CITY COUNCIL WORKSHOP SUPPLEMENTAL

October 13, 2022 E-19 ACTUARIAL ASSUMPTIONS Assumptions June 30, 2021 Valuation  Basis for Assumptions  CalPERS 2021 experience study covering 2000 to 2019 experience  Mortality improvement based on Society of Actuaries tables  Inflation based on our estimate for the Plan’s very long time horizon  Age-based claims are based on Society of Actuaries publications  Participation and coverage assumptions based in part on Plan experience  Capital market assumptions based on 2021 Bartel Associates stochastic analysis, taking into account capital market assumptions of investment advisory firms  Medical trend: • Short-term healthcare trend was developed in consultation with Axene Health Partners’ healthcare actuaries • Long-term healthcare trend was developed using Society of Actuaries’ Getzen Model of Long-Run Medical Cost Trends October 13, 2022 E-20 DEFINITIONS  OPEB Accrual Accounting • Project future employer-provided benefit cash flows for current active employees and current retirees • Discount projected cash flow to valuation date using discount rate (assumed return on assets used to pay benefits) and other actuarial assumptions to determine present value of projected future benefits (PVB) • Allocate PVB to past, current, and future periods using the actuarial cost method • Actuarial cost method used for this valuation is the Entry Age Normal Cost method which determines Normal Cost as a level percentage of payroll (same method used by CalPERS) • Normal Cost is amount allocated to current fiscal year • Actuarial Accrued Liability (AAL) is amount allocated to prior service with employer • Unfunded AAL (UAAL) is AAL less plan assets pre-funded in a segregated and restricted trust  PayGo Cost • Cash subsidy is employer pay-as-you-go benefit payments for retirees • Implied subsidy is difference between actual cost of retiree benefits and retiree premiums subsidized by active employee premiums