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Mr. Brian Ponty November 24, 2008 Page 2 ~ The alternative benefit options can be calculated as part of the June 30, 2008 valuation. However, if the City requires the alternative benefit results sooner, we can base those results on the January 1,2006 valuation. Estimated Fees Our fee to prepare a GASB 45 valuation as of June 30, 2008, along with three alternative benefits, will be approximately $23,000 with one meeting to discuss results. Proiect Elements GASB 45 Actuarial Valuation and Results Meeting Three Alternative Benefit Options: Alternative # 1 Alternative #2 Alternative #3 Total Estimated Fee $ 13,000 3,000 3,000 4.000 23,000 Please note our fee estimate assumes: . We will bill the City at the following hourly rates: President & Actuary $300 Actuary $250 Consultant $200 Actuarial Analyst $175 Actuarial Trainee $150 Administrative Support $75 . The City has made no material changes to its retiree healthcare plan since the last actuarial valuation as of January 1,2006. . Participant census data will be provided completely and accurately in an Excel spreadsheet with one record per individual. . Costs and liabilities will be provided using one funding method and one set of assumptions including 2 discount rates: a "not funded" discount rate representative of the expected future long- term return of Redwood City's investment fund and a "funded" discount rate representative of the expected future long-term return of a segregated investment fund. If the City is considering funding with CERBT, the funded discount rate will be 7.75% as required by CalPERS. . GASB 45 costs and liabilities will be presented for the plan as a whole with breakdowns for 7 employee groups: SEIU, RCMEA, Executives, City Council, POA, PSA, and IAFF. . We will have one meeting with the City to review preliminary valuation results and alternative benefit options, and will provide a discussion outline for our meeting. There will be no additional meeting if the alternative benefit results are based on the January 1, 2006 valuation. . We based our estimated fee on our best guess of the amount of time required for the project. This represents the likely cost of the valuation and alternative benefits study, but it is possible that unexpected work or complexities may arise that will require additional time-. We understand the City's budgeting needs and agree not to bill more than $14,500 in fees for the June 30,2008 actuarial valuation and no more than $11,000 in fees for the alternative benefits study, assuming one meeting with the City unless the project scope changes. . There will be no additional charges for expenses (e.g., travel, telephone, copying, etc.). The hourly rates listed above include our costs for these items. . We will invoice the City monthly based on time incurred, subject to the above maximum fee. .:i 11 Burel \ Yt:f1U\:. ~uirt. 44:- ,. S~ln \'1:m,:(I. Calif(!r;ii~l 94402 main:(!:;O/~-:-:-I(l(li.! -fax: 6.10 .>+S-gOS-: ,. >>JCb:\1,",n:.b1nd-:l~:;:(;ci;::t:'::.col11