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n David Culver May 23, 2006 Page 2 Department Heads, Mld-Managers and Benefit Confldentisl Em to ees' All other Em to eea ^ Disability Retirement Percentage of monthly Kaiser Percentage of mondtly Kaiser S-1 rate, where percentage is S-1 rate, whero percentage is based on service, as follows: based on service, as follows: 10 20% ~8 54% 10 20% 18 54% 11 25 19 57 11 25 19 57 12 30 20 80 12 30 20 80 13 35 21 84 13 35 21 84 14 40 22 88 l4 40 22 88 15 45 23 92 15 45 23 92 16 48 24 96 16 48 24 96 17 51 25 100 17 51 25 100 ^ Service For Department Heads and Mid-Management, service includes service with another CaIPERS municipal a¢encv. The City currently pays for the above benefits on spay-as-you-go basis. The Governmental Accounting Standards Board (GASB) issued Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefit Plans Other Than Pension Plans, called OPEB by GASB, in June 2004. I was a member GASB's task force providing background information to the Board on this issue. It is important to note the new GASB OPEB standards will almost certainly result in net obligations significantly different from the City's current pay-as-you-go method. The GASB has made it clear the City will need to recognize this promise to future retirees as employees render service to the City. The City also has a program that converts unused sick leave at retirement to an annuity based on CaIPERS conversion formula. Retirees then have a choice between taking a lump sum based on the amount required to purchase an annuity or the annuity. We believe this benefit must be accounted for under Statement No. 27, Accounting for Pensions by State and Local Governmental Employers (GASB 27). Valuation Process Our valuation is a five step process consisting of: 1. Gather participant data; 2. Meet with City to discuss valuation method and assumptions; 3. Valuation processing; 4. Meet with City to discuss valuation results, including: a. Annual Required Contribution,