the percentage contributed for active employees. There will also be separate maximum contribution levels for non-medicare and Medicare retirees. For the Campuses and Medical Centers, this change in plan provisions decreased the actuarial accrued liability by $485 million (3.3%) and the ARC by $57 million (3.2%), compared to valuation results that assumed no change to the contribution policy. University Reporting Entities For financial reporting purposes, the associated liabilities, expenses and other disclosure items are reported for different covered populations: The primary results are presented for the Campuses and Medical Centers of the University, which also includes the Office of the President, Agricultural & Natural Resources and the Associated Students of UCLA. This combined entity is referred to as Campus/Medical Center/Other (CMCO). Page 3

8 Section II Background and Comments Background and Comments (cont.) In addition, results are presented separately for two other organizations: o Lawrence Berkeley National Laboratory (LBNL), a Department of Energy (DOE) laboratory managed and operated by the University; and o UC Hastings College of the Law (Hastings). This report includes the combined results for the University s Campuses and Medical Centers and the LBNL population, and the combined results for all three entities. Actuarial Methods and Assumptions The University of California Retirement Plan performs experience studies periodically to determine reasonable and appropriate economic and demographic assumptions for purposes of valuing the defined benefit pension plan. The most recent UCRP experience study was completed in April 2007 for the four-year period ending June 30, The recommendations of that study were used to determine the assumptions for this valuation, where applicable. One significant area where the recommendation of the experience study is not applicable to this retiree health benefit valuation is the discount rate. The University of California elected to use a discount rate of 5.5%. Since the University s retiree health benefits are effectively funded on only a pay-as-you-go cash cost basis, GASB 45 requires that the discount rate be based on the estimated long-term investment yield on the general assets. As of June 30, 2009, approximately 82% of general assets remained in the Short Term Investment Pool ( STIP ) and 18% were held in the Total Returns Investment Pool ( TRIP ). The combination of assets held in the STIP and TRIP are generally more liquid and risk averse than the assets of UCRP; therefore, the expected long-term investment yield is lower for the STIP/TRIP than that for the assets of UCRP. The actuarial methods and assumptions are described in more detail in Section XI of this report. Additionally, Section XIII illustrates the impact that changes to the discount and benefit cost trend rate assumptions would have on the Actuarial Accrued Liability and Normal Cost. This is not part of GASB 45 disclosure requirements, but it is provided for the University s information. Page 4

9 Section II Background and Comments Background and Comments (cont.) Cash Costs vs. Implicit Rate GASB Statement Nos. 43 and 45 require that trusts and employers recognize the expected claims of the retiree population less the expected contributions by those retirees. This is not necessarily the same determination as the expected cash payments of the employer for retiree health benefits. The difference is that many post-employment health plans (including the University s Retiree Health Benefit Program) charge the same premium rates for all participants in a non-medicare plan regardless of their age. This single premium rate is called a blended premium rate because it blends the expected claims of both active and retired participants. Retirees are generally older than the average participant in a non-medicare plan, which means they are expected to generate higher claims than the average participant of the plan; therefore, they are receiving a subsidy even if they pay 100% of the blended premium rate because they would be paying less in premiums than their claims costs. This subsidy is referred to as the Implicit Rate. Another way of considering the Implicit Rate is to assume the retirees were removed from a blended plan and, instead, separately rated. In this scenario, the premium rate for the remaining active population would be lower; therefore, the retirees premium rate is being subsidized by the premiums for active employees. Since the employer generally pays a portion of the premiums for the active employees, this subsidy creates a liability for the employer. By comparison, the cash costs are the actual dollars paid by the employer to cover a portion or all of the retirees premium rates. This is sometimes referred to as the Explicit Rate. This is the benefit that is explicitly stated by the University that will be paid on behalf of retirees. Before implementing GASB 45, the University accounted for the annual costs of retiree health benefits solely based on these cash costs. The actuarial accrued liability for the Implicit Rate for the Campuses and Medical Centers is approximately $2.13 billion as of July 1, This is approximately 14.6% of the total actuarial accrued liability for the Retiree Health Benefit Program. Final Disclosures Most values reported here are final amounts for disclosures in the University s financial statements; however, amounts related to the University cash benefit payments for Fiscal Year 2009/2010 are currently based on estimated benefit payments. The University s final disclosures will be updated to reflect the actual benefit payments during the fiscal year. Page 5

10 Section III Summary of Actuarial Valuation Results Summary of Actuarial Valuation Results This section provides a summary of the actuarial valuation results. All information is provided as of the measurement date except for GASB 45 disclosure information. GASB 45 disclosure information is shown as of the end of the Fiscal Year to reflect when it will actually be disclosed. All liabilities are net of expected retiree contributions. Explicit Campus/Medical Center/Other (CMCO) July 1, 2009 July 1, 2008 Implicit Explicit Implicit Total Total a. Actuarial Accrued Liability (1) Active Participants $ 8,294,609 $ 1,217,740 $ 9,512,349 $ 7,575,734 $ 1,120,319 $ 8,696,053 (2) Retired Participants* 4,117, ,291 5,029,180 3,786, ,987 4,606,453 (3) Total $ 12,412,498 $ 2,129,031 $ 14,541,529 $ 11,362,200 $ 1,940,306 $ 13,302,506 b. Actuarial Value of UCRHBT Assets $ 76,893 $ - $ 76,893 $ 51,221 $ - $ 51,221 c. Unfunded Actuarial Accrued Liability (UAAL): (a) - (b) $ 12,335,605 $ 2,129,031 $ 14,464,636 $ 11,310,979 $ 1,940,306 $ 13,251,285 d. Funded Ratio: (b) / (a) 0.6% 0.0% 0.5% 0.5% 0.0% 0.4% e. UAAL as a Percentage of Covered Payroll: (c) / (l) 161.5% 27.9% 189.4% 156.1% 26.8% 182.9% f. Annual Required Contribution (ARC) at Year End $ 1,506,192 $ 244,474 $ 1,750,666 $ 1,339,591 $ 210,841 $ 1,550,432 g. Annual Retiree Health Benefit Expense at Year End $ 1,412,532 $ 230,211 $ 1,642,743 $ 1,297,561 $ 204,376 $ 1,501,937 * Retired participants include retirees, disabled participants, and surviving family members. Page 6

11 Section III Summary of Actuarial Valuation Results Summary of Actuarial Valuation Results (cont.) Explicit Campus/Medical Center/Other (CMCO) July 1, 2009 July 1, 2008** Implicit Explicit Implicit Total Total h. University Contributions*** (1) To UCRHBT $ (242,482) $ - $ (242,482) $ (234,428) $ - $ (234,428) (2) To Health Care Insurers and Administrators (3) Implicit - (49,526) (49,526) - (44,079) (44,079) (4) Total Contributions $ (242,482) $ (49,526) $ (292,008) $ (234,428) $ (44,079) $ (278,507) i. Increase in Obligations for Retiree Health Benefits: (g) + (h) $ 1,170,050 $ 180,685 $ 1,350,735 $ 1,063,133 $ 160,297 $ 1,223,430 j. Obligations for Retiree Health Benefits (1) Beginning of Year $ 2,004,973 $ 305,176 $ 2,310,149 $ 941,840 $ 144,879 $ 1,086,719 (2) End of Year: (j.1) + (i) $ 3,175,023 $ 485,861 $ 3,660,884 $ 2,004,973 $ 305,176 $ 2,310,149 k. Participant Counts (1) Active Participants 114, ,083 (2) Retired Participants* 32,278 31,473 (3) Total 146, ,556 l. Covered Payroll $ 7,637,064 $ 7,245,447 * Retired participants include retirees, disabled participants, and surviving family members. ** Results updated to reflect actual contributions made for FY 2008/2009. *** Actual contributions shown for FY 2007/2008; Expected contributions shown for FY 2009/2010. Page 7

12 Section III Summary of Actuarial Valuation Results Summary of Actuarial Valuation Results (cont.) Explicit Lawrence Berkeley National Laboratory (LBNL) July 1, 2009 July 1, 2008 Implicit Explicit Implicit Total Total a. Actuarial Accrued Liability (1) Active Participants $ 237,414 $ 33,472 $ 270,886 $ 232,577 $ 33,238 $ 265,815 (2) Retired Participants* 202,594 46, , ,071 42, ,928 (3) Total $ 440,008 $ 80,247 $ 520,255 $ 421,648 $ 76,095 $ 497,743 b. Actuarial Value of UCRHBT Assets $ - $ - $ - $ - $ - $ - c. Unfunded Actuarial Accrued Liability (UAAL): (a) - (b) $ 440,008 $ 80,247 $ 520,255 $ 421,648 $ 76,095 $ 497,743 d. Funded Ratio: (b) / (a) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% e. UAAL as a Percentage of Covered Payroll: (c) / (l) 203.4% 37.1% 240.5% 206.3% 37.2% 243.6% f. Annual Required Contribution (ARC) at Year End $ 47,724 $ 8,026 $ 55,750 $ 42,854 $ 7,177 $ 50,031 g. Annual Retiree Health Benefit Expense at Year End $ 45,055 $ 7,590 $ 52,645 $ 41,652 $ 6,973 $ 48,625 * Retired participants include retirees, disabled participants, and surviving family members. Page 8

13 Section III Summary of Actuarial Valuation Results Summary of Actuarial Valuation Results (cont.) Explicit Lawrence Berkeley National Laboratory (LBNL) July 1, 2009 July 1, 2008** Implicit Explicit Implicit Total Total h. University Contributions*** (1) To UCRHBT $ - $ - $ - $ - $ - $ - (2) To Health Care Insurers and Administrators (12,746) - (12,746) (11,441) - (11,441) (3) Implicit - (2,492) (2,492) - (2,240) (2,240) (4) Total Contributions $ (12,746) $ (2,492) $ (15,238) $ (11,441) $ (2,240) $ (13,681) i. Increase in Obligations for Retiree Health Benefits: (g) + (h) $ 32,309 $ 5,098 $ 37,407 $ 30,211 $ 4,733 $ 34,944 j. Obligations for Retiree Health Benefits (1) Beginning of Year $ 57,139 $ 9,299 $ 66,438 $ 26,928 $ 4,566 $ 31,494 (2) End of Year: (j.1) + (i) $ 89,448 $ 14,397 $ 103,845 $ 57,139 $ 9,299 $ 66,438 k. Participant Counts (1) Active Participants 2,800 2,693 (2) Retired Participants* 1,676 1,660 (3) Total 4,476 4,353 l. Covered Payroll $ 216,355 $ 204,349 * Retired participants include retirees, disabled participants, and surviving family members. ** Results updated to reflect actual contributions made for FY 2008/2009. *** Actual contributions shown for FY 2007/2008; Expected contributions shown for FY 2009/2010. Page 9

14 Section III Summary of Actuarial Valuation Results Summary of Actuarial Valuation Results (cont.) July 1, 2009 CMCO + LBNL July 1, 2008 Explicit Implicit Explicit Implicit Total Total a. Actuarial Accrued Liability (1) Active Participants $ 8,532,023 $ 1,251,212 $ 9,783,235 $ 7,808,311 $ 1,153,557 $ 8,961,868 (2) Retired Participants* 4,320, ,066 5,278,549 3,975, ,844 4,838,381 (3) Total $ 12,852,506 $ 2,209,278 $ 15,061,784 $ 11,783,848 $ 2,016,401 $ 13,800,249 b. Actuarial Value of UCRHBT Assets $ 76,893 $ - $ 76,893 $ 51,221 $ - $ 51,221 c. Unfunded Actuarial Accrued Liability (UAAL): (a) - (b) $ 12,775,613 $ 2,209,278 $ 14,984,891 $ 11,732,627 $ 2,016,401 $ 13,749,028 d. Funded Ratio: (b) / (a) 0.6% 0.0% 0.5% 0.4% 0.0% 0.4% e. UAAL as a Percentage of Covered Payroll: (c) / (l) 162.7% 28.1% 190.8% 157.5% 27.1% 184.6% f. Annual Required Contribution (ARC) at Year End $ 1,553,916 $ 252,500 $ 1,806,416 $ 1,382,445 $ 218,018 $ 1,600,463 g. Annual Retiree Health Benefit Expense at Year End $ 1,457,587 $ 237,801 $ 1,695,388 $ 1,339,213 $ 211,349 $ 1,550,562 * Retired participants include retirees, disabled participants, and surviving family members. Page 10

15 Section III Summary of Actuarial Valuation Results Summary of Actuarial Valuation Results (cont.) Explicit CMCO + LBNL July 1, 2009 July 1, 2008** Implicit Explicit Implicit Total Total h. University Contributions*** (1) To UCRHBT $ (242,482) $ - $ (242,482) $ (234,428) $ - $ (234,428) (2) To Health Care Insurers and Administrators (12,746) - (12,746) (11,441) - (11,441) (3) Implicit - (52,018) (52,018) - (46,319) (46,319) (4) Total Contributions $ (255,228) $ (52,018) $ (307,246) $ (245,869) $ (46,319) $ (292,188) i. Increase in Obligations for Retiree Health Benefits: (g) + (h) $ 1,202,359 $ 185,783 $ 1,388,142 $ 1,093,344 $ 165,030 $ 1,258,374 j. Obligations for Retiree Health Benefits (1) Beginning of Year $ 2,062,112 $ 314,475 $ 2,376,587 $ 968,768 $ 149,445 $ 1,118,213 (2) End of Year: (j.1) + (i) $ 3,264,471 $ 500,258 $ 3,764,729 $ 2,062,112 $ 314,475 $ 2,376,587 k. Participant Counts (1) Active Participants 117, ,776 (2) Retired Participants* 33,954 33,133 (3) Total 151, ,909 l. Covered Payroll $ 7,853,419 $ 7,449,796 * Retired participants include retirees, disabled participants, and surviving family members. ** Results updated to reflect actual contributions made for FY 2008/2009 *** Actual contributions shown for FY 2007/2008; Expected contributions shown for FY 2009/2010. Page 11

16 Section III Summary of Actuarial Valuation Results Summary of Actuarial Valuation Results (cont.) Explicit Hastings College of the Law (Hastings) July 1, 2009 July 1, 2008 Implicit Explicit Implicit Total Total a. Actuarial Accrued Liability (1) Active Participants $ 18,324 $ 2,748 $ 21,072 $ 17,089 $ 2,547 $ 19,636 (2) Retired Participants* 11,307 2,766 14,073 10,338 2,392 12,730 (3) Total $ 29,631 $ 5,514 $ 35,145 $ 27,427 $ 4,939 $ 32,366 b. Actuarial Value of UCRHBT Assets $ 208 $ - $ 208 $ 134 $ - $ 134 c. Unfunded Actuarial Accrued Liability (UAAL): (a) - (b) $ 29,423 $ 5,514 $ 34,937 $ 27,293 $ 4,939 $ 32,232 d. Funded Ratio: (b) / (a) 0.7% 0.0% 0.6% 0.5% 0.0% 0.4% e. UAAL as a Percentage of Covered Payroll: (c) / (l) 145.5% 27.3% 172.7% 143.5% 26.0% 169.5% f. Annual Required Contribution (ARC) at Year End $ 3,376 $ 585 $ 3,961 $ 3,034 $ 498 $ 3,532 g. Annual Retiree Health Benefit Expense at Year End $ 3,171 $ 554 $ 3,725 $ 2,939 $ 484 $ 3,423 * Retired participants include retirees, disabled participants, and surviving family members. Page 12

17 Section III Summary of Actuarial Valuation Results Summary of Actuarial Valuation Results (cont.) Explicit Hastings College of the Law (Hastings) July 1, 2009 July 1, 2008** Implicit Explicit Implicit Total Total h. University Contributions*** (1) To UCRHBT $ (690) $ - $ (690) $ (687) $ - $ (687) (2) To Health Care Insurers and Administrators (3) Implicit - (130) (130) - (136) (136) (4) Total Contributions $ (690) $ (130) $ (820) $ (687) $ (136) $ (823) i. Increase in Obligations for Retiree Health Benefits: (g) + (h) $ 2,481 $ 424 $ 2,905 $ 2,252 $ 348 $ 2,600 j. Obligations for Retiree Health Benefits (1) Beginning of Year $ 4,382 $ 668 $ 5,050 $ 2,130 $ 320 $ 2,450 (2) End of Year: (j.1) + (i) $ 6,863 $ 1,092 $ 7,955 $ 4,382 $ 668 $ 5,050 k. Participant Counts (1) Active Participants (2) Retired Participants* (3) Total l. Covered Payroll $ 20,225 $ 19,013 * Retired participants include retirees, disabled participants, and surviving family members. ** Results updated to reflect actual contributions made for FY 2008/2009 *** Actual contributions shown for FY 2007/2008; Expected contributions shown for FY 2009/2010. Page 13

18 Section III Summary of Actuarial Valuation Results Summary of Actuarial Valuation Results (cont.) July 1, 2009 Combined - All Locations July 1, 2008 Explicit Implicit Explicit Implicit Total Total a. Actuarial Accrued Liability (1) Active Participants $ 8,550,347 $ 1,253,960 $ 9,804,307 $ 7,825,400 $ 1,156,104 $ 8,981,504 (2) Retired Participants* 4,331, ,832 5,292,622 3,985, ,236 4,851,111 (3) Total $ 12,882,137 $ 2,214,792 $ 15,096,929 $ 11,811,275 $ 2,021,340 $ 13,832,615 b. Actuarial Value of UCRHBT Assets $ 77,101 $ - $ 77,101 $ 51,355 $ - $ 51,355 c. Unfunded Actuarial Accrued Liability (UAAL): (a) - (b) $ 12,805,036 $ 2,214,792 $ 15,019,828 $ 11,759,920 $ 2,021,340 $ 13,781,260 d. Funded Ratio: (b) / (a) 0.6% 0.0% 0.5% 0.4% 0.0% 0.4% e. UAAL as a Percentage of Covered Payroll: (c) / (l) 162.6% 28.1% 190.8% 157.5% 27.1% 184.5% f. Annual Required Contribution (ARC) at Year End $ 1,557,292 $ 253,085 $ 1,810,377 $ 1,385,479 $ 218,516 $ 1,603,995 g. Annual Retiree Health Benefit Expense at Year End $ 1,460,758 $ 238,355 $ 1,699,113 $ 1,342,152 $ 211,833 $ 1,553,985 * Retired participants include retirees, disabled participants, and surviving family members. Page 14

19 Section III Summary of Actuarial Valuation Results Summary of Actuarial Valuation Results (cont.) July 1, 2009 Combined - All Locations July 1, 2008** Explicit Implicit Explicit Implicit Total Total h. University Contributions*** (1) To UCRHBT $ (243,172) $ - $ (243,172) $ (235,115) $ - $ (235,115) (2) To Health Care Insurers and Administrators (12,746) - (12,746) (11,441) - (11,441) (3) Implicit - (52,148) (52,148) - (46,455) (46,455) (4) Total Contributions $ (255,918) $ (52,148) $ (308,066) $ (246,556) $ (46,455) $ (293,011) i. Increase in Obligations for Retiree Health Benefits: (g) + (h) $ 1,204,840 $ 186,207 $ 1,391,047 $ 1,095,596 $ 165,378 $ 1,260,974 j. Obligations for Retiree Health Benefits (1) Beginning of Year $ 2,066,494 $ 315,143 $ 2,381,637 $ 970,898 $ 149,765 $ 1,120,663 (2) End of Year: (j.1) + (i) $ 3,271,334 $ 501,350 $ 3,772,684 $ 2,066,494 $ 315,143 $ 2,381,637 k. Participant Counts (1) Active Participants 117, ,008 (2) Retired Participants* 34,047 33,220 (3) Total 151, ,228 l. Covered Payroll $ 7,873,644 $ 7,468,809 * Retired participants include retirees, disabled participants, and surviving family members. ** Results updated to reflect actual contributions made for FY 2008/2009 *** Actual contributions shown for FY 2007/2008; Expected contributions shown for FY 2009/2010. Page 15

20 Section IV Development of Unfunded Actuarial Accrued Liability Development of Unfunded Actuarial Accrued Liability This section develops the Unfunded Actuarial Accrued Liability (UAAL), which is the actuarial accrued liability net of the actuarial value of plan assets. The actuarial accrued liability is the portion of the present value of future benefits (PVFB) accrued to date. The present value of future normal costs represents the portion of the PVFB expected to accrue in the future, based on the current population. CMCO July 1, 2009 Explicit Implicit Total a. Present Value of Future Benefits Active Participants $ 12,267,945 $ 1,768,199 $ 14,036,144 Retired Participants* 4,117, ,291 5,029,180 Total $ 16,385,834 $ 2,679,490 $ 19,065,324 b. Total Present Value of Future Normal Costs $ 3,973,336 $ 550,459 $ 4,523,795 c. Actuarial Accrued Liability: (a) - (b) $ 12,412,498 $ 2,129,031 $ 14,541,529 d. Assets $ 76,893 $ - $ 76,893 e. Unfunded Actuarial Accrued Liability (UAAL): (c) - (d) $ 12,335,605 $ 2,129,031 $ 14,464,636 * Retired participants include retirees, disabled participants, and surviving family members. Page 16

21 Section IV Development of Unfunded Actuarial Accrued Liability Development of Unfunded Actuarial Accrued Liability (cont.) LBNL July 1, 2009 Explicit Implicit Total a. Present Value of Future Benefits Active Participants $ 336,080 $ 48,149 $ 384,229 Retired Participants* 202,594 46, ,369 Total $ 538,674 $ 94,924 $ 633,598 b. Total Present Value of Future Normal Costs $ 98,666 $ 14,677 $ 113,343 c. Actuarial Accrued Liability: (a) - (b) $ 440,008 $ 80,247 $ 520,255 d. Assets $ - $ - $ - e. Unfunded Actuarial Accrued Liability (UAAL): (c) - (d) $ 440,008 $ 80,247 $ 520,255 * Retired participants include retirees, disabled participants, and surviving family members. Page 17

22 Section IV Development of Unfunded Actuarial Accrued Liability Development of Unfunded Actuarial Accrued Liability (cont.) CMCO + LBNL July 1, 2009 Explicit Implicit Total a. Present Value of Future Benefits Active Participants $ 12,604,025 $ 1,816,348 $ 14,420,373 Retired Participants* 4,320, ,066 5,278,549 Total $ 16,924,508 $ 2,774,414 $ 19,698,922 b. Total Present Value of Future Normal Costs $ 4,072,002 $ 565,136 $ 4,637,138 c. Actuarial Accrued Liability: (a) - (b) $ 12,852,506 $ 2,209,278 $ 15,061,784 d. Assets $ 76,893 $ - $ 76,893 e. Unfunded Actuarial Accrued Liability (UAAL): (c) - (d) $ 12,775,613 $ 2,209,278 $ 14,984,891 * Retired participants include retirees, disabled participants, and surviving family members. Page 18

23 Section IV Development of Unfunded Actuarial Accrued Liability Development of Unfunded Actuarial Accrued Liability (cont.) Hastings July 1, 2009 Explicit Implicit Total a. Present Value of Future Benefits Active Participants $ 26,011 $ 3,754 $ 29,765 Retired Participants* 11,307 2,766 14,073 Total $ 37,318 $ 6,520 $ 43,838 b. Total Present Value of Future Normal Costs $ 7,687 $ 1,006 $ 8,693 c. Actuarial Accrued Liability: (a) - (b) $ 29,631 $ 5,514 $ 35,145 d. Assets $ 208 $ - $ 208 e. Unfunded Actuarial Accrued Liability (UAAL): (c) - (d) $ 29,423 $ 5,514 $ 34,937 * Retired participants include retirees, disabled participants, and surviving family members. Page 19

24 Section IV Development of Unfunded Actuarial Accrued Liability Development of Unfunded Actuarial Accrued Liability (cont.) Combined - All Locations July 1, 2009 Explicit Implicit Total a. Present Value of Future Benefits Active Participants $ 12,630,036 $ 1,820,102 $ 14,450,138 Retired Participants* 4,331, ,832 5,292,622 Total $ 16,961,826 $ 2,780,934 $ 19,742,760 b. Total Present Value of Future Normal Costs $ 4,079,689 $ 566,142 $ 4,645,831 c. Actuarial Accrued Liability: (a) - (b) $ 12,882,137 $ 2,214,792 $ 15,096,929 d. Assets $ 77,101 $ - $ 77,101 e. Unfunded Actuarial Accrued Liability (UAAL): (c) - (d) $ 12,805,036 $ 2,214,792 $ 15,019,828 * Retired participants include retirees, disabled participants, and surviving family members. Page 20

25 Section V Summary of Assets Summary of Assets The Retiree Health Benefit Program is currently funded on a pay-as-you-go basis; however, there are some plan assets created by a combination of initial funding to facilitate administration and the difference between the amount collected from locations via the retiree health assessment and the actual benefit plan costs since inception. Income and disbursements are allocated between CMCO and Hastings based on their respective contributions made to the plan during the fiscal year. The DOE laboratory (LBNL) reimburses the University for the benefit costs paid by the University attributable to LBNL retirees and does not participate in the UCRHBT. The following tables contain summaries of transactions for UCRHBT during the year. Summary of Transactions CMCO July 1, Net assets available for plan benefits as of July 1, 2008 $ 50,672 Income 2. Employer contributions $ 234, Retiree contributions 15, Investment income 526 $ 250,803 Disbursements 5. Benefit premiums and payments $ (203,161) 6. Medicare Part B reimbursements (22,146) 7. Expenses & fees (2,001) $ (227,308) 8. Net assets available for Plan benefits as of July 1, 2009 $ 74,167 Page 21

26 Section V Summary of Assets Summary of Assets (cont.) Summary of Transactions Hastings July 1, Net assets available for plan benefits as of July 1, 2008 $ 132 Income 2. Employer contributions $ Retiree contributions Investment income 2 $ 735 Disbursements 5. Benefit premiums and payments $ (595) 6. Medicare Part B reimbursements (65) 7. Expenses & fees (6) $ (666) 8. Net assets available for Plan benefits as of July 1, 2009 $ 201 Page 22

27 Section V Summary of Assets Summary of Assets (cont.) Summary of Transactions CMCO + Hastings July 1, Net assets available for plan benefits as of July 1, 2008 $ 50,804 Income 2. Employer contributions $ 235, Retiree contributions 15, Investment income 528 $ 251,538 Disbursements 5. Benefit premiums and payments $ (203,756) 6. Medicare Part B reimbursements (22,211) 7. Expenses & fees (2,007) $ (227,974) 8. Net assets available for Plan benefits as of July 1, 2009 $ 74,368 Page 23

28 Section V Summary of Assets Summary of Assets (cont.) The actuarial valuation method phases in investment gains and losses over five (5) years. This method is consistent with the asset valuation method adopted for the UCRP valuation. The following tables develop the actuarial value of assets used in the valuation. Development of Actuarial Value of Assets CMCO July 1, Market value of assets as of July 1, 2008 $ 50, Contributions 250, Benefit payments and expenses (227,308) 4. Assumed earnings at 5.50% on (1), (2), and (3) 3, Expected assets at July 1, 2009: (1) + (2) + (3) + (4) $ 77, Actual assets at July 1, 2009 $ 74, Investment gain (loss) a. Gain (loss) for 2008: (6) - (5) (2,893) b. Gain (loss) for 2007 (686) c. Total gain (loss) (3,579) 8. Gain (loss) not yet reflected in actuarial value of assets a. 80% of 2008 gain (loss) (2,314) b. 60% of 2007 gain (loss) (412) c. Total gain (loss) not yet reflected (2,726) 9. Actuarial value of assets as of July 1, 2009: (6) - (8.c) $ 76,893 Page 24

29 Section V Summary of Assets Summary of Assets (cont.) Development of Actuarial Value of Assets Hastings July 1, Market value of assets as of July 1, 2008 $ Contributions Benefit payments and expenses (666) 4. Assumed earnings at 5.50% on (1), (2), and (3) 9 5. Expected assets at July 1, 2009: (1) + (2) + (3) + (4) $ Actual assets at July 1, 2009 $ Investment gain (loss) a. Gain (loss) for 2008: (6) - (5) (7) b. Gain (loss) for 2007 (2) c. Total gain (loss) (9) 8. Gain (loss) not yet reflected in actuarial value of assets a. 80% of 2008 gain (loss) (6) b. 60% of 2007 gain (loss) (1) c. Total gain (loss) not yet reflected (7) 9. Actuarial value of assets as of July 1, 2009: (6) - (8.c) $ 208 Page 25

30 Section V Summary of Assets Summary of Assets (cont.) Development of Actuarial Value of Assets CMCO + Hastings July 1, Market value of assets as of July 1, 2008 $ 50, Contributions 251, Benefit payments and expenses (227,974) 4. Assumed earnings at 5.50% on (1), (2), and (3) 3, Expected assets at July 1, 2009: (1) + (2) + (3) + (4) $ 77, Actual assets at July 1, 2009 $ 74, Investment gain (loss) a. Gain (loss) for 2008: (6) - (5) (2,900) b. Gain (loss) for 2007 (688) c. Total gain (loss) (3,588) 8. Gain (loss) not yet reflected in actuarial value of assets a. 80% of 2008 gain (loss) (2,320) b. 60% of 2007 gain (loss) (413) c. Total gain (loss) not yet reflected (2,733) 9. Actuarial value of assets as of July 1, 2009: (6) - (8.c) $ 77,101 * Total investment income is $528. Page 26

31 Section VI Determination of Annual Required Contribution Determination of Annual Required Contribution GASB 45 requires the disclosure of the annual post-employment benefits other than pensions ( OPEB ) cost. A component of the annual OPEB cost is the Annual Required Contribution. The following is a brief explanation of the components of the Annual Required Contribution: Normal Cost: The portion of the Total Present Value of Future Benefits attributed to employee service during the current fiscal year by the actuarial cost method. Amortization Payments: Closed, 30-year, level dollar amortization of the initial Unfunded Actuarial Accrued Liability; closed, 15-year, level dollar amortizations of any future experience gains and losses; and closed, 30-year, level dollar amortization of any gains and losses due to assumption changes or changes in plan provisions. Interest to End of Year: The Annual Required Contribution is determined as a year-end value. The Normal Cost and Amortization Payments are determined at the valuation date and have a full year of interest applied to determine the end of year value. The Annual Required Contribution is compared to the plan contributions (with interest) made during the year to determine the increase in the Net OPEB Obligation. Since the University uses a pay-as-you-go funding policy, the benefit payments with interest should be used to determine contributions. To simplify the determination of year-end plan contributions, the benefit payments will be determined without interest. Instead, the interest on expected benefit payments will be used to offset the determination of the Annual Required Contribution. The next five pages present the Annual Required Contribution development for the fiscal year ending June 30, The development of amortization payments for each location follows the Annual Required Contribution development exhibits. Page 27

32 Section VI Determination of Annual Required Contribution Determination of Annual Required Contribution (cont.) Annual Required Contribution for Fiscal Year Ending June 30, 2010 Explicit CMCO Implicit Total a. Normal Cost* $ 527,958 $ 73,696 $ 601,654 b. Amortization Payment* 906, ,324 1,065,357 c. Interest to End of Year** [(a) + (b)] x 5.5% + (e) x [5.5% / 2] 72,201 11,454 83,655 d. Annual Required Contribution As of Fiscal Year End $ 1,506,192 $ 244,474 $ 1,750,666 e. Expected University Contribution $ (242,482) $ (49,526) $ (292,008) * If Normal Cost and Amortization Payment are expressed on an end of year basis, their values are $635 million and $1,116 million, respectively. ** Includes interest on expected benefit payments made throughout the year Page 28

33 Section VI Determination of Annual Required Contribution Determination of Annual Required Contribution (cont.) Annual Required Contribution for Fiscal Year Ending June 30, 2010 Explicit LBNL Implicit Total a. Normal Cost* $ 13,693 $ 2,074 $ 15,767 b. Amortization Payment* 31,875 5,599 37,474 c. Interest to End of Year** [(a) + (b)] x 5.5% + (e) x [5.5% / 2] 2, ,509 d. Annual Required Contribution As of Fiscal Year End $ 47,724 $ 8,026 $ 55,750 e. Expected University Contribution $ (12,746) $ (2,492) $ (15,238) * If Normal Cost and Amortization Payment are expressed on an end of year basis, their values are $17 million and $39 million, respectively. ** Includes interest on expected benefit payments made throughout the year Page 29

34 Section VI Determination of Annual Required Contribution Determination of Annual Required Contribution (cont.) Annual Required Contribution for Fiscal Year Ending June 30, 2010 Explicit CMCO + LBNL Implicit Total a. Normal Cost* $ 541,651 $ 75,770 $ 617,421 b. Amortization Payment* 937, ,923 1,102,831 c. Interest to End of Year** [(a) + (b)] x 5.5% + (e) x [5.5% / 2] 74,357 11,807 86,164 d. Annual Required Contribution As of Fiscal Year End $ 1,553,916 $ 252,500 $ 1,806,416 e. Expected University Contribution $ (255,228) $ (52,018) $ (307,246) * If Normal Cost and Amortization Payment are expressed on an end of year basis, their values are $652 million and $1,155 million, respectively. ** Includes interest on expected benefit payments made throughout the year Page 30

35 Section VI Determination of Annual Required Contribution Determination of Annual Required Contribution (cont.) Annual Required Contribution for Fiscal Year Ending June 30, 2010 Explicit Hastings Implicit Total a. Normal Cost* $ 1,074 $ 143 $ 1,217 b. Amortization Payment* 2, ,559 c. Interest to End of Year** [(a) + (b)] x 5.5% + (e) x [5.5% / 2] d. Annual Required Contribution As of Fiscal Year End $ 3,376 $ 585 $ 3,961 e. Expected University Contribution $ (690) $ (130) $ (820) * If Normal Cost and Amortization Payment are expressed on an end of year basis, their values are $1 million and $3 million, respectively. ** Includes interest on expected benefit payments made throughout the year Page 31

36 Section VI Determination of Annual Required Contribution Determination of Annual Required Contribution (cont.) Annual Required Contribution for Fiscal Year Ending June 30, 2010 Combined - All Locations Explicit Implicit Total a. Normal Cost* $ 542,725 $ 75,913 $ 618,638 b. Amortization Payment* 940, ,338 1,105,390 c. Interest to End of Year** [(a) + (b)] x 5.5% + (e) x [5.5% / 2] 74,515 11,834 86,349 d. Annual Required Contribution As of Fiscal Year End $ 1,557,292 $ 253,085 $ 1,810,377 e. Expected University Contribution $ (255,918) $ (52,148) $ (308,066) * If Normal Cost and Amortization Payment are expressed on an end of year basis, their values are $653 million and $1,158 million, respectively. ** Includes interest on expected benefit payments made throughout the year Page 32

37 Section VI Determination of Annual Required Contribution Determination of Annual Required Contribution (cont.) Schedule of Amortization Payments CMCO Date Initial Initial Remaining 7/1/2009 Amortization Established Description Amount Years Years Balance Amount 7/1/2007 Initial UAAL $ 12,074, $ 11,732,129 $ 787,492 7/1/2008 Experience (Gain)/Loss 256, ,123 24,229 Contribution (Gain)/Loss 1,086, ,038, ,621 7/1/2009 Experience (Gain)/Loss 662, ,259 62,538 Contribution (Gain)/Loss 1,271, ,271, ,110 Plan Change (Gain)/Loss (485,023) (485,023) (31,632) Total $ 14,464,637 $ 1,065,357 LBNL Date Initial Initial Remaining 7/1/2009 Amortization Established Description Amount Years Years Balance Amount 7/1/2007 Initial UAAL $ 459, $ 446,735 $ 29,986 7/1/2008 Experience (Gain)/Loss 12, ,245 1,210 Contribution (Gain)/Loss 31, ,089 2,974 7/1/2009 Experience (Gain)/Loss 7, , Contribution (Gain)/Loss 36, ,350 3,433 Plan Change (Gain)/Loss (12,275) (12,275) (801) Total $ 520,255 $ 37,474 Page 33

38 Section VI Determination of Annual Required Contribution Determination of Annual Required Contribution (cont.) Schedule of Amortization Payments CMCO + LBNL Date Initial Initial Remaining 7/1/2009 Amortization Established Description Amount Years Years Balance Amount 7/1/2007 Initial UAAL $ 12,534, $ 12,178,864 $ 817,478 7/1/2008 Experience (Gain)/Loss 269, ,368 25,439 Contribution (Gain)/Loss 1,118, ,068, ,595 7/1/2009 Experience (Gain)/Loss 669, ,370 63,210 Contribution (Gain)/Loss 1,308, ,308, ,543 Plan Change (Gain)/Loss (497,298) (497,298) (32,433) Total $ 14,984,892 $ 1,102,831 Hastings Date Initial Initial Remaining 7/1/2009 Amortization Established Description Amount Years Years Balance Amount 7/1/2007 Initial UAAL $ 29, $ 28,826 $ 1,935 7/1/2008 Experience (Gain)/Loss Contribution (Gain)/Loss 2, , /1/2009 Experience (Gain)/Loss 1, , Contribution (Gain)/Loss 2, , Plan Change (Gain)/Loss (1,179) (1,179) (77) Total $ 34,936 $ 2,559 Page 34

39 Section VI Determination of Annual Required Contribution Determination of Annual Required Contribution (cont.) Schedule of Amortization Payments Combined - All Locations Date Initial Initial Remaining 7/1/2009 Amortization Established Description Amount Years Years Balance Amount 7/1/2007 Initial UAAL $ 12,564, $ 12,207,691 $ 819,413 7/1/2008 Experience (Gain)/Loss 269, ,868 25,488 Contribution (Gain)/Loss 1,120, ,070, ,826 7/1/2009 Experience (Gain)/Loss 671, ,109 63,374 Contribution (Gain)/Loss 1,310, ,310, ,799 Plan Change (Gain)/Loss (498,477) (498,477) (32,510) Total $ 15,019,827 $ 1,105,390 Page 35

40 Section VII Actuarial Experience Actuarial Experience Actuarial gains and losses arise from experience different from that assumed, changes in actuarial assumptions and methods, and changes in plan provisions. The change in the University s contribution policy resulted in a gain due to changes in plan provisions of $485.0 million. Actuarial experience during the fiscal year ended June 30, 2009 resulted in an actuarial loss of $1,934.2 million for the Campuses and Medical Centers. The primary cause of this loss is that pay-as-you-go contributions were less than the ARC creating a $1,271.9 million loss. The remaining $662.3 million loss was caused by higher than expected future benefit costs. CMCO July 1, Unfunded liability as of July 1, 2008 $ 13,251, Normal cost for prior year 562, Annual Required Contribution for prior year (EOY) 1,550, Interest to end of prior year* 752, Expected unfunded liability as of July 1, 2009: (1) + (2) - (3) + (4) $ 13,015, (Gain)/Loss due to (over)/underpayment of ARC 1,271, Increase (decrease) in plan liability due to plan change (485,023) 8. Increase (decrease) in plan liability due to assumption change - 9. Unfunded liability as of July 1, ,464, (Gain)/loss due to experience: (9) - [(5) + (6) + (7) + (8)] $ 662,259 * Includes interest on unfunded liability, normal cost, and expected benefit payments Page 36

41 Section VII Actuarial Experience Actuarial Experience (cont.) LBNL July 1, Unfunded liability as of July 1, 2008 $ 497, Normal cost for prior year 13, Annual Required Contribution for prior year (EOY) 50, Interest to end of prior year* 27, Expected unfunded liability as of July 1, 2009: (1) + (2) - (3) + (4) $ 489, (Gain)/Loss due to (over)/underpayment of ARC 36, Increase (decrease) in plan liability due to plan change (12,275) 8. Increase (decrease) in plan liability due to assumption change - 9. Unfunded liability as of July 1, , (Gain)/loss due to experience: (9) - [(5) + (6) + (7) + (8)] $ 7,111 * Includes interest on unfunded liability, normal cost, and expected benefit payments Page 37

42 Section VII Actuarial Experience Actuarial Experience (cont.) CMCO + LBNL July 1, Unfunded liability as of July 1, 2008 $ 13,749, Normal cost for prior year 575, Annual Required Contribution for prior year (EOY) 1,600, Interest to end of prior year* 780, Expected unfunded liability as of July 1, 2009: (1) + (2) - (3) + (4) $ 13,504, (Gain)/Loss due to (over)/underpayment of ARC 1,308, Increase (decrease) in plan liability due to plan change (497,298) 8. Increase (decrease) in plan liability due to assumption change - 9. Unfunded liability as of July 1, ,984, (Gain)/loss due to experience: (9) - [(5) + (6) + (7) + (8)] $ 669,370 * Includes interest on unfunded liability, normal cost, and expected benefit payments Page 38

43 Section VII Actuarial Experience Actuarial Experience (cont.) Hastings July 1, Unfunded liability as of July 1, 2008 $ 32, Normal cost for prior year 1, Annual Required Contribution for prior year (EOY) 3, Interest to end of prior year* 1, Expected unfunded liability as of July 1, 2009: (1) + (2) - (3) + (4) $ 31, (Gain)/Loss due to (over)/underpayment of ARC 2, Increase (decrease) in plan liability due to plan change (1,179) 8. Increase (decrease) in plan liability due to assumption change - 9. Unfunded liability as of July 1, , (Gain)/loss due to experience: (9) - [(5) + (6) + (7) + (8)] $ 1,739 * Includes interest on unfunded liability, normal cost, and expected benefit payments Page 39

44 Section VII Actuarial Experience Actuarial Experience (cont.) Combined - All Locations July 1, Unfunded liability as of July 1, 2007 $ 13,781, Normal cost for prior year 577, Annual Required Contribution for prior year (EOY) 1,603, Interest to end of prior year* 781, Expected unfunded liability as of July 1, 2008: (1) + (2) - (3) + (4) $ 13,536, (Gain)/Loss due to (over)/underpayment of ARC 1,310, Increase in plan liability due to plan amendments (498,477) 8. Increase (decrease) in plan liability due to assumption change - 9. Unfunded liability as of July 1, ,019, (Gain)/loss due to experience: (9) - [(5) + (6) + (7) + (8)] $ 671,109 * Includes interest on unfunded liability, normal cost, and expected benefit payments Page 40

45 Section VIII GASB Statement No. 45 Notes to the Financial Statements and RSI GASB Statement No. 45 Notes to the Financial Statements and Required Supplementary Information (RSI) GASB Statement No. 45 requires disclosure of notes to the financial statements and required supplementary information that includes information shown in three schedules: the Schedule of Funding Progress (Table A), the Schedule of Employer Contributions (Table B), and the Development of Net OPEB Obligation (NOO) and Annual OPEB Cost (Table C). The values shown in Table A are the final amounts for disclosure. Selected values in Tables B and C related to the University s contribution (specifically, the employer cash benefit costs) are estimated and will change in the financial disclosures to reflect actual University cash costs. Page 41

46 Section VIII GASB Statement No. 45 Notes to the Financial Statements and RSI GASB Statement No. 45 Notes to the Financial Statements and RSI (cont.) Table A GASB No. 45 Schedule of Funding Progress CMCO Unfunded UAAL as a Actuarial Actuarial Actuarial Actuarial Percentage of Valuation Value Accrued Accrued Funded Covered Covered Date of Assets Liability (AAL) Liability (UAAL) Ratio Payroll Payroll (a) (b) (c) (d) (e) (f) (b) - (a) (a) / (b) [(b) - (a)] / (e) July 1, 2007 $ - $ 12,074,689 $ 12,074, % $ 6,720, % July 1, ,221 13,302,506 13,251, % 7,245, % July 1, ,893 14,541,529 14,464, % 7,637, % LBNL Unfunded UAAL as a Actuarial Actuarial Actuarial Actuarial Percentage of Valuation Value Accrued Accrued Funded Covered Covered Date of Assets Liability (AAL) Liability (UAAL) Ratio Payroll Payroll (a) (b) (c) (d) (e) (f) (b) - (a) (a) / (b) [(b) - (a)] / (e) July 1, 2007 $ - $ 459,779 $ 459, % $ 192, % July 1, , , % 204, % July 1, , , % 216, % Page 42