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04.a. Actuarial Valuation and Review
Abridged Version - Pages containing information on other agencies have been removed Contra Costa County Employees' Retirement Association Actuarial Valuation and Review As of December 31, 2014 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 © 2015 by The Segal Group, Inc., parent of The Segal Company. All rights reserved. 4-a- Segal Consulting 100 Montgomery Street Suite 500 San Francisco, CA 94104 -4308 T 415.263.8257 www.segalco.com June 30, 2015 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, 2014. It summarizes the actuarial data used in the valuation, establishes the funding requirements for the fiscal year beginning July 1, 2016 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 B 1 By: Paul Angelo, FSA, EA, MAAA, FCA Senior Vice President and Actuary A W /hy Pm- YY1oe John Monroe, ASA, EA, ALL Vice President and Actuary SECTION 1 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 Important Information about Actuarial Valuations ............ viii SECTION 2 VALUATION RESULTS A. Member Data .......................... 1 B. Financial Information ..............4 C. Actuarial Experience ...............9 D. Recommended Contribution. 14 E. Funded Ratio ......................... 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, 2014 ................. ............................... 47 EXHIBIT C Average Monthly Benefit and Membership Distribution of Retired Members and Beneficiaries ............. 59 EXHIBIT D Reconciliation of Member Data — December 31, 2013 to December 31, 2014 ................. ............................... 63 EXHIBIT E Summary Statement of Income and Expenses on an Actuarial Value Basis................. ............................... 64 EXHIBIT F Summary Statement of Assets ......... 65 EXHIBIT G Actuarial Balance Sheet ...................66 EXHIBIT H Summary of Total Allocated Reserves ........... ............................... 67 EXHIBIT I Development of Unfunded Actuarial Accrued Liability ............................68 EXHIBIT J Table of Amortization Bases ........... 69 EXHIBIT K Section 415 Limitations ................... 82 EXHIBIT L Definitions of Pension Terms ..........83 REPORTING INFORMATION EXHIBIT I Summary of Actuarial Valuation Results.............. ............................... 85 EXHIBIT 11 Schedule of Employer Contributions .... ............................... 87 EXHIBIT III Schedule of Funding Progress .......... 88 EXHIBIT IV Supplementary Information Required on-Actuarially Determined Contribution by GASB ....................89 EXHIBIT V Actuarial Assumptions and Methods............ ............................... 90 EXHIBIT VI Summary of Plan Provisions .......... 103 Appendix A Member Contribution Rates for Members with Membership Dates before January 1, 2013 ..................112 Appendix B Member Contribution Rates for Members with Membership Dates on or after January 1, 2013 .................136 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, 2014. 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, 2014, provided by the Association's staff, > The assets of the Plan as of December 31, 2014, 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, 2014 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 15 year period with 8 years remaining as of December 31, 2014. 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, 2016 through June 30, 2017. SIGNIFICANT ISSUES IN VALUATION YEAR The following key findings were the result of this actuarial valuation: Ref Pg. 88 > The ratio of the valuation value of assets to the actuarial accrued liability increased from 76.4% to 81.7% while the ratio of Ref Pg. 68 the market value of assets to the actuarial accrued liability increased from 83.5% to 86.1 %. The Association's UAAL (which is based on the valuation value of assets) has decreased from $1.8 billion to $1.5 billion. This decrease is due to an investment return on actuarial value (i.e. after smoothing) greater than the 7.25% assumed rate, lower than expected individual salary increases and lower than expected COLA increases for retirees and beneficiaries. 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 43.58% of payroll to 40.06% of payroll. This decrease is due an investment return on actuarial value (i.e. after smoothing) greater than the 7.25% assumed rate, lower than expected individual salary increases, lower than expected COLA increases for retirees and beneficiaries and other experience gains. A complete reconciliation of the Association's aggregate employer rate is provided in Section 2, Subsection D (see Chart 15). 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. Segal Consulting SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association Ref Pg. 33 > The average member rate calculated in this valuation has decreased from 11.91 % of payroll to 11.84% of payroll. This is the net result of (1) a decrease in the average rate due to a change in the composition of the active membership and (2) an increase in the individual member rates due to including leave cashout assumptions in developing basic member rates for non -PEPRA members. A complete reconciliation of the Association's aggregate member rate is provided in Section 2, Subsection D (see Chart 16). The detailed member rates are provided in Appendix A and B of this report. They are now shown by cost group (instead of just by tier) and reflect including the leave cashout assumption in the basic member rates (discussed below). Ref Pg. 16 > As adopted by the Board, for determining the cost of the total benefit (i.e., basic and COLA components), the leave cashout assumptions are recognized in the valuation in determining both the employer and member costs. Prior to this valuation, for determining the cost of the basic benefit (i.e., non -COLA component), the leave cashout assumptions were recognized in the valuation only in the employer cost and did not affect member contribution rates. Including the leave cashout assumptions in developing the basic member rates for non -PEPRA members resulted in a decrease in the average employer rate of 0.07% of payroll and an increase in the average member rate of 0.07% of payroll. As a result of including the leave cashout assumptions in determining the basic member rates for the members of each specific cost group, the COLA member rates are no longer pooled across all members of the same tier. This results in a total of twelve different sets of member contribution rates for the non -PEPRA members, one for each cost group. Ref Pg. 97 > The results of this valuation reflect a change in the leave cashout assumption for Cost Group #9 adopted by the Board. The leave cashout assumption was reduced from 0.25% to 0.00% resulting in a decrease of 0.06% in employer rate for Cost Group #9. However, it has no impact to the overall average employer rate after rounding. Ref- Pg. S > The total unrecognized net investment gain as of December 31, 2014 is about $336 million as compared to an unrecognized net investment gain of $536 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 $336 million would be recognized over the next few years as shown in the footnote in Chart 7. > The net deferred gains of $336 million represent about 5% of the market value of assets. Unless offset by future investment losses or other unfavorable experience, the recognition of the $336 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: Segal Consulting ��� SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association • If the net deferred gains were recognized immediately in the valuation value of assets, the funded percentage would increase from 81.7% to 85.9 %. • If the net deferred gains were recognized immediately in the valuation value of assets, the average employer contribution rate would decrease from 40.1 % to about 36.5% of payroll. > The actuarial valuation report as of December 31, 2014 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. > This valuation includes contribution rates for the new PEPRA Tier E in Cost Group #8. This cost group and also PEPRA Tier 4 (2% COLA) in Cost Group #1 do not have any actual members as of December 31, 2014. The contribution rates for these cost groups 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 the demographic profiles (e.g., entry age, composition of male versus female, etc.) for these cost groups can be approximated by the data profiles of current active members with membership dates on and after January 1, 2011. > This valuation reflects the $5 million additional contribution made by the Central Contra Costa Sanitary District on December 30, 2014 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, 2013 valuation. > The Governmental Accounting Standards Board (GASB) approved two 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. Statement 67 is effective with the calendar year ending December 31, 2014 for plan reporting. Statement 68 is effective with the fiscal year ending June 30, 2015 for employer reporting. The information needed to comply with Statements 67 and 68 will be provided in separate reports. 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. % Segal Consulting i" SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association Summary of Key Valuation Results December 31, 2014 December 31, 2013 Average Employer Contribution Ratesil): Estimated Estimated General Total Rate Annual Amount Total Rate Annual Amount Cost Group #11 - County and Small Districts (Tier 1 and 4) 33.14% $7,471,910 35.48% $8,400,094 Cost Group #2 - County and Small Districts (Tier 3 and 5) 29.36% 147,184,037 32.28% 154,922,757 Cost Group #3 - Central Contra Costa Sanitary District 55.71% 15,653,379 60.51% 16,446,846 Cost Group #4 - Contra Costa Housing Authority 41.76% 2,138,471 43165% 2,196,992 Cost Group #5 - Contra Costa County Fire Protection District 31.59% 1,124,433 35.04% 1,283,642 Cost Group #6 - Small Districts (Non- Enhanced Tier 1 and 4) 26.62% 220,891 29.13% 230,791 Safety Cost Group #7 - County (Tier A and D) 77.77% 47,801,788 80.27% 53,484,103 Cost Group #8 - Contra Costa and East Fire Protection Districts 78.93% 24,149,147 82.98% 26,034,468 Cost Group #9 - County (Tier C and E) 70.63% 13,024,297 74.50% 11,435,422 Cost Group #10 - Moraga- Orinda Fire District 69.66% 4,887,061 70.45% 5,293,654 Cost Group #11- San Ramon Valley Fire District 83.79% 13,965,831 88.33% 14,581,928 Cost Group #12 - Rodeo - Hercules Fire Protection District 89.27% 1,977,156 110.23% 1,784,422 All Employers combined 40.06% $279,598,401 43.58% $296,095,119 Average Member Contribution Rates0): Estimated Estimated General Total Rate Annual Amount Total Rate Annual Amount Cost Group #1 - County and Small Districts (Tier 1 and 4) 10.63% $2,396,574 10.58% $2,504,556 Cost Group #2 - County and Small Districts (Tier 3 and 5) 10.54% 52,834,487 10.60% 50,889,675 Cost Group #3 - Central Contra Costa Sanitary District 11.65% 3,273,422 11.10% 3,016,823 Cost Group #4 - Contra Costa Housing Authority 10.95% 560,790 11.17% 562,261 Cost Group #5 - Contra Costa County Fire Protection District 10.86% 386,572 11.05% 404,760 Cost Group #6 - Small Districts (Non- Enhanced Tier 1 and 4) 12.37% 102,637 12.41% 98,322 Safety Cost Group #7 - County (Tier A and D) 17.52% 10,768,805 17.41% 11,600,517 Cost Group #8 - Contra Costa and East Fire Protection Districts 17.19% 5,259,475 17.18% 5,390,352 Cost Group #9 - County (Tier C and E) 14.08% 2,596,473 13.66% 2,096,818 Cost Group #10 - Moraga - Orinda Fire District 17.10% 1,199,666 17.01% 1,278,057 Cost Group #11- San Ramon Valley Fire District 17.28% 2,880,327 16.88% 2,786,567 Cost Group # 12 - Rodeo - Hercules Fire Protection District 16.16% 357,914 15.90% 257,382 All Categories Combined 11.84% $82,617,142 11.91% $80,886,090 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. v Segal Consulting SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association Summary of Key Valuation Results (continued) December 31, 2014 December 31, 2013 Refundability Factors General Legacy Tiers PEPRA Tiers Legacy Tiers PEPRA Tiers Cost Group #1 - County and Small Districts (Tier 1) 0.9601 0.9603 PEPRA Tier 4 (2% COLA) 0.9605 0.9598 PEPRA Tier 4 (3% COLA) 0.9634 0.9693 Cost Group #2 - County and Small Districts (Tier 3) 0.9575 0.9571 PEPRA Tier 5 (2% COLA) 0.9640 0.9725 PEPRA Tier 5 (3 0/o/4% COLA) 0.9650 0.9650 Cost Group #3 - Central Contra Costa Sanitary District 0.9581 0.9624 0.9581 0.9650 Cost Group #4 - Contra Costa Housing Authority 0.9564 0.9753 0.9560 0.9769 Cost Group #5 - Contra Costa County Fire Protection District 0.9592 0.9586 PEPRA Tier 4 (2% COLA) 0.9727 0.9598 PEPRA Tier 4 (3% COLA) 0.9664 0.9646 Cost Group #6 - Small Districts (Non- Enhanced Tier 1 and 4) 0.9560 0.9717 0.9546 0.9640 Safety Cost Group #7 - County (Tier A and D) 0.9741 0.9772 0.9741 0.9784 Cost Group #8 - Contra Costa and East Fire Protection Districts 0.9749 0.9748 PEPRA Tier D (3% COLA) 0.9821 0.9811 PEPRA Tier E (2% COLA) 0.9809 0.9813 Cost Group #9 - County (Tier C and E) 0.9755 0.9802 0.9755 0.9787 Cost Group #10 - Moraga- Orinda Fire District 0.9764 0.9837 0.9765 0.9828 Cost Group #I 1 - San Ramon Valley Fire District 0.9763 0.9837 0.9765 0.9831 Cost Group # 12 - Rodeo - Hercules Fire Protection District 0.9757 0.9852 0.9754 0.9828 Funded Status: Actuarial accrued liability (AAL) $8,027,438,213 $7,731,097,407 Valuation value of assets (VVA) $6,557,496,101 $5,907,416,432 Market value of assets (MVA) $6,908,910,230 $6,458,317,596 Funded percentage on VVA basis (VVA/AAL) 81.7% 76.4% Funded percentage on MVA basis (MVA/AAL) 86.1% 83.5% Unfunded Actuarial Accrued Liability (UAAL) on VVA basis $1,469,942,112 $1,823,680,975 Unfunded Actuarial Accrued Liability (UAAL) on MVA basis $1,118,527,983 $1,272,779,811 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. IV `'i Segal Consulting SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association Summary of Key Valuation Demographic and Financial Data Number of terminated vested members(' December 31, 2014 December 31, 2013 Percentage Change Active Members: 46.7 47.0 N/A Number of members 9,159 9,124 0.4% Average age 45.8 45.8 N/A Average service 9.9 10.1 N/A Projected total payroll (compensation) $697,831,837 $679,428,911 2.7% Average projected payroll $76,191 $74,466 2.3% Retired Member and Beneficiaries: $6,557,496,101 $5,907,416,432 11.0% Number of members: 11.40% 9.02% N/A Service retired 6,665 6,438 3.5% Disability retired 921 927 -0.6% Beneficiaries 1,285 1,260 2.0% Total 8,871 8,625 2.9% Average age 69.4 69.3 N/A Average Monthly Benefit $3,669 $3,579 2.5% Vested Terminated Members: Number of terminated vested members(' 2,647 2,345 12.9% Average age 46.7 47.0 N/A Summary of Financial Data: Market value of assets $6,908,910,230 $6,458,317,596 7.0% Return on market value of assets 7.35% 15.50% N/A Actuarial value of assets $6,572,560,432 $5,922,449,192 11.0% Return on actuarial value of assets 11.39% 9.01% N/A Valuation value of assets $6,557,496,101 $5,907,416,432 11.0% Return on valuation value of assets 11.40% 9.02% N/A Includes 1,176 terminated members with less than five years of service as of December 31, 2014 and 933 as of December 31, 2013. Segal Consulting vii SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association Important Information about Actuarial Valuations In order to prepare an actuarial valuation, Segal Consulting ( "Segal ") relies on a number of input items. These include: > Plan of benefits Plan provisions define the rules that will be used to determine benefit payments, and those rules, or the interpretation of them, may change over time. It is important to keep Segal informed with respect to plan provisions and administrative procedures, and to review the plan description in this report (as well as the plan summary included in our funding valuation report) to confirm that Segal has correctly interpreted the plan of benefits. > Participant data An actuarial valuation for a plan is based on data provided to the actuary by the Association. Segal does not audit such data for completeness or accuracy, other than reviewing it for obvious inconsistencies compared to prior data and other information that appears unreasonable. It is important for Segal to receive the best possible data and to be informed about any known incomplete or inaccurate data. > Assets This valuation is based on the market value of assets as of the valuation date, as provided by the Association. > Actuarial assumptions In preparing an actuarial valuation, Segal projects the benefits to be paid to existing plan participants for the rest of their lives and the lives of their beneficiaries. This projection requires actuarial assumptions as to the probability of death, disability, withdrawal, and retirement of each participant for each year. In addition, the benefits projected to be paid for each of those events in each future year reflect actuarial assumptions as to salary increases and cost -of- living adjustments. The projected benefits are then discounted to a present value, based on the assumed rate of return that is expected to be achieved on the plan's assets. There is a reasonable range for each assumption used in the projection and the results may vary materially based on which assumptions are selected. It is important for any user of an actuarial valuation to understand this concept. Actuarial assumptions are periodically reviewed to ensure that future valuations reflect emerging plan experience. While future changes in actuarial assumptions may have a significant impact on the reported results, that does not mean that the previous assumptions were unreasonable. The user of Segal's actuarial valuation (or other actuarial calculations) should keep the following in mind: > The valuation is prepared at the request of the Board to assist the sponsors of the Fund in preparing items related to the pension plan in their financial reports. Segal is not responsible for the use or misuse of its report, particularly by any other party. > An actuarial valuation is a measurement of the plan's assets and liabilities at a specific date. Accordingly, except where otherwise noted, Segal did not perform an analysis of the potential range of future financial measures. The actual long -term cost of the plan will be determined by the actual benefits and expenses paid and the actual investment experience of the plan. `''ii Segal Consulting SECTION 1: Valuation Summary for the Contra Costa County Employees' Retirement Association > If the Association is aware of any event or trend that was not considered in this valuation that may materially change the results of the valuation, Segal should be advised, so that we can evaluate it. > Segal does not provide investment, legal, accounting, or tax advice. Segal's valuation is based on our understanding of applicable guidance in these areas and of the plan's provisions, but they may be subject to alternative interpretations. The Board should look to their other advisors for expertise in these areas. As Segal Consulting has no discretionary authority with respect to the management or assets of the Retirement Association, it is not a fiduciary in its capacity as actuaries and consultants with respect to the Retirement Association. Segal Consulting ix 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: 2005 — 2014 over the past ten vahtations 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 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 2014 9,159 2.647 8,871 1.26 Includes members who terminate with less than five years of service and leave accumulated contributions on deposit. Segal Consulting ' 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 9,159 active members with an average age of 45.8, average years of service of 9.9 years and average payroll of $76,191. The 9,124 active members in the prior valuation had an average age of 45.8, average service of 10.1 years and average payroll of $74,466. 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, 2014 years of service. 1,600 --- - - - - -- 1,400 --- - - - - -- 1,200 --- - - - - -- 1,000 --- - - - - -- 800 --- - - - - -- 600 - - - - - -- 400 - - - - - -- 200 - - - - - -- 0 y� o Inactive Members In this year's valuation, there were 2,647 members with a vested right to a deferred or immediate vested benefit or entitled to a return of their employee contributions versus 2,345 in the prior valuation. CHART 3 Distribution of Active Members by Years of Service as of December 31, 2014 3,500 ---- - - - - -- 3,000 -- - - -- 2,500 -- - - -- 2,000 -- - -- 1,500 -- - -- 1,000 -- - -- 500 -- - -- 0 p o ,moo ,moo a o a 0 �o % 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. • BeneficiarN • Disability • Service SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association Retired Members and Beneficiaries As of December 31, 2014, 7,586 retired members and 1,285 beneficiaries were receiving total monthly benefits of $32,543,254. For comparison, in the previous valuation, there were 7,365 retired members and 1,260 beneficiaries receiving monthly benefits of $30,866,774. CHART 4 Distribution of Retired Members and Beneficiaries by Type and by Monthly Amount as of December 31, 2014 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 -------- - - - - -- CHART 5 Distribution of Retired Members and Beneficiaries by Type and by Age as of December 31, 2014 2,000 ------ - - - - -- 1,800 ------ - - - - -- 1,600 ------ - - - - -- 1,400 ------ - - - - -- 1,200 ------ - - - --- 1,000 ------ - - - - -- 800 ------ - - - - -- 600 ------ - - - - -- 400 ------ - - - - -- 200 ---- -- - - - - -- 0 0 o� �J o, 4 Segal Consulting 3 r1 ^b 0 °°o h ° °o ° °o 0 ^ ° °o 0 ° C CHART 5 Distribution of Retired Members and Beneficiaries by Type and by Age as of December 31, 2014 2,000 ------ - - - - -- 1,800 ------ - - - - -- 1,600 ------ - - - - -- 1,400 ------ - - - - -- 1,200 ------ - - - --- 1,000 ------ - - - - -- 800 ------ - - - - -- 600 ------ - - - - -- 400 ------ - - - - -- 200 ---- -- - - - - -- 0 0 o� �J o, 4 Segal Consulting 3 The chart depicts the components of changes in the actuarial valise of assets over the last ten years. Pension Obligation Bonds in the amozunt 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, $7.0 million for 2013 and $S.0 million for 2014. ■Adjustment toward market value • Benefits paid • Net interest and dividends ■ Contributions -A- 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, 2005 - 2014 1,100 1,000 900 800 N 700 0 600 500 69 400 300 200 100 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 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, 2014 The chart shows the Six Month Period Total Actual determination of the Market Expected Market Investment Deferred actuarial and valuation value of assets as of the From To Return (net) Return (net) Gain (Loss) Deferred Factor Return valuation date. 7/2009 12/2009 $628,870,712 $150,326,140 $478,544,572 0.0 $0 1/2010 6/2010 (94,057,382) 174,278,387 (268,335,769) 0.0 0 7/2010 12/2010 687,503,854 169,679,293 517,824,561 0.1 51,782,456 1/2011 6/2011 292,872,483 195,544,414 97,328,069 0.2 19,465,614 7/2011 12/2011 (205,242,203) 204,284,793 (409,526,996) 0.3 (122,858,099) 1/2012 6/2012 296,675,568 195,294,521 101,381,047 0.4 40,552,419 7/2012 12/20/12 371,057,645 205,350,894 165,706,751 0.5 82,853,375 1/2013 6/2013 281,608,945 218,386,047 63,222,898 0.6 37,933,739 7/2013 12/20/13 588,758,958 227,909,702 360,849,256 0.7 252,594,479 1/2014 6/2014 347,257,106 249,636,410 97,620,696 0.8 78,096,557 7/2014 12/20/14 125,727,585 241,361,743 (115,634,158) 0.9 (104,070,742) 1. Total Deferred Retum(l) $336,349,798 2. Market Value of Assets 6,908,910,230 3. Actuarial Value of Assets (Item 2 — Item 1) 6,572,560,432 4. Actuarial Value as Percentage of Market Value (Item 3 / Item 2) 95.1% 5. Non - valuation Reserves and Designations: a. Post Retirement Death Benefit $15,064,331 b. Statutory Contingency 0 c. Additional One Percent Contingency 0 d. Unrestricted Designation 0 e. Total $15,064,331 6. Valuation Value of Assets (Item 3 — Item 5e) $6,557,496,101 Deferred Return Recognized in each of the next 5 years: (a) Amount Recognized during 2015 $123,971,970 (b) Amount Recognized during 2016 93,676,598 (c) Amount Recognized during 2017 97, 782, 413 (d) Amount Recognized during 2018 32,482,233 (e) Amount Recognized during 2019 (11.563.416) (n Subtotal $336,349,798 Note: Results may not add due to rounding. v 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, 2014 The calculation of the valuation value of assets from December 31, 2013 to December 31, 2014 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. IV Segal Consulting General Cost Groups # I 1,692,323 357,988 378,167 67,301 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) $3,305,601,787 $206,696,819 $39,066,589 $38,089,194 $4,838,413 48,640,418 1,692,323 357,988 378,167 67,301 166,800,807 19,184,334 2,070,149 1,298,302 257,485 1,815,333 5,000,000 0 0 0 217,256,558 25,876,657 2,428,137 1,676,469 324,786 220,098,943 16,523,216 2,612,657 2,615,422 282,145 0 0 0 0 0 3,302,759,402 216,050,260 38,882,069 37,150,241 4,881,054 3,304,180,594 211,373,540 38,974,329 37,619,718 4,859,734 376,541,401 24,087,936 4,441,479 4,287,109 553,811 $3,679,300,803 $240,138,196 $43,323,548 $41,437,350 $5,434,865 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, 2014 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. T Segal Consulting Safe 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 689,275,153 District District $1,218,393,602 $701,830,573 $125,942,170 $244,766,774 $22,190,514 13,921,808 59,425,724 1,340,151 74,687,683 75,505,518 7,234,923 19,612,263 0 1,703,910 3,899,189 0 3,946,733 12,135,590 0 314,093 921,087 0 Total $5,907,416,432 78,257,665 285,604,929 8,155,484 26,847,186 5,603,099 16,082,323 1,235,180 372,018,078 51,958,027 9,122,612 13,464,953 1,712.128 393,895,621 0 0 0 0 0 0 1,217,575,767 676,719,732 122,422,657 247,384,144 21,713,566 5,885,538,889 1,217,984,685 689,275,153 124,182,414 246,075,459 21,952,040 5,896,477,661 138,800,422 78,549,167 14,151,715 28,042,535 2,501,634 671,957,212 $1,356,376,189 $755,268,899 $136,574,372 $275,426,679 $24,215,200 $6,557,496,101 7 This chart shows the change in the relative values of market value, actuarial value and vahuation value of assets over the past ten years. --O— Market Value —e Actuarial Value * Valuation Value Segal Consulting 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, 2005 — 2014 8.0 7.0 6.0 5.0 C 4.0 E 3.0 2.0 1.0 ------------------------ 0.0 -- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 8 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 development and that, over the long term, experience will CHART 10 Actuarial Experience for Year Ended December 31, 2014 1. Net gain/(loss) from investmentso) 2. Net gain/(loss) from contribution experience 3. Net gain/(loss) from other experience (2) 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 experience gain was $303.3 million, a gain of $244.5 million from investments, a loss of $9.2 million from contribution experience (includes a gain of $4.6 million from additional UAAL payments and a loss of $13.8 million from all other contribution experiene) and a gain of $68.0 million from all other sources. A discussion of the major components of the actuarial experience is on the following pages. $244,462,582 (9,154,631) 67.988.486 4. Net experience gain/(loss): (1) + (2) + (3) $303,296,437 Details in Chart 11 lz) See Section 3, Exhibit 1. Does not include the effect of plan or assumption changes, if any. This chart shows the gainlooss) due to investment experience. 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 2014 was 7.25 %. The actual rate of return on the actuarial value for the 2014 Plan Year was 11.39 %. 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, 2014. Investment Experience for Year Ended December 31, 2014 — Market Value, Actuarial Value and Valuation Value of Assets Market Value Actuarial Value Valuation Value 1. Actual return $473,522,261 2. Average value of assets 6,446,852,783 3. Actual rate of return: (1) - (2) 7.35% 4. Assumed rate of return 7.25% 5. Expected return: (2) x (4) 467,396,827 $673,040,867 5,910,984,379 11.39% 7.25% 428,546,367 $671,957,212 5,896,477,661 11.40% 7.25% 427,494,630 6. Actuarial gain/(loss): (1) —(5) $6.125.,4 $244.494.500 5244.462.582 Segal Consulting 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: 2005 - 2014 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 2005 $331,400,271 8.71 °, o $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 %) 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% 2014 473,522,261 7.35% 673,040,867 11.39% 671,957,212 11.40% Total $3,184,571,020 $2,880,668,444 $2,870,141,978 Five -Year Average Return 10.16% 5.59% 5.59% Ten -Year Average Return 6.58% 5.74% 5.74% Note: Each year's yield is weighted by the average asset value in that year. 7r Segal Consulting I1 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, 2005 - 2014 30% 20% 10% 0% -10% -20% �— Market Value -30% —a Actuarial Value -40% * Valuation Value i� Segal Consulting 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 12 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, > salary increases different than assumed, and > COLA increases for retirees and beneficiaries different than assumed. Please see Exhibit I in Section 3 for a detailed reconciliation of changes in the Unfunded Actuarial Accrued Liability. 13 Y 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 8 -year declining period as of December 31, 2014. 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. For the PEPRA cost groups without actual membership data, 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 14 Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association 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 > IA 00 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 > 1 /100 of one year Final Average Salary per year of service at age 50 for Safety Tier A Enhanced > I/ 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 15 Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association 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. Effective with the December 31, 2014 valuation, for determining the cost of the total benefit (i.e., basic and COLA components), the leave cashout assumptions are recognized in the valuation as an employer and member cost. Prior to the December 31, 2014 valuation, for determining the cost of the basic benefit (i.e., non -COLA component), the leave cashout assumptions were recognized in the valuation only as an employer cost and did not affect member contribution rates. In other words, the leave cashout assumptions were only used in establishing COLA member contribution rates. As a result of including the leave cashout assumptions in the basic member rates for the members of each specific cost group, the COLA member rates are no longer pooled across all members of the same tier. This results in twelve different sets of member contribution rates for each specific cost group. The age specific contribution rates are provided in Appendix A. 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. 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. Member contribution rates are provided in Appendix B. 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 16 Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association 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. 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 #I and Cost Group #2 which represent General County and Small Districts. UAAL costs are also pooled for Cost Groups 47 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, 2014 are as follows: 17 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 I 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 I Enhanced/PEPRA Tier 4 Yes Contra Costa County Employees' Retirement Association Tier I 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 l Enhanced/PEPRA Tier 4 Yes Rodeo - Hercules Fire Protection District (Non- Integrated) Tier I 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 I 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 IV Segal Consulting 19 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, 2014 (Recommended hates for FY 16 -17) December 31, 2013 (Recommended Rates for FY 15 -16) Estimated Estimated Cost Group #12 Basic COLA Total Annual Amount Basic COLA Total Annual Amount Non - Enhanced Rodeo - Hercules FPD Safety Tier A Normal Cost 16.88% 5.91% 22.79% $434,567 17.29% 5.91% 23.20% $359,833 UAAL 40.78% 26.57% 67.35 0/.(') 1.284,250 52.98% 34.24% 87.22 %(2) 1,352,787 Total Contributions 57.66% 32.48% 90.14% $1,718,817 70.27% 40.15% 110.42% $1,712,620 Payroll = $1,906,830 Payroll = $1,551,005 Cost Group #12 Non - Enhanced Rodeo - Hercules FPD Safety Tier D Normal Cost 11.43% 5.10% 16.53% $50,910 12.99% 5.77% 18.76% $12,710 UAAL 40.78% 26.57% 67.35 0/.(') 207,429 52.98% 34.24% 87.22 %(2) 59,092 Total Contributions 52.21% 31.67% 83.88% $258,339 65.97% 40.01% 105.98% $71,802 Payroll= $307,987 Payroll = $67,750 Total All Employers Combined (Aggregate) Normal Cost 12.87% 4.06% 16.93% $118,171,947 13.35% 4.20% 17.55% $119,239,774 UAAL 15.07% 8.06% 23.13% 161,426,454 16.70% 9.33% 26.03% 176,855,345 Total Contributions 27.94% 12.12% 40.06% $279,598,401 30.05% 13.53% 43.58% $296,095,119 Payroll = $697,831,837 Payroll = $679,428,911 to Total UAAL dollar contribution for Rodeo - Hercules FPD is $1,582,069 for FY 15 -16 It is based on the UAAL rate shown above multiplied by estimated payroll for FY 16 -17. The estimated payroll for FY 15 -16 was determined by increasing payroll amounts shown above for 2015 by 18- months of assumed wage inflation. (2) Total UAAL dollar contribution for Rodeo - Hercules FPD is $1,497,433 for FY 15 -16. It is based on the UAAL rate shown above multiplied by estimated payroll for FY 15 -16. The estimated payroll for FY 15 -16 was determined by increasing payroll amounts shown above for 2014 by 18- months of assumed wage inflation. IV 31 7r Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association The employer contribution rates as of December 31, 2014 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. CHART 15 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. Reconciliation of Recommended Average Employer Contribution from December 31, 2013 to December 31, 2014 Valuation Contribution Rate(') Estimated Annual Dollar Cost(z) Recommended Average Employer Contribution Rate in December 31, 2013 Valuation 43.58% $296,095,119 Effect of investment (gain) /loss(3) (2.59 %) (18,073,845) Effect of additional UAAL contributions from Sanitary District (0.05 %) (348,916) Effect of difference in actual versus expected contributions due to delay in implementation of 0.15% 1,046,748 contribution rates calculated in 12/31/2013 valuation Effect of lower than expected individual salary increases (0.46 %) (3,210,026) Effect of amortizing prior year's UAAL over a lower than expected projected total payroll 0.33% 7,074,214(4) Effect of lower than expected COLA increases for retirees and beneficiaries (0.27 0%) (1,884,146) Effect of net other experience (gains) /losses(5) (0.56 %) (608,392) Effect of changes in actuarial assumptions(6) 0.00% (3,873) Effect of including leave cashout assumptions in legacy plan member rates (0.07 %) 488 482 Total change (3.52 %) $(16.496.7181 Recommended Average Employer Contribution Rate in December 31, 2014 Valuation 40.06% $279,598,401 M These rates do not include any employer subvention of member contributions, or member subvention of employer contributions. (2) Based on projected total payroll for each valuation date shown. (3) Return on the valuation value of assets of 11.40% was greater than the 7.25% assumed in the 2013 valuation. (4) The dollar amount shown represents the dollar increase in UAAL amortization payments for amortization bases established prior to the December 31, 2014 valuation. (5) 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. (6) The Board approved changes in leave cashout assumptions for Cost Group #9. Segal Consulting 32 The chart reconciles the member contribution from the prior valuation to the amount determined in this valuation. Segal Consulting SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association The member contribution rates as of December 31, 2014 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. CHART 16 Reconciliation of Recommended Member Contribution Rate The chart below details the changes in the recommended average member contribution rate from the prior valuation to the current year's valuation. Reconciliation of Recommended Average Member Contribution from December 31, 2013 to December 31, 2014 Valuation Contribution Rate(" Estimated Annual Dollar Cost(2) Recommended Average Member Contribution Rate in December 31, 2013 Valuation 11.91% $80,886,090 Effect of changes in actuarial assumptions (3) 0.000/0 (1,844) Effect of including leave cashout assumptions in legacy plan member rates Effect of other experience (gains) /losses(4) 0.07% 488,482 (0.14%) 1,244,414 Total change Recommended Average Member Contribution Rate in December 31, 2014 Valuation 11.84% $82,617,142 1 ) These rates do not include any employer subvention of member contributions, or member subvention of employer contributions. t21 Based on projected total payroll for each valuation date shown. (3) The Board approved changes in leave cashout assumptions for Cost Group #9. (4) Other differences in actual versus expected experience. Estimated annual dollar cost also reflects change in payroll from prior valuation. 33 SECTION 2: Valuation Results for the Contra Costa County Employees' Retirement Association E. FUNDED RATIO A critical piece of information regarding the Plan's financial status is the funded ratio. The ratios compare the valuation value of assets and market value of assets to the actuarial accrued liabilities of the Plan as calculated. High ratios indicate a well- funded plan with assets sufficient to cover the plan's actuarial accrued 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 factors. The chart below CHART 17 Funded Ratio for Plan Years Ending December, 31 2005 — 2014 100% ------------------------------------- 95% ---------- ------ ----------- --- -- ----- 90% 85% 80% 75% 70% 65% 60% —f MVA Basis 55% —0 VVA Basis 50% -;�r Segal Consulting depicts a history of the funded ratio for this plan. The funded status measures shown in this valuation are appropriate for assessing the need for or amount of future contributions. However, they are not necessarily appropriate for assessing the sufficiency of Plan assets to cover the estimated cost of settling the Plan's benefit obligations. As the chart below shows, the measures are different depending on whether the valuation or market value of assets is used. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 34 This chart shows how the asset and liability volatility ratios have varied overtime, both for the plan in total and separately for General and Safety. % 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 9.9. This means that a 1% asset gain/(loss) (relative to the assumed investment return) translates to about 9.9% 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 18 Volatility Ratios for Years Ended December 31, 2008 - 2014 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 11.5. This is about 16% higher than the AVR. Therefore, we would expect that contribution volatility will increase over the long -term. 35 Asset Volatility Ratios Liability Volatility Ratios Year Ended December 31 General Safety Total General Safety Total 2008 4.5 8.1 5.3 6.5 15.0 8.5 2009 5.0 11.4 6.4 7.0 16.0 9.1 2010 5.6 13.1 7.3 7.5 17.2 9.7 2011 5.9 13.6 7.6 8.0 18.6 10.4 2012 6.7 16.2 8.7 9.0 22.5 11.9 2013 7.3 18.2 9.5 8.6 22.3 11.4 2014 7.5 19.7 9.9 8.6 23.5 11.5 35 SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT A Table of Plan Coverage L General Tier 1 Classic Members Year Ended December 31 Change From Prior Category 2014 2013 Year Active members in valuation Number 606 661 -8.3% Average age 49.1 48.7 N/A Average service 14.4 14.1 N/A Projected total payroll"' $57,134,291 $59,506,557 -4.0% Projected average payroll $94,281 $90,025 4.7% Account balances $51.259,202 $50,639.503 1.2% Total active members with at least five years of service 518 554 -6.5% Vested terminated members 239 260 -8.1% Retired members Number in pay status 2,610 2,647 -1.4% Average age 74.0 73.7 N/A Average monthly benefit $3,855 $3,735 3.2% Disabled members Number in pay status(') 283 292 -3.1% Average age 70.5 70.1 N/A Average monthly benefit $2,665 $2,599 2.5% Beneficiaries Number in pay status 685 694 -1.3% Average age 77.2 76.8 N/A Average monthly benefit $2,055 $1,975 4.1% � � ) Calculated by increasing actual calendar year salaries by the assumed salary scale. (2) For 2014, includes 210 members receiving a service - connected disability and 73 members receiving an ordinary disability. 4r( Segal Consulting 36 SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT A (continued) Table of Plan Coverage v. General Tier 4 — 3% COLA PEPRA Members Year Ended December 31 Change From Prior Category 2014 2013 Year Active members in valuation 0 0 0.0% Number 44 16 175.0% Average age 38.8 39.3 N/A Average service 0.7 0.5 N/A Projected total payroll(') $2,968,756 $833,519 256.2% Projected average payroll $67,472 $52,095 29.5% Account balances $166,976 $29,905 458.4% Total active members with at least five years of service 0 0 0.0% Vested terminated members 3 0 N/A 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 (Z) Calculated by increasing actual calendar year salaries by the assumed salary scale. Projected compensation for 2015 has been limited. It is our understanding that in the determination ofpension benefits under the PEPR9 formulas, the compensation that can be taken into account for 2015 is equal to $117,020 (For an employer that is not enrolled in Social Security, the maximum amount is 120% of 8117, 020, or $140,424). (reference: Section 7522.10). These amounts should be adjusted for changes to the Consumer Price Index for All Urban Consumers after 2015. (reference: Section 7522.10(d)) � Segal Consulting 40 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, 2014 By Age and Years of Service ii. General Tier 1 Enhanced Classic Members 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 3 3 - - $75,776 $75,776 - - - 25 -29 20 17 3 -- -- __ 85,729 85,982 $84293 30-34 43 14 26 3 92,027 78,367 98,987 $95,455 35 -39 50 14 15 18 3 -- -- - -- -- 85,985 82,258 86,573 91,770 $65,719 40 -44 68 12 16 31 8 1 - -- -- -- 97,054 90,284 100,478 97,177 93,635 $147,038 - - - - - - - 45-49 115 12 16 40 29 11 7 - - - - - - 98,261 114,926 95,138 99,753 94,713 85,883 $102,464 - - - - - 50-54 121 10 23 31 22 16 14 5 - - - - 98,184 120,867 87,065 94,987 102,016 101,216 108,167 $69,264 - - - 55-59 99 11 17 27 18 10 10 2 4 - - 95,617 85,297 100,820 99,813 93,019 91,652 103,002 128,561 $60,218 60-64 56 4 11 20 8 7 2 1 2 1 96,258 84,214 90,064 104,130 75,833 107,097 94,533 129,360 50,257 $205,013 65 -69 16 1 4 7 3 -- - -- 1 -- 81,154 58,799 66,719 91,770 85,999 - - - - - 72,399 - - 70 & over 4 2 - 1 l -- -- 49,051 33,163 80,722 49,158 -- -- Total 595 100 131 178 92 45 33 8 7 1 $94,671 $90,092 $93,351 $97,675 $92,667 $97275 $104,566 $91,600 $59,112 $205,013 it Segal Consulting 48 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, 2014 By Age and Years of Service v. General Tier 4 — 3% COLA ,IEPRA Members --Yyr Segal Consulting �i 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 2 2 $52,331 $52,331 25-29 6 6 54,575 54,575 - 30-34 14 14 58,925 58,925 35-39 3 3 43,985 43,985 40-44 5 5 85,254 85,254 - - 45 -49 6 6 -- 83,896 83,896 50-54 4 4 - 86,032 86,032 55-59 4 4 76,490 76,490 60 -64 -- -- ---- -- -- -- -- -- -- 65-69 -- -- -- -- -- -- -- -- -- - - -- -- -- -- -- -- -- 70 & over - -- - - -- -- -- -- -- -- -- -- -- Total 44 44 - $67,472 $67,472 - --Yyr Segal Consulting �i 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. 2014 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 -- -- -- -- -- -- -- -- -- 25-29 -- 4 -- 2 -- -- -- - -- 2 -- -- -- $672 $945 $400 -- 30-34 3 1 - -- 1 1 -- 867 945 - - - $1,256 400 - - - - 35 -39 5 -- - -- 2 2 1 -- 717 -- - - 548 776 -- $933 -- 40-44 4 1 -- 1 - 2 -- -- -- 1,498 1,798 - - $2,249 - 972 - - - - - - 45 -49 6 - -- 1 3 2 -- -- - - 1,396 -- 1,507 1,325 1,448 -- -- - 50-54 48 27 5 5 6 4 1 - - - - 1,666 1,937 $1,602 1,217 1,236 1,337 $805 - -- 55-59 212 136 43 10 7 10 2 3 - 1 3,259 3,933 2,108 2,143 2,346 2,002 1,808 1,188 $366 60-64 444 184 149 71 13 9 10 3 2 3 4,065 5,099 4,155 2,264 2,819 2,272 2,020 1,439 $1,198 868 65 -69 659 103 211 196 93 28 11 9 7 1 4,135 5,063 5,012 4,255 2,096 2,123 2,510 1,850 1,609 1,784 70-74 558 16 90 213 120 73 27 11 7 1 3,875 4,386 5,034 4,662 3,350 1,907 2,250 2,844 1,731 787 75 -80 491 1 14 99 175 100 72 15 10 5 3,400 236 3,696 4,892 3,904 2,661 1,628 2,206 2,557 1,536 80 -84 469 -- 1 13 105 143 112 73 13 9 2,940 -- 5,654 4,151 3,733 3,786 2,099 1,517 1,900 1,721 85 -89 364 -- 2 1 14 95 106 83 56 7 2,616 - 3,679 13,840 4,374 3,446 2,813 1,711 1,621 1,623 90 & over 311 -- 2 4 11 64 124 74 32 2,373 -- 583 2,810 3,269 2,781 2,241 2,470 1,593 Total 3.578 471 515 612 543 482 405 322 169 59 $3,417 $4,505 $4.453 $4,203 $3,336 $2,952 $2,325 $1.927 $2,069 $1,543 Note: Total retired benefit $12,224,573, average age 74.3 and average years retired 17.9 59 -Tyr Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT D Reconciliation of Member Data — December 31, 2013 to December 31, 2014 63 Segal Consulting Vested Active Terminated Participants Members Pensioners Disableds Beneficiaries Total Number as of December 31. 2013 9.124 2.345 6.438 927 1,260 20,094 New participants 913 74 0 0 89 1,076 Terminations — with vested rights -375 375 0 0 0 0 Contributions Refunds -170 -72 0 0 0 -242 Retirements -325 -57 382 0 0 0 New disabilities -20 -1 -4 25 0 0 Return to work 21 -18 -3 0 0 0 Died with or without beneficiary -9 -3 -151 -30 -59 -252 Data adjustments 0 4 3 _1 _5 1 Number as of December 31, 2014 9,159 2,647 6,665 921 1.285 20,677 63 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. 7 Segal Consulting 64 Year Ended December 31, 2014 Year Ended December 31, 2013 Contribution income: Employer contributions $293,760,413 $235,017,452 Employee contributions 78,257,665 72,373,254 Net contribution income $372,018,078 $307,390,706 Investment income: Interest, dividends and other income $160,135,921 $158,886,435 Adjustment toward market value(l) 561,485,134 378,551,480 Less investment and administrative fees (48,580,188) (44,934,113) Net investment income 673,040,867 492,503,802 Total income available for benefits $1,045,058,945 $799,894,508 Less benefit payments: Benefits paid $(387,026,328) $(369,809,403) Refunds of contributions (6,798,277) (3,844,376) Adjustments/transfers (1,123,100) 98( 5,199) Net benefit payments $(394,947,705) $(374,638,978) Change in reserve for future benefits $650,111,240 $425,255,530 (1) Equals the "non- cash" earnings on investments implicitly included in the Actuarial Value of Assets. 7 Segal Consulting 64 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. Y Segal Consulting 65 Year Ended December 31, 2014 Year Ended December 31, 2013 Cash equivalents $613,763,830 $856,340,856 Other Assets 1,408,938 1,444,726 Accounts receivable: Investment trades $772,963,134 $560,196,591 Investment income 25,967,651 30,970,440 Employee and employer contributions 8,859,556 8,067,883 Additional contributions() 18,774,112 20,267,913 Total accounts receivable 826,564,453 619,502,828 Investments: Stocks $2,850,120,402 $2,523,485,927 Bonds 2,051,100,371 1,868,682,216 Real estate 934,126,982 828,561,519 Alternative investments and real assets 869,856,402 760,678,445 Total investments at market value 6,705,204,157 5,981,408,107 Total assets $8,146,941,378 $7,458,696,517 Less accounts payable: Investment trades $(778,448,185) $(610,567,716) Security lending (277,254,134) (262,983,553) Employer contributions unearned (164,557,125) (112,308,231) Other (17,771,704) (14,519,421) Total accounts payable $(1,238,031,148) $(1,000,378,921) Net assets at market value $6908.910.230 $6 458.317.596 Net assets at actuarial value $6.572.560.432 $5.922.449.192 Net assets at valuation value $6,557.496.101 $5.907.416.432 1 ) Equals the sum of additional contribution receivables for the final Paulson Settlement. Y Segal Consulting 65 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 Second, we determine how this liability will be met. These Balance Sheet. In this approach, we first determine the actuarial "assets" include the net amount of assets already amount and timing of all future payments that are accumulated by the Plan, the present value of future projected/anticipated to be made by the Plan for current member contributions, the present value of future employer participants. We then discount these payments at the normal cost contributions, and the present value of future valuation interest rate to the date of the valuation, thereby employer amortization payments. 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 Liabilities 5. Present value of benefits for retirees and beneficiaries 6. Present value of benefits for vested terminated members(l) 7. Present value of benefits for active members 8. Total present value of benefits (1) Includes nonvested terminated members. Basic $4,109,982,659 428,795,714 674,236,281 975,717,771 $6,188,732,425 $3,154,272,535 170,026,614 2,864,433,276 $6,188,732,425 C 16111101 $2,447,513,442 218,713,737 209,369,269 494,224,341 $3,369,820,789 $2,174,349,065 64,072,629 1,131,399,095 $3,369,820,789 Total $6,557,496,101 647,509,451 883,605,550 1,469,942,112 $9,558,553,214 $5,328,621,600 234,099,243 3,995,832,371 $9,558,553,214 66 Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT H Summary of Total Allocated Reserves Reserves December 31, 2014 December 31, 2013 Member Deposits (1) Member Cost of Living Employer Advance (1)(2) Employer Cost of Living (1) (2) Retired Members (1)(2) Retired Cost of Living (1)(2) 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 $586,388,103 $554,688,703 312,832,275 289,979,180 1,494,234,759 1,919,723,014 608,072,157 1,370,664,993 3,109,447,338 2,409,084,264 2,13 8,359,325 1,164,711,751 8,503,154 10,330,314 15,064,331 15,032,760 0 0 0 0 (1,700,341,010) (1,811,765,783) $6,572,560,432 $5,922,449,192 336,349,798 535,868,404 $6,908,910,230 $6,458,317,596 Note: Results may not add due to rounding. Included in valuation value ofassets. (2) December 31, 2014 information reflects a "true -up" ofretired reserves. (3) Not included in valuation value of assets. 67 Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT I Development of Unfunded Actuarial Accrued Liability (e) Lower than expected COLA increases for retirees and beneficiaries (25,084,260) (f) Other experience (gain) /lossM 71,605 (g) Changes in actuarial assumptions (52,337) (h) Total changes $(303,348,774) 7. Unfunded actuarial accrued liability at end of year $1.469.942.112 Note: The "net gain from other experience " of 867, 988,486 shown in Section 2, Chart 10 is equal to the sum of items 6 (d), (e) and 09. (1) Other differences in actual versus expected experience including (but not limited to) disability, withdrawal, retirement and leave cashout experience IV 68 Segal Consulting Year Ended December 31, 2014 1. Unfunded actuarial accrued liability at beginning of year $1,823,680,975 2. Gross Normal Cost at middle of year 204,123,748 3. Expected employer and member contributions (380,342,768) 4. Interest (whole year on (1) plus half year on (2) - (3)) 125,828.931 5. Expected unfunded actuarial accrued liability at end of year $1.773.290.886 6. Actuarial (gain) /loss due to all changes: (a) Investment return $(244,462,582) (b) Gain from additional UAAL contributions by Sanitary District (4,644,628) (c) Actual contributions less than expected 13,799,259 (d) Lower than expected individual salary increases (42,975,831) (e) Lower than expected COLA increases for retirees and beneficiaries (25,084,260) (f) Other experience (gain) /lossM 71,605 (g) Changes in actuarial assumptions (52,337) (h) Total changes $(303,348,774) 7. Unfunded actuarial accrued liability at end of year $1.469.942.112 Note: The "net gain from other experience " of 867, 988,486 shown in Section 2, Chart 10 is equal to the sum of items 6 (d), (e) and 09. (1) Other differences in actual versus expected experience including (but not limited to) disability, withdrawal, retirement and leave cashout experience IV 68 Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association Note: Results may not add due to rounding. 70 Segal Consulting EXHIBIT J (continued) Table of Amortization Bases Date Source Initial Outstanding Years Annual Established Amount Balance Remaining Payment "' Cost Group #3 December 31, 2007 Restart of Amortization $36,185,000 $28,594,757 8 $4,124,198 Central Contra Costa December 31, 2008 Actuarial (Gain)/Loss 3,709,835 3,454,296 12 352,112 Sanitary District December 31, 2009 Actuarial (Gain)/Loss 10,118,261 9,639,333 13 920,155 December 31, 2009 Assumption Change (2) 2,003,000 1,908,192 13 182,153 December 31, 2009 Depooling Implementation 20,037,235 19,088,812 13 1,822,186 December 31, 2010 Actuarial (Gain)/Loss 18,178,489 17,618,872 14 1,584,265 December 31, 2010 Assumption Change (3) 11,479,648 11,126,252 14 1,000,458 December 31, 2011 Actuarial (Gain)/Loss 10,514,535 10,315,900 15 878,174 December 31, 2012 Actuarial (Gain)/Loss 12,564,241 12,423,802 16 1,005,662 December 31, 2012 Assumption Change (2) 22,455,342 22,204,343 16 1,797,361 December 31, 2012 UAAL Prepayment (4,666,477) (4,614,317) 16 (373,512) December 31, 2013 Actuarial (Gain) /Loss 582,962 580,678 17 44,867 December 31, 2013 Assumption Change (3) (14,950,866) (14,892,282) 17 (1,150,664) December 31, 2013 UAAL Prepayment (4,662,899) (4,644,628) 17 (358,871) December 31, 2014 Actuarial (Gain)/Loss (11,848,823) (11.848,823) 18 (876,848) Total for Cost Group #3 $1009955,188 $10,951,696 Note: Results may not add due to rounding. 70 Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association 80 Yr Segal Consulting EXHIBIT J (continued) Table of Amortization Bases Date Source Initial Outstanding Years Annual Established Amount Balance Remaining Payment ") All Cost Groups Combined December 31, 2007 Restart of Amortization $1,147,096,132 $906,478,802 8 $130,740,696 December 31, 2007 County General POBs(5) (453,973,319) (358,745,691) 8 (51,741,597) December 31, 2007 Moraga General POBs(5) (701,412) (554,280) 8 (79,943) December 31, 2007 CCCFPD Safety POBsls1 (127,509,711) (100,762,660) 8 (14,532,916) December 31, 2008 Actuarial (Gain)/Loss 131,778,368 122,701,286 12 12,507,494 December 31, 2009 Actuarial (Gain)/Loss 280,030,406 266,775,723 13 25,465,966 December 31, 2009 Assumption Change (2) 63,460,000 60,456,247 13 5,771,052 December 31, 2009 Depooling Implementation 681,371 649,120 13 61,964 December 31, 2010 Actuarial (Gain)/Loss 285,254,002 276,472,574 14 24,860,043 December 31, 2010 Assumption Change (3) 15,521,464 15,043,642 14 1,352,704 December 31, 2011 Actuarial (Gain)/Loss 194,756,575 191,077,340 15 16,266,068 December 31, 2011 First Five UAAL Prepaymene5) (1,794,205) (1,435,190) 8 (234,972) December 31, 2012 Actuarial (Gain) /Loss 245,336,047 242,593,759 16 19,637,085 December 31, 2012 Assumption Change (2) 570,154,754 563,781,746 16 45,636,090 December 31, 2012 Sanitary UAAL Prepayment (4,666,477) (4,614,317) 16 (373,512) December 31, 2013 Actuarial (Gain)/Loss (202,894,807) (202,099,778) 17 (15,615,404) December 31, 2013 Assumption Change (3) (205,332,015) (204,527,436) 17 (15,802,980) December 31, 2013 Sanitary UAAL Prepayment (4,662,899) (4,644,628) 17 (358,871) December 31, 2014 Actuarial (Gain)/Loss (298,651,809) (298,651,809) 18 (22,101,113) December 31, 2014 Assumption Change (4) (52,337) (52,337) 18 (3,873) Total for All Cost Groups $1,469,942,112 $161,453,981 Note: Results may not add due to rounding. 80 Yr Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association EXHIBIT J (continued) Table of Amortization Bases � 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. (Z) 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 cashout (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) The Board approved changes in actuarial assumptions. Effective with the December 31, 2014 valuation, leave cashout (terminal pay) assumptions were eliminated for Cost Group #9. (5) 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. 81 %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 2015. 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. 82 A- Segal Consulting SECTION 3: Supplemental Information for the Contra Costa County Employees' Retirement Association 83 i� Segal Consulting 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. 83 i� 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. 84 Segal Consulting 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 1,285 beneficiaries in pay status) 8,871 2. Members inactive during year ended December 31, 2014 with vested rights 2,647 3. Members active during the year ended December 31, 2014 9,159 The actuarial factors as of the valuation date are as follows (amounts in 000s): 1. Normal cost $200,789 2. Present value of future benefits 9,558,553 3. Present value of future normal costs 1,531,115 4. Actuarial accrued liability* 8,027,438 Retired members and beneficiaries $5,328,622 Inactive members with vested rights 234,099 Active members 2,464,717 5. Valuation value of assets ** ($6,908,910 at market value as reported by Retirement Association) 6,557,496 6. Unfunded actuarial accrued liability $1,469,942 * Excludes liabilities for non - valuation reserves * * Excludes assets for non - valuation reserves IV 85 Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association 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 $200,789 28.77% 2. Expected employee contributions 8( 2.617) 1 1( 84 %) 3. Employer normal cost: (1) + (2) $118,172 16.93% 4. Amortization of unfunded actuarial accrued liability 161.426 23.13% 5. Total recommended average employer contribution: (3) + (4) $279,598 40.06% 6. Projected payroll $697.832 86 Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association EXHIBIT II Schedule of Employer Contributions Plan Year Annual Required Actual Percentage Ended December 31 Contributions Contributions Contributed 2005 $147.165.108 $147,165,1081 � � 100.0% 2006 179.755,315 179,755,31512) 100.0% 2007 196,929,570 196,929,570 100.0% 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% 2014 288,760,413 288,760,413(4) 100.0% ")Excludes pension obligation bond proceeds of S153,134,911. '')Excludes pension obligation bond proceeds of $11,693,396. (a)Excludes additional contributions towards UAAL of $7,000,000. (4)Exchides additional contributions towards UAAL of $5, 000, 000. 87 � Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association EXHIBIT III Schedule of Funding Progress "' Excludes assets for non - valuation reserves. (al Excludes liabilities for non - valuation reserves 88 i -Segal Consulting Unfunded/ UAAL as a Valuation Actuarial (Overfunded) Percentage of Actuarial Value Accrued Liability AAL Funded Covered Covered Valuation of Assets(') (AAL)(') (UAAL) Ratio Payroll Payroll Date (a) (b) (b) - (a) (a) / (b) (c) [(b) - (a)] / (c) 12/31/2005 $4,062,057.143 $4.792,428.024 $730,370,881 84.76% $627.546,408 116.39% 12/31/2006 4,460,871,033 5.293.977,010 833.105.977 84.26% 653,953,163 127.40% 12/31/2007 5,016,136,535 5,581.048,225 564,911,690 89.88% 671,617,932 84.11% 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 1312,215,090 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 7,7613 15.535 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% 12/31/2014 6,557.496,101 8.027.438.213 1,469,942,112 81.69% 697.831.837 210.64% "' Excludes assets for non - valuation reserves. (al Excludes liabilities for non - valuation reserves 88 i -Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association EXHIBIT IV Supplementary Information Required on Actuarially Determined Contribution by GASB Valuation date December 31, 2014 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 8 years remaining as of December 31, 2014. 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 increases(l) General: 4.75% to 13.50 %; Safety: 4.75% to 14.00% Cost of living adjustments 3% per year except for Tier 3 and PEPRA Tier 5 (3% COLA) 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 8,871 Terminated members entitled to, but not yet receiving 2,647 benefits Active members 9.159 Total 20,677 Includes inflation at 3.25%, 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, 2014 valuation is 7.1 %. 89 Yr 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: 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. Disabled: 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: 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. Member Contribution Rates: 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. 90 � Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Termination Rates Before Retirement: Rate ( %) Mortality General Age Male Female Male 25 0.03 0.01 0.02 30 0.04 0.02 0.03 35 0.06 0.03 0.05 40 0.08 0.04 0.08 45 0.10 0.07 0.09 50 0.12 0.09 0.11 55 0.17 0.18 0.16 60 0.37 0.38 0.33 65 0.74 0.74 0.66 All pre- retirement deaths are assumed to be non- service connected Safety Female 0.01 0.02 0.03 0.04 0.06 0.08 0.15 0.34 0.66 91 -Tr Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Termination Rates Before Retirement (continued): Rate ( %) Disability (1) 70% of General Tier 1 disabilities are assumed to be duty disabilities. The other 30% are assumed to be ordinary disabilities. (Z) 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. 92 Segal Consulting General General Age Tier 11" Tier 3121 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 (1) 70% of General Tier 1 disabilities are assumed to be duty disabilities. The other 30% are assumed to be ordinary disabilities. (Z) 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. 92 Segal Consulting 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. 93 -7 - Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Retirement Rates (General): Age 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 General Tier 1 (Enhanced) Rate General Tier 3 General Tier 1 (Enhanced) (Non- enhanced) PEPRA General Tiers 4 and 5 5.00 4.00 3.00 0.00 4.00 3.00 3.00 0.00 6.00 3.00 3.00 2.00 6.00 5.00 3.00 3.00 12.00 5.00 3.00 3.00 20.00 10.00 10.00 5.00 20.00 10.00 10.00 5.00 20.00 10.00 10.00 6.00 22.00 12.00 10.00 8.00 25.00 12.00 10.00 9.00 30.00 15.00 25.00 10.00 35.00 20.00 15.00 14.00 35.00 27.00 40.00 21.00 35.00 27.00 25.00 21.00 35.00 30.00 30.00 21.00 40.00 40.00 40.00 27.00 40.00 40.00 35.00 33.00 40.00 40.00 35.00 33.00 40.00 40.00 35.00 33.00 40.00 40.00 35.00 33.00 100.00 40.00 100.00 50.00 100.00 40.00 100.00 50.00 100.00 40.00 100.00 50.00 100.00 40.00 100.00 50.00 100.00 40.00 100.00 50.00 100.00 100.00 100.00 100.00 94 Segal Consulting 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. 96 -rT- Segal Consulting 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: 0.00% Cost Group 10: 1.50% Cost Group 11 3.00% Cost Group 12: 3.50% The cost of this pay element is recognized in the valuation as an employer and member cost in both basic and COLA components. PEPRA General Tiers 4 and S PEPRA Safety Tiers D and E None 97 % Segal Consulting 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. 98 A Segal Consulting 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 6.75 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 99 -7 -Segal Consulting 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, 2014 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. 100 A' Segal Consulting 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: The leave cashout assumption for Safety Tier C (Cost Group #9) was eliminated. The previous assumption was as shown below. In addition, the basic (i.e., non -COLA) member contribution rates now reflect the leave cashout assumptions for non -PEPRA members. ]01 'T� Segal Consulting 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 1 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 S 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. 103 % Segal Consulting 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 General Tier 2 Service Retirement Eligibility: General Tiers 1, 2 and 3 PEPRA General Tiers 4 and 5 Safety Tiers A and C PEPRA Safety Tiers D and E Years of service *. (Yrs) Years of service up to a maximum of 30 years *. (Yrs30) *Includes accumulated sick leave as of the date of retirement ( §31641.01). Age 50 with 10 years of service, or age 70 regardless of service, or after 30 years of service, regardless of age. ( §31672) Age 52 with 5 years of service, or age 70 regardless of service. ( §7522.20(a)) and §31672.3) Age 50 with 10 years of service, or age 70 regardless of service, or after 20 years of service, regardless of age. ( §31663.25) Age 50 with 5 years of service, or age 70 regardless of service. ( §7522.25(a)) and §31672.3) IV 104 Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Benefit Formula: General Tiers 1 and 3 (Non - enhanced)( §31676.11) General Tier I and Tier 3 (Enhanced) ( §31676.16) Retirement Age Benefit Formula 50 (1.24 %xFASI - l /3x1.24 %x$350xl2)xYrs 55 (1.67 %xFASI - 1 /3x1.67 %x$350xl2)xYrs 60 (2.18 %xFASI - 1 /3x2.18 %x$350xl2)xYrs 62 (2.35 %xFASI - 1 /3x2.35 %x$350xl2)xYrs 65 or later (2.61 %xFASI - l /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 %xFAS] - 1 /3x2.26 %x$350xl2)xYrs 62 (2.37 %xFASI - 1 /3x2.37 %x$350xl2)xYrs 65 or later (2.42 %xFASI - 1 /3x2.42 %x$350xl2)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 %xYrs30xPIA 55 1.13 %xFAS3xYrs - 0.87 %xYrs30xPIA 60 1.43 %xFAS3xYrs - 1.37 %xYrs30xPIA 62 1.55 %xFAS3xYrs - 1.67 %xYrs30xPIA 65 or later 1.73 %xFAS3xYrs - 1.67 %xYrs30xPIA The offsets shown in all of the above formulas only apply to members integrated with Social Security. 105 i�- Segal Consulting 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 2.30WAS3xYrs 67 or later 2.50 %xFAS3xYrs Safety Tier A (Non- enhanced) ( §31664) 50 2.00WAS 1 xYrs 55 or later 2.62%xFAS 1 xYrs Safety Tier (Enhanced) (§31664. 1) 50 or later 3.00WASIxYrs 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 106 % Segal Consulting 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 5 Eligibility Ten years of service (definition 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 Safety 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. 107 -;'r" Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association Death After Retirement: Non - General Tier 2 Service or Ordinary Disability Retirement Line -of -Duty Disability General Tier 2 Service or Disability Retirement Withdrawal Benefits: Less than Five Years of Service Five or More Years of Service 60% of member's unmodified allowance continued to eligible spouse. An eligible spouse is a surviving spouse who was married to the member one year prior to member's retirement or at least two years prior to the date of death and has attained age 55 on or prior to the date of death ( §31760.2). An additional lump sum benefit of $5,000 is payable to the member's beneficiary ( §31789.5). 100% of members allowance continued to eligible spouse ( §31786). An additional lump sum benefit of $5,000 is payable to the member's beneficiary ( §31789.5). 60% of member's unmodified allowance continued to eligible spouse plus 20% of allowance to each minor child ( §31789.11). Minimum benefit is 60% of allowance. Maximum benefit is 100% of allowance. $5,000 lump sum death benefit ( §31789.5) plus $2,000 less any Social Security Lump sum payment ( §31789.01) are payable to member's beneficiary. Refund of accumulated employee contributions with interest, or earned benefit at age 70 ( §31628). If contributions left on deposit, entitled to earned benefits commencing at any time after eligible to retire ( §31700). 109 7r Segal Consulting 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 Member Contributions: General Tiers 1 and 3 (Non- enhanced) Basic Cost -of- Living General Tiers 1 and 3 (Enhanced) Basic Cost -of- Living PEPRA General Tiers 4 and 5 Safety Tier A (Non- enhanced) Basic Cost -of- Living 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." Please refer to Appendices A and B for the specific rates. Provide for one -half of the §31676.11 benefit payable at age 55. Provide for one -half of future Cost -of- Living costs. Provide for an average annuity at age 60 equal to 1/120 of FAS1. Provide for one -half of future Cost -of- Living costs. 50% of the total Normal Cost rate. Provide for one -half of the §31664 benefit payable at age 50. Provide for one -half of future Cost -of- Living costs. 110 � Segal Consulting 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 FAS1. 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: Contra Costa County Fire Protection PEPRA members covered under a Memorandum of Understanding who become members on or after January 1, 2015 enter Tier E with the 2% COLA provisions. ? 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. 111 A' Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association General Cost Group #3 Members' Contribution Rates (Expressed as a Percentage of Monthly Payroll) For Members with Membership Dates before January 1, 2013 Calculated Under Recommended Assumptions Basic COLA Total Entry Age First $350 Over $350 First $350 Over $350 First $350 Over $350 15 3.77% 5.66% 2.11% 3.16% 5.88% 8.82% 16 3.83% 5.74% 2.13% 3.20% 5.96% 8.94% 17 3.88% 5.82% 2.16% 3.24% 6.04% 9.06% 18 3.93% 5.90% 2.19% 3.29% 6.12% 9.19% 19 3.99% 5.98% 2.22% 3.33% 6.21% 9.31% 20 4.04% 6.06% 2.25% 3.38% 6.29% 9.44% 21 4.10% 6.15% 2.29% 3.43% 6.39% 9.58% 22 4.15% 6.23% 2.31% 3.47% 6.46% 9.70% 23 4.21% 6.32% 2.35% 3.52% 6.56% 9.84% 24 4.27% 6.41% 2.38% 3.57% 6.65% 9.98% 25 4.33% 6.50% 2.41% 3.62% 6.74% 10.12% 26 4.39% 6.59% 2.45% 3.67% 6.84% 10.26% 27 4.45% 6.68% 2.48% 3.72% 6.93% 10.40% 28 4.51% 6.77% 2.51% 3.77% 7.02% 10.54% 29 4.57% 6.86% 2.55% 3.82% 7.12% 10.68% 30 4.64% 6.96% 2.59% 3.88% 7.23% 10.84% 31 4.70% 7.05% 2.62% 3.93% 7.32% 10.98% 32 4.77% 7.15% 2.66% 3.99% 7.43% 11.14% 33 4.83% 7.25% 2.69% 4.04% 7.52% 11.29% 34 4.90% 7.35% 2.73% 4.10% 7.63% 11.45% 35 4.97% 7.45% 2.77% 4.15% 7.74% 11.60% 36 5.03% 7.55% 2.81% 4.21% 7.84% 11.76% 37 5.10% 7.65% 2.84% 4.26% 7.94% 11.91% 38 5.17% 7.76% 2.89% 4.33% 8.06% 12.09% 39 5.25% 7.87% 2.93% 4.39% 8.18% 12.26% 40 5.32% 7.98% 2.97% 4.45% 8.29% 12.43% 41 5.39% 8.09% 3.01% 4.51% 8.40% 12.60% 42 5.47% 8.20% 3.05% 4.57% 8.52% 12.77% 43 5.55% 8.32% 3.09% 4.64% 8.64% 12.96% 116 4r" Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association General Cost Group #3 Members' Contribution Rates (Expressed as a Percentage of Monthly Payroll) For Members with Membership Dates before January 1, 2013 Calculated Under Recommended Assumptions Interest: 7.25% Salary Increase: See Exhibit V. Leave Cashout: 6.50% COLA Loading: 55.75% Mortality: RP -2000 Combined Healthy Mortality Table Projected to 2030 with Scale AA, set back one year, weighted 30% Male and 70% Female. 117 %Segal Consulting Basic COLA Total Entry Age First $350 Over $350 First $350 _ Over $350 First $350 Over $350 44 5.62% 8.43% 3.13% 4.70% 8.75% 13.13% 45 5.71% 8.56% 3.18% 4.77% 8.89% 13.33% 46 5.79% 8.69% 3.23% 4.84% 9.02% 13.53% 47 5.87% 8.81% 3.27% 4.91% 9.14% 13.72% 48 5.97% 8.95% 3.33% 4.99% 9.30% 13.94% 49 6.06% 9.09% 3.38% 5.07% 9.44% 14.16% 50 6.17% 9.25% 3.44% 5.16% 9.61% 14.41% 51 6.27% 9.41% 3.50% 5.25% 9.77% 14.66% 52 6.37% 9.55% 3.55% 5.32% 9.92% 14.87% 53 6.47% 9.70% 3.61% 5.41% 10.08% 15.11% 54 6.56% 9.84% 3.66% 5.49% 10.22% 15.33% 55 6.63% 9.94% 3.69% 5.54% 10.32% 15.48% 56 6.68% 10.02% 3.73% 5.59% 10.41% 15.61% 57 6.61% 9.92% 3.69% 5.53% 10.30% 15.45% 58 6.53% 9.79% 3.64% 5.46% 10.17% 15.25% 59 6.07% 9.11% 3.39% 5.08% 9.46% 14.19% 60 6.07% 9.11% 3.39% 5.08% 9.46% 14.19% Interest: 7.25% Salary Increase: See Exhibit V. Leave Cashout: 6.50% COLA Loading: 55.75% Mortality: RP -2000 Combined Healthy Mortality Table Projected to 2030 with Scale AA, set back one year, weighted 30% Male and 70% Female. 117 %Segal Consulting SECTION 4: Reporting Information for the Contra Costa County Employees' Retirement Association 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 (2% COLA) 8.17% 1.84% 10.01% Cost Group #I — PEPRA Tier 4 (3% COLA) 7.98% 2.96% 10.94% Cost Group #2 - PEPRA Tier 5 (2% COLA) 7.12% 1.61% 8.73% Cost Group #2 - PEPRA Tier 5 (3 %/4% COLA) 7.63% 2.76% 10.39% Cost Group #3 - PEPRA Tier 4 (3% COLA) 8.80% 3.26% 12.06% Cost Group #4 - PEPRA Tier 4 (3% COLA) 6.96% 2.64% 9.60% Cost Group #5 - PEPRA Tier 4 (2% COLA) 6.99% 1.59% 8.58% Cost Group #5 - PEPRA Tier 4 (3% COLA) 10.26% 3.88% 14.14% Cost Group #6 - PEPRA Tier 4 (3% COLA) 8.41% 3.24% 11.65% 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 2015 is equal to the Social Security Taxable Wage Base or $117,020. (For an employer that is not enrolled in Social Security, the maximum amount is $140,424 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 2015. (reference: Section 7522.10(d)) 136 i� Segal Consulting