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HomeMy WebLinkAboutReso - CC - 081-2013RESOLUTION NO- 81-2013 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BURLINGAME APPROVING THE AGREEMENT WITH THE CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM (CalPERS) TO PREFUND RETIREE BENEFITS THROUGH PARTICIPATIO IN THE CALIFORIA EMPLOYER RETIREE BENEFIT TRUST PROGRAM (CERBT); DELEGATING AUTHORITY TO REQUEST DISBURSEMENTS FROM THE TRUST AND OTHER ACTIONS AS NEEDED TO ADMINISTER THE CITY'S CERBT PLAN WHEREAS, pursuant to Memorandums of Understanding with each employee association, the City provides a Retiree Medical Subsidy and Benefit to retirees; and WHEREAS, such non -pension medical benefits for retirees are commonly known as "other post -employment benefits" or "OPEBs'. Previously, under Statement 12 of the Governmental Accounting Standards Board ("GASB"), governments typically followed a "pay-as-you-go" accounting approach in which the costs of OPPEB benefits.are not reported on financial statements until after employees retire; and WHEREAS, in 2004, GASB adopted Statement 45, which requires, financial statements to report the present value of estimated total OPEB benefits that is attributed to employee services received in the current year, plus the, cost of amortizing a portion of the unfunded actuarial accrued liability for previous years, and WHEREAS, under Government Code Section 53216, the City may create a trust as a means to prefund and invest OPEB obligations payable in the future; and WHEREAS, a request for proposals was issued to various vendors to provide investment services and manage a trust for the Retiree Medical subsidy and Benefit; and WHEREAS, the City Council has selected the California Employers Benefit Trust Fund (CERBT), a multi-employer trust established by the California Public Employees Retirement System (CalPERS) to be that trust; and WHEREAS, to participate in the CERBT program, CalPERS requires the City Council to approve the accompanying agreement in a public meeting; NOW, THEREFORE BE IT RESOLVED, the City Council of the City of Burlingame does hereby approve and authorize the Mayor to sign the agreement with the California Public Employees Retirement System (CalPERS) to prefund retiree medical benefits through participation in the Califomia Employers Benefit Trust Fund (CERBT); attached hereto as Exhibit A, BE IT FURTHER RESOLVED, the City Council of the City of Burlingame does hereby adopt a resolution delegating_ authority to the City Manager and the Finance Director to request disbursements from the Trust, and take whatever additional actions are required to administer the City's CERBT Plan, attached hereto as Exhibit B. PASSED AND ADOPTED, by the City Council of the City of Burlingame of the State of California on September 16, 2013. Mn Keighran, May I, Mary Ellen Kearney, City Clerk of the City of Burlingame do hereby certify that the foregoing Resolution was introduced at a regular meeting of the City Council on the 160' day of September, 2013, and was adopted thereafter by the following vote: AYES: Councilmembers: BAYLOCK, BROWNRIGG, DEAL, KEIGHRAN, NAGEL NOES: Councilmembers: NONE ABSENT: Councilmembers: NONE Mary Ellen Kerney, City Clerk EXHIBIT A CALIFORNIA EMPLOYERS' RETIREE BENEFIT TRUST PROGRAM ("CERBT") AGREEMENT AND ELECTION OF THE CITY OF BURLINGAME TO PREFUND OTHER POST EMPLOYMENT BENEFITS THROUGH CaIPERS WHEREAS (1) Government Code Section 22940 establishes in the State Treasury the Annuitants' Health Care Coverage Fund for the prefunding of health care coverage for annuitants (Prefunding Plan); and WHEREAS (2) The California Public Employees' Retirement System (CaIPERS) Board of Administration (Board) has sole and exclusive control and power over the administration and investment of the Prefunding Plan (sometimes also referred to as CERBT), the purposes of which include, but are not limited to (i) receiving contributions from participating employers and establishing separate Employer Prefunding Accounts in the Prefunding Plan for the performance of an essential governmental function (ii) investing contributed amounts and income thereon, if any, in order to receive yield on the funds and (iii) disbursing contributed amounts and income thereon, if any, to pay for costs of administration of the Prefunding Plan and to pay for health care costs or other post -employment benefits in accordance with the terms of participating employers' plans; and WHEREAS (3) THE CITY OF BURLINGAME (Employer) desires to participate in the Prefunding Plan upon the terms and conditions set by the Board and as set forth herein; and WHEREAS (4) Employer may participate in the Prefunding Plan upon (i) approval by the Board and (ii) filing a duly adopted and executed Agreement and Election to Prefund Other Post Employment Benefits (Agreement) as provided in the terms and conditions of the Agreement; and WHEREAS (5) The Prefunding Plan is a trust fund that is intended to perform an essential governmental function within the meaning of Section 115 of the Internal Revenue Code as an agent multiple -employer plan as defined in Governmental Accounting Standards Board (GASB) Statement No. 43 consisting of an aggregation of single -employer plans, with pooled administrative and investment functions; Rev 1/2/2013 NOW, THEREFORE, BE IT RESOLVED THAT EMPLOYER HEREBY MAKES THE FOLLOWING REPRESENTATION AND WARRANTY AND THAT THE BOARD AND EMPLOYER AGREE TO THE FOLLOWING TERMS AND CONDITIONS: A. Representation and Warranty Employer represents and warrants that it is a political subdivision of the State of California or an entity whose income is excluded from gross income under Section 115 (1) of the Internal Revenue Code. B. Adoption and Approval of the Agreement; Effective Date; Amendment (1) Employer's governing body shall elect to participate in the Prefunding Plan by adopting this Agreement and filing with the CalPERS Board a true and correct original or certified copy of this Agreement as follows: Filing by mail, send to: CalPERS Affiliate Program Services Division CERBT (OPEB) P.O. Box 1494 Filing in person, deliver to: Sacramento, CA 95812-1494 CalPERS Mailroom Affiliate Program Services Division CERBT (OPEB) 400 Q Street Sacramento, CA 95811 (2) Upon receipt of the executed Agreement, and after approval by the Board, the Board shall fix an effective date and shall promptly notify Employer of the effective date of the Agreement. (3) The terms of this Agreement may be amended only in writing upon the agreement of both CalPERS and Employer, except as otherwise provided herein. Any such amendment or modification to this Agreement shall be adopted and executed in the same manner as required for the Agreement. Upon receipt of the executed amendment or modification, the Board shall fix the effective date of the amendment or modification. (4) The Board shall institute such procedures and processes as it deems necessary to administer the Prefunding Plan, to carry out the purposes of this Agreement, and to maintain the tax exempt status of the Prefunding Plan. Employer agrees to follow such procedures and processes. Rev 1/2/2013 2 C. Other Post Employment Benefits (OPEB) Cost Reports and Employer Contributions (1) Employer shall provide to the Board an OPEB cost report on the basis of the actuarial assumptions and methods prescribed by the Board. Such report shall be for the Board's use in financial reporting, and shall be prepared at least as often as the minimum frequency required by GASB 43. This OPEB cost report may be prepared as an actuarial valuation report or, if the employer is qualified under GASB 45 and 57, may be prepared as an Alternative Measurement Method (AMM) report. (a) Unless qualified under GASB 45 and 57 to provide an AMM report, Employer shall provide to the Board an actuarial valuation report. Such report shall be for the Board's use in financial reporting, and shall be prepared at least as often as the minimum frequency required by GASB 43 and 57, and shall be: 1) prepared and signed by a Fellow or Associate of the Society of Actuaries who is also a Member of the American Academy of Actuaries or a person with equivalent qualifications acceptable to the Board; 2) prepared in accordance with generally accepted actuarial practice and GASB 43, 45 and 57; and, 3) provided to the Board prior to the Board's acceptance of contributions for the valuation period or as otherwise required by the Board. (b) If qualified under GASB 45 and 57, Employer may provide to the Board an AMM report. Such report shall be for the Board's use in financial reporting, shall be prepared at least as often as the minimum frequency required by GASB 43 and 57, and shall be: 1) affirmed by Employer's external auditor, or by a Fellow or Associate of the Society of Actuaries who is also a Member of the American Academy of Actuaries or a person with equivalent qualifications acceptable to the Board, to be consistent with the AMM process described in GASB 45; 2) prepared in accordance with GASB 43, 45, and 57; and, 3) provided to the Board prior to the Board's acceptance of contributions for the valuation period or as otherwise required by the Board. (2) The Board may reject any OPEB cost report submitted to it, but shall not unreasonably do so. In the event that the Board determines, in its sole discretion, that the OPEB cost report is not suitable for use in the Board's financial statements or if Employer fails to provide a required OPEB cost report, the Board may obtain, at Rev 1/2/2013 Employer's expense, an OPEB cost report that meets the Board's financial reporting needs. The Board may recover from Employer the cost of obtaining such OPEB cost report by billing and collecting from Employer or by deducting the amount from Employer's account in the Prefunding Plan. (3) Employer shall notify the Board of the amount and time of contributions which contributions shall be made in the manner established by the Board. (4) Employer contributions to the Prefunding Plan may be limited to the amount necessary to fully fund Employer's actuarial present value of total projected benefits, as supported by the OPEB cost report acceptable to the Board. As used throughout this document, the meaning of the term "actuarial present value of total projected benefits" is as defined in GASB Statement No. 45. If Employer's contribution causes its assets in the Prefunding Plan to exceed the amount required to fully fund the actuarial present value of total projected benefits, the Board may refuse to accept the contribution. (5) No contributions are required. If an employer elects to contribute then the contribution amount should not be less than $5000 or the employer's annual required contribution (ARC), whichever amount is lower. Contributions can be made at any time following the seventh day after the effective date of the Agreement provided that Employer has first complied with the requirements of Paragraph C. D. Administration of Accounts, Investments, Allocation of Income (1) The Board has established the Prefunding Plan as an agent plan consisting of an aggregation of single -employer plans, with pooled administrative and investment functions, under the terms of which separate accounts will be maintained for each employer so that Employer's assets will provide benefits only under employer's plan. (2) All Employer contributions and assets attributable to Employer contributions shall be separately accounted for in the Prefunding Plan (Employer's Prefunding Account). (3) Employer's Prefunding Account assets may be aggregated with prefunding account assets of other employers and may be co -invested by the Board in any asset classes appropriate for a Section 115 Trust. (4) The Board may deduct the costs of administration of the Prefunding Plan from the investment income or Employer's Prefunding Account in a manner determined by the Board. (5) Investment income shall be allocated among employers and posted to Employer's Prefunding Account as determined by the Board but no less frequently than annually. (6) If Employer's assets in the Prefunding Plan exceed the amount required to fully fund the actuarial present value of total projected benefits, the Board, in compliance with applicable accounting and legal requirements, may return such excess to Employer. Rev 1/2/2013 4 E. Reports and Statements (1) Employer shall submit with each contribution a contribution report in the form and containing the information prescribed by the Board. (2) The Board shall prepare and provide a statement of Employer's Prefunding Account at least annually reflecting the balance in Employer's Prefunding Account, contributions made during the period and income allocated during the period, and such other information as the Board determines. F. Disbursements (1) Employer may receive disbursements not to exceed the annual premium and other costs of post -employment healthcare benefits and other post -employment benefits as defined in GASB 43. (2) Employer shall notify CaIPERS in writing in the manner specified by CaIPERS of the persons authorized to request disbursements from the Prefunding Plan on behalf of Employer. (3) Employer's request for disbursement shall be in writing signed by Employer's authorized representative, in accordance with procedures established by the Board. The Board may require that Employer certify or otherwise establish that the monies will be used for the purposes of the Prefunding Plan. (4) Requests for disbursements that satisfy the requirements of paragraphs (2) and (3) will be processed monthly. (5) CalPERS shall not be liable for amounts disbursed in error if it has acted upon the written instruction of an individual authorized by Employer to request disbursements. In the event of any other erroneous disbursement, the extent of CalPERS' liability shall be the actual dollar amount of the disbursement, plus interest at the actual earnings rate but not less than zero. (6) No disbursement shall be made from the Prefunding Plan which exceeds the balance in Employer's Prefunding Account. G. Costs of Administration Employer shall pay its share of the costs of administration of the Prefunding Plan, as determined by the Board. H. Termination of Employer Participation in Prefunding Plan (1) The Board may terminate Employer's participation in the Prefunding Plan if: Rev 1/2/2013 5 (a) Employer gives written notice to the Board of its election to terminate; (b) The Board finds that Employer fails to satisfy the terms and conditions of this Agreement or of the Board's rules or regulations. (2) If Employer's participation in the Prefunding Plan terminates for any of the foregoing reasons, all assets in Employer's Prefunding Account shall remain in the Prefunding Plan, except as otherwise provided below, and shall continue to be invested and accrue income as provided in Paragraph D. (3) After Employer's participation in the Prefunding Plan terminates, Employer may not make contributions to the Prefunding Plan. (4) After Employer's participation in the Prefunding Plan terminates, disbursements from Employer's Prefunding Account may continue upon Employer's instruction or otherwise in accordance with the terms of this Agreement. (5) After thirty-six (36) months have elapsed from the effective date of this Agreement or at such earlier date as may be approved by the Board in its sole discretion: (a) Employer may request a trustee to trustee transfer of the assets in Employer's Prefunding Account. Upon satisfactory showing to the Board that the transfer will satisfy applicable requirements of the Internal Revenue Code and the Board's fiduciary duties, then the Board shall effect the transfer within one hundred twenty (120) days. The amount to be transferred shall be the amount in the Employer's Prefunding Account as of the disbursement date and shall include investment earnings up to the investment earnings allocation date immediately preceding the disbursement date. In no event shall the investment earnings allocation date precede the transfer by more than 120 days. (b) Employer may request a disbursement of the assets in Employer's Prefunding Account. Upon satisfactory showing to the Board that all of Employer's obligations for payment of post employment health care benefits and other post employment benefits and reasonable administrative costs of the Board have been satisfied, then the Board shall effect the disbursement within one hundred twenty (120) days. The amount to be disbursed shall be the amount in the Employer's Prefunding Account as of the disbursement date and shall include investment earnings up to the investment earnings allocation date immediately preceding the disbursement date. In no event shall the investment earnings allocation date precede the disbursement by more than 120 days. (6) After Employer's participation in the Prefunding Plan terminates and at such time that no assets remain in Employer's Prefunding Account, this Agreement shall terminate. Rev 1/2/2013 6 (7) If, for any reason, the Board terminates the Prefunding Plan, the assets in Employer's Prefunding Account shall be paid to Employer after retention of (i) amounts sufficient to pay post -employment health care benefits and other post -employment benefits to annuitants for current and future annuitants described by the employer's current substantive plan (as defined in GASB 43), and (ii) amounts sufficient to pay reasonable administrative costs of the Board. (8) If Employer ceases to exist but Employer's Prefunding Plan continues to exist and no provision has been made by Employer for ongoing payments to pay post - employment health care benefits and other post -employment benefits to annuitants for current and future annuitants, the Board is authorized to and shall appoint a third party administrator to carry out Employer's Prefunding Plan. Any and all costs associated with such appointment shall be paid from the assets attributable to contributions by Employer. (9) If Employer should breach the representation and warranty set forth in Paragraph A., the Board shall take whatever action it deems necessary to preserve the tax-exempt status of the Prefunding Plan. I. General Provisions (1) Books and Records. Employer shall keep accurate books and records connected with the performance of this Agreement. Employer shall ensure that books and records of subcontractors, suppliers, and other providers shall also be accurately maintained. Such books and records shall be kept in a secure location at the Employer's office(s) and shall be available for inspection and copying by CalPERS and its representatives. (2) Audit. (a) During and for three years after the term of this Agreement, Employer shall permit the Bureau of State Audits, CaIPERS, and its authorized representatives, and such consultants and specialists as needed, at al reasonable times during normal business hours to inspect and copy, at the expense of CalPERS, books and records of Employer relating to ita performance of this Agreement. (b) Employer shall be subject to examination and audit by the Bureau of State Audits, CaIPERS, and its authorized representatives, and such consultants and specialists as needed, during the term of this Agreement and for three years after final payment under this Agreement. Any examination or audit shall be confined to those matters connected with the performance of this Agreement, including, but not limited to, the costs of administering this Agreement. Employer shall cooperate fully with the Bureau of State Audits, CaIPERS, and its authorized representatives, and such consultants and specialists as needed, in connection with any Rev 1/2/2013 7 examination or audit. All adjustments, payments, and/or reimbursements determined to be necessary by any examination or audit shall be made promptly by the appropriate party. (3) Notice. (a) Any notice, approval, or other communication required or permitted under this Agreement will be given in the English language and will be deemed received as follows: Personal delivery. When personally delivered to the recipient. Notice is effective on delivery. 2. First Class Mail. When mailed first class to the last address of the recipient known to the party giving notice. Notice is effective three delivery days after deposit in a United States Postal Service office or mailbox. 3. Certified mail. When mailed certified mail, return receipt requested. Notice is effective on receipt, if delivery is confirmed by a return receipt. 4. Overnight Delivery. When delivered by an overnight delivery service, charges prepaid or charged to the sender's account, Notice is effective on delivery, if delivery is confirmed by the delivery service. 5. Telex or Facsimile Transmission. When sent by telex or fax to the last telex or fax number of the recipient known to the party giving notice. Notice is effective on receipt, provided that (i) a duplicate copy of the notice is promptly given by first-class or certified mail or by overnight delivery, or (ii) the receiving party delivers a written confirmation of receipt. Any notice given by telex or fax shall be deemed received on the next business day if it is received after 5:00 p.m. (recipient's time) or on a nonbusiness day. 6. E-mail transmission. When sent by e-mail using software that provides unmodifiable proof (i) that the message was sent, (ii) that the message was delivered to the recipient's information processing system, and (iii) of the time and date the message was delivered to the recipient along with a verifiable electronic record of the exact content of the message sent. Addresses for the purpose of giving notice are as shown in Paragraph B.(1) of this Agreement. Rev 1/2/2013 (b) Any correctly addressed notice that is refused, unclaimed, or undeliverable because of an act or omission of the party to be notified shall be deemed effective as of the first date that said notice was refused, unclaimed, or deemed undeliverable by the postal authorities, messenger or overnight delivery service. (c) Any party may change its address, telex, fax number, or e-mail address by giving the other party notice of the change in any manner permitted by this Agreement. (d) All notices, requests, demands, amendments, modifications or other communications under this Agreement shall be in writing. Notice shall be sufficient for all such purposes if personally delivered, sent by first class, registered or certified mail, return receipt requested, delivery by courier with receipt of delivery, facsimile transmission with written confirmation of receipt by recipient, or e-mail delivery with verifiable and unmodifiable proof of content and time and date of sending by sender and delivery to recipient. Notice is effective on confirmed receipt by recipient or 3 business days after sending, whichever is sooner. (4) Modification This Agreement may be supplemented, amended, or modified only by the mutual agreement of the parties. No supplement, amendment, or modification of this Agreement shall be binding unless it is in writing and signed by the party to be charged. (5) Survival All representations, warranties, and covenants contained in this Agreement, or in any instrument, certificate, exhibit, or other writing intended by the parties to be a part of their Agreement shall survive the termination of this Agreement until such time as all amounts in Employer's Prefunding Account have been disbursed. (6) Waiver No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this Agreement shall be effective unless it is in writing anc signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy shall be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, nor shall any waiver constitute a continuing waiver unless the writing so specifies. Rev 1/2/2073 (7) Necessary Acts, Further Assurances The parties shall at their own cost and expense execute and deliver such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to evidence or carry out the intent and purposes of this Agreement. A majority vote of Employer's Governing Body at a public meeting held on the 16th day of the month of September in the year 2013 , authorized entering into this Agreement. Signature of the Presiding Officer: Printed Name of the Presiding Officer: Ann Keighran, Mayor Name of Governing Body: City Council of the City of Burlingame Name of Employer: Date: City of Burlingame BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM BY RAND ANDERSON AFFILIATE PROGRAM SERVICES DIVISION CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM To be completed by CalPERS The effective date of this Agreement is: Rev 1/2/2013 10 EXHIBIT B '�',,,' DELEGATION OF AUTHORITY - TO REQUEST DISBURSEMENTS CaIPERS RESOLUTION OF THE City Council of the City of Burlingame (GOVERNING BODY) OF THE City of Burlingame (NAME OF EMPLOYER) The City Council of the City of Burlingame delegates to the incumbents (GOVERNING BODY) in the positions of City Manager and (TITLE) Finance Director (TITLE) (TITLE) and/or authority to request on behalf of the Employer disbursements from the Other Post Employment Prefunding Plan and to certify as to the purpose for which the disburse funds will be used By Ann Keighr n Title Mayor Witness Date OPEB Delegation of Authority (1/13) CERTIFICATION OF OPEB FUNDING POLICY & GASB 43/45 REPORTING COMPLIANCE SECTION I: Asset Allocation Strategy and Discount Rate Selection I certify that 1. My agency chooses the following asset allocation strategy Select one Asset Allocation Strategy and the corresponding Discount Rate Asset Allocation gimt—ew Discount Rate with NO MFAD adjustment Strategy 1 7.61% ❑ Strategy 2 7.06% ❑ Strategy 3 6.39% 2. My agency elects to use a Margin for Adverse Deviation (MFAD) ❑ No S?" Yes *If "Yes", then identify that MFAD percentage here: 0.36 % 3. The discount rate net of MFAD is 7.25 % SECTION II: ARC Fundina As the employer, I certify that our funding policy is to contribute consistently an amount that is equal to (select one): (Valuation date should correspond with Item No. 1.0 in Summary of Actuarial Information) Full ARC Funding: V'100 % of the ARC as determined in our OPEB valuation (or AMM) dated January 1 2013, which used an average actuarial Discount Rate of "7 . 2S Partial ARC Funding: ❑ % of the ARC as determined in our OPEB valuation (or AMM if it applies) dated , 20 which used a blended actuarial Discount Rate of % where the base short-term investment Discount Rate is % Rev 04/21/2011 Page 1 of 4 CERTIFICATION OF OPEB FUNDING POLICY & GASB 43/45 REPORTING COMPLIANCE ❑ We will contribute to the trust using an approach not directly related to the ARC (In the space provided below, please describe your funding approach and how the approach relates to the average discount rate assumption made by your actuary in the OPEB valuation (or AMM if it applies) dated , 20 which used a blended actuarial Discount Rate of % where the base short-term investment Discount Rate is % ): SECTION III: ARC Contribution Method We plan to contribute toward the ARC in the following manner (select one): ❑ Contribute our full ARC payments to the trust and seek reimbursements for Pay -go costs ❑vt'Contribute our ARC payments to the trust net of Pay -go costs and not seek reimbursements (ARC minus Pay -go = Trust Contribution) ❑ Other (Please describe) SECTION IV: Years of ARC Coveraae This OPEB valuation provides ARC amounts for the following periods: (ARC dates should correspond with Item No. 10.0 in Summary of Actuarial Information) First Year: From July 1 2013 through June 30, 2014 Second Year: From July 1, 2014 through June 30, 2015 The California Employers' Retiree Benefit Trust (CERBT) fund plan includes more than 200 members. We understand that, under GASB 43, paragraph 33, as an employee participating in the CalPERS CERBT, we must obtain an actuarial valuation (or AMM if ii applies) on at least a biennial basis. Rev 04/21/2011 Page 2 of 4 CERTIFICATION OF OPEB FUNDING POLICY & GASB 43/45 REPORTING COMPLIANCE We understand that we will be asked to provide accounting information to CalPERS as required in order to facilitate CalPERS compliance with GASB 43 reporting requirements, and we agree to make any information requested available to CalPERS on a timely basis. Our contact information is noted below. We understand that CalPERS will provide us with our Statement of Plan Net Assets and our Statement of Changes in Plan Net Assets, which can be used to prepare our GASB 4E reporting. CalPERS will report aggregated GASB 43 information pertaining to the Fundec Status and Funding Progress. 1, 2013 'EB Valuation AMM it it applies) Carol Augustine, Finance Director Printed Name and Title of Person Sianir 9'/#/2013 -Pmrz Carol Augustine, Finance Director Designated Employer Contact Name for GASB Reporting (650) 558-7222 CAugustine@Burlingame.org Phone # Email Address Instructions to complete the form Rev 04/21/2011 Page 3 of 4 CERTIFICATION OF OPEB FUNDING POLICY & GASB 43/45 REPORTING COMPLIANCE SECTION I: Asset allocation Strategy and Discount Rate Selection Check the box next to the Asset Allocation Strategy on which you have based your OPEB actuarial valuation or Alternative Measurement Method (AMM) cost report. Each strategy has a different assumed Discount Rate and risk profile. Your CERBT assets will be invested using the Asset Allocation Strategy indicated here. Check the box to show whether your actuary applied a Margin for Adverse Deviation the expected assumed discount rate for your portfolio. If reducing the expected rate of return for a Margin for Adverse Deviation please indicate the percentage adjustment for the Margin for Adverse Deviation in the location indicated and then indicate the appropriate net rate of return resulting when the full rate of return has been reduced by a selected by your consulting actuary. The choices you check off on this form should match those used by your actuary in the OPEB valuation. SECTION II: ARC Funding • If you are fully funding, check the first box indicating the 100% funding, the applicable Discount Rate, and the valuation date. • If you are funding at less than 100%, check the second box to indicate the percentage of funding [trust contributions plus paygo (and Implicit Rate Subsidy if applicable) divided by ARC), the valuation date, the Discount Rate, and the Base rate used to blend. • If you are funding at less than 100% and your contributions are not tied specifically to the ARC, then indicate how you expect to contribute. For example, if you intend to make unreimbursed pay -go payments plus a fixed dollar amount to the trust, then describe this in the space provided. SECTION III: ARC Contribution Method Here we ask you to indicate how you expect to make contributions to the trust: Full ARC with reimbursements, ARC net of paygo, or something else (please describe). SECTION IV: Years of ARC Coverage Generally, your OPEB valuation will provide two years of ARC coverage. Please identify the specific periods to which the ARC applies. Rev 04/21/2011 Page 4 of 4