Key Benefit Concepts, LLC

Key Benefit Concepts, LLC Accounting and Sample Funding Report of Liabilities for Participants Post Employment Benefits as of July 1, 2013 Thru End of the Year June 30, 2014 April 2014 This report, its text, charts, content and formatting are subject to copyright protection and are the exclusive property of Key Benefit Concepts, LLC.

Post Employment Benefits Liability 2 of 43 Table of Contents Background and Certification Page 2 Introduction Page 3 CESA OPEB Benefits Page 3 Supplemental Pension (Stipend) Benefit Page 4 Amortization Method Page 5 CESA OPEB Liability Page 5 CESA Stipend (Supplemental Pension) Liability Page 6 Discussion of Valuation Methods and Assumptions Page 6 OPEB Tables OPEB Technical Appendix Stipend Tables Stipend Technical Appendix Key Benefit Concepts, LLC, No Claim to U.S. Govt. Works

Post Employment Benefits Liability 3 of 43 Background and Certification The Government Accounting Standards Board (GASB) considers other post employment benefits, like pension benefits, as part of the compensation employees earn each year although they are not received until after employment ends. GASB has finalized Statement No. 27 (Accounting for Pensions by State and Local Government Employers), Statement No. 43 (Financial Reporting for Post Employment Benefit Plans Other Than Pension Plans), Statement No. 45 (Accounting and Financial Reporting by Employers for Post Employment Benefits Other Than Pensions) and Statement No. 50 (Pension Disclosures). These Statements establish standards for the measurement, recognition, and display of Other Post Employment Benefits (OPEB) expense/expenditures and pension expense/expenditures as well as other related liabilities. Key Benefit Concepts, LLC (KBC) is an independent actuarial and employee benefit consulting firm providing actuarial services to clients who sponsor qualified retirement and other post-employment benefits. We maintain no relationships with any client that might impair the objectivity of our work. This valuation and report were prepared based upon: Our understanding of GASB s current Statements The Summary of Benefits and Eligibility determined by the handbook and other CESA agreements, as outlined or summarized herein The accuracy and completeness of information and data provided by the CESA. The calculations of cost and liabilities illustrated were determined according to generally accepted actuarial principles and standards. Specific assumptions and actuarial methodology for the study are defined within the report. Given that actual experience may vary from the actuarial assumptions projected, developing liabilities and costs may differ from those estimated in this report. Furthermore, in the event of any inaccuracies in the information or data provided, upon which these calculations were based, revisions may be needed. This report was prepared based upon data received and benefits confirmed by the CESA and is developed solely for the purposes of providing information required by GASB for the entity s financial reporting. KBC assumes neither responsibility nor any liability for use of this report for any other purposes. This valuation was prepared in full compliance with the American Academy of Actuaries Code of Professional Conduct Precept 7 regarding conflict of interest. John Mitchell is an actuary meeting the qualifications of the American Academy of Actuaries required to provide the actuarial opinion detailed in this report. John Mitchell April 24, 2014 Key Benefit Concepts, LLC, No Claim to U.S. Govt. Works Page 3

Post Employment Benefits Liability 4 of 43 Introduction The actuarial present value of the other post employment benefit (OPEB) liabilities is the value of all benefits estimated to be payable to plan members discounted at the assumed discount interest rate back to the valuation date. The actuarial present value is comprised of: Benefits employees have already earned, and Benefits expected to be earned by employees in the future. Presented in this report are the results of our study of the post employment benefits and the associated liabilities and costs. The study includes the following: Actuarial Accrued Liability (AAL): The portion of the actuarial present value of benefits allocated to all periods prior to the valuation date of July 1, 2013 also known as the accrued benefit. Normal Cost (NC): The portion of the actuarial present value of benefits allocated to the valuation year (i.e. the additional benefits to be earned from July 1, 2013 through June 30, 2014). Unfunded Actuarial Accrued Liability (UAAL): The difference between the actuarial accrued liability and the actuarial value of assets. This amount may also be negative indicating the presence of a surplus of actuarial assets over actuarial accrued liabilities. Annual Required Contribution (ARC): The employer s annual contribution comprised of the normal cost plus the portion of the unfunded actuarial accrued liability to be amortized in the valuation year. CESA OPEB Benefits For the (the CESA ), the other post employment benefit liability consists of several interdependent pieces arising from the rules of the plan. The amounts paid by the CESA for continued health care for all classifications that are entitled to a benefit are briefly outlined below. A full description of the eligibilities and benefits for eligible classifications can be found in the OPEB Technical Appendix. a. Administration/Directors: At least age 59; the CESA will contribute 80% of the medical premiums not to exceed the maximum annual contribution limits of $11,000/single and $21,000/family on behalf of the retiree for a duration determined by their years of service but not to exceed a total of 6 years. The CESA also provides a health reimbursement arrangement (HRA) contribution of $700 single and $1400 for limited family to reimbursement eligible health plan deductible expenses. Unused funds are carried over each year. Key Benefit Concepts, LLC, No Claim to U.S. Govt. Works Page 4

Post Employment Benefits Liability 5 of 43 Note that Administration hired on or after July 1, 2013 are not eligible for the post employment benefit. No benefit was calculated for those hired after July 1, 2013. b. Teachers, General & Support Staff: At least age 59 with a minimum of 15 years of service; the CESA will contribute 80% of the medical premiums, not to exceed the annual limits of $11,000/single and $21,000/family, on behalf of the retiree for a duration determined by their years of service but not to exceed a total of 6 years. The CESA also provides a health reimbursement arrangement (HRA) contribution of $700 single and $1400 for limited family to reimbursement eligible health plan deductible expenses. Unused funds are carried over each year Note that Teachers, General & Support Staff hired on or after July 1, 2013 are not eligible for the post employment benefit. No benefit was calculated for those hired after July 1, 2013. In a standard OPEB valuation, the GASB guidelines require that the OPEB to be based upon the value of the health care benefit. Thus, when the benefits are insured, the value above the premium cost of benefits must be determined. This applies to all classifications and arises from the value of benefits in excess of the payments made by the CESA during the guaranteed period. This amount is determined and incorporated in the determined liability of the medical care benefit. In addition, since GASB guidelines require the OPEB to be based upon the value of the medical care benefit, when an individual self-pays 100% of the premium cost, the valuation also includes the difference between the premium cost and the value cost of the benefit. This is known as the Implicit Rate Subsidy. Implicit Rate Subsidy exists when an employer s retirees and current employees are covered together as a group wherein the premium rate or premium equivalent rate paid by the retirees may be lower than they would be if the retirees were rated separately. The final GASB Statements declare that even if the retirees pay 100% of the premium, without a contribution from the employer, the employer is required to treat the implicit rate subsidy as an OPEB liability. This is a reversal of GASB s initial opinion. Note that the implicit rate subsidy is only applied when retirees are enrolled in the CESA s medical plans. It is not applied, however, when retirees participate in the CESA s dental plan. Furthermore, since retirees may self-pay 100% of the dental premium, no post employment liability was calculated for continued dental coverage. The census provided by the CESA included 69 active participants waiving coverage in the CESA s group medical plan for which we valued the stipend: 2 Admin, 35 Teachers, 32 Support. For these 69 active employees, it was assumed that throughout the remainder of their employment with and retirement from the CESA they would continue to opt out of participating in the group medical plan and instead shall receive a cash benefit in lieu of their participation, if eligible. As such, no medical OPEB liability was calculated on behalf of these 69 active employees waiving coverage in the medical plan. Key Benefit Concepts, LLC, No Claim to U.S. Govt. Works Page 5

Post Employment Benefits Liability 6 of 43 No post-employment liability of any kind, however, was calculated on behalf of the 12 active employees whose employment with the CESA was noted as terminated on the census provided, nor for the 20 employees hired after 7/1/2013 that are not eligible for the post employment benefit. Those employees with a MOI are assumed to receive a cash-in-lieu benefit at retirement into a 403(b) and were therefore excluded from the OPEB valuation. Supplemental Pension (Stipend) Benefit Eligible retirees (both current and future) that waived coverage in the medical plan during active service will instead receive a cash benefit in lieu of such participation. The duration of this benefit is also based upon years of service, not to exceed a maximum of 6 years. Those who have a memorandum of intention (MOI) will have such funds placed in 403(b) account. Since retirees receive a pension benefit from the Wisconsin Retirement System (WRS), these post employment pension benefits (monthly stipend payments) are supplemental to the WRS benefit and therefore, we refer to them as a supplemental pension benefit. According to current GASB regulations, any such form of cash payments, whether it be a stipend, contributions to a TSA, severance or any other type of cash-related benefits (other than sick leave) are considered a supplemental pension and should be accounted for as such under GASB Statement 27 as updated and amended in GASB Statement 50. The actuarial value of the stipend payments for eligible current and future retirees has been calculated and provided as separate tables. Sick Leave Benefit The District provides those classified as Administration/Directors hired prior to July 1, 2013 and Teachers, General & Support Staff hired on or after July 1, 2013 with a sick leave payout. The retiree will be granted upon retirement a pay out of up to a maximum 75 accumulated sick days at the rate of $20 per day. This sick leave benefit is regarded as a termination payment and should already be account for under GASB Statement 16 as a compensated absence. This valuation does not include valuation of the compensated absences, as it should already be reflected on the District s financials. Amortization Method The current guidelines allow two amortization methods: Level Dollar Amortization Method The amount to be amortized is divided into equal dollar amounts to be paid over a given number of years; part of each payment is interest and part is principle (similar to a mortgage payment on a building). Since payroll can be expected to increase as a result of inflation, level dollar payments generally represent a decreasing percentage of the payroll over time. Level Percent Amortization Method Amortization payments are calculated so that they increase at a constant percentage over a given number of years. The dollar amount of the payments generally will increase over time due to inflation; however the percentage increases in these payments can be expected to remain level. Note: The OPEB and Stipend Tables are based upon a 30-year amortization period. Key Benefit Concepts, LLC, No Claim to U.S. Govt. Works Page 6

Post Employment Benefits Liability 7 of 43 CESA OPEB Liability Based upon the actuarial assumptions and projections described herein as determined by the census, benefit and premium data provided by the CESA, the post employment medical and dental benefits as of July 1, 2013 are as follows: Other Post Employment Liability Level $ amortization Level % amortization 1. Normal Cost with interest to end of year 115,240 115,240 2. Unfunded Actuarial Accrued Liability (UAAL) 242,944 242,944 3. 30-year amortization of UAAL 16,716 11,840 4. Annual Required Contribution (ARC) 131,956 127,080 Detailed calculations for the above results can be found in the OPEB Tables C and D. CESA Stipend (Supplemental Pension) Liability Based upon actuarial assumptions and projections described herein, the total post employment stipend liabilities (i.e. cash in lieu benefit) as of July 1, 2013 are as follows: Supplemental Pension Liability Level $ amortization Level % amortization 1. Normal Cost with Interest to end of year 18,265 18,265 2. Unfunded Actuarial Accrued Liability (UAAL) (82,399) (82,399) 3. 30-year amortization of UAAL (5,670) (4,016) 4. Annual Supplemental Pension Cost 12,595 14,249 Detailed calculations for the above results can be found in the Stipend Tables C and D. Discussion of Valuation Methods and Assumptions The valuation was based upon the data provided by the CESA. In performing this study we utilized the premium rate history of the CESA s medical and dental plans as well as the claims experience of the CESA s self-insured plans. From the claims experience and premium rates, we identified future trends and projected a stream of expected premium rates for each year in the future based on the data as of July 1, 2013. Furthermore, it was assumed that the CESA s maximum annual contribution limits for Teachers and Support Staff would remain frozen at the amounts currently in effect for the 2013/14. Similarly, the monthly cash in lieu payments were also assumed to remain frozen at the current amounts. Trend and retirement age are the most sensitive assumptions. Changes in these assumptions have the largest impact on the amount of liabilities. All of the demographic assumptions used for this report (i.e. other than trend, salary, payroll growth, expected discount rate, percent electing coverage and percent electing family coverage) are Key Benefit Concepts, LLC, No Claim to U.S. Govt. Works Page 7

Post Employment Benefits Liability 8 of 43 approximately the same as those used in the 12/31/2012 WRS actuarial valuation report. The assumptions are shown in the technical appendices. This is a subsequent valuation of the CESA s post-employment liabilities. The trust assets as of the valuation date were incorporated in this study to offset the CESA s actuarial accrued post-employment liabilities. A discount rate of 5½% (as the expected long-term yield on the trust) was used in this valuation in calculating the postemployment liabilities. Furthermore, it was assumed that the CESA would continue to fund its post-employment liabilities in the same manner it has in past years. Key Benefit Concepts, LLC, No Claim to U.S. Govt. Works Page 8

Post Employment Benefits Liability 9 of 43 OPEB Tables Key Benefit Concepts, LLC, No Claim to U.S. Govt. Works

10 of 43 OPEB Table A Active Employees as of July 1, 2013 Years of Service in the Age 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35 or more Total Under 20 - - - - - - - - - 20-24 1 - - - - - - - 1 25-29 11 1 - - - - - - 12 30-34 8 7 - - - - - - 15 Averages: 35-39 8 3 2 - - - - - 13 Age: 46.0 40-44 13 6 3 3 - - - - 25 Service: 8.2 45-49 7 8 4 5 2 1 - - 27 50-54 6 4 3 2-2 - 2 19 55-59 5 5 2 2 2 3 1-20 60-64 3 6 1 3 - - 1 1 15 65 and over 1-1 - - - - - 2 Total 63 40 16 15 4 6 2 3 149 Key Benefit Concepts, LLC OPEB Table A

11 of 43 OPEB Table B Members by Medical Coverage as of July 1, 2013 Medical Plan Enrollment Actives Retirees Single Family MOI/CPO Total Single Family MOI/CPO Total Administration - 7 2 9-2 1 3 Teachers 7 23 42 72 4 6 2 12 Support Staff 11 22 35 68 1 2-3 Totals 18 52 79 149 5 10 3 18 Notes: 1- Administration includes Directors. 2- General Staff are included with Teachers. 3- No medical OPEB liability was calculated on behalf of those listed under 'MOI/CPO'. 4- Included in the active count are 12 active employees whose employment with the CESA was terminated at the end of the 2013/12 year. No post-employment liability of any kind was calculated on their behalf. 5- Of the 149 active participants, 20 were excluded because they were hired after 7/1/2013 and have no OPEB liability Key Benefit Concepts, LLC OPEB Table B

12 of 43 OPEB Table C Determination of Normal Cost, Actuarial Accrued Liability Total Incurred OPEB Liabilities Administration Teachers Support Staff Total 1. Normal cost as of 7/01/2013 a. Future retiree value of OPEB 30,973 62,520 84,550 178,043 b. Future retiree paid portion of premiums 9,672 27,648 31,491 68,811 c. Total normal cost [#1a - #1b] 21,301 34,872 53,059 109,232 2. Actuarial accrued liability as of 7/01/2013 a. Current retiree value of OPEB 603,728 707,212 0 1,310,940 b. Current retiree paid portion of premiums 125,563 90,238 0 215,801 c. Future retiree value of OPEB 489,346 747,650 1,140,989 2,377,985 d. Future retiree paid portion of premiums 134,215 286,931 343,909 765,055 e. Total actuarial accrued liability 833,296 1,077,693 797,080 2,708,069 [(#2a - #2b) + (#2c - #2d)] 3. Actuarial value of assets 758,540 981,012 725,573 2,465,125 4. Unfunded actuarial accrued liability [#2e - #3] 74,756 96,681 71,507 242,944 Note - General Staff are included with Teachers OPEB- Table C OPEB- Table C

13 of 43 OPEB Table D - Level % Amortization Determination of 2013-2014 Fiscal Year Annual Required Contribution (ARC) Total Incurred OPEB Liabilities Administration Teachers Support Staff Total 1. Normal cost a. Beginning of year 21,301 34,872 53,059 109,232 b. With interest to end of year 22,473 36,790 55,977 115,240 2. Expected payroll for 2013-2014 fiscal year n/a n/a n/a n/a 3. Unfunded actuarial accrued liability (UAAL) 74,756 96,681 71,507 242,944 4. 30 year amortization of UAAL as a level percent method a. Dollars 3,643 4,712 3,485 11,840 b. Percent of payroll n/a n/a n/a n/a 5. Annual required contribution (ARC) a. Normal cost 22,473 36,790 55,977 115,240 b. Amortization 3,643 4,712 3,485 11,840 c. Total contribution [a+b] 26,116 41,502 59,462 127,080 Note - General Staff are included with Teachers Key Benefit Concepts, LLC OPEB-Table D%

14 of 43 OPEB Table D - Level $ Amortization Determination of 2013-2014 Fiscal Year Annual Required Contribution (ARC) Total Incurred OPEB Liabilities Administration Teachers Support Staff Total 1. Normal cost a. Beginning of year 21,301 34,872 53,059 109,232 b. With interest to end of year 22,473 36,790 55,977 115,240 2. Expected payroll for 2013-2014 fiscal year n/a n/a n/a n/a 3. Unfunded actuarial accrued liability (UAAL) 74,756 96,681 71,507 242,944 4. 30 year amortization of UAAL as a level dollar method a. Dollars 5,144 6,652 4,920 16,716 b. Percent of payroll n/a n/a n/a n/a 5. Annual required contribution (ARC) a. Normal cost 22,473 36,790 55,977 115,240 b. Amortization 5,144 6,652 4,920 16,716 c. Total contribution [a+b] 27,617 43,442 60,897 131,956 Note - General Staff are included with Teachers Key Benefit Concepts, LLC OPEB-Table D$

15 of 43 OPEB Table E - Level % Amortization Annual OPEB Cost and Net OPEB Obligation for the Fiscal Year Ending June 30, 2014 Total Annual required contribution (ARC) 127,080 Interest on net OPEB obligation (6,323) Adjustment to annual required contribution 5,603 Annual OPEB cost (expense) 126,360 Contributions made TBD Change in net OPEB obligation TBD Net OPEB obligation - beginning of year (114,972) Net OPEB obligation - end of year TBD Valuation Year Ending History of OPEB Cost, Percentage of Annual Contribution and Net OPEB Obligation Annual OPEB Cost Percentage of Annual OPEB Cost Contributed Net OPEB Obligation 6/30/2012 79,927 217.16% (93,646) 6/30/2013 79,340 126.88% (114,972) 6/30/2014 126,360 TBD TBD Key Benefit Concepts, LLC OPEB- Table E%

16 of 43 OPEB Table E - Level $ Amortization Annual OPEB Cost and Net OPEB Obligation for the Fiscal Year Ending June 30, 2014 Total Annual required contribution (ARC) 131,956 Interest on net OPEB obligation (6,323) Adjustment to annual required contribution 7,911 Annual OPEB cost (expense) 133,544 Contributions made TBD Change in net OPEB obligation TBD Net OPEB obligation - beginning of year (114,972) Net OPEB obligation - end of year TBD Valuation Year Ending History of OPEB Cost, Percentage of Annual Contribution and Net OPEB Obligation Annual OPEB Cost Percentage of Annual OPEB Cost Contributed Net OPEB Obligation 6/30/2012 79,927 217.16% (93,646) 6/30/2013 79,340 126.88% (114,972) 6/30/2014 133,544 TBD TBD Key Benefit Concepts, LLC OPEB-Table E$

17 of 43 OPEB Table F Required Supplementary Information Actuarial Valuation Date Actuarial Value of Assets Actuarial Accrued Liability (AAL) - Projected Unit Credit Unfunded AAL (UAAL) Funded Ratio Covered Payroll UAAL as a Percentage of Covered Payroll (a) (b) (b-a) (a/b) (c) ((b-a) / c) 7/1/2008 1,753,869 3,183,420 1,429,551 55.09% not provided not provided 7/1/2011 2,361,070 2,247,661 (113,409) 105.05% not provided not provided 7/1/2013 2,465,125 2,708,069 242,944 91.03% TBD TBD Key Benefit Concepts, LLC OPEB-Table F

18 of 43 OPEB Table G Significant Methods and Assumptions Actuarial valuation date 7/1/2013 Actuarial cost method Unit credit Amortization method 30 open level dollar & level percent Remaining amortization period 30 years Asset valuation method Market value Actuarial Assumptions Investment rate of return * 5.50% Level percent increases 3.00% (for level percent amortizations) Medical care trend * 10.00% decreasing by 1.0% per year down to 5.00% Dental care trend NA. 100% of the dental premium is paid by the retiree Teachers' maximum annual contribution limits 0.00% - It was assumed that the maximum contribution limits would remain frozen at the 2013-2014 amounts *Implicit in this rate is an assumed rate of inflation of 4.00% Key Benefit Concepts, LLC OPEB-Table G

19 of 43 OPEB Table H - Level % Amortization Historical Development of Annual Net OPEB Obligation Total Incurred OPEB Liabilities Valuation Year Ending ARC Interest on Net OPEB Obligation ARC Adjustment Amort. Factor OPEB Cost Contribution Change in Net OPEB Obligation Net OPEB Obligation Balance (1) (2) (3) (4) (5) (6) (7) (8) (9) 6/30/2012 79,927 0 0 14.53 79,927 173,573 (93,646) (93,646) 6/30/2013 79,927 (5,151) 4,564 14.53 79,340 100,666 (21,326) (114,972) 6/30/2014 127,080 (6,323) 5,603 20.52 126,360 TBD TBD TBD Key Benefit Concepts, LLC OPEB-Table H%

20 of 43 OPEB Table H - Level $ Amortization Historical Development of Annual Net OPEB Obligation Total Incurred OPEB Liabilities Valuation Year Ending ARC Interest on Net OPEB Obligation ARC Adjustment Amort. Factor OPEB Cost Contribution Change in Net OPEB Obligation Net OPEB Obligation Balance (1) (2) (3) (4) (5) (6) (7) (8) (9) 6/30/2012 79,927 0 0 14.53 79,927 173,573 (93,646) (93,646) 6/30/2013 79,927 (5,151) 4,564 14.53 79,340 100,666 (21,326) (114,972) 6/30/2014 131,956 (6,323) 7,911 14.53 133,544 TBD TBD TBD Key Benefit Concepts, LLC OPEB-Table H$

Post Employment Benefits Liability 21 of 43 OPEB Technical Appendix Key Benefit Concepts, LLC, No Claim to U.S. Govt. Works

22 of 43 Post Employment Benefit Summary Administration/Directors With Individual Contracts Hired Prior to 7/1/13 Eligibility OPEB At least age 59 Medical Insurance: The CESA will pay 80% of the medical premiums (up to the cap for active employees), not to exceed the maximum annual contribution limits of $11,000/single and $21,000/family (2013/2014 caps) for a duration determined as follows: Years of Service Duration of Coverage 3 Years 1 Year 6 Years 2 Years 9 Years 3 Years 12 Years 4 Years 15 Years 5 Years 18 + Years 6 Years Retirees are limited to single plan or employee +1 plan At age 65, Medicare will serve as primary coverage with agency coverage a secondary source No survivor benefit HRA Contributions for all participating in the District s Group Medical Plan: The District shall contribute towards retiree s deductible expenses annual contributions of $700 for single or $1,400 for employee +1 into an HRA. Unused funds will be carried over each year. Upon death of retiree, the surviving spouse and/or dependents are eligible to be reimbursed under this plan for their eligible medical expenses. Non-OPEB Cash in Lieu: Eligible retirees may elect to receive a payment of $480 per month (80% of $600) not to exceed $5,760 annually for the same duration as determined above. Survivor Benefit: No Sick Leave Payout: Unused sick days accumulated upon retirement shall be converted to a dollar amount at the rate of $20 per day, up to a maximum of 75 days, and shall be paid out in cash. OPEB Technical Appendix Page 1

23 of 43 Administration Hired On or After 7/1/13 Eligibility Active Benefit At least age 59 403(b) Contributions: During their active years of service, employees hired into administrative positions shall receive an agency contribution into a 403(b) account. HRA Contributions: During their active years of service employees shall receive an annual agency contribution of $2,000 to an HRA. Active employees who opt-in* to the HRA shall not receive payment for years of service prior to 7/1/13. These funds may not be used for continued coverage in the group medical plan. Note: *Active employees hired between 7/1/98 and 6/30/13 were, in the fall of 2013, given the option to opt-in to the above plan as an alternative to early retirement health insurance. Teachers, General & Support Staff Hired Before 7/1/13 Eligibility OPEB At least age 59 with a minimum of 15 years of service with the CESA Note: Eligibility for hourly districtbased staff will be determined by the School District Medical Insurance: The CESA will pay 80% of the medical premiums (up to the cap for active employees), not to exceed the maximum annual contribution limits of $11,000/single and $21,000/family (2013/2014 caps), on behalf of the retiree for a duration determined as follows: Years of Service Duration of Coverage 15 Years 3 Years 20 Years 4 Years 25 Years 5 Years 30 Years 6 Years Retirees are limited to single plan or employee +1 plan At age 65, Medicare will serve as primary coverage with agency coverage a secondary source No survivor benefit HRA Contributions for all participating in the District s Group Medical Plan: The District shall contribute towards retiree s deductible expenses annual contributions of $700 for single or $1,400 for employee +1 into an HRA. Unused funds will be carried over each year. Upon death of retiree, the surviving spouse and/or dependents are eligible to be reimbursed under this plan for their eligible medical expenses. These funds may be used for continued coverage in the group medical plan upon retirement. Non-OPEB Cash in Lieu: Eligible retirees may elect to receive a payment of $480 per month (80% of $600) not to exceed $5,760 annually for the same duration as determined above. Survivor Benefit: No OPEB Technical Appendix Page 2

24 of 43 Teachers, General & Support Staff Hired On or After 7/1/13 Eligibility Non-OPEB 100% vested (including accrued interest) upon reaching at least age 59 and retirement Note: Eligibility for hourly districtbased staff will be determined by the School District Sick Leave Payout: Unused sick days accumulated upon retirement shall be converted to a dollar amount at the rate of $20 per day, up to a maximum of 75 days, and shall be paid out in cash. Active Benefit HRA Contributions: During their active years of service employees shall receive an annual agency contribution of $2,000 to an HRA. Active employees who opt-in* to the HRA shall not receive payment for years of service prior to 7/1/13. These funds may not be used for continued coverage in the group medical plan. Note: *Active employees hired between 7/1/98 and 6/30/13 were, in the fall of 2013, given the option to opt-in to the above plan as an alternative to early retirement health insurance. NOTE: All benefits are based on employees working.50 FTE or more. OPEB Technical Appendix Page 3

25 of 43 OPEB Actuarial Assumptions 1. Actuarial Valuation July 1, 2013 Date 2. Actuarial Cost Method Unit Credit: The calculation of retirement plan benefits is based upon the accumulation of benefit units earned from such things as salary and/or service years. A Plan s normal cost is determined by the present value of benefits allocated to the valuation year. A Plan s accrued liability is the present value of benefits allocated to all periods prior to the valuation year. 3. Interest Rate Discount rate for valuing liabilities 5.50% Interest rate on plan assets 5.50% Implicit in these rates is a 4.00% assumed rate of inflation 4. Level Percent Increase 3.00% Used only for level percent amortization of Unfunded Actuarial Accrued Liability 5. Amortization Method 30 year open level percent & level dollar method 6. Remaining Amortization Period 7. Asset Valuation Method 30 years Market Value OPEB Technical Appendix Page 4

26 of 43 8. Retirement Early Retirement Age Male Female 55 12.0% 11.0% 56 12.0 11.0 57 12.0 11.0 58 12.0 11.0 59 12.0 11.0 60 12.0 15.0 61 12.0 15.0 62 20.0 20.0 63 20.0 20.0 64 20.0 20.0 65 100.0 100.0 Regular Retirement (30 or more years of service) Age Male Female 57 40% 27% 58 35 27 59 25 27 60 28 27 61 25 27 62 36 34 63 32 27 64 24 23 65 100 100 9. Mortality Active participant mortality rates at sample ages: Age Male Female 20 0.000155 0.000089 25 0.000184 0.000097 30 0.000229 0.000129 35 0.000398 0.000230 40 0.000540 0.000329 45 0.000717 0.000519 50 0.000966 0.000765 55 0.002228 0.001345 60 0.003147 0.001935 65 0.004814 0.002974 70 0.007979 0.005057 75 0.013576 0.009155 80 0.024949 0.017103 Projection Scale AA was used for Mortality Improvement OPEB Technical Appendix Page 5

27 of 43 10. Separation Rates Select and ultimate termination rates at sample ages and years of service are shown below: Age Service Male Female 0 17.7% 15.0% 1 11.4 10.5 2 7.3 7.1 3 5.2 5.5 4 3.9 4.6 5 3.0 4.0 6 2.8 3.5 7 2.5 3.0 8 2.0 2.5 9 1.8 2.3 25 10 or more 1.8 2.2 30 1.4 1.9 35 1.2 1.4 40 1.1 1.1 45 1.0 0.9 50 1.0 0.9 55 1.0 0.9 60 1.0 0.9 11. Disablement Rates Active participant disability rates at sample ages: Age Male Female 20 0.01% 0.01% 25 0.01 0.01 30 0.01 0.01 35 0.01 0.01 40 0.02 0.02 45 0.04 0.06 50 0.11 0.12 55 0.21 0.17 60 0.34 0.25 OPEB Technical Appendix Page 6

28 of 43 12. Medical & Dental Trends (Annual Increases) Year 1 2 3 4 5 6 7 8 9 10 11 12 13 & over Medical 10.0% 9.0 8.0 7.0 6.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Dental n/a% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 13. Employer and Retiree Premium Rates fiscal 2013 14. Teachers Maximum Contribution Limits 15. Age Related Health Care Cost 16. Percent with Medical Coverage at Retirement Pre-age 65 Family $1754.00 Employer portion is 80% Single $ 781.00 Post Age 65 Family $1192.72 Employer portion is 80% Ltd Family $1403.20 Single $ 624.80 Medicare Supplement Coverage assumed 40% of 2013 premium equivalent. Medical trend assumed for future years Maximum annual contribution limits for Teachers assumed to remain frozen at current amounts Based upon analysis of CESA #10 claims data, a premium equivalent rate of $1,073 was used to determine age related health care costs for the valuation. Health care costs are assumed to increase at 2.5% per year of age separate from trend due to increased cost of older participants. 100% of active Administration and Teachers currently participating in the medical plan and eligible for a postemployment benefit 17. Spouses Age Males are assumed to be three years older than their spouses OPEB Technical Appendix Page 7

Post Employment Benefits Liability 29 of 43 Stipend Tables Key Benefit Concepts, LLC, No Claim to U.S. Govt. Works

30 of 43 Stipend Table C Determination of Normal Cost, Actuarial Accrued Liability Total Incurred Non-OPEB Liabilities Administration Teachers Support Staff Total 1. Normal cost as of 7/01/2013 505 9,794 7,013 17,312 2. Actuarial accrued liability as of 7/01/2013 a. Current retiree value of Non-OPEB 25,825 28,374 0 54,199 b. Future retiree value of Non-OPEB 4,081 83,029 59,567 146,677 c. Total actuarial accrued liability [#2a - #2b] 29,906 111,403 59,567 200,876 3. Actuarial value of assets 42,174 157,100 84,001 283,275 4. Unfunded actuarial accrued liability [#2c - #3] (12,268) (45,697) (24,434) (82,399) Note - General Staff are included with Teachers Key Benefit Concepts, LLC STIP-Table C

31 of 43 Stipend Table D - Level % Amortization Determination of 2013-2014 Fiscal Year Supplemental Pension Cost Total Incurred Non-OPEB Liabilities Administration Teachers Support Staff Total 1. Normal cost a. Beginning of year 505 9,794 7,013 17,312 b. With interest to end of year 533 10,333 7,399 18,265 2. Expected payroll for 2013-2014 fiscal year n/a n/a n/a n/a 3. Unfunded actuarial accrued liability (UAAL) (12,268) (45,697) (24,434) (82,399) 4. 30 year amortization of UAAL as a level percent method a. Dollars (598) (2,227) (1,191) (4,016) b. Percent of payroll n/a n/a n/a n/a 5. Annual supplemental pension cost a. Normal cost 533 10,333 7,399 18,265 b. Amortization (598) (2,227) (1,191) (4,016) c. Total cost [a+b] (65) 8,106 6,208 14,249 Note - General Staff are included with Teachers Key Benefit Conepts, LLC STIP-Table D%

32 of 43 Stipend Table D - Level $ Amortization Determination of 2013-2014 Fiscal Year Supplemental Pension Cost Total Incurred Non-OPEB Liabilities Administration Teachers Support Staff Total 1. Normal cost a. Beginning of year 505 9,794 7,013 17,312 b. With interest to end of year 533 10,333 7,399 18,265 2. Expected payroll for 2013-2014 fiscal year n/a n/a n/a n/a 3. Unfunded actuarial accrued liability (UAAL) (12,268) (45,697) (24,434) (82,399) 4. 30 year amortization of UAAL as a level dollar method a. Dollars (845) (3,144) (1,681) (5,670) b. Percent of payroll n/a n/a n/a n/a 5. Annual supplemental pension cost a. Normal cost 533 10,333 7,399 18,265 b. Amortization (845) (3,144) (1,681) (5,670) c. Total cost [a+b] (312) 7,189 5,718 12,595 Note - General Staff are included with Teachers Key Beneit Concepts, LLC STIP-Table D$]

Stipend Table E - Level % Amortization Annual Pension Cost and Net Pension Obligation for the Fiscal Year Ending June 30, 2014 33 of 43 Total Annual required pension cost (APC) 14,249 Interest on net pension cost (1,931) Adjustment to APC 1,711 Annual pension cost (expense) 14,029 Contributions made TBD Change in net pension obligation TBD Net pension obligation - beginning of year (35,102) Net pension obligation - end of year TBD Valuation Year Ending History of Pension Cost, Percentage of Annual Contribution and Net Pension Obligation Annual Pension Cost Percentage of Annual Pension Cost Contributed Net Pension Obligation 6/30/2012 17,887 272.48% (30,851) 6/30/2013 17,887 123.26% (35,102) 6/30/2014 14,029 TBD TBD Key Benefit Concepts, LLC STIP-Table E%

34 of 43 Stipend Table E - Level $ Amortization Annual Pension Cost and Net Pension Obligation for the Fiscal Year Ending June 30, 2014 Total Annual required pension cost (APC) 12,595 Interest on net pension cost (1,931) Adjustment to APC 2,415 Annual pension cost (expense) 13,079 Contributions made TBD Change in net pension obligation TBD Net pension obligation - beginning of year (35,102) Net pension obligation - end of year TBD Valuation Year Ending History of Pension Cost, Percentage of Annual Contribution and Net Pension Obligation Annual Pension Cost Percentage of Annual Pension Cost Contributed Net Pension Obligation 6/30/2012 17,887 272.48% (30,851) 6/30/2013 17,887 123.26% (35,102) 6/30/2014 13,079 TBD TBD Key Benefit Concepts, LLC STIP-Table E$

35 of 43 Stipend Table F Required Supplementary Information Actuarial Valuation Date Actuarial Value of Assets Actuarial Accrued Liability (AAL) - Projected Unit Credit Unfunded AAL (UAAL) Funded Ratio Covered Payroll UAAL as a Percentage of Covered Payroll (a) (b) (b-a) (a/b) (c) ((b-a) / c) 7/1/2008 128,990 234,128 105,138 55.09% not provided not provided 7/1/2011 219,657 209,106 (10,551) 105.05% not provided not provided 7/1/2013 283,275 200,876 (82,399) 141.02% TBD TBD Key Benefit Concepts, LLC STIP-Table F

36 of 43 Stipend Table G Significant Methods and Assumptions Actuarial valuation date 7/1/2013 Actuarial cost method Unit credit Amortization method 30 open level dollar & level percent Remaining amortization period 30 years Asset valuation method Market value Actuarial Assumptions Investment rate of return * 5.50% Level percent increases 3.00% (for level percent amortizations) Stipend amount increases 0.00% - It was assumed that the maximum contribution limits would remain frozen at the 2013-2014 amounts *Implicit in this rate is an assumed rate of inflation of 4.00% Key Benefit Concepts, LLC STIP-Table G

37 of 43 Stipend Table H - Level % Amortization Historical Development of Annual Net Supplemental Pension Obligation Total Incurred Stipend Liabilities Valuation Year Ending Annual Required Pension Cost Interest on Net Supplemental Pension Obligation Annual Supplemental Pension Cost Adjustment Amort. Factor Supplemental Pension Cost Contribution Change in Net Supplemental Pension Obligation Net Supplemental Pension Obligation Balance (1) (2) (3) (4) (5) (6) (7) (8) (9) 6/30/2012 17,887 0 0 14.53 17,887 48,738 (30,851) (30,851) 6/30/2013 17,887 (1,851) 2,241 14.53 18,277 22,528 (4,251) (35,102) 6/30/2014 14,249 (1,931) 1,711 20.52 14,029 TBD TBD TBD Key Benefit Concepts, LLC STIP-Table H%

38 of 43 Stipend Table H - Level $ Amortization Historical Development of Annual Net Supplemental Pension Obligation Total Incurred Stipend Liabilities Valuation Year Ending Annual Supplemental Pension Cost Interest on Net Supplemental Pension Obligation Annual Supplemental Pension Cost Adjustment Amort. Factor Supplemental Pension Cost Contribution Change in Net Supplemental Pension Obligation Net Supplemental Pension Obligation Balance (1) (2) (3) (4) (5) (6) (7) (8) (9) 6/30/2012 17,887 0 0 14.53 17,887 48,738 (30,851) (30,851) 6/30/2013 17,887 (1,851) 2,241 14.53 18,277 22,528 (4,251) (35,102) 6/30/2014 12,595 (1,931) 2,415 20.52 13,079 TBD TBD TBD Key Benefit Concepts, LLC STIP-Table H$

Stipend Table I Pay As You Go 39 of 43 Fiscal Year Beginning Expected Total Payouts 2013 17,252 2014 17,818 2015 13,767 2016 14,353 2017 13,468 2018 10,200 2019 5,662 2020 8,734 2021 15,574 2022 16,026 2023 37,720 2024 33,121 2025 44,357 2026 35,623 2027 44,542 2028 44,911 2029 53,445 2030 56,316 2031 59,695 2032 57,881 2033 56,204 2034 56,533 2035 57,974 2036 51,184 2037 46,082 2038 45,205 2039 47,133 2040 44,503 2041 45,202 2042 45,048 Key Benefit Concepts, LLC STIP-Table I

Post Employment Benefits Liability 40 of 43 Stipend Technical Appendix Key Benefit Concepts, LLC, No Claim to U.S. Govt. Works

41 of 43 Stipend Actuarial Assumptions 1. Actuarial Valuation Date July 1, 2013 2. Actuarial Cost Method Unit Credit: The calculation of retirement plan benefits is based upon the accumulation of benefit units earned from such things as salary and/or service years. A Plan s normal cost is determined by the present value of benefits allocated to the valuation year. A Plan s accrued liability is the present value of benefits allocated to all periods prior to the valuation year. 3. Interest Rate Discount rate for valuing liabilities 5.50% Interest rate on plan assets 5.50% Implicit in these rates is a 4.00% assumed rate of inflation 4. Level Percent Increase 3.00% Used only for level percent amortization of Unfunded Actuarial Accrued Liability 5. Stipend Increases 0.00% - Monthly cash in lieu payments assumed to remain frozen at current amounts 6. Amortization Method 30 year open level percent & level dollar method 7. Remaining Amortization Period 30 years 8. Asset Valuation Method Market Value 9. Disablement Rates Active participant disability rates at sample ages: Age Male Female 20 0.01% 0.01% 25 0.01 0.01 30 0.01 0.01 35 0.01 0.01 40 0.02 0.02 45 0.04 0.06 50 0.11 0.12 55 0.21 0.17 60 0.34 0.25 Stipend Technical Appendix Page 1

42 of 43 10. Retirement Early Retirement Age Male Female 55 12.0% 11.0% 56 12.0 11.0 57 12.0 11.0 58 12.0 11.0 59 12.0 11.0 60 12.0 15.0 61 12.0 15.0 62 20.0 20.0 63 20.0 20.0 64 20.0 20.0 65 100.0 100.0 Regular Retirement (30 or more years of service) Age Male Female 57 40% 27% 58 35 27 59 25 27 60 28 27 61 25 27 62 36 34 63 32 27 64 24 23 65 100 100 11. Mortality Active participant mortality rates at sample ages: Age Male Female 20 0.000155 0.000089 25 0.000184 0.000097 30 0.000229 0.000129 35 0.000398 0.000230 40 0.000540 0.000329 45 0.000717 0.000519 50 0.000966 0.000765 55 0.002228 0.001345 60 0.003147 0.001935 65 0.004814 0.002974 70 0.007979 0.005057 75 0.013576 0.009155 80 0.024949 0.017103 Projection Scale AA was used for Mortality Improvement Stipend Technical Appendix Page 2

43 of 43 12. Separation Rates Select and ultimate termination rates at sample ages and years of service are shown below: Age Service Male Female 0 17.7% 15.0% 1 11.4 10.5 2 7.3 7.1 3 5.2 5.5 4 3.9 4.6 5 3.0 4.0 6 2.8 3.5 7 2.5 3.0 8 2.0 2.5 9 1.8 2.3 25 10 or more 1.8 2.2 30 1.4 1.9 35 1.2 1.4 40 1.1 1.1 45 1.0 0.9 50 1.0 0.9 55 1.0 0.9 60 1.0 0.9 Stipend Technical Appendix Page 3