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06. 12/31/13 CCCERA Valuation and UAAL Status
Central Contra Costa Sanitary District November 12, 2014 TO: FINANCE COMMITTEE VIA: DAVID HEATH, DIRECTOR OF ADMINISTRATION ROGER S. BAILEY, GENERAL MANAGER FROM: THEA VASSALLO, FINANCE MANAGER SUBJECT: 12/31/13 CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT ASSOCIATION (CCCERA) VALUATION AND STATUS OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY (UAAL) Attached for your review are a few of the preliminary slides (ATTACHMENT A) from the upcoming annual update on the Unfunded Actuarial Accrued Liability (UAAL), which will be given at an upcoming Board meeting. Also attached is an abridged version of the December 31, 2013 Contra Costa County Employees' Retirement Association (CCCERA) valuation (ATTACHMENT B), containing only pages that apply to Central Contra Costa Sanitary District, with pertinent information to the District highlighted in yellow. Should you like to view the full Actuarial Valuation and Review, it is available on CCCERA's website at http: / /www.cccera.org /PDFFiles/ Actuarial %20Va1 %20Report%202013.pdf TV-.cg Attachments 2013 -14 Unfunded Liabilities CCCERA(2013 valuation for 2015 -16 Rates) (2012 Valuation was $142.5M) GASB 45 OPEB (New Valuation due in January 2015) Debt (2009 Bonds /SRF) Accrued Comp Absence Total ($28.8M total reduction compared to PY) $120e8M 72.6M 40.6M 3.8M 5237.8M ATTACHMENT A Current 2013 Valuation Major Events 2013 -Leave Cashout Terminal Pay assumption reduced: — 24% to 6.5% (If hired prior to 1/1/11) — 8.75% to 6.5% (if hired on or after 1/1/11 and prior to 1/1/13) — 8.75% to Zero (if hired after 1/1/13) UAAL Components Actuarial Losse Gains and As Changes(12/ 12/31/2 58% $ 120,792,362 $ 142,523,586 $ (21,731,224) - 15.25% As of December 31, 2013 12/31/2013 12/31/2012 Variance % Change Restart of Amortization in 12/31/2008 Study $ 30,479,973 $ 32,090,896 $ (1,610,923) -5.02% Depooiing Impact in 12/31/2009, 2010 and 2013 Actuarial Studies S 15.834,899 S 31,217,380 5 (1.5.382,481.) - 49.28% CCCSD Voluntary Prepayment of UAAL $ 4,648,192 $ - $ 4,648,192 - Actuarial Losses Exceeding Gains and Assumption Changes (12/31/2008 - 12/31/2013) $ 69,829,298 $ 79,215,310 $ (9,386,012) - 11.85% Actuarial Losse Gains and As Changes(12/ 12/31/2 58% $ 120,792,362 $ 142,523,586 $ (21,731,224) - 15.25% As of December 31, 2013 CCCSD UAAL Amortization Plus Normal Rate Employer Bears UAAL Burden -TI l '::7 The Unfunded Accrued Actuarial Liability (UAAL) has a significant impact on rates because a portion of the rate is used to pay -down the UAAL annually. The information below displays the Normal Cost and UAAL Annual Amortization rate factors: y , Valuation Date 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 Employer Total Contribution Rate Breakdown Rate Representing UAAL Annual Amortization 14.66% 24.31% 35.27% 39.53/ 53.02/ ' 43.12/` CCCSD Total Employer Contribution Rate 30.945 40.30 53.91 % - {.36% 7193% 60.51% UAAL % of Total Employer Rate 47.38% 60.32% 65.42% 67.74% 71.72% 71.26% Total CCCSD Unfunded Liability $39,779,000 71,018,135 99,841,380 109,168,803 142,523,585 120,791,362 j District Funded % of UAAL N/A N/A 64.12% 62.50% 56.38% 63.12% CCCERA Total Pool Funded % of UAAL 88.45% 83.77% 80.28% 78.47% 70.64% 76.41% IN Source: Segal Actuarial Report Rate pages breaking out UAAL Component, then percent applied to Total Employer Contribution Rate 80.00°1/0 Normal & UAAL Rate Components of CCCSD Employer Average Rate 70.00% — 60.00% 50.00% — 40.00'/o - -- — 30.001/o 20.00% — — 10.00° /a — 0.00% 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 ■ Rate Representing UAAL Annual Amortization 11 Rate Representing Normal Cost How Funded Should the UAAL Be? Credit Rate Agency Benchmarks Standard & Poors: Pension Funded Ratio Strong 90% or above Above Average 80% to 90% Below Average 60% to 80% Weak 60% or below Fitch Ratings: Pension Funded Ratio Adequate 70% or above Weak 60% or below Fitch also states that "the funded ratio is one of many factors considered in Fitch's analysis of pension obligations. American Academy of Actuaries "The 80% Pension Funding Myth ", July 2012 • Frequent unchallenged references to 80% funding as a healthy level threaten to create a mythic standard. • No single level of funding should be identified as a defining line between a "healthy" and an "unhealthy" pension plan. • Funded ratios are a point -in -time measurement. The movement or trend of the funded ratio is as important as the absolute level. • Most plans should have the objective of accumulating assets equal to 100% of a relevant pension obligation. • The financial health of a pension plan depends on many factors in addition to funded status — particularly the size of any shortfall compared with the resources of the plan sponsor. Exhibit Contra Costa County Employees' Retirement Association Estimated Employer Rate Change by Cost Group (CG) Based on December 31, 2013 Valuation " Excludes Post Retirement Death Benefit reserve. These rates do not include any employer subvention of member contributions or any member subvention of employer contributions. 53369460105337.002 SEGAL CONSULTING CGk1 & CGa2 Combined CG//3 CG84 CG#5 CGll6 Enhanced Enhanced Enhanced Enhanced Non- Enhanced General CCC Sanitary District Housing Authorily CCCFPD District Market Value ofAssels(MVA)• 53,605,456,649 5225,446,520 S42,610,363 S41,544,308 55,277,311 Projected Payroll for 2014 S.S03,763,828 527,178,589 S5,033,671 $3,662,987 $792,280 Volatility Index (VI)= MVA/Payroll 7.16 8.30 8.47 11.34 6.66 Relative Volatility Index(VI) =CC VI /Total Plan VI 0.75 0.87 0.89 1.20 0.70 Estimated Incremental Rate Change as of 12/31/2014 -1.68% -1.95% -1.99% - 2.67% - 1.57% Estimated Incremental Rate Change as of 12/31/2015 -1.46% -1.70% .1.73% -2.32% -1.36% Estimated Incremental Rate Change as of 12/31/2016 -1.00% - 1.16% -1.19% -1.59% -0.93% Estimated Incremental Rate Change as of 12/3112017 -0.91% -1.05% -1.07% - 1.44'% -0.84% Fstimated Incremental Rate Change as or 12/31/1018 -0.36% -0.42% -0.413%, -0.57% - 0.34% . Cumulative Rate Change as of 12/31/2014 -1.68% -1.95% -4.30 % - 2.67'% -1.57% Cumulative Rate Change as of 12/31/2015 -3.14% -3.6S% -8.04 % -4.99%. - 2.93% Cumulative Rate Change as of 12/31/2016 -4.14% -4.81 % ]4.91 -6.58% -3.86% Cumulative Rate Change as of 12/31/2017 - 5.05% -5.86% -12.91 %, - 8.02%, -4.70% Cumulative Rate Change as of 12/31/2018 -5.41 % -6.28 % -13.84 % -8.59 % -11.33 " Excludes Post Retirement Death Benefit reserve. These rates do not include any employer subvention of member contributions or any member subvention of employer contributions. 53369460105337.002 SEGAL CONSULTING CGN7 & CC89 Combined CGl/8 CG#10 CGNII CGN12 Enhanced Enhanced Enhanced Enhanced Non- Enhanced County CCCFPD1Fast CCCFPL Moraga- 0rinda FD San Ramon Vallev FD Rodeo - Hercules FPD Market Value of Assets (MVA)" 51,328,915,458 5765,494,415 S137,366,526 5266,969,844 S24,203,441 Projected Payroll for 2014 581;981,398 531,375,742 57,513,564 S16,508,097 S1,618,755 Volatility Index (VI) = AI VA /Payroll 16.21 24.40 18.28 16.17 14.95 Relative Volatility Index (VI) - CC V( /Total Plan VI 1.71 2.57 1.93 1.71 1.58 Estimated Incremental Rate Change as of 12/31/2014 -3.81% -5.74% -4.30% - 3.80% -3.52% Estimated Incremental Rate Change as of 12/31/2015 -3.32% - 4.99%, -3.74 %, - 3.31'% - 3.061% Estimated Incremental Rate Change as of 12/31/2016 -2.27% -3.42 % -2.56% - 2.27 %, -2.10% Estimated Incremental Rate Change as of 12/31/2017 -2.05% -3.09% -2.31 % -2.05% - 1.89% Estimated Incremental Rate Change as of 12/31/2018 -0.82%. -1.23% - 0.93% -0.82% - 0.76% Cumulative Rate Change as of 12/31/2014 -3.81% -5.74 % -4.30 % -3.80% -3.52 % Cumulative Rate Change as or 12/31/2015 -7.13% -10.73% -8.04 % -7.11% -6.58% Cumulative Rate Change as of 12 /31/2016 -9.40% - 14.15% - 10.60% -9.38% -8.68% Cumulative Rate Change as of 12/31/2017 - 11.45% - 17.24% -12.91 %, 11.43 %. - 10. -57 % Cumulative Rate Change as of 12/31/2018 - 12,27% - 18.47%. -13.84 % -12.25"' -11.33 " Excludes Post Retirement Death Benefit reserve. These rates do not include any employer subvention of member contributions or any member subvention of employer contributions. 53369460105337.002 SEGAL CONSULTING Abridged Version - Pages Containing Information on Other Agencies are Removed Contra Costa County Employees' Retirement Association Actuarial Valuation and Review As of December 31, 2013 This report has been prepared at the request of the Board of Retirement to assist in administering the Fund. This valuation report may not otherwise be copied or reproduced in any form without the consent of the Board of Retirement and may only be provided to other parties in its entirety. The measurements shown in this actuarial valuation may not be applicable for other purposes. Copyright © 2014 by The Segal Group, Inc., parent of The Segal Company. All rights reserved. ATTACHMENT B t� �Nc scaK ar+ov - IorAn) � 19D9 IV Segal Consulting 100 Montgomery Street Suite 500 San Francisco, CA 941044308 T 415.263.8257 www.segalco.com September 30, 2014 Board of Retirement Contra Costa County Employees' Retirement Association 1335 Willow Way, Suite 221 Concord, CA 94520 Dear Board Members: We are pleased to submit this Actuarial Valuation and Review as of December 31, 2013. It summarizes the actuarial data used in the valuation, establishes the funding requirements for the fiscal year beginning July 1, 2015 and analyzes the preceding year's experience. This report was prepared in accordance with generally accepted actuarial principles and practices at the request of the Board to assist in administering the Plan. The census information on which our calculations were based was prepared by CCCERA and the financial information was provided by the Association's staff. That assistance is gratefully acknowledged. The measurements shown in this actuarial valuation may not be applicable for other purposes. 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 operation of the methodology used for these measurements (such as the end of an amortization period); and changes in plan provisions or applicable law. The actuarial calculations were completed under the supervision of John Monroe, ASA, MAAA, Enrolled Actuary. We are members of the American Academy of Actuaries and we meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion herein. To the best of our knowledge, the information supplied in the actuarial valuation is complete and accurate. Further, in our opinion, the assumptions as approved by the Board are reasonably related to the experience of and the expectations for the Plan. We look forward to reviewing this report at your next meeting and to answering any questions. Sincerely, SEGAL CONSULTING By: Paul Angelo, FSA, EA, MAAA, FCA Senior Vice President and Actuary AW/bgb Q,,;, e John Monroe, ASA, EA, MAAA Vice President and Associate Actuary SECTION 1 SECTION 2 SECTION 3 SECTI VALUATION SUMMARY Purpose and Scope ......................... i Significant Issues in Valuation Year.......... ............................... ii Summary of Key Valuation Results ...... ............................... v Summary of Key Valuation Demographic and Financial Data........ ............................... vii VALUATION RESULTS A. Member Data .......................... 1 B. Financial Information ..............4 C. Actuarial Experience ............... 9 D. Recommended Contribution. 14 E. Information Required by GASB ..... ............................... 34 F. Volatility Ratios .................... 35 SUPPLEMENTARY INFORMATION EXHIBIT A Table of Plan Coverage ................... 36 EXHIBIT B Members in Active Service and Projected Payroll as of December 31, 2013 ................... .............................46 EXHIBIT C Average Monthly Benefit and Membership Distribution of Retired Members and Beneficiaries .............57 EXHIBIT D Reconciliation of Member Data - December 31, 2012 to December 31, 2013 ................. ............................... 61 EXHIBIT E Summary Statement of Income and Expenses on an Actuarial Value Basis................. ............................... 62 EXHIBIT F Summary Statement of Assets ......... 63 EXHIBIT G Actuarial Balance Sheet ................... 64 EXHIBIT H Summary of Total Allocated Reserves ........... ............................... 65 EXHIBIT I Development of Unfunded Actuarial Accrued Liability ............................ 66 EXHIBIT J Table of Amortization Bases ........... 67 EXHIBIT K Section 415 Limitations ................... 74 EXHIBIT L Definitions of Pension Terms .......... 75 REPORTING INFORMATION EXHIBIT I Summary of Actuarial Valuation Results.............. ............................... 77 EXHIBIT II Supplementary Information Required by GASB - Schedule of Employer Contributions .... ............................... 79 EXHIBIT III Supplementary Information Required by GASB - Schedule of Funding Progress ............ ............................... 80 EXHIBIT IV Supplementary Information Required by GASB .......... ............................... 81 EXHIBIT V Actuarial Assumptions and Methods............ ............................... 82 EXHIBIT VI Summary of Plan Provisions ............ 95 Appendix A Member Contribution Rates for Members with Membership Dates before January 1, 2013 ..................104 Appendix B Member Contribution Rates for Members with Membership Dates on or after January 1, 2013 .................116 SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association PURPOSE AND SCOPE This report has been prepared by Segal Consulting to present a valuation of the Contra Costa County Employees' Retirement Association (CCCERA) as of December 31, 2013. The valuation was performed to determine whether the assets and contributions are sufficient to provide the prescribed benefits. The contribution rate requirements presented in this report are based on: > The benefit provisions of the Retirement Association, as administered by the Board; > The characteristics of covered active members, terminated members, and retired members and beneficiaries as of December 31, 2013, provided by the Association's staff, > The assets of the Plan as of December 31, 2013, provided by the Association's staff, > Economic assumptions regarding future salary increases and investment earnings; and > Other actuarial assumptions, regarding employee terminations, retirement, death, etc. One of the general goals of an actuarial valuation is to establish contributions that fully fund the system's liabilities, and that, as a percentage of payroll, remain as level as possible for each generation of active members. Annual actuarial valuations measure the progress toward this goal, as well as test the adequacy of the contribution rates. The actuarial valuation required for the Contra Costa County Employees' Retirement Association has been prepared as of December 31, 2013 by Segal Consulting. In preparing this valuation, we have employed generally accepted actuarial methods and assumptions to evaluate the Association's assets, liabilities and future contribution requirements. Our calculations are based upon member data and financial information provided to us by the Association's staff. This information has not been audited by us, but it has been reviewed and found to be reasonably consistent, both internally and with prior years' information. Segal Consulting SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association The contribution requirements are determined as a percentage of payroll. The Association's employer rates provide for both normal cost and a contribution to amortize any unfunded or overfunded actuarial accrued liabilities. In 2008, the Board elected to amortize the remaining balance of the Association's unfunded actuarial accrued liability (UAAL) through December 31, 2007 over a decreasing period with 9 years remaining as of December 31, 2013. Any change in the UAAL that arises at each valuation after December 31, 2007 is amortized over its own separate declining 18 -year period. Effective with the December 31, 2013 valuation, any change in UAAL that arises due to plan amendments is amortized over its own declining 10 -year period (with the exception of a change due to retirement incentives, which is to be funded in full upon adoption of the incentive). We recommend that the rates calculated in this report be adopted by the Board for the fiscal year that extends from July 1, 2015 through June 30, 2016. SIGNIFICANT ISSUES IN VALUATION YEAR The following key findings were the result of this actuarial valuation: Ref Pg. 89 > The results of this valuation reflect changes in the leave cashout (terminal pay) assumptions adopted by the Board. These changes were adopted in response to changes in leave cashouts (terminal pay) consistent with AB 197. They were documented in our letter dated August 5, 2014 and are also outlined in Section 4, Exhibit V of this report. These assumption changes resulted in a decrease in the average employer rate of 4.1% of payroll and a decrease in the average member rate of 0.3% of payroll. In addition, the results of the valuation also reflect changes as part of the Board's review of the funding policy. Those changes did not impact the employer contribution rate as they only changed amortization periods for possible future changes in liability. Ref Pg. 80 > The ratio of the valuation value of assets to actuarial accrued liabilities increased from 70.6% to 76.4 %. The Association's Ref Pg. 66 UAAL has decreased from $2.3 billion to $1.8 billion. This decrease is primarily due to changes in leave cashout assumptions, an investment return on actuarial value (i.e. after smoothing) greater than the 7.25% assumed rate and lower than expected individual salary increases. A reconciliation of the Association's UAAL is provided in Section 3, Exhibit I. Ref Pg. 32 > The average employer rate calculated in this valuation (excluding any employer subvention of member rates or member subvention of employer rates) has decreased from 49.82% of payroll to 43.58% of payroll. This decrease is primarily due to changes in leave cashout assumptions, the investment gain and lower than expected individual salary increases. A complete reconciliation of the Association's aggregate employer rate is provided in Section 2, Subsection D (see Chart 15). -7 Segal Consulting ii SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association Separate employer contribution rates are shown in Chart 14 for members with membership dates before January 1, 2013 (non - PEPRA members) and on or after January 1, 2013 ( PEPRA members). However, the average employer contribution rates shown on page v are based on all members regardless of their membership date. The schedule of the employer contribution rates is provided in Section 2, Subsection D, Chart 14. Chart 14 no longer shows separate employer contribution rates based on a membership date breakpoint of January 1, 2011 as non - PEPRA members are no longer subject to different leave cashout assumptions depending on membership date. Ref Pg. 33 > The average member rate calculated in this valuation has decreased from 12.20% of payroll to 11.91% of payroll. This decrease is primarily due to changes in leave cashout assumptions. A complete reconciliation of the Association's aggregate member rate is provided in Section 2, Subsection D (see Chart 16). Based on our recommendation, the Board has exercised the discretion made available by AB 1380 to no longer round the member's contribution rates for PEPRA members to the nearest 1/4% as previously required by the California Public Employees' Pension Reform Act of 2013 ( PEPRA). This should allow for exactly one -half of the Normal Cost to be paid by the employees and by the employers covered under the PEPRA plans. The detailed member rates are provided in Appendix A and B of this report. Ref Pg. 5 > The total unrecognized net investment gain as of December 31, 2013 is about $536 million as compared to an unrecognized net investment gain of $157 million in the previous valuation. This net investment gain will be recognized in the determination of the actuarial value of assets for funding purposes in the next few years. This means that if the Association earns the assumed rate of investment return of 7.25% per year (net of expenses) on a market value basis, then the net deferred gains of $536 million would be recognized over the next few years as shown in the footnote in Chart 7. > The net deferred gains of $536 million represent about 8% of the market value of assets. Unless offset by future investment losses or other unfavorable experience, the recognition of the $536 million market gains is expected to have an impact on the Association's future funded ratio and contribution rate requirements. This potential impact may be illustrated as follows: • If the net deferred gains were recognized immediately in the valuation value of assets, the funded percentage would increase from 76.4% to 83.3 %. • If the net deferred gains were recognized immediately in the valuation value of assets, the average employer contribution rate would decrease from 43.6% to about 37.7% of payroll. > The actuarial valuation report as of December 31, 2013 is based on financial information as of that date. Changes in the assets subsequent to that date, to the extent that they exist, are not reflected. Declines in asset values will increase the actuarial cost of the plan, while increases will decrease the actuarial cost of the plan. Segal Consulting iii SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association > PEPRA contribution rates for certain cost group without actual members (i.e., Cost Group #6) have been developed based on generally the same methodology used to estimate contribution rates for all of the PEPRA tiers in the December 31, 2012 valuation. We have assumed in this valuation that their demographic profiles (e.g., entry age, composition of male versus female, etc.) can be approximated by the data profiles of current active members with membership dates on and after January 1, 2011. > This report reflects the $2 million additional contribution made by the First -5 Children & Families Commission towards their UAAL. As adopted by the Board, this amount will be amortized as a level dollar amount over a period of eleven years beginning with the December 31, 2011 valuation. This report also reflects the $5 million additional contribution made by the Central Contra Costa Sanitary District towards their UAAL. Based on CCCERA's funding policy, this amount will be amortized as a level percent of pay over a period of eighteen years beginning with the December 31, 2012 valuation. Ref.- Pg. 79 > The Governmental Accounting Standards Board (GASB) approved two new Statements affecting the reporting of pension liabilities for accounting purposes. Statement 67 replaces Statement 25 and is for plan reporting. Statement 68 replaces Statement 27 and is for employer reporting. It is important to note that the new GASB rules only redefine pension expense for financial reporting purposes, and do not apply to contribution amounts for actual pension funding purposes. Employers and plans can still develop and adopt funding policies under current practices. Because these new statements are not effective until the calendar year ending December 31, 2014 for plan reporting and the fiscal year ending June 30, 2015 for employer reporting, the financial reporting information in this report continues to be prepared in accordance with Statements 25 and 27. Impact of Future Experience on Contribution Rates Future contribution requirements may differ from those determined in the valuation because of: > Differences between actual experience and anticipated experience; > Changes in actuarial assumptions or methods; > Changes in statutory provisions; and > Differences between the contribution rates determined by the valuation and those adopted by the Board. r Segal Consulting iv SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association Sum_ mary of Key Valuation Results December 31, 2013 December 31, 2012 Average Employer Contribution Rates : Estimated Estimated General Total Rate Annual Amount Total Rate Annual Amount Cost Group #1- County and Small Districts (Tier 1 and 4) 35.48% $8,400,094 41.59% $10,611,239 Cost Group #2 - County and Small Districts (Tier 3 and 5) 32.28% 154,922,757 37.08% 168,815,252 Cost Group #3 - Central Contra Costa Sanitary District 60.51% 16,446,846 73.93% 17,620,915 Cost Group #4 - Contra Costa Housing Authority 43.65% 2,196,992 47.04% 2,377,319 Cost Group #5 - Contra Costa County Fire Protection District 35.04% 1,283,642 42.81% 1,522,178 Cost Group #6 - Small Districts (Non- Enhanced Tier 1 and 4) 29.13% 230,791 32.16 % 240,133 Safety Cost Group #7 - County (Tier A and D) 80.27% 53,484,103 89.83% 59,805,301 Cost Group #8 - Contra Costa and East Fire Protection Districts 82.98% 26,034,468 89.79% 29,274,716 Cost Group #9 - County (Tier C and E) 74.50% 11,435,422 81.53% 11,166,934 Cost Group #10 - Moraga -Orinda Fire District 70.45% 5,293,654 80.03% 5,669,942 Cost Group #11 - San Ramon Valley Fire District 88.33% 14,581,928 95.39% 15,961,561 Cost Group #12 - Rodeo - Hercules Fire Protection District 110.23% 1,784,422 110.02% 1,865,548 All Employers combined 43.58% $296,095,119 49.82% $324,931,038 Average Member Contribution Rates(1 ): Estimated Estimated General Total Rate Annual Amount Total Rate Annual Amount Cost Group #1 - County and Small Districts (Tier 1 and 4) 10.58% $2,504,556 10.90% $2,781,559 Cost Group #2 - County and Small Districts (Tier 3 and 5) 10.60% 50,889,675 10.81% 49,226,376 Cost Group #3 - Central Contra Costa Sanitary District 11.10% 3,016,823 11.26% 2,684,595 Cost Group #4 - Contra Costa Housing Authority 11.17% 562,261 11.59% 585,541 Cost Group #5 - Contra Costa County Fire Protection District 11.05% 404,760 11.14% 396,160 Cost Group #6 - Small Districts (Non- Enhanced Tier 1 and 4) 12.41% 98,322 12.86% 96,073 Safety Cost Group #7 - County (Tier A and D) 17.41% 11,600,517 17.80% 11,851,328 Cost Group #8 - Contra Costa and East Fire Protection Districts 17.18% 5,390,352 17.43% 5,681,658 Cost Group #9 - County (Tier C and E) 13.66% 2,096,818 14.06% 1,926,255 Cost Group #10 - Moraga -Orinda Fire District 17.01% 1,278,057 17.31% 1,226,374 Cost Group #11 - San Ramon Valley Fire District 16.88% 2,786,567 17.20% 2,878,150 Cost Group #12 - Rodeo - Hercules Fire Protection District 15.90% 257,382 16.36% 277,408 All Categories Combined 11.91% $80,886,090 12.20% $79,611,477 (1) Based on projected payroll as of each valuation date shown. These rates do not include any employer subvention of member contributions or any member subvention of employer contributions. The rates shown are averages based on all members regardless of their membership date. Note: Pages 19 and 20 contain a summary that shows which employers are in each cost group. r Segal Consulting SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association Summary of Key Valuation Results (continued) December 31, 2013 December 31, 2012 Refundability Factors General Legacy Tiers PEPRA Tiers Legacy Tiers PEPRA Tiers Cost Group #1 - County and Small Districts (Tier 1) 0.9603 0.9845 PEPRA Tier 4 (2% COLA) 0.9598 0.9845 PEPRA Tier 4 (3% COLA) 0.9693 0.9845 Cost Group #2 - County and Small Districts (Tier 3) 0.9571 0.9360 PEPRA Tier 5 (2% COLA) 0.9725 0.9360 PEPRA Tier 5 (3 %/4% COLA) 0.9650 0.9360 Cost Group #3 - Central Contra Costa Sanitary District 0.9581 0.9650 0.9486 0.9486 Cost Group #4 - Contra Costa Housing Authority 0.9560 0.9769 0.9811 0.9811 Cost Group #5 - Contra Costa County Fire Protection District 0.9586 0.9602 PEPRA Tier 4 (2 % COLA) 0.9598 0.9602 PEPRA Tier 4 (3% COLA) 0.9646 0.9602 Cost Group #6 - Small Districts (Non- Enhanced Tier 1 and 4) 0.9546 0.9640 0.9338 0.9338 Safety Cost Group #7 - County (Tier A and D) 0.9741 0.9784 0.9924 0.9924 Cost Group #8 - Contra Costa and East Fire Protection Districts 0.9748 0.9811 0.9897 0.9897 Cost Group #9 - County (Tier C and E) 0.9755 0.9787 0.8718 0.8718 Cost Group #10 - Moraga -Orinda Fire District 0.9765 0.9828 0.9938 0.9938 Cost Group #11- San Ramon Valley Fire District 0.9765 0.9831 0.9905 0.9905 Cost Group #12 - Rodeo - Hercules Fire Protection District 0.9754 0.9828 0.9860 0.9860 Funded Status: Actuarial accrued liability (AAL) $7,731,097,407 $7,761,315,535 Valuation value of assets (VVA) $5,907,416,432 $5,482,257,062 Market value of assets (MVA) $6,458,317,596 $5,654,581,124 Funded percentage on VVA basis (VVA/AAL) 76.4% 70.6% Funded percentage on WA basis (MVA/AAL) 83.5% 72.9% Unfunded Actuarial Accrued Liability (UAAL) on VVA basis $1,823,680,975 $2,279,058,473 Unfunded Actuarial Accrued Liability (UAAL) on WA basis $1,272,779,811 $2,106,734,411 Key Assumptions: Interest rate 7.25% 7.25% Inflation rate 3.25% 3.25% Across the board salary increase 0.75% 0.75% Note: Pages 19 and 20 contain a summary that shows which employers are in each cost group. `i Segal Consulting SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association Summary of Key Valuation Demographic and Financial Data December 31, 2013 December 31, 2012 Percentage Change Active Members: Number of members 9,124 8,640 5.6% Average age 45.8 45.9 N/A Average service 10.1 10.2 N/A Projected total payroll (compensation) $679,428,911 $652,312,178 4.2% Average projected payroll $74,466 $75,499 -1.4% Retired Member and Beneficiaries: Number of members: Service retired 6,438 6,375 1.0% Disability retired 927 923 0.4% Beneficiaries 1,260 1,219 3.4% Total 8,625 8,517 1.3% Average age 69.3 69.0 N/A Average Monthly Benefit $3,579 $3,518 1.7% Vested Terminated Members: Number of terminated vested members(l) 2,345 2,288 5.9% Average age 47.0 46.8 N/A Summary of Financial Data: Market value of assets $6,458,317,596 $5,654,581,124 14.2% Return on market value of assets 15.50% 13.31% N/A Actuarial value of assets $5,922,449,192 $5,497,193,662 7.7% Return on actuarial value of assets 9.01% 2.25% N/A Valuation value of assets $5,907,416,432 $5,482,257,062 7.8% Return on valuation value of assets 9.02% 2.24% N/A (1) Includes 933 terminated members with less than five years of service as of December 31, 2013 and 888 as o f December 31, 2012. AT-Segal Consulting vii SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association A. MEMBER DATA The Actuarial Valuation and Review considers the number and demographics of covered members, including active members, vested terminated members, retired members and beneficiaries. This section presents a summary of significant statistical data on these member groups. More detailed information for this valuation year and the preceding valuation can be found in Section 3, Exhibits A, B, C and D. A historical perspective of CHART 1 how the member population has changed Member Population: 2004 — 2013 over the past ten valuations can be seen in Year Ended Active Vested Terminated Retired Members Ratio of Non - Actives this chart. December 31 Members Members(') and Beneficiaries to Actives 2004 9,358 1,517 6,118 0.82 2005 9,205 1,731 6,437 0.89 2006 9,210 1,919 6,646 0.93 2007 9,421 2,008 6,911 0.95 2008 9,385 2,153 7,012 0.98 2009 8,938 2,209 7,292 1.06 2010 8,811 2,231 7,559 1.11 2011 8,629 2,214 8,085 1.19 2012 8,640 2,288 8,517 1.25 2013 9,124 2,345 8,625 1.20 (1) Includes members who terminate with less than five years of service and leave accumulated contributions on deposit Ar Segal Consulting 1 SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association Active Members Plan costs are affected by the age, years of service and payroll of active members. In this year's valuation, there are 9,124 active members with an average age of 45.8, average years of service of 10.1 years and average payroll of $74,466. The 8,640 active members in the prior valuation had an average age of 45.9, average service of 10.2 years and average payroll of $75,499. Among the active members, there were none with unknown age or service information. These graphs show a CHART 2 distribution of active Distribution of Active Members by Age as of members by age and by December 31, 2013 years of service. 1,600 1,400 1,200 1,000 800 600 400 200 0 J ,�o Inactive Members In this year's valuation, there were 2,345 members with a vested right to a deferred or immediate vested benefit or entitled to a return of their employee contributions versus 2,288 in the prior valuation. CHART 3 Distribution of Active Members by Years of Service as of December 31, 2013 3,000 2,500 2,000 1,500 1,000 500 0 b° Segal Consulting 2 These graphs show a distribution of the current retired members and beneficiaries based on their monthly amount and age, by type of pension. ■ Beneficiary ■ Disability ■ Service SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association Retired Members and Beneficiaries As of December 31, 2013, 7,365 retired members and 1,260 beneficiaries were receiving total monthly benefits of $30,866,774. For comparison, in the previous valuation, there were 7,298 retired members and 1,219 beneficiaries receiving monthly benefits of $29,964,786. CHART 4 Distribution of Retired Members and Beneficiaries by Type and by Monthly Amount as of December 31, 2013 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 000 C5 pis QP 1P oil, �� CP c� cam o0 00 (V 00 lb' 00 100 00 h• 00 o• 0 0 000 w• 00 00 CHART 5 Distribution of Retired Members and Beneficiaries by Type and by Age as of December 31, 2013 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 oh 1P 4r 0 Q? 0 11p1 1�1 Cl? C, o 2l � J o0 Segal Consulting 3 The chart depicts the components of changes in the actuarial value of assets over the last ten years. Pension Obligation Bonds in the amount of $153 million for 2005 and $11.7 million for 2006 are included in the contributions. Also included are UAAL prepayments of $8.6 million for 2006, $3.0 million for 2007, and $7.0 million for 2013. ■ Adjustment toward market value ■ Benefits paid • Net interest and dividends • Contributions % Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association B. FINANCIAL INFORMATION Retirement plan funding anticipates that, over the long term, both contributions and net investment earnings (less investment and administrative fees) will be needed to cover benefit payments. Retirement plan assets change as a result of the net impact of these income and expense components. The adjustment toward market value shown in the chart is the "non- cash" earnings on investment implicitly included in the Actuarial Value of Assets. Additional financial information, including a summary of these transactions for the valuation year, is presented in Section 3, Exhibits E and F. CHART 6 It is desirable to have level and predictable plan costs from one year to the next. For this reason, the Board of Retirement has approved an asset valuation method that gradually adjusts to market value. Under this valuation method, the full value of market fluctuation is not recognized in a single year and, as a result, the asset value and the plan costs are more stable. The amount of the adjustment to recognize market value is treated as income, which may be positive or negative. Realized and unrealized gains and losses are treated equally and, therefore, the sale of assets has no immediate effect on the actuarial value. Comparison of Increases and Decreases in the Actuarial Value of Assets for Years Ended December 31, 2004 - 2013 900 800 700 u) 600 C .2 500 � 400 300 200 100 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association CHART 7 Determination of Actuarial and Valuation Value of Assets for Year Ended December 31, 2013 The chart shows the determination of the actuarial and valuation Six Month Period Total Actual Market From To Return (net) Expected Market Return (net) Investment Gain (Loss) Deferred Factor Deferred Return value ofassets as of the 7/2008 12/2008 $(1,128,210,678) $189,989,366 $(1,318,200,044) 0.0 $0 valuation date. 1/2009 6/2009 106,872,212 146,385,892 (39,513,680) 0.0 0 Subtotal 7/2009 12/2009 628,870,712 150,326,140 478,544,572 0.1 47,854,457 1/2010 6/2010 (94,057,382) 174,278,387 (268,335,769) 0.2 (53,667,154) 7/2010 12/2010 687,503,854 169,679,293 517,824,561 0.3 155,347,368 1/2011 6/2011 292,872,483 195,544,414 97,328,069 0.4 38,931,228 7/2011 12/2011 (205,242,203) 204,284,793 (409,526,996) 0.5 (204,763,498) 1/2012 6/2012 296,675,568 195,294,521 101,381,047 0.6 60,828,628 7/2012 12/20/12 371,057,645 205,350,894 165,706,751 0.7 115,994,726 1/2013 6/2013 281,608,945 218,386,047 63,222,898 0.8 50,578,319 7/2013 12/20/13 588,758,958 227,909,702 360,849,256 0.9 324,764,330 1. Total Deferred Retum") $535,868,404 2. Market Value of Assets 6,458,317,596 3. Actuarial Value of Assets (Item 2 — Item 1) 5,922,449,192 4. Actuarial Value as Percentage of Market Value (Item 3 / Item 2) 91.7% 5. Non - valuation Reserves and Designations: a. Post Retirement Death Benefit $15,032,760 b. Statutory Contingency 0 c. Additional One Percent Contingency 0 d. Unrestricted Designation 0 e. Total $15,032,760 6. Valuation Value of Assets (Item 3 — Item 5e) $5,907,416,432 Deferred Return Recognized in each of the next 5 years: (a) Amount Recognized during 2014 $173,544,421 (b) Amount Recognized during 2015 127,574,660 (c) Amount Recognized during 2016 97,279,290 (d) Amount Recognized during 2017 101,385,107 (e) Amount Recognized during 2018 36,084,926 (0 Subtotal $535,868,404 Note: Results may not add due to rounding it Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association CHART 8 Allocation of Valuation Value of Assets as of December 31, 2013 The calculation of the valuation value of assets from December 31, 2012 to December 31, 2013 by cost groups is provided below. 1 Allocated Valuation Value of Assets As of Beginning of Plan Year 2 Contributions: a. Total Member Contributions b. Employer Contributions - Excludes POB and other Special Contributions c. Employer Contributions - Special (POB, Termination, etc.) d. Total Contributions 3 Total Payments Excluding Post - Retirement Death 4 Total Transfers Into or Out of Valuation Assets 5 Subtotal (Item 1 + 2d - 3 + 4) 6 Weighted Average Fund Balance 7 Earnings Allocated in Proportion to Item 6 8 Allocated Valuation Value of Assets As of End of Plan Year (Item 5 + 7) Note: Results may not add due to rounding. i"' Segal Consulting General Cost Groups #I 1,509,131 345,520 364,139 60,400 and #2 Cost Group #3 Cost Group #4 Cost Group #5 Cost Group #6 General County Central Contra Contra Costa Contra Costa Small Districts and Small Costa Sanitary Housing County Fire (General Districts District Authority Protection District Non - Enhanced) $3,053,006,557 $184,214,514 $36,238,717 $36,092,223 $4,423,558 43,834,901 1,509,131 345,520 364,139 60,400 133,885,123 15,849,057 1,770,063 987,831 224,059 2,154,061 5,000,000 0 0 0 179,874,085 22,358,188 2,115,583 1,351,970 284,459 201,574,588 16,738,898 2,536,209 2,555,015 269,144 0 0 0 0 0 3,031,306,054 189,833,804 35,818,091 34,889,178 4,438,873 3,042,156,306 187,024,159 36,028,404 35,490,701 4,431,216 274,295,733 16,863,015 3,248,498 3,200,016 399,540 $3,305,601,787 $206,696,819 $39,066,589 $38,089,194 $4,838,413 6 SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association CHART 8 (continued) Allocation of Valuation Value of Assets as of December 31, 2013 Note: Results may not add due to rounding. 7 i� Segal Consulting Cost Group #8 Cost Group #10 Cost Group #11 Cost Group #12 Cost Groups #7 & 9 Contra Costa & Moraga- Orinda San Ramon Rodeo - Hercules Safety County East Fire Protection Fire District Valley Fire Fire Protection Districts District District Total 1 Allocated Valuation Value of Assets As of Beginning of Plan Year $1,133,572,324 $669,515,717 $.119,893,798 $224,603,944 $20,695,715 $ 5,482,257,062 2 Contributions: a. Total Member Contributions 14,086,216 7,364,555 1,755,799 2,867,116 185,477 72,373,254 b. Employer Contributions - Excludes POB and other Special 45,993,091 14,907,649 2,848,910 10,248,331 1,149,277 227,863,391 Contributions C. Employer Contributions — Special (POB, Termination, etc.) 0 0 0 0 0 7,154,061 d. Total Contributions 60,079,307 22,272,204 4,604,709 13,115,447 1,334,754 307,390,706 3 Total Payments Excluding Post - Retirement Death 76,716,427 49,114,072 9,161,135 13,200,190 1,689,968 373,555,644 4 Total Transfers Into or Out of Valuation 0 0 0 0 0 0 Assets 5 Subtotal (Item 1 + 2d — 3 + 4) 1,116,935,204 642,673,849 115,337,372 224,519,201 20,340,501 5,416,092,124 6 Weighted Average Fund Balance 1,125,253,764 656,094,783 117,615,585 224,561,573 20,518,108 5,449,174,593 7 Earnings Allocated in Proportion to Item 6 101,458,398 59,156,724 10,604,798 20,247,573 1,850,013 491,324,308 8 Allocated Valuation Value of Assets As of End of Plan Year (Item 5 +7) $1,218,393,602 $701,830,573 $125,942,170 $244,766,774 $22,190,514 $ 5,907,416,432 Note: Results may not add due to rounding. 7 i� Segal Consulting This chart shows the change in the relative values of market value, actuarial value and valuation value of assets over the past ten years. --W— Market Value 4 Actuarial Value —A Valuation Value SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association The market value, actuarial value and valuation value of assets are representations of the Plan's financial status. As investment gains and losses are gradually taken into account, the actuarial value of assets tracks the market value of assets, but with less volatility. The valuation value of assets is the actuarial value, excluding any non - valuation . reserves. The valuation value of assets is significant because the Plan's liabilities are compared to this measure of its assets to determine what portion, if any, remains unfunded. Amortization of the unfunded liability is an important element in determining the contribution requirement. CHART 9 Relative Values of Market Value, Actuarial Value and Valuation Value of Assets for Years Ended December 31, 2004 — 2013 7.0 6.0 5.0 4.0 c 0 3.0 m 2.0 1.0 0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 IV Segal Consulting s This chart provides a summary of the actuarial experience during the past year. % Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association C. ACTUARIAL EXPERIENCE To calculate the required contribution, assumptions are made about future events that affect the amount and timing of benefits to be paid and assets to be accumulated. Each year actual experience is measured against the assumptions. If overall experience is more favorable than anticipated (an actuarial gain), the contribution requirement will decrease from the previous year. On the other hand, the contribution requirement will increase if overall actuarial experience is less favorable than expected (an actuarial loss). Taking account of experience gains or losses in one year without making a change in assumptions reflects the belief that the single year's experience was a short-term CHART 10 Actuarial Experience for Year Ended December 31, 2013 1. Net gain/(loss) from investments* 2. Net gain/(loss) from other experience ** development and that, over the long term, experience will return to the original assumptions. For contribution requirements to remain stable, assumptions should approximate experience. If assumptions are changed, the contribution requirement is adjusted to take into account a change in experience anticipated for all future years. The total gain is $209.1 million, $96.3 million gain from investments and $112.8 million gain from all other sources. The net experience variation from individual sources other than investments was 1.5% of the actuarial accrued liability. A discussion of the major components of the actuarial experience is on the following pages. $96,259,150 112,848,298 3. Net experience gain/(loss): (1) + (2) + (3) $209,107,448 * Details in Chart 11 * * See Section 3, Exhibit 1. Does not include the effect of plan or assumption changes, if any. 9 This chart shows the gain /(loss) due to investment experience. T Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association Investment Rate of Return A major component of projected asset growth is the assumed rate of return. The assumed return should represent the expected long -term rate of return, based on the Plan's investment policy. For valuation purposes, the assumed rate of return on the actuarial value of assets during 2013 was 7.25 %. The actual rate of return on the actuarial value for the 2013 Plan Year was 9.01 %. The market value return reflects the entire impact of the investment performance during the current year and ignores returns from prior years. CHART 11 The actuarial and valuation value returns reflect the fact that investment gains and losses are gradually taken into account. This is because these returns reflect only a portion of the investment gain or loss from the current year as well as portions of the gains and losses from prior years in accordance with the Board's asset valuation method. Since the actual return for the year was greater than the assumed return, the Plan experienced an actuarial gain on the actuarial and valuation value of assets during the year ended December 31, 2013. Investment Experience for Year Ended December 31, 2013 — Market Value, Actuarial Value and Valuation Value of Assets Market Value Actuarial Value Valuation Value 1. Actual return $870,984,744 $492,503,802 $491,324,308 2. Average value of assets 5,620,956,988 3. Actual rate of return: (1) - (2) 15.50% 4. Assumed rate of return 7.25% 5. Expected return: (2) x (4) 407,519,382 6. Actuarial gain/(loss): (1) — (5) $463,465,362 5,463,569,526 9.01% 7.25% 396,108,791 96.395.011 5,449,174,593 9.02% 7.25% 395,065,158 96.259.150 10 SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association Because actuarial planning is long term, it is useful to see how the assumed investment rate of return has followed actual experience over time. The chart below shows the rates of return on an actuarial, valuation and market value basis for the last ten years. CHART 12 Investment Return - Market Value, Actuarial Value, and Valuation Value: 2004 - 2013 Market Value Investment Actuarial Value Valuation Value Return Investment Return Investment Return Year Ended Percent Percent Percent December 31 Amount of Assets Amount of Assets Amount of Assets 2004 $406,427,237 12.27% $136,674,234 3.85% $135,741,405 3.84% 2005 331,400,271 8.71% 216,618,073 5.74% 215,737,484 5.74% 2006 603,899,378 14.23% 353,776,306 8.63% 352,838,472 8.64% 2007 294,694,885 6.03% 522,206,583 11.63% 521,211,436 11.64% 2008 (1,477,705,765) (28.35°/x) 238,397,117 4.73% 237,402,129 4.72% 2009 736,956,891 19.68% 18,226,933 0.34% 17,021,116 0.32% 2010 594,637,090 13.35% 95,918,913 1.82% 94,835,030 1.80% 2011 88,042,268 1.76% 148,058,548 2.78% 146,988,614 2.77% 2012 668,138,997 13.31% 121,921,302 2.25% 120,826,177 2.24% 2013 870,984,744 15.50% 492,503,802 9.01% 491,324,308 9.02% Total $3,117,475,996 $2,344,301,811 $2,333,926,171 Five -Year Average Return 12.41% 3.27% 3.26% Ten -Year Average Return 6.88% 4.90% 4.90% Note: Each year's yield is weighted by the average asset value in that year Segal Consulting 11 —41— Market Value —a Actuarial Value - -*— Valuation Value SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association Subsection B described the actuarial asset valuation method that gradually takes into account fluctuations in the market value rate of return. The effect of this is to stabilize the actuarial rate of return, which contributes to leveling pension plan costs. CHART 13 Market, Actuarial and Valuation Value Rates of Return for Years Ended December 31, 2004 - 2013 30% 20% 10% 0% -10% -20% -30% -40% . . . . . . . . . . . . . . . . . . . . . --------------------- --------------------- --------------------- 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 12 Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association Other Experience There are other differences between the expected and the actual experience that appear when the new valuation is compared with the projections from the previous valuation. These include: > the extent of turnover among the participants, > retirement experience (earlier or later than expected), > mortality (more or fewer deaths than expected), > the number of disability retirements, and > salary increases different than assumed. Please see Exhibit I in Section 3 for a detailed reconciliation of changes in the Unfunded Actuarial Accrued Liability. 13 Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association D. RECOMMENDED CONTRIBUTION Employer contributions consist of two components: Normal Cost The annual contribution rate that, if paid annually from a member's first year of membership through the year of retirement, would accumulate to the amount necessary to fully fund the member's retirement- related benefits. Accumulation includes annual crediting of interest at the assumed investment earning rate. The contribution rate is expressed as a level percentage of the member's compensation. Contribution to the Unfunded Actuarial Accrued Liability (UAAL) The annual contribution rate that, if paid annually over the UAAL amortization period, would accumulate to the amount necessary to fully fund the UAAL. Accumulation includes annual crediting of interest at the assumed investment earning rate. The contribution (or rate credit in the case of a negative UAAL ) is calculated to remain as a level percentage of future active member payroll (including payroll for new members as they enter the Association) assuming a constant number of active members. In order to remain as a level percentage of payroll, amortization payments (credits) are scheduled to increase at the combined annual inflation and "across the board" salary increase rate of 4.00% along with expected payroll. The remaining balance of the December 31, 2007 UAAL is being amortized over a 9 -year declining period as of December 31, 2013. Any change in the UAAL that arises at each valuation after December 31, 2007 is amortized over its own separate declining 18 -year period. Effective with the December 31, 2013 valuation, any change in the UAAL that arises due to plan amendments is amortized over its own declining 10 -year period (with the exception of a change due to retirement incentives, which is to be funded in full upon adoption of the incentive). Employer Contribution Rates The current and recommended employer contribution rates are shown in Chart 14. County contribution rates also include the Superior Court. Separate rates for non -PEPRA members with membership dates prior to or on or after January 1, 2011 are no longer shown or necessary. This is because of the leave cashout assumption change that results in the same leave cashout assumption for both of these membership groups. Therefore, combined employer contribution rates for those groups have been determined effective with this valuation. 14 r Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association For the PEPRA cost groups without actual membership data (i.e. Cost Group #6), we have assumed in this valuation that their demographic profiles can be approximated by the data profiles of current active members with membership dates on or after January 1, 2011. The amortization cost for the UAAL has been expressed as a percentage of total future payroll, including members with membership dates on or after January 1, 2013. This has been done in order to continue the open group level percent of payroll amortization methodology for the UAAL associated with members with membership dates before January 1, 2013. It is also consistent with the methodology applied when Safety Tier C was implemented. The employer contribution rates shown in Chart 14 are the aggregate rates before reflecting the under and over $350 of monthly compensation contribution provisions for members integrated with Social Security. The detailed contribution rates reflecting these provisions will be provided in the contribution rate packet that goes to the Board of Supervisors. Member Contributions Non - PEPRA Members Articles 6 and 6.8 of the 1937 Act define the methodology to be used in the calculation of member basic contribution rates for non - PEPRA General and Safety members, respectively. The basic contribution rate is determined as that percentage of compensation which if paid annually from a member's first year of membership through the prescribed retirement age would accumulate to the amount necessary to fund a prescribed annuity. The annuity is equal to: > 1/120 of one year Final Average Salary per year of service at age 55 for General Tier 1 and Tier 3 Non - enhanced members > 1 /100 of one year Final Average Salary per year of service at age 50 for Safety Tier A Non - enhanced members > 1/120 of one year Final Average Salary per year of service at age 60 for General Tier 1 and Tier 3 Enhanced members 15 Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association > 1 /100 of one year Final Average Salary per year of service at age 50 for Safety Tier A Enhanced > 1 /100 of three year Final Average Salary per year of service at age 50 for Safety Tier C Enhanced members Member contributions are accumulated at an annual interest rate adopted annually by the Board. Note that recently negotiated MOU's for County General members no longer include the 50% employer subvention of the members' basic contributions. Districts pay varying portions, of the members' basic contributions on a nonrefundable basis. Members also pay 50% of the cost -of- living benefit. For most Safety Tier A employers, Safety members also subvent a portion of the employer rate, currently up to 9% of compensation (depending on their MOU). Chart 14 does not include any employer subvention of member contributions or any member subvention of employer contributions. The age specific contribution rates are provided in Appendix A. For determining the cost of the basic benefit (i.e. non -COLA component), the cost of this pay element is currently recognized in the valuation as an employer only cost and does not affect member contribution rates. The leave cashout assumptions are only used in establishing cost -of- living member contributions. Note that the Board has adopted a change in this methodology effective with the next (December 31, 2014) valuation. Under that new methodology, the leave cashout assumptions will be included in the determination of the basis member contribution rates. PEPRA Members Pursuant to Section 7522.30(a) of the Government Code, PEPRA members are required to contribute at least 50% of the Normal Cost rate. When previously calculating member rates, there were certain additional requirements that had to be met such as requiring the employee rates be rounded to the nearest one quarter of one percent and requiring the new employees to pay the contribution rate of "similarly situated employees ", if it is greater. (reference: Section 7522.30(c)). Furthermore, Section 7522.30(d) indicated that "once established, the employee contribution rate described in subdivision (c) shall not be adjusted on account of a change to the normal cost rate unless the normal cost rate increases or decreases by more than 1 percent of payroll above or below the normal cost rate in effect at the 16 r Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association time the employee contribution rate is first established or, if later, the normal cost rate in effect at the time of the last adjustment to the employee contribution rate under this section." However, as we referenced in our letter dated December 17, 2013, Assembly Bill 1380 (AB 1380) was approved by the Governor on September 6, 2013. In particular, Section 31620.5(a) was added to the Government Code to provide the Board with the discretion to not apply the rounding previously required under Section 7522.30(c). We understand that our recommendation in that letter to no longer apply the rounding rule effective with the December 31, 2013 valuation was adopted by the Board, and the results in this valuation reflect that action taken by the Board. Section 31620.5(b) of AB 1380 also stipulates that the "one percent rule" under Section 7522.30(d) "shall not apply to the contribution rates of members of retirement systems established pursuant to this chapter." Therefore, in preparing the Normal Cost rates in this report, we have assumed that exactly 50% of the Normal Cost would be paid by PEPRA members. In addition, we have calculated the total Normal Cost rate for the PEPRA tiers to the nearest one - fiftieth of one percent (i.e., the nearest even one - hundredth) as that will allow the Normal Cost rate to be shared exactly 50:50 without going beyond two decimal places. Cost Sharing Adjustments Starting with the December 31, 2009 Actuarial Valuation, the Board took action to depool CCCERA's assets, liabilities and normal cost by employer when determining employer contribution rates. The Board action included a review of experience back to December 31, 2002. This did not involve recalculation of any employer rates prior to December 31, 2009. However, it did involve reflecting the separate experience of the employers in each individual cost group back from December 31, 2002 through December 31, 2009. The cost groups are detailed on pages 19 and 20. In addition, the Board action called for a discontinuation of certain cost sharing adjustments for both member and employer contribution rates for General Tier 1 and Safety Tier A. Even under the depooling structure, there are a few remaining cost sharing arrangements. 17 AT- Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association Here is a summary of the cost sharing arrangements that were implemented in the December 31, 2009 Actuarial Valuation: > Smaller employers (less than 50 active members as of December 31, 2009) were pooled with the applicable County tier. Safety members from the East Contra Costa Fire Protection District were pooled with Safety members of the Contra Costa County Fire Protection District. > Due to a statutory requirement, the Superior Court was pooled with the County regardless of how many members the Court has. > UAAL costs are pooled between Cost Group #1 and Cost Group #2 which represent General County and Small Districts. UAAL costs are also pooled for Cost Groups #7 and #9 which are Safety County tiers. Other Adjustments Other adjustments made in the determination of rates are as follows: > Adjustments are made to some UAAL amounts for the County, the Contra Costa County Fire Protection District ( CCCFPD), the Moraga -Orinda Fire District ( Moraga) and First 5 — Children & Families Commission (First Five) to account for Pension Obligation Bonds (POBs) and any other any other special contributions that they previously made. These adjustments serve to reduce the UAAL contribution rate for these employers. The outstanding balances of these adjustments as of December 31, 2013 are as follows: County General Moraga General First Five General CCCFPD Safety Basic $212,288,457 $373,847 $890,704 $60,934,463 COL $170,108,873 $216,977 $673,745 $46,471,350 18 Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association Summary of Cost Groups and Employers GENERAL Cost Group Employer Name Benefit Structure Special Adjustment (1) County General Tier 1 Enhanced/PEPRA Tier 4 Yes Local Agency Formation Commission Tier 1 Enhanced/PEPRA Tier 4 Contra Costa Mosquito and Vector Control District Tier 1 Enhanced/PEPRA Tier 4 Bethel Island Municipal District (Non- Integrated) Tier 1 Enhanced/PEPRA Tier 4 First 5- Children & Families Commission Tier 1 Enhanced/PEPRA Tier 4 Yes Contra Costa County Employees' Retirement Association Tier 1 Enhanced/PEPRA Tier 4 Superior Court Tier 1 Enhanced/PEPRA Tier 4 Yes East Contra Costa Fire Protection District (Non- Integrated) Tier 1 Enhanced/PEPRA Tier 4 Moraga -Orinda Fire District (Non- Integrated) Tier 1 Enhanced/PEPRA Tier 4 Yes Rodeo - Hercules Fire Protection District (Non- Integrated) Tier 1 Enhanced/PEPRA Tier 4 San Ramon Valley Fire District (Non- Integrated) Tier 1 Enhanced/PEPRA Tier 4 (2) County General Tier 3 Enhanced/PEPRA Tier 5 Yes In -Home Supportive Services Authority Tier 3 Enhanced/PEPRA Tier 5 Contra Costa Mosquito and Vector Control District Tier 3 Enhanced/PEPRA Tier 5 Superior Court Tier 3 Enhanced/PEPRA Tier 5 Yes (3) Central Contra Costa Sanitary District (Non- Integrated) Tier 1 Enhanced/PEPRA Tier 4 (4) Contra Costa Housing Authority Tier 1 Enhanced/PEPRA Tier 4 (5) Contra Costa County Fire Protection District (Non - Integrated) Tier 1 Enhanced/PEPRA Tier 4 (6) Rodeo Sanitary District Tier 1 Non- Enhanced/PEPRA Tier 4 Byron Brentwood Cemetery Tier 1 Non- Enhanced/PEPRA Tier 4 Segal Consulting 19 SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association Summary of Cost Groups and Employers (continued) SAFETY Cost Group Employer Name (7) County Safety (8) Contra Costa County Fire Protection District East Contra Costa Fire Protection District (9) County Safety Benefit Structure Tier A Enhanced/PEPRA Tier D Tier A Enhanced/PEPRA Tier D Tier A Enhanced/PEPRA Tier D Tier C Enhanced/PEPRA Tier E (Members hired on or after January 1, 2007) (10) Moraga- Orinda Fire District Tier A Enhanced/PEPRA Tier D (l 1) San Ramon Valley Fire District Tier A Enhanced/PEPRA Tier D (12) Rodeo - Hercules Fire Protection District Tier A Non- Enhanced/PEPRA Tier D A special adjustment is made for employers that have a remaining balance of a Pension Obligation Bond or any other special contributions as described on page 18. Tr Segal Consulting Special Adjustment Yes 20 SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association CHART 14 (continued) Components of Current and Recommended Employer Contribution Rates December 31, 2013 (Recommended Rates for FY 15 -16) December 31, 2012 (Current Rates for FY 14 -15) Estimated Estimated Cost Group #3 Basic COLA Total Annual Amount Basic COLA Total Annual Amount CCCSD General Tier 1 PCe -2013 Normal Cost 13.26% 4.20% 17.46% $4,680,654 15.89% 5.02% 20.91% $4,983,792 UAAL 28.69% 14.43% 43.12% 11,559,552 35.10% 17.92% 53.02% 12,637,123 Total Contributions 41.95% 18.63% 60.58% $16,240,206 50.99% 22.94% 73.93% $17,620,915 Payroll = $26,807,867 Payroll = $23,833,773 Cost Group #3 CCCSD General Tier 4 P E P RA (3% COLA) Normal Cost 9.20% 3.42% 12.62% $46,785 7.97% 2.95% 10.92% $0 UAAL 28.69% 14.43% 43.12% 159,855 35.10% 17.92% 53.02% 0 Total Contributions 37.89% 17.85% 55.74% $206,640 43.07% 20.87% 63.94% $0 Payroll = $370,722 Payroll = $0 Note: The rates from the December 31, 2012 valuation for CCCSD are before reflecting their UAAL prepayment. Cost Group #4 Contra Costa Housing Authority General Tier 1 Normal Cost UAAL Total Contributions Cost Group #4 Contra Costa Housing Authority General Tier 4 (3% COLA) Normal Cost UAAL Total Contributions Segal Consulting 12.74% 3.78% 16.52% $806,784 12.83% 3.37% 16.20% $818,699 15.91% 11.44% 27.35% 1,335,687 18.03% 12.81% 30.84% 1,558,620 28.65% 15.22% 43.87% $2,142,471 30.86% 16.18% 47.04% $2,377,319 Payroll = $4,883,683 Payroll = $5,054,117 6.55% 2.45% 9.00% $13,499 7.97% 2.95% 10.92% $0 15.91% 11.44% 27.35% 41,022 18.03% 12.81% 30.84% 0 22.46% 13.89% 36.35% $54,521 26.00% 15.76% 41.76% $0 Payroll = $149,988 Payroll = $0 25 SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association CHART 14 (continued) Components of Current and Recommended Employer Contribution Rates Total All Employers Combined (Aggregate) Normal Cost UAAL Total Contributions December 31, 2013 (Recommended Rates for FY 15 -16) December 31, 2012 (Current Rates for FY 14 -15) Estimated Estimated Basic COLA Total Annual Amount Basic COLA Total Annual Amount 13.35% 4.20% 17.55% $119,239,774 14.70% 4.50% 19.20% $125,224,326 16.70% 9.33% 26.03% 176,855,345 19.55% 11.07% 30.62% 199,706,712 30.05% 13.53% 43.58% $296,095,119 34.25% 15.57% 49.82% $324,931,038 Payroll = $679,428,911 Payroll = $652,312,180 31 Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association The employer contribution rates as of December 31, 2013 are based on all of the data described in the previous sections, the actuarial assumptions described in Section 4, and the Plan provisions adopted at the time of preparation of the Actuarial Valuation. They include all changes affecting future costs, adopted benefit changes, actuarial gains and losses and changes in the actuarial assumptions. Reconciliation of Recommended Employer Contribution Rate The chart below details the changes in the recommended employer contribution rate from the prior valuation to the current year's valuation. CHART 15 Reconciliation of Recommended Average Employer Contribution from December 31, 2012 to December 31, 2013 Valuation Contribution Rate* Estimated Annual Dollar Cost ** Recommended Average Employer Contribution Rate in December 31, 2012 Valuation 49,82% $324,931,038 Effect of investment (gain) /lossM (1.05 %) (7,134,004) Effect of difference in actual versus expected contributions due to delay in 1.18% 8,017,261 implementation of contribution rates calculated in 12/31/2012 valuation Effect of lower than expected individual salary increases (1.25 %) (8,492,861) Effect of amortizing prior year's UAAL over a greater than expected projected total (0.05 %) 7,986,910(2) payroll Effect of lower than expected COLA increases for retirees and beneficiaries (0.52 %) (3,533,030) Effect of mortality gain for retirees and beneficiaries (0.37 %) (2,513,887) Effect of net other experience (gains) /losses(3) (0.13 %) 4,350,563 Effect of changes in actuarial assumptions (4) (4.05 %) j27,516.8711 Total change (6.24 %) $(28.835.919) Recommended Average Employer Contribution Rate in December 31, 2013 Valuation 43.58% $296,095,119 * These rates do not include any employer subvention of member contributions, or member subvention of employer contributions. ** Based on projected total payroll for each valuation date shown. Return on the valuation value of assets of 9.02% was greater than the 7.25% assumed in the 2012 valuation. (2) The dollar amount shown represents the dollar increase in UAAL amortization payments for amortization bases established prior to the December 31, 2013 valuation. (3) Other differences in actual versus expected experience including (but not limited to) disability, withdrawal, retirement and leave cashout experience Estimated annual dollar cost also reflects change in payroll from prior valuation. (4) The Board approved changes in leave cashout assumptions. AT-Segal Consulting 32 The chart reconciles the member contribution from the prior valuation to the amount determined in this valuation. SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association The member contribution rates as of December 31, 2013 are based on all of the data described in the previous sections, the actuarial assumptions described in Section 4, and the Plan provisions adopted at the time of preparation of the Actuarial Valuation. They include all changes affecting future costs, adopted benefit changes, actuarial gains and losses and changes in the actuarial assumptions. Reconciliation of Recommended Member Contribution Rate The chart below details the changes in the recommended member contribution rate from the prior valuation to the current year's valuation. CHART 16 Reconciliation of Recommended Average Member Contribution from December 31, 2012 to December 31, 2013 Valuation Contribution Rate* Estimated Annual Dollar Cost ** Recommended Average Member Contribution Rate in December 31, 2012 Valuation 12.20% $79,611,477 Effect of changes in actuarial assumptions(l) (0.30 %) (2,038,287) Effect of other experience (gains) /losses(2) 0.01% 3,312,900 Total change 0.29° 1 2 4 613 Recommended Average Member Contribution Rate in December 31, 2013 Valuation 11.91% $80,886,090 * These rates do not include any employer subvention of member contributions, or member subvention of employer contributions. ** Based on projected total payroll for each valuation date shown. The Board approved changes in leave cashout assumptions. (z) Other differences in actual versus expected experience. Estimated annual dollar cost also reflects change in payroll from prior valuation. -;Or" Consulting 33 SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association E. INFORMATION REQUIRED BY GASB Government Accounting Standards Board (GASB) reporting information provides standardized information for comparative purposes of governmental pension plans. This information allows a reader of the financial statements to compare the funding status of one governmental plan to another on relatively equal terms. Critical information to GASB is the historical comparison of the GASB required contributions to the actual contributions. This comparison demonstrates whether a plan is being funded on an actuarially sound basis and in accordance with the GASB funding requirements. Chart 17 below presents a graphical representation of this information for the Plan. These graphs show key CHART 17 GASB factors. Required Versus Actual Contributions 250 200 150 m 0 100 r Segal Consulting 2008 2009 2010 2011 2012 2013 ■Required ■Actual The other critical piece of information regarding the Plan's financial status is the funded ratio. This ratio compares the valuation value of assets of the plan to the liabilities of the plan as calculated under GASB requirements. High ratios indicate a well - funded plan with assets sufficient to cover the Plan's liabilities. Lower ratios may indicate recent changes to benefit structures, funding of the plan below actuarial requirements, poor asset performance, or a variety of other changes. The details regarding the calculations of these values and other GASB numbers may be found in Section 4, Exhibits II, III, and IV. CHART 18 Funded Ratio 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% 2008 2009 2010 2011 2012 2013 t VVA Basis 34 This chart shows how the asset and liability volatility ratios have varied over time. 7r Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association F. VOLATILITY RATIOS Retirement plans are subject to volatility in the level of required contributions. This volatility tends to increase as retirement plans become more mature. The Asset Volatility Ratio (AVR), which is equal to the market value of assets divided by total payroll, provides an indication of the potential contribution volatility for any given level of investment volatility. A higher AVR indicates that the plan is subject to a greater level of contribution volatility. This is a current measure since it is based on the current level of assets. For CCCERA, the current AVR is about 9.5. This means that a 1% asset gain/(loss) (relative to the assumed investment return) translates to about 9.5% of one - year's payroll. Since CCCERA amortizes actuarial gains and losses over a 18 -year period, there would be a 0.7% of payroll decrease /(increase) in the required contribution for each 1% asset gain/(loss). CHART 19 Volatility Ratios for Years Ended December 31, 2008 — 2013 The Liability Volatility Ratio (LVR), which is equal to the Actuarial Accrued Liability divided by payroll, provides an indication of the longer -term potential for contribution volatility for any given level of investment volatility. This is because, over an extended period of time, the plan's assets should track the plan's liabilities. For example, if a plan is 50% funded on a market value basis, the liability volatility ratio would be double the asset volatility ratio and the plan sponsor should expect contribution volatility to increase over time as the plan becomes better funded. The LVR also indicates how volatile contributions will be in response to changes in the Actuarial Accrued Liability due to actual experience or to changes in actuarial assumptions. For CCCERA, the current LVR is about 11.4. This is about 20% higher than the AVR. Therefore, we would expect that contribution volatility will increase over the long -term. Year Ended December 31 Asset Volatility Ratio Liability Volatility Ratio 2008 5.3 8.5 2009 6.4 9.1 2010 7.3 9.7 2011 7.6 10.4 2012 8.7 11.9 2013 9.5 11.4 35 SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT A Table of Plan Coverage L General Tier 1 Year Ended December 31 Change From Prior Category 2013 2012 Year Active members in valuation Number 661 686 -3.6% Average age 48.7 48.2 N/A Average service 14.1 13.6 N/A Projected total payroll(') $59,506,557 $58,703,729 1.4% Projected average payroll $90,025 $85,574 5.2% Account balances $50,639,503 $46,348,419 9.3% Total active members with at least five years of service 554 544 1.8% Vested terminated members 260 267 -2.6% Retired members Number in pay status 2,647 2,726 -2.9% Average age 73.7 73.6 N/A Average monthly benefit $3,735 $3,634 2.8% Disabled members Number in pay status (2) 292 307 -4.9% Average age 70.1 69.6 N/A Average monthly benefit $2,599 $2,534 2.6% Beneficiaries Number in pay status 694 690 0.6% Average age 76.8 76.6 N/A Average monthly benefit $1,975 $1,915 3.1% (l) Calculated by increasing actual calendar year salaries by the assumed salary scale. (2) For 2013, includes 219 members receiving a service- connected disability and 73 members receiving an ordinary disability. Segal Consulting 36 SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT A (continued) Table of Plan Coverage iv. General Tier 4 — 3% COLA Year Ended December 31 Change From Prior Category 2013 2012 Year Active members in valuation Number 16 0 N/A Average age 39.3 N/A N/A Average service 0.5 N/A N/A Projected total payroll(') $833,519 N/A N/A Projected average payroll $52,095 N/A N/A Account balances $29,905 N/A N/A Total active members with at least five years of service 0 0 0.0% Vested terminated members 0 0 0.0% Retired members Number in pay status 0 0 0.0% Average age N/A N/A N/A Average monthly benefit N/A N/A N/A Disabled members Number in pay status 0 0 0.0% Average age N/A N/A N/A Average monthly benefit N/A N/A N/A Beneficiaries Number in pay status 0 0 0.0% Average age N/A N/A N/A Average monthly benefit N/A N/A N/A Calculated by increasing actual calendar year salaries by the assumed salary scale. Projected compensation for 2014 has been limited. It is our understanding that in the determination of pension benefits under the PEPR4 formulas, the compensation that can be taken into account for 2014 is equal to $115,064. (For an employer that is not enrolled in Social Security, the maximum amount is 120% of $115,064, or $138,077). (reference: Section 7522.10). These amounts should be adjusted for changes to the Consumer Price Index for All Urban Consumers after 2014. (reference: Section 7522.10(d)) 7T Segal Consulting 39 SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT B (continued) Members in Active Service and Projected Payroll as of December 31, 2013 By Age and Years of Service ii. General Tier 1 Enhanced Years of Service Age Total 0-4 5 -9 10 -14 15 -19 20 -24 25 -29 30 -34 35 -39 40 & over Under 25 4 4 -- -- -- -- -- -- -- -- $76,619 $76,619 25-29 24 21 3 79,860 79,979 $79,024 30-34 51 22 24 5 - - 81,837 72,820 89,245 $85,961 35-39 57 16 17 21 3 - 83,943 77,409 86,818 86,559 $84,182 - 40 -44 78 15 19 31 12 1 - -- 90,160 82,054 90,049 93,088 87,993 $149,074 45-49 118 10 18 52 18 16 4 95,971 113,975 95,840 97,567 87,332 86,214 $108,718 50-54 123 12 22 34 20 18 13 4 - - 94,379 94,083 81,933 93,440 89,108 110,880 112,388 $65,253 55-59 116 14 16 31 18 13 12 6 6 91,586 84,753 99,778 99,198 78,682 106,135 90,553 88,486 $58,718 60-64 62 4 17 18 7 8 2 3 3 92,874 91,557 91,861 90,920 69,634 89,740 111,522 158,220 96,888 65-69 12 3 3 3 2 1 82,799 64,705 118,017 80,486 65,782 - - 72,399 70 & over 4 2 -- 1 1 -- - -- 47,837 32,770 -- 77,860 47,947 -- -- -- -- Total 649 120 139 196 82 58 31 13 10 $90,469 $82,871 $89,537 $94,527 $83,606 $99,200 $103,406 $97,430 $71,537 47 Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT B (continued) Members in Active Service and Projected Payroll as of December 31, 2013 By Age and Years of Service iv. General Tier 4 — 3% COLA it Segal Consulting 49 Years of Service Age Total 0-4 5 -9 10 -14 15 -19 20 -24 25 -29 30 -34 35 -39 40 & over Under 25 1 1 -- -- -- -- -- -- -- -- $30,993 $30,993 25 -29 2 2 42,096 42,096 30-34 4 4 42,993 42,993 35 -39 -- -- -- -- -- -- -- 40-44 -- 2 -- -- -- -- -- -- -- -- 2 71,460 71,460 45 -49 5 5 -- 62,132 62,132 50 -54 1 1 45,310 45,310 55-59 1 1 47,471 47,471 60 -64 -- ---- -- -- -- -- -- -- 65 -69 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 70 & over -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Total 16 16 $52,095 $52,095 it Segal Consulting 49 SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT C Average Monthly Benefit and Membership Distribution of Retired Members and Beneficiaries i. General Tier 1 as of December 31, 2013 Years of Retirement Age Total 0-4 5 -9 10 -14 15 -19 20 -24 25 -29 30 -34 35 -39 40 $ over Under 25 I I $390 $390 25-29 4 3 1 789 $922 390 30-34 3 1 2 739 $601 808 35-39 5 3 1 1 698 556 $917 $906 40-44 4 1 2 1 1,253 2,194 948 923 45-49 9 1 3 3 2 -- - 1,183 1,960 $1,333 714 1,274 50-54 54 33 6 4 6 2 3 1,636 1,800 1,361 1,514 1,583 1,341 $853 55-59 225 153 40 12 8 6 3 2 - 1 3,512 4,186 2,116 2,147 2,475 1,843 1,524 $1,772 -- $355 60-64 494 208 163 77 16 16 6 4 1 3 3,890 4,949 3,804 2,262 2,547 2,293 1,824 1,669 $355 843 65 -69 643 89 232 187 84 18 14 9 9 1 4,062 5,060 5,147 3,734 1,973 2,019 2,684 1,607 1,441 $1,732 70-74 542 13 95 196 123 74 21 14 4 2 3,624 6,379 4,747 4,452 2,679 1,877 1,949 2,627 1,973 1,829 75-80 507 1 14 102 168 108 87 19 5 3 3,331 230 4,642 4,780 3,825 2,697 1,638 2,398 1,781 1,608 80-84 471 -- 3 17 97 143 116 66 20 9 2,773 6,837 3,084 3,849 3,333 2,079 1,314 1,976 1,730 85-89 381 3 1 11 106 119 91 46 4 2,551 6,894 1,320 4,504 3,091 2,760 1,764 1,659 1,839 90 & over 290 3 3 10 66 111 73 24 2,236 815 3,396 3,017 2,510 2,136 2,328 1,368 Total 3,633 500 559 602 528 487 435 317 158 47 $3,307 $4,531 $4,417 $3,861 $3,123 $2,784 $2,240 $1,868 $1,999 $1,465 Note: Total retired benefit $12,015,502, average age 74.0 and average years retired 17.5 57 A- Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT D Reconciliation of Member Data — December 31, 2012 to December 31, 2013 61 A- Segal Consulting Active Participants Vested Terminated Members Pensioners Disableds Beneficiaries Total Number as of December 31, 2012 8,640 2,288 6,375 923 1,219 19,445 New participants 960 54 0 0 100 1,114 Terminations — with vested rights -179 179 0 0 0 0 Contributions Refunds -110 -82 0 0 0 -192 Retirements -200 -56 256 0 0 0 New disabilities -17 -3 -15 35 0 0 Return to work 37 -32 -5 0 0 0 Died with or without beneficiary -7 -3 -171 -31 -62 -274 Data adjustments 0 0 -2 0 3 1 Number as of December 31, 2013 9,124 2,345 6,438 927 1,260 20,094 61 A- Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT E Summary Statement of Income and Expenses on an Actuarial Value Basis (1) Equals the "non- cash" earnings on investments implicitly included in the Actuarial Value of Assets. %Segal Consulting 62 Year Ended December 31, 2013 Year Ended December 31, 2012 Contribution income: Employer contributions $235,017,452 $212,321,325 Employee contributions 72,373,254 73,361,712 Net contribution income $307,390,706 $285,683,037 Investment income: Interest, dividends and other income $158,886,435 $161,163,771 Adjustment toward market value(l) 378,551,480 1,151,230 Less investment and administrative fees (44,934,113) (40,393,699) Net investment income 492,503,802 121,921,302 Total income available for benefits $799,894,508 $407,604,339 Less benefit payments: Benefits paid $(369,809,403) $(347,569,044) Refunds of contributions (3,844,376) (3,275,968) Adjustments /transfers 985199 68( 5,356) Net benefit payments $(374,638,978) $(351,530,368) Change in reserve for future benefits $425,255,530 $56,073,971 (1) Equals the "non- cash" earnings on investments implicitly included in the Actuarial Value of Assets. %Segal Consulting 62 SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT F Summary Statement of Assets (1) Equals the sum of additional contribution receivables for the final Paulson Settlement. Segal Consulting 63 Year Ended December 31, 2013 Year Ended December 31, 2012 Cash equivalents $856,340,856 $375,051,326 Other Assets 1,444,726 1,682,574 Accounts receivable: Investment trades $560,196,591 $349,375,172 Investment income 30,970,440 19,631,875 Employee and employer contributions 8,067,883 8,105,409 Additional contributions(l) 20,267,913 21,048,104 Total accounts receivable 619,502,828 398,160,560 Investments: Stocks $2,523,485,927 $2,733,435,352 Bonds .1,868,682,216 1,688,952,924 Real estate 828,561,519 741,660,064 Alternative investments and real assets 760,678,445 396,452,549 Total investments at market value 5,981,408,107 5,560,500,889 Total assets $7,458,696,517 $6,335,395,349 Less accounts payable: Investment trades $(610,567,716) $(429,062,199) Security lending (262,983,553) (145,423,087) Employer contributions unearned (112,308,231) (92,762,859) Other (14,519,421) (13,566,080) Total accounts payable $(1,000,378,921) $(680,814,225) Net assets at market value 6.458.317.596 5,654,581.124 Net assets at actuarial value 5,922,449.192 5,497,193.662 Net assets at valuation value 5,907,416,432 5,482,257.062 (1) Equals the sum of additional contribution receivables for the final Paulson Settlement. Segal Consulting 63 SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT G Actuarial Balance Sheet An overview of the Plan's funding is given by an Actuarial Balance Sheet. In this approach, we first determine the amount and timing of all future payments that are projected/anticipated to be made by the Plan for current participants. We then discount these payments at the valuation interest rate to the date of the valuation, thereby determining their present value. We refer to this present value as the "liability" of the Plan. Assets 1. Total valuation value of assets 2. Present value of future contributions by members 3. Present value of future employer contributions for: (a) entry age normal cost (b) unfunded actuarial accrued liability 4. Total actuarial assets Second, we determine how this liability will be met. These actuarial "assets" include the net amount of assets already accumulated by the Plan, the present value of future member contributions, the present value of future employer normal cost contributions, and the present value of future employer amortization payments. Basic $3,733,792,771 $409,710,887 $690,116,394 $1,181,199,068 COLA $2,173,623,661 $221,299,897 $212,936,153 $642,481,907 $6,014,819,120 $3,250,341,618 Total $5,907,416,432 $631,010,784 $903,052,547 $1,823,680,975 $9,265,160,738 Liabilities 5. Present value of benefits for retirees and beneficiaries $3,026,801,664 $2,059,727,000 $5,086,528,664 6. Present value of benefits for vested terminated membersM $153,739,346 $60,092,722 $213,832,068 7. Present value of benefits for active members $2,834,278,110 $1,130,521,896 $3,964,800,006 8. Total present value of benefits $6,014,819,120 $3,250,341,618 $9,265,160,738 m Includes nonvested terminated members. 64 r Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT H Summary of Total Allocated Reserves Reserves Member Deposits (1) Member Cost of Living Employer Advance (1) Employer Cost of Living Retired Members (1) Retired Cost of Living Smoothed Market Value Valuation (1) (z) Dollar Power Cost of Living Supplement Pre - Funding Post Retirement Death Benefit (3) Statutory Contingency (one percent) (3) Additional One Percent Contingency Designation (3) Contra Tracking Account (1) Total Allocated Reserves Total Deferred Return Net Market Value December 31. 2013 $554,688,703 289,979,180 1,919,723,014 1,370,664,993 2,409,084,264 1,164,711,751 0 10,330,314 15,032,760 0 0 December 31. 2012 $698,208,398 334,087,401 2,526,748,906 1,568,890,491 1,332,381,216 698,157,521 0 12,253,103 14,936,600 0 W (1,811,765,783) (1,688,469,971) $5,922,449,192 $5,497,193,662 535, 868,404 157,3 87,462 $6,458,317,596 $5,654,581,124 Note: Results may not add due to rounding. (1) Included in valuation value ofassets. (2) The balance in this reserve was transferred to the Employer Advance reserve. (3) Not included in valuation value of assets. 65 7T Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association Note: The "net gain from other experience" of $112,848,298 shown in Section 2, Chart 10 is equal to the sum of items 6(b), (c), (d), (e) and 69. Includes additional contributions of $2 million by First -5 Children & Families Commission and $5 million from Central Contra Costa Sanitary District. (2) Other differences in actual versus expected experience including (but not limited to) disability, withdrawal, retirement and leave cashout experience. 66 Segal Consulting EXHIBIT I Development of Unfunded Actuarial Accrued Liability Year Ended December 31, 2013 1. Unfunded actuarial accrued liability at beginning of year $2,279,058,473 2. Gross Normal Cost at middle of year 212,718,379 3. Expected employer and member contributions (411,675,942) 4. Interest (whole year on (1) plus half year on (2) - (3)) 158,019,528 5. Expected unfunded actuarial accrued liability at end of year 2.238.120.438 6. Actuarial (gain) /loss due to all changes: (a) Investment return $(96,259,150) (b) Actual contributions less than expected() 107,999,434 (c) Lower than expected individual salary increases (114,770,746) (d) Lower than expected COLA increases for retirees and beneficiaries (47,612,620) (e) Mortality gain for retirees and beneficiaries (33,713,727) (f) Other experience (gain) /loss(2) (24,750,639) (g) Changes in actuarial assumptions (205,332,015) (h) Total changes $(414,439,463) 7. Unfunded actuarial accrued liability at end of year 1.823.680.975 Note: The "net gain from other experience" of $112,848,298 shown in Section 2, Chart 10 is equal to the sum of items 6(b), (c), (d), (e) and 69. Includes additional contributions of $2 million by First -5 Children & Families Commission and $5 million from Central Contra Costa Sanitary District. (2) Other differences in actual versus expected experience including (but not limited to) disability, withdrawal, retirement and leave cashout experience. 66 Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association 68 AT' Segal Consulting Date Established Source Initial Amount Outstanding Balance Years Remaining Annual Payment' Cost Group #3 December 31, 2007 Restart of Amortization $36,185,000 $30,479,973 9 $3,965,575 Central Contra Costa December 31, 2008 Actuarial (Gain)/Loss 3,709,835 3,546,775 13 338,569 Sanitary District December 31, 2009 Actuarial (Gain)/Loss 10,118,261 9,839,605 14 884,764 December 31, 2009 Assumption Change (2) 2,003,000 1,947,838 14 175,147 December 31, 2009 Depooling Implementation 20,037,235 19,485,411 14 1,752,102 December 31, 2010 Actuarial (Gain)/Loss 18,178,489 17,894,570 15 1,523,332 December 31, 2010 Assumption Change(3) 11,479,648 11,300,354 15 961,979 December 31, 2011 Actuarial (Gain)/Loss 10,514,535 10,431,571 16 844,398 December 31, 2012 Actuarial (Gain)/Loss 12,564,241 12,515,009 17 966,982 December 31, 2012 Assumption Change (2) 22,455,342 22,367,352 17 1,728,232 December 31, 2012 UAAL Prepayment - 4,666,477 - 4,648,192 17 - 359,146 December 31, 2013 Actuarial (Gain)/Loss 582,962 582,962 18 43,141 December 31, 2013 Assumption Change (3) - 14,950,866 - 14,950,866 18 - 1,106,408 Total for Cost Group #3 $120,792,362 $11,718,667 Cost Group #4 December 31, 2007 Restart of Amortization $7,770,000 $6,544,960 9 $851,527 Contra Costa Housing December 31, 2008 Actuarial (Gain)/Loss 1,573,513 1,504,352 13 143,603 Authority December 31, 2009 Actuarial (Gain)/Loss 1,277,079 1,241,908 14 111,671 December 31, 2009 Assumption Change (2) 425,000 413,296 14 37,163 December 31, 2009 Depooling Implementation - 189,275 - 184,062 14 - 16,551 December 31, 2010 Actuarial (Gain)/Loss 619,697 610,018 15 51,930 December 31, 2010 Assumption Change (3) - 920,656 - 906,277 15 - 77,150 December 31, 2011 Actuarial (Gain)/Loss 1,059,328 1,050,970 16 85,072 December 31, 2012 Actuarial (Gain)/Loss 1,912,999 1,905,503 17 147,230 December 31, 2012 Assumption Change (2) 3,722,862 3,708,274 17 286,523 December 31, 2013 Actuarial (Gain)/Loss - 2,220,704 - 2,220,704 18 - 164,339 December 31, 2013 Assumption Change (3) - 1,077,289 - 1,077,289 18 - 79,723 Total for Cost Group #4 $12,590,949 $1,376,956 Note: Results may not add due to rounding. 68 AT' Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association Date Established Source Initial Amount Outstanding Balance Years Remaining Annual Paymerif ) All Cost Groups Combined December 31, 2007 Restart of Amortization $1,147,096,132 $966,241,777 9 $125,712,206 December 31, 2008 Actuarial (Gain)/Loss 131,778,368 125,986,268 13 12,026,438 December 31, 2009 Actuarial (Gain)/Loss 280,030,406 272,318,394 14 24,486,505 December 31, 2009 Assumption Change (2) 63,460,000 61,712,317 14 5,549,090 December 31, 2009 Depooling Implementation 681,371 662,606 14 59,581 December 31, 2010 Actuarial (Gain)/Loss 285,254,002 280,798,783 15 23,903,888 December 31, 2010 Assumption Change (3) 15,521,464 15,279,043 15 1,300,678 December 31, 2011 Actuarial (Gain)/Loss 194,756,575 193,219,858 16 15,640,447 December 31, 2012 Actuarial (Gain)/Loss 245,336,047 244,374,715 17 18,881,812 December 31, 2012 Assumption Change (2) 570,154,754 567,920,643 17 43,880,856 December 31, 2012 UAAL Prepayment - 4,666,477 - 4,648,192 17 - 359,146 December 31, 2013 Actuarial (Gain)/Loss - 202,894,807 - 202,894,807 18 - 15,014,814 December 31, 2013 Assumption Change (3) - 205,332,015 - 205,332,015 18 - 15,195,173 Total for All Cost Groups $2,315,639,391 $240,872,368 Special Adjustments (4) December 31, 2007 County General POBs - $453,973,319 - $382,397,332 9 - $49,751,536 December 31, 2007 Moraga General POBs - 701,412 - 590,823 9 - 76,869 December 31, 2007 CCCFPD Safety POBs - 127,509,711 - 107,405,812 9 - 13,973,958 December 31, 2011 First Five UAAL Prepayment - 1,794,205 - 1,564,449 9 - 234,972 Total for Special Adjustments - $491,958,416 - $64,037,335 Grand Total $1,823,680,975 $176,835,033 (1) As of middle of year. The annual payment amounts shown for the Special Adjustments represent the credit allocated to the employer to reflect the receipt of the proceeds for Pension Obligation Bonds (POBs) or any other special contributions. These adjustments serve to reduce the UAAL contribution rate for these employers. The cost of debt service associated with the POBs is not reflected in this report. (2) Changes in actuarial assumptions and methods from actuarial experience study. (3) The Board approved changes in actuarial assumptions. Effective with the December 31, 2010 valuation, leave cashouts (terminal pay) assumptions are now based on cost groups. Effective with the December 31, 2013 valuation, the leave cashout assumption were reduced to reflect AB 197. (4) Includes remaining balance of POBs and any other special contributions made by the County (including Courts), First S — Children & Families Commission or Moraga-Orinda Fire District that have been allocated to the County General cost groups or for Contra Costa Fire Protection District that have been allocated to their Safety cost group. Note: Results may not add due to rounding. 73 AT- Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT K Section 415 Limitations Section 415 of the Internal Revenue Code (IRC) specifies the maximum benefits that may be paid to an individual from a defined benefit plan and the maximum amounts that may be allocated each year to an individual's account in a defined contribution plan. A qualified pension plan may not pay benefits in excess of the Section 415 limits. The ultimate penalty for non- compliance is disqualification: active participants could be taxed on their vested benefits and the IRS may seek to tax the income earned on the plan's assets. In particular, Section 415(b) of the IRC limits the maximum annual benefit payable at the Normal Retirement Age to a dollar limit of $160,000 indexed for inflation. That limit is $210,000 for 2014. Normal Retirement Age for these purposes is age 62. These are the limits in simplified terms. They must generally be adjusted based on each participant's circumstances, for such things as age at retirement, form of benefits chosen and after tax contributions. Limits are also affected by the "grandfather" election under Section 415(b)(10). For non -PEPRA members, benefits in excess of the limits may be paid through a qualified governmental excess plan that meets the requirements of Section 415(m). Legal Counsel's review and interpretation of the law and regulations should be sought on any questions in this regard. Contribution rates determined in this valuation have not been reduced for the Section 415 limitations. Actual limitations will result in actuarial gains as they occur. 74 Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT L Definitions of Pension Terms The following list defines certain technical terms for the convenience of the reader: Assumptions or Actuarial Assumptions: The estimates on which the cost of the Plan is calculated including: (a) Investment return — the rate of investment yield that the Plan will earn over the long -term future; (b) Mortality rates — the death rates of employees and pensioners; life expectancy is based on these rates; (c) Retirement rates — the rate or probability of retirement at a given age; and (d) Turnover rates — the rates at which employees of various ages are expected to leave employment for reasons other than death, disability, or retirement. Normal Cost: The amount of contributions required to fund the level cost allocated to the current year of service. Actuarial Accrued Liability For Actives: The equivalent of the accumulated normal costs allocated to the years before the valuation date. Actuarial Accrued Liability For Pensioners: The single sum value of lifetime benefits to existing pensioners. This sum takes account of life expectancies appropriate to the ages of the pensioners and of the interest that the sum is expected to earn before it is entirely paid out in benefits. Unfunded Actuarial Accrued Liability: The extent to which the actuarial accrued liability of the Plan exceeds the assets of the Plan. 75 T Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association Amortization of the Unfunded Actuarial Accrued Liability: Payments made over a period of years equal in value to the Plan's unfunded actuarial accrued liability. Investment Return: The rate of earnings of the Plan from its investments, including interest, dividends and capital gain and loss adjustments, computed as a percentage of the average value of the fund. For actuarial purposes, the investment return often reflects a smoothing of the market gains and losses to avoid significant swings in the value of assets from one year to the next. Payroll or Compensation: Payroll for pension purposes expected to be paid to active members during the twelve months following the valuation date. Only pay that would possibly go into the determination of retirement benefits is included. Asset Volatility Ratio: Equal to the market value of assets divided by total projected payroll. This provides an indication of the potential contribution volatility for any given level of investment volatility. Liability Volatility Ratio: Equal to the Actuarial Accrued Liability divided by total projected payroll. This provides an indication of the longer -term potential for contribution volatility for any given level of investment volatility. It also indicates how volatile contributions will be in response to changes in the Actuarial Accrued Liability due to actual experience or to changes in actuarial assumptions. 76 ;r Seqal Consultinq SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association EXHIBIT I Summary of Actuarial Valuation Results The valuation was made with respect to the following data supplied to us: 1. Retired members as of the valuation date (including 1,260 beneficiaries in pay status) 8,625 2. Members inactive during year ended December 31, 2013 with vested rights 2,345 3. Members active during the year ended December 31, 2013 9,124 The actuarial factors as of the valuation date are as follows (amounts in 000s): 1. Normal cost $200,126 2. Present value of future benefits 9,265,161 3. Present value of future normal costs 1,534,064 4. Actuarial accrued liability* 7,731,097 Retired members and beneficiaries $5,086,528 Inactive members with vested rights 213,832 Active members 2,430,737 5. Valuation value of assets ** ($6,458,318 at market value as reported by Retirement Association) 5,907,416 6. Unfunded actuarial accrued liability $1,823,681 * Excludes liabilities for non - valuation reserves * * Excludes assets for non - valuation reserves 77 AT-Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association 78 -'rvr Segal Consulting EXHIBIT I (continued) Summary of Actuarial Valuation Results The determination of the recommended average employer contribution is as follows (amounts in OOOs): Dollar Amount % of Payroll 1. Total normal cost $200,126 29.46% 2. Expected employee contributions - 80,886 - 11.91% 3. Employer normal cost: (1) +(2) $119,240 17.55% 4. Amortization of unfunded actuarial accrued liability 176,855 26.03% 5. Total recommended average employer contribution: (3) + (4) $296,095 43.58% 6. Projected payroll $679,429 78 -'rvr Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association EXHIBIT II Supplementary Information Required by GASB — Schedule of Employer Contributions Plan Year Annual Required Actual Percentage Ended December 31 Contributions Contributions Contributed 2008 $206,518,693 $206,518,693 100.0% 2009 195,613,673 195,613,673 100.0% 2010 183,950,930 183,950,930 100.0% 2011 200,388,994 200,388,994 100.0% 2012 212,321,325 212,321,325 100.0% 2013 228,017,452 228,017,452... 100.0% "'Excludes additional contributions towards UAAL of $7 million. 79 -7 -Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association "' Excludes assets for non - valuation reserves. (2) Excludes liabilities.for non- valuation reserves 80 -r -Segal Consulting EXHIBIT III Supplementary Information Required by GASB — Schedule of Funding Progress Unfunded/ UAAL as a Valuation Actuarial (Overfunded) Percentage of Actuarial Valuation Value of Assets(l) Accrued Liability (AAL) (2) AAL (UAAL) Funded Ratio Covered Payroll Covered Payroll Date (a) (b) (b) - (a) (a) / (b) (c) [(b) - (a)] / (c) 12/31/2008 $5,282,505,159 $5,972,471,074 $689,965,915 88.45% $704,947,668 97.87% 12/31/2009 5,290,114,102 6,314,787,187 1,024,673,085 83.77% 694,443,999 147.55% 12/31/2010 5,341,821,711 6,654,036,801 1,312,215,090 80.28% 687,443,206 190.88% 12/31/2011 5,426,719,066 6,915,311,649 1,488,592,583 78.47% 666,394,146 223.38% 12/31/2012 5,482,257,062 7,761,315,535 2,279,058,473 70.64% 652,312,180 349.38% 12/31/2013 5,907,416,432 7,731,097,407 1,823,680,975 76.41% 679,428,911 268.41% "' Excludes assets for non - valuation reserves. (2) Excludes liabilities.for non- valuation reserves 80 -r -Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association 81 7T- Segal Consulting EXHIBIT IV Supplementary Information Required by GASB Valuation date December 31, 2013 Actuarial cost method Entry Age Actuarial Cost Method Amortization method Level percent of payroll for total unfunded liability (4.00% payroll growth assumed) Remaining amortization period Remaining balance of December 31, 2007 UAAL is amortized over a fixed (decreasing or closed) period with 9 years remaining as of December 31, 2013. Any changes in UAAL after December 31, 2007 will be separately amortized over a fixed 18 -year period effective with that valuation. Effective December 31, 2013, any changes in UAAL due to plan amendments (with the exception of a change due to retirement incentives) will be amortized over a 10 -year fixed period effective with that valuation. The entire increase in UAAL resulting from a temporary retirement incentive will be funded in full upon adoption of the incentive. Asset valuation method Market value of assets less unrecognized returns in each of the last nine semi - annual accounting periods. Unrecognized return is equal to the difference between the actual market return and the expected return on the market value, and is recognized semi - annually over a five -year period. The Actuarial Value of Assets is reduced by the value of the non - valuation reserves and designations. Actuarial assumptions: Investment rate of return 7.25% Inflation rate 3.25% Projected salary increasesM General: 4.75% to 13.50 %; Safety: 4.75% to 14.00% Cost of living adjustments 3% per year except for Tier 3 disability benefits and Tier 2 benefits that are valued as a 3.25% increase per year. Safety Tier C and E benefits and benefits for PEPRA Tier 4 and Tier 5 members covered under certain memoranda of understanding are assumed to increase at 2% per year. All increases are contingent upon actual increases in CPI. Plan membership: Retired members and beneficiaries receiving benefits 8,625 Terminated members entitled to, but not yet receiving 2,345 benefits Active members 9,124 Total 20,094 Includes inflation at 3.2501o, plus "across the board" salary increases of 0.75% plus merit and promotional increases. See Exhibit V for these increases. The average total assumed salary increase for active members in the December 31, 2013 valuation is 5.7% 81 7T- Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association EXHIBIT V Actuarial Assumptions and Methods Actuarial Assumptions Post — Retirement Mortality Rates: Healthy: Disabled: Beneficiaries: Member Contribution Rates For General Members: RP -2000 Combined Healthy Mortality Table projected to 2030 with Scale AA, set back one year. For Safety Members: RP -2000 Combined Healthy Mortality Table projected to 2030 with Scale AA, set back two years. For General Members: RP -2000 Combined Healthy Mortality Table projected to 2030 with Scale AA, set forward six years for males and set forward seven years for females. For Safety Members: RP -2000 Combined Healthy Mortality Table projected to 2030 with Scale AA, set forward three years. Beneficiaries are assumed to have the same mortality as a General Member of the opposite sex who has taken a service (non- disability) retirement. The mortality tables projected with Scale AA to 2015 and adjusted by the applicable set backs and set forwards shown above reasonably reflect the projected mortality experience as of the measurement date. The additional projection to 2030 is a provision for future mortality improvement. For General Members: RP -2000 Combined Healthy Mortality Table projected to 2030 with Scale AA, set back one year, weighted 30% male and 70% female. For Safety Members: RP -2000 Combined Healthy Mortality Table projected to 2030 with Scale AA, set back two years, weighted 85% male and weighted 15% female. 82 Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Termination Rates Before Retirement: Age Male Rate ( %) Mortality General Female Safety Male Female 25 0.03 0.01 0.02 0.01 30 0.04 0.02 0.03 0.02 35 0.06 0.03 0.05 0.03 40 0.08 0.04 0.08 0.04 45 0.10 0.07 0.09 0.06 50 0.12 0.09 0.11 0.08 55 0.17 0.18 0.16 0.15 60 0.37 0.38 0.33 0.34 65 0.74 0.74 0.66 0.66 All pre- retirement deaths are assumed to be non - service connected. 83 7 Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Termination Rates Before Retirement (continued): Rate ( %) Disability 70% of General Tier 1 disabilities are assumed to be duty disabilities. The other 30% are assumed to be ordinary disabilities. (2) 35% of General Tier 3 disabilities are assumed to be duty disabilities. The other 65% are assumed to be ordinary disabilities. (3) 100% of Safety disabilities are assumed to be duty disabilities. 84 -7-SEGAL General General Age Tier V) Tier 3(2) Safety (3) 20 0.01 0.01 0.02 25 0.02 0.02 0.22 30 0.04 0.03 0.42 35 0.08 0.05 0.56 40 0.16 0.08 0.66 45 0.32 0.13 0.94 50 0.52 0.17 2.54 55 0.66 0.21 4.10 60 0.70 0.27 4.80 65 0.70 0.36 5.00 70 0.70 0.44 5.00 70% of General Tier 1 disabilities are assumed to be duty disabilities. The other 30% are assumed to be ordinary disabilities. (2) 35% of General Tier 3 disabilities are assumed to be duty disabilities. The other 65% are assumed to be ordinary disabilities. (3) 100% of Safety disabilities are assumed to be duty disabilities. 84 -7-SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Termination Rates Before Retirement (continued): Rate ( %) Withdrawal* Years of Service General Safety Less than 1 13.50 11.50 1 9.00 6.50 2 9.00 5.00 3 6.00 4.00 4 4.50 3.50 5 4.00 3.00 6 3.75 2.75 7 3.50 2.50 8 3.25 2.25 9 3.00 2.00 10 2.75 1.90 11 2.50 1.80 12 2.40 1.70 13 2.30 1.60 14 2.20 1.50 15 2.10 1.40 16 2.00 1.30 17 2.00 1.20 18 2.00 1.10 19 2.00 1.00 20 or more 2.00 1.00 * The member is assumed to receive the greater of the member's contribution balance or a deferred retirement benefit. No withdrawal is assumed after a member is first assumed to retire. 85 `-SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Retirement Rates (General): Rate PEPRA General Tiers 4 and 5 0.00 0.00 2.00 3.00 3.00 5.00 5.00 6.00 8.00 9.00 10.00 14.00 21.00 21.00 21.00 27.00 33.00 33.00 33.00 33.00 50.00 50.00 50.00 50.00 50.00 100.00 86 -'-SEGAL General Tier 1 General Tier 3 General Tier 1 Age (Enhanced) (Enhanced) (Non- enhanced) 50 5.00 4.00 3.00 51 4.00 3.00 3.00 52 6.00 3.00 3.00 53 6.00 5.00 3.00 54 12.00 5.00 3.00 55 20.00 10.00 10.00 56 20.00 10.00 10.00 57 20.00 10.00 10.00 58 22.00 12.00 10.00 59 25.00 12.00 10.00 60 30.00 15.00 25.00 61 35.00 20.00 15.00 62 35.00 27.00 40.00 63 35.00 27.00 25.00 64 35.00 30.00 30.00 65 40.00 40.00 40.00 66 40.00 40.00 35.00 67 40.00 40.00 35.00 68 40.00 40.00 35.00 69 40.00 40.00 35.00 70 100.00 40.00 100.00 71 100.00 40.00 100.00 72 100.00 40.00 100.00 73 100.00 40.00 100.00 74 100.00 40.00 100.00 75 100.00 100.00 100.00 PEPRA General Tiers 4 and 5 0.00 0.00 2.00 3.00 3.00 5.00 5.00 6.00 8.00 9.00 10.00 14.00 21.00 21.00 21.00 27.00 33.00 33.00 33.00 33.00 50.00 50.00 50.00 50.00 50.00 100.00 86 -'-SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Retirement Age and Benefit for Deferred Vested Members: For deferred vested benefits, we make the following retirement assumption: General: Age 59 Safety: Age 54 We assume that 40% and 60% of future General and Safety deferred vested members, respectively, will continue to work for a reciprocal employer. For reciprocals, we assume 5.25% compensation increases per annum. Future Benefit Accruals: 1.0 year of service per year for the full -time employees. Continuation of current partial service accrual for part-time employees. Unknown Data for Members: Same as those exhibited by members with similar known characteristics. If not specified, members are assumed to be male. Percent Married: 75% of male members and 50% of female members are assumed to be married at pre - retirement death or retirement. There is no explicit assumption for children's benefits. Age of Spouse: Females are 3 years younger than their spouses. Offsets by Other Plans of the Employer for Disability Benefits: The Plan requires members who retire because of disability from General Tier 3 and PEPRA General Tier 5 to offset the Plan's disability benefits with other Plans of the employer. We have not assumed any offsets in this valuation. 88 _�'-SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Leave Cashout Assumptions: The following assumptions for leave cashouts as a percentage of final average pay are used: General Tiers 1, 2 and 3 Safety Tiers A and C Membership Date before January 1, 2013 Cost Group 1: 1.50% Cost Group 2: 0.50% for Tier 2 0.75% for Tier 3 Cost Group 3: 6.50 % Cost Group 4: 0.25% Cost Group 5: 1.50% Cost Group 6: 1.25% Cost Group 7: 0.75% Cost Group 8: 0.75% Cost Group 9: 0.25% Cost Group 10: 1.50% Cost Group 11 3.00% Cost Group 12: 3.50% For determining the cost of the basic benefit (i.e. non -COLA component), the cost of this pay element is currently recognized in the valuation as an employer only cost and does not affect member contribution rates. PEPRA General Tiers 4 and 5 PEPRA Safety Tiers D and E None 89 _'�-SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Service From Accumulated Sick Leave: The following assumptions for additional service due to accumulated sick leave as a percentage of service at retirement are used: All Retirements Excluding Disability: General: 1.25% Safety: 2.00% Disability Retirements: General: 0.10% Safety: 1.25% Pursuant to Section 31641.01, the cost of this benefit for the non - PEPRA tiers will be charged only to employers and will not affect member contribution rates. Net Investment Return: 7.25 %, net of administration and investment expenses. Employee Contribution Crediting Rate: 7.25 %, compounded semi - annually. Consumer Price Index: Increase of 3.25% per year; retiree COLA increases due to CPI subject to a 3.00% maximum change per year except for Tier 3 and PEPRA Tier 5 disability benefits and Tier 2 benefits which are subject to a 4.00% maximum change per year (valued as a 3.25% increase). Safety Tier C benefits and benefits for PEPRA Tier 4 and Tier 5 members covered under certain memoranda of understanding are subject to a 2.00% maximum change per year. 90 _�'- SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Salary Increases: Annual Rate of Compensation Increase Inflation: 3.25% per year, plus "across the board" salary increases of 0.75% per year, plus the following merit and promotional increases. Years of Service General Safety Less than 1 9.50% 10.00% 1 6.50 6.50 2 4.75 5.25 3 3.25 4.00 4 2.25 2.25 5 1.50 1.00 6 1.25 0.75 7 1.00 0.75 8 0.75 0.75 9 0.75 0.75 10 0.75 0.75 11 0.75 0.75 12 0.75 0.75 13 0.75 0.75 14 0.75 0.75 15 0.75 0.75 16 0.75 0.75 17 0.75 0.75 18 0.75 0.75 19 0.75 0.75 20 & over 0.75 0.75 91 -7-SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Actuarial Methods Actuarial Cost Method: Entry Age Actuarial Cost Method. Entry Age is calculated as age on the valuation date minus years of service. Normal Cost and Actuarial Accrued Liability are calculated on an individual basis and are based on costs allocated as a level percent of compensation, as if the current benefit formulas have always been in effect (i.e., "replacement life "). Actuarial Value of Assets: Market value of assets less unrecognized returns in each of the last nine semi - annual accounting periods. Unrecognized return is equal to the difference between the actual market return and the expected return on the market value, and is recognized semi- annually over a five -year period. Valuation Value of Assets: Actuarial Value of Assets reduced by the value of the non - valuation reserves and designations. Amortization Policy: The UAAL (i.e., the difference between the AAL and the Valuation Value of Assets) as of December 31, 2012 will continue to be amortized over separate amortization layers based on the valuations during which each separate layer was previously established. Any new UAAL as a result of actuarial gains or losses identified in the annual valuation as of December 31 will be amortized over a period of 18 years. Any new UAAL as a result of change in actuarial assumptions or methods will be amortized over a period of 18 years. Unless the Board adopts an alternative amortization period after receiving an actuarial analysis: i. With the exception noted in ii., below, the increase in UAAL as a result of any plan amendments will be amortized over a period of 10 years; ii. The entire increase in UAAL resulting from a temporary retirement incentive will be funded in full upon adoption of the incentive. If the increase in UAAL is due to the impact of benefits resulting from additional service permitted in Section 31641.04 of the 1937 CERL (Golden Handshake), the entire increase in UAAL will be funded in full upon adoption of the Golden Handshake. 92 -'-'SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association The UAAL will be amortized over "closed" amortization periods so that the amortization period for each layer decreases by one year with each actuarial valuation. The UAAL will be amortized as a level percentage of payroll so that the amortization amount in each year during the amortization period shall be expected to be a level percentage of covered payroll, taking into consideration the current assumption for general payroll increase (i.e., wage inflation). If an overfunding or "surplus" exists (i.e., the Valuation Value of Assets exceeds the AAL, so that the total of all UAAL amortization layers become negative), any prior UAAL amortization layers will be considered fully amortized, and any subsequent UAAL will be amortized as the first of a new series of amortization layers, using the above amortization periods. If the surplus exceeds 20% of the AAL per Section 7522.52 of the Government Code, then the amount of surplus in excess of 20% of the AAL (and any subsequent surpluses in excess of that amount) will be amortized over an "open" amortization period of 30 years, but only if the other conditions of Section 7522.52 have also been met. If those conditions are not met, then the surplus will not be amortized and the full Normal Cost will be contributed. These amortization policy components will generally apply separately to each of CCCERA's UAAL cost groups with the exception that the conditions of Section 7522.32 apply to the total plan. Changes in Actuarial Assumptions and Methods: Based on a review of CCCERA's funding policy, changes in the amortization periods for future plan amendments and surplus were adopted. In addition, changes in the leave cashout assumption were adopted in response to changes in leave cashouts consistent with AB 197. Previously, this assumption was as follows: 93 '�-SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Changes in Actuarial Assumptions and Methods — Prior Assumptions: Leave Cashout (Terminal Pay) Assumptions: General Tiers 1, 2 and 3 Safety Tiers A and C The following assumptions for leave cashout as a percentage of final average pay are used: Membership Date before Membership Date on or January 1, 2011 after January 1, 2011 Cost Group 1: 12.50% 3.00% Cost Group 2: 4.00% for Tier 2 1.00% 8.00% for Tier 3 Cost Group 3: 24.00% 8.75% Cost Group 4: 5.75% 0.75% Cost Group 5: 11.50% 2.75% Cost Group 6: 9.00% 2.25% Cost Group 7: 12.00% 1.50% Cost Group 8: 10.50% 1.25% Cost Group 9: 4.00% 0.50% Cost Group 10: 13.00% 1.50% Cost Group 11 14.00% 3.50% Cost Group 12: 15.50% 6.25% 94 -�'-SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association EXHIBIT VI Summary of Plan Provisions This exhibit summarizes the major provisions of the Plan included in the valuation. It is not intended to be, nor should it be interpreted as, a complete statement of all plan provisions. Membership Eligibility: General Tier I General members hired before July 1, 1980 and electing not to transfer to Tier 2 Plan. Certain General members with membership dates before January 1, 2013 hired by specific employers who did not adopt Tier 2 are placed in Tier 1. General Tier 2 Most General members hired on or after August 1, 1980 and all General members hired before July 1, 1980 electing to transfer to the Tier 2 Plan. Effective October 1, 2002, for the County, Tier 2 was eliminated and all County employees (excluding CNA employees) in Tier 2 were placed in Tier 3. Effective January 1, 2005, all CNA employees in Tier 2 were placed in Tier 3. General Tier 3 General members with membership dates before January 1, 2013 who are not placed in Tier 1 are placed in Tier 3. PEPRA General Tier 4 General members with membership dates on or after January 1, 2013 hired by specific employers who did not adopt Tier 2 are placed in Tier 4. PEPRA General Tier 5 General members with membership dates on or after January 1, 2013 who are not placed in Tier 4 are placed in Tier 5. Safety Tiers A and C Safety members with membership dates before January 1, 2013. County Sheriff's Department Safety members hired on or after January 1, 2007, but before January 1, 2013 are placed in Safety Tier C Enhanced. PEPRA Safety Tiers D and E Safety members with membership dates on or after January 1, 2013. Safety members from certain bargaining units are placed in Safety Tier E. 95 -�'-SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Final Compensation for Benefit Determination: General Tier 1, Tier 3 (non - disability), and Safety Tier A Highest consecutive twelve months of compensation earnable. (FAS 1) (§ 31462.1) General Tier 2, Tier 3 (disability), and Safety Tier C Highest consecutive thirty-six months of compensation earnable. (FAS3) ( §31462) PEPRA General Tiers 4 and S PEPRA Safety Tiers D and E Highest consecutive thirty-six months of pensionable compensation. (FAS3) ( §7522.10(c), §7522.32 and §7522.34) Social Security Primary Insurance Amount: General Tier 2 Estimated Social Security award at age 62 assuming level future earnings. (PIA) Service: All tiers Years of service *. (Yrs) General Tier 2 Years of service up to a maximum of 30 years *. (Yrs30) *Includes accumulated sick leave as of the date of retirement ( §31641.01). Service Retirement Eligibility: General Tiers 1, 2 and 3 Age 50 with 10 years of service, or age 70 regardless of service, or after 30 years of service, regardless of age. ( §31672) PEPRA General Tiers 4 and S Age 52 with 5 years of service, or age 70 regardless of service. ( §7522.20(a)) and §31672.3) Safety Tiers A and C Age 50 with 10 years of service, or age 70 regardless of service, or after 20 years of service, regardless of age. ( §31663.25) PEPRA Safety Tiers D and E Age 50 with 5 years of service, or age 70 regardless of service. ( §7522.25(a)) and §31672.3) 96 -" SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Benefit Formula: General Tiers I and 3 (Non - enhanced) (§31676 11) General Tier I and Tier 3 (Enhanced) ( §3167616) Retirement Age 1 50 (1.24 %xFAS 1 55 (1.67 %xFAS 1 60 (2.18 %xFAS 1 62 (2.35 %xFAS 1 65 or later (2.61 %xFAS 1 lenefit Formula - 1 /3x1.24 %x$350xl2)xYrs - 1 /3x1.67 %x$350xl2)xYrs - 1 /3x2.18 %x$350xl2)xYrs - 1 /3x2.35 %x$350xl2)xYrs - 1 /3x2.61 %x$350xl2)xYrs 50 (1.43 %xFASI - 1 /3x1.43 %x$350xl2)xYrs 55 (2.00 %xFASI - 1 /3x2.00 %x$350xl2)xYrs 60 (2.26 %xFASI - 1 /3x2.26 %x$350xl2)xYrs 62 (2.37 %xFAS1 - 1 /3x2.37 %x$350xl2)xYrs 65 or later (2.42 %xFASI - 1 /3x2.42 %x$350x12)xYrs For members previously covered under the non - enhanced §31676.11 formula, they are entitled to at least the benefits they could have received under §31676.11. General Tier 2 ( §31752) 50 0.83 %xFAS3xYrs - 0.57 %xYrs30xP1A 55 . 1.13 %xFAS3xYrs - 0.87 %xYrs30xP1A 60 1.43 %xFAS3xYrs - 1.37 %xYrs30xP1A 62 1.55 %xFAS3xYrs - 1.67 %xYrs30xP1A 65 or later 1.73 %xFAS3xYrs - 1.67 %xYrs30xP1A The offsets shown in all of the above formulas only apply to members integrated with Social Security. 97 '�'-SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Benefit Formula: PEPRA General Tiers 4 and 5 ( §7522.20(a)) Retirement Age Benefit Formula 52 1.00 %xFAS3xYrs 55 1.30 %xFAS3xYrs 60 1.80 %xFAS3xYrs 62 2.00 %xFAS3xYrs 65 2.30 %xFAS3xYrs 67 or later 2.50 %xFAS3xYrs Safety Tier (Non- enhanced)( §31664) 50 2. 00%xFAS 1 xYrs 55 or later 2.62 %xFASlxYrs Safety TierA (Enhanced) (§31664. 1) 50 or later 3.00 %xFASlxYrs Safety Tier C (Enhanced) (§31664. 1) 50 or later 3.00 %xFAS3xYrs PEPRA Safety Tiers D and E 50 2.00 %xFAS3xYrs ( §7522.25(d)) 55 2.50 %xFAS3xYrs 57 or later 2.70 %xFAS3xYrs Maximum Benefit: General Tiers I and 3 Safety Tiers A and C 100% of Final Compensation ( §31676.11, §31676.16, §31664, §31664.1) General Tier 2 PEPRA General Tiers 4 and 5 PEPRA Safety Tiers D and E None 98 -'-SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Ordinary Disability: General Tiers I and 4 Eligibility Five years of service ( §31720). Benefit Formula 1.5% per year of service. If the benefit does not exceed one -third of Final Compensation, the service is projected to 65, but total benefit cannot be more than one -third of Final Compensation ( §31727). General Tiers 2. 3 and S Eligibility Ten years of service (defmition of disability is more strict than Tier 1 Plan) ( §31720.1). Benefit Formula 40% of Final Compensation plus 10% of Final Compensation used in the benefit determination for each minor child (maximum of three) ( §31727.01). Offset Disability benefits are offset by other plans of the employer except Workers Compensation and Social Security. Sa e Eligibility Five years of service ( §31720). Benefit Formula 1.8% per year of service. If the benefit does not exceed one -third of Final Compensation, the service is projected to 55, but total benefit cannot be more than one -third of Final Compensation ( §31727.2). Line -of -Duty Disability: General Tiers I and 4, and Salty Eligibility No age or service requirements ( §31720). Benefit Formula 50% of the Final Compensation ( §31727.4). General Tiers 2. 3 and 5 Eligibility No age or service requirements ( §31720). Benefit Formula 40% of Final Compensation plus 10% of Final Compensation for each minor child (maximum of three) ( §31727.01). Offset Disability benefits are offset by other plans of the Employer except Workers Compensation and Social Security. 99 _�'_SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Post - Retirement Cost -of- Living Benefits: General Tiers 1, 3, 4 and 5 Safety Tiers A and D General Tier 2 Safety Tiers C and E Future changes based on Consumer Price Index to a maximum of 3% per year, excess "banked." Tier 3 and PEPRA Tier 5 disability benefits have a maximum of 4% per year, excess "banked." Benefits for PEPRA Tier 4 and Tier 5 members covered under certain memoranda of understanding have a maximum of 2% per year, excess "banked ". Future changes based on Consumer Price Index to a maximum of 4% per year, excess "banked." Future changes based on Consumer Price Index to a maximum of 2% per year, excess "banked." Member Contributions: Please refer to Appendices A and B for the specific rates. General Tiers 1 and 3 (Non- enhanced) Basic Provide for one -half of the §31676.11 benefit payable at age 55. Cost -of- Living Provide for one -half of future Cost -of- Living costs. General Tiers 1 and 3 (Enhanced) Basic Provide for an average annuity at age 60 equal to 1/120 of FAS1. Cost -of- Living Provide for one -half of future Cost -of- Living costs. PEPRA General Tiers 4 and 5 50% of the total Normal Cost rate. Safety Tier A (Non- enhanced) Basic Provide for one -half of the §31664 benefit payable at age 50. Cost -of- Living Provide for one -half of future Cost -of- Living costs. _�'-SEGAL 102 SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Member Contributions (continued): Safety Tier A (Enhanced) Basic Cost -of- Living Safety Tier C (Enhanced) Basic Cost -of- Living PEPRA Safety Tiers D and E Provide for an average annuity at age 50 equal to 1 /100 of FAS 1. Provide for one -half of future Cost -of- Living costs. Provide for an average annuity at age 50 equal to 1 /100 of FAS3. Provide for one -half of future Cost -of- Living costs. 50% of the total Normal Cost rate. Other Information: Transfers from the Tier 1 Plan to the Tier 2 Plan were made on an individual voluntary irrevocable basis. Credit is given under the Tier 2 Plan for future service only. The Cost -of- Living maximum is 4% only for the credit under the Tier 2 Plan. Transferred Tier 2 Plan members keep the five -year requirement for nonservice- connected disability. Those who were members on or before March 7, 1973 and Safety members under the enhanced benefit formula with membership dates on or before January 1, 2013 will be exempt from paying member contributions after 30 years of service. Plan Provisions Not Valued: Additional $5,000 lump sum post - retirement death benefit payable to a member's beneficiary. This benefit is paid from a reserve that is not included in the Valuation Value of Assets and is subject at all times to the availability of funds. Plan Changes: There have been no changes in plan provisions since the previous actuarial valuation. NOTE: The summary of major plan provisions is designed to outline principal plan benefits as interpreted for purposes of the actuarial valuation. If the Association should find the plan summary not in accordance with the actual provisions, the Association should alert the actuary so that both can be sure the proper provisions are valued. 103 _�'-SEGAL SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association General Tier 1 (Enhanced) Members' Contribution Rates for Members Receiving Benefits under 2% at 55 Formula (Expressed as a Percentage of Monthly Payroll) For Members with Membership Dates before January 1, 2013 Entry Age 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 Calculated Under Recommended Assumptions Basic COLA First $350 Over $350 First $350 Over $350 3.54% 3.59% 3.65% 3.69% 3.75% 3.80% 3.85% 3.91% 3.96% 4.01% 4.07% 4.13% 4.19% 4.25% 4.30% 4.36% 4.42% 4.48% 4.55% 4.61% 4.67% 4.73% 4.80% 4.87% 4.93% 5.01% 5.07% 5.31% 5.39% 5.47% 5.54% 5.62% 5.70% 5.78% 5.86% 5.94% 6.02% 6.11% 6.19% 6.28% 6.37% 6.45% 6.54% 6.63% 6.72% 6.82% 6.91% 7.01% 7.10% 7.20% 7.30% 7.40% 7.51% 7.61% 2.03% 2.07% 2.09% 2.12% 2.15% 2.18% 2.21% 2.25% 2.27% 2.31% 2.34% 2.37% 2.41% 2.44% 2.47% 2.51% 2.54% 2.57% 2.61% 2.65% 2.69% 2.72% 2.75% 2.79% 2.83% 2.87% 2.91% 3.05% 3.10% 3.14% 3.18% 3.23% 3.27% 3.32% 3.37% 3.41% 3.46% 3.51% 3.55% 3.61% 3.66% 3.70% 3.76% 3.81% 3.86% 3.92% 3.97% 4.03% 4.08% 4.13% 4.19% 4.25% 4.31% 4.37% First $350 5.57% 5.66% 5.74% 5.81% 5.90% 5.98% 6.06% 6.16% 6.23% 6.32% 6.41% 6.50% 6.60% 6.69% 6.77% 6.87% 6.96% 7.05% 7.16% 7.26% 7.36% 7.45% 7.55% 7.66% 7.76% 7.88% 7.98% Total Over $350 8.36% 8.49% 8.61% 8.72% 8.85% 8.97% 9.10% 9.23% 9.35% 9.48% 9.62% 9.74% 9.89% 10.03% 10.15% 10.30% 10.44% 10.58% 10.74% 10.88% 11.04% 11.18% 11.33% 11.49% 11.65% 11.82% 11.98% 106 7 Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association General Tier 1 (Enhanced) Members' Contribution Rates for Members Receiving Benefits under 2% at 55 Formula (Expressed as a Percentage of Monthly Payroll) For Members with Membership Dates before January 1, 2013 Calculated Under Recommended Assumptions First $350 2.96% 3.00% 3.05% 3.09% 3.13% 3.18% 3.23% 3.29% 3.34% 3.41% 3.46% 3.52% 3.57% 3.63% 3.65% 3.67% 3.62% 3.49% 3.49% COLA Over $350 4.44% 4.50% 4.57% 4.63% 4.70% 4.77% 4.85% 4.93% 5.01% 5.11% 5.19% 5.28% 5.36% 5.45% 5.47% 5.50% 5.43% 5.23% 5.23% Total Basic Entry Age First $350 Over $350 42 5.15% 7.73% 43 5.22% 7.83% 44 5.30% 7.95% 45 5.38% 8.07% 46 5.46% 8.19% 47 5.54% 8.31% 48 5.63% 8.44% 49 5.72% 8.58% 50 5.82% 8.73% 51 5.93% 8.90% 52 6.03% 9.04% 53 6.13% 9.20% 54 6.23% 9.34% 55 6.33% 9.49% 56 6.35% 9.52% 57 6.39% 9.58% 58 6.30% 9.45% 59 6.07% 9.11% 60 6.07% 9.11% First $350 2.96% 3.00% 3.05% 3.09% 3.13% 3.18% 3.23% 3.29% 3.34% 3.41% 3.46% 3.52% 3.57% 3.63% 3.65% 3.67% 3.62% 3.49% 3.49% COLA Over $350 4.44% 4.50% 4.57% 4.63% 4.70% 4.77% 4.85% 4.93% 5.01% 5.11% 5.19% 5.28% 5.36% 5.45% 5.47% 5.50% 5.43% 5.23% 5.23% Interest: 7.25% Salary Increase: See Exhibit V. COLA Loading: 57.43% Mortality: RP -2000 Combined Healthy Mortality Table Projected to 2030 with Scale AA, set back one year, weighted 30% Male and 70% Female. 107 Segal Consulting Total First $350 Over $350 8.11% 12.17% 8.22% 12.33% 8.35% 12.52% 8.47% 12.70% 8.59% 12.89% 8.72% 13.08% 8.86% 13.29% 9.01% 13.51% 9.16% 13.74% 9.34% 14.01% 9.49% 14.23% 9.65% 14.48% 9.80% 14.70% 9.96% 14.94% 10.00% 14.99% 10.06% 15.08% 9.92% 14.88% 9.56% 14.34% 9.56% 14.34% Interest: 7.25% Salary Increase: See Exhibit V. COLA Loading: 57.43% Mortality: RP -2000 Combined Healthy Mortality Table Projected to 2030 with Scale AA, set back one year, weighted 30% Male and 70% Female. 107 Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Note: It is our understanding that in the determination of pension benefits under the PEPRA formulas, the compensation that can be taken into account for 2014 is equal to the Social Security Taxable Wage Base or $115,064. (For an employer that is not enrolled in Social Security, the maximum amount is $138,077 or 120% of the Social Security Taxable Wage Base). (reference: Section 7522.10). These amounts should be adjusted for changes to the Consumer Price Index for All Urban Consumers after 2014. (reference: Section 7522.10(d)) 116 Segal Consulting Appendix B Member Contribution Rates for Members with Membership Dates on or after January 1, 2013 General Members' Contribution Rates for Members with Membership Dates on or after January 1, 2013 (Expressed as a Percentage of Monthly Payroll) Calculated Under Recommended Assumptions Basic COLA Total Cost Group #1 — PEPRA Tier 4 (3% COLA) 8.68% 3.27% 11.95% Cost Group #2 - PEPRA Tier 5 (2% COLA) 6.58% 1.52% 8.10% Cost Group #2 - PEPRA Tier 5 (3 %/4% COLA) 7.74% 2.79% 10.53% Cost Group #3 - PEPRA Tier 4 (3% COLA) 9.20% 3.42% 12.62% Cost Group #4 - PEPRA Tier 4 (3% COLA) 6.55% 2.45% 9.00% Cost Group #5 - PEPRA Tier 4 (2% COLA) 8.25% 1.85% 10.10% Cost Group #5 - PEPRA Tier 4 (3% COLA) 10.15% 3.83% 13.98% Cost Group #6 - PEPRA Tier 4 (3% COLA) 8.25% 3.01% 11.26% Note: It is our understanding that in the determination of pension benefits under the PEPRA formulas, the compensation that can be taken into account for 2014 is equal to the Social Security Taxable Wage Base or $115,064. (For an employer that is not enrolled in Social Security, the maximum amount is $138,077 or 120% of the Social Security Taxable Wage Base). (reference: Section 7522.10). These amounts should be adjusted for changes to the Consumer Price Index for All Urban Consumers after 2014. (reference: Section 7522.10(d)) 116 Segal Consulting