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. Exhibit A ��i �� L , ��c��:��. �.�� September 29,2014 Alison Freeman Financial Services Manager Redwood City 1017 Middlefield Road Redwood City,CA 94063 Re: June 30,2015 GASB 45 OPEB Actuarial Valuation Proposal&Data Request Dear Ms.Freeman: Bartel Associates would be pleased to provide actuarial consulting services to Redwood City. This letter summarizes the project scope and our fee estimate for a June 30,2015 actuarial valuation for the City's retiree healthcare plan. .. - The prior June 30,2013 valuation can be used for the 2013/14 and 2014/15 fiscal years. The June 30,2015 valuation can be used for the 2015/16 and 2016/17 fiscal years. GASB 45 requires the City prepare a new valuation at least every 2 years. However,a new valuarion is required if there is a significant change to plan membership,benefit provisions,healthcare providers,funding policy,or the basis of any long-term actuarial assumptions between the valuation date and the applicable fiscal year. Estimated Fees Our estimated fee to prepare a GASB 45 actuarial valuation of the City's retiree healthcare plan as of June 30,2015 is$17,000,including CERBT actuarial certifications and a meeting to discuss the valuation results. While our fee estimate represents the likely cost of the valuation,it is possible that the valuation may require additional time. We understand the City's budgeting needs and agree not to bill more than $19,000 for the June 30,2015 valuation untess the project scope changes. New for the City's June 30,2015 valuation,the results will need to include a calculation of the PEMHCA implied subsidy. The"implied subsidy"is the amount by which active employee premiums subsidize retiree healthcare costs. This subsidy from actives to retirees occurs because active employees aze,on the whole, younger than retirees and because PEMHCA uses a blended premium for both actives and retirees not eligible for Medicare. In the past,most agencies participating in PEMHCA(including Redwood City)did not disclose an implied subsidy since GASB 45 includes an exception from reporting the implied subsidy in disclosures for community-rated plans such as PEMHCA. However,GASB 45 defers the deternunation as to whether an implied subsidy need be calculated to the actuarial profession. The Actuarial Standards Board (ASB)of the American Academy of Actuaries released revised Actuarial Standards of Practice(ASOP) No.6,"Measuring Retiree Group Benefit Obligations"in May 2014 requiring actuaries to calculate an implied subsidy with all retiree healthcare plan valuations,including those for community-rated plans, ' effecrive for measwements after March 31,2015. Our estimated fees above include the additional calculation of the PEMHCA implied subsidy. 411 Borel Avenue,Suite 101 •San Mateo,California 94402 ATTY/AGR.2014.205/B�I��l�ia��-��Qj�4C�� '"'e'�'`^�`"'"��bartel-associates.com