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Please note the following assumptions: 1. Estimated costs are presented for the following plan years: 2007/2008, 2008/2009, 2009/2010, 2010/2011, 2011/2012 2. We assume the following cost increases for the County medical plans: a. Increase for 2008/2009: 10% b. Increase for 2009/2010: 8% c. Increase for 2010/2011: 8% d. Increase for 2011/2012: 8% 3. Because CalPERS rates change on January 1, we average the 2007 and 2008 CalPERS rates to derive the 2007/2008 rates under the CalPERS option. Then, we assume the following cost increases for the CalPERS medical plans: a. Increase for 2008/2009: 10% b. Increase for 2009/2010: 8% c. Increase for 2010/2011: 8% d. Increase for 2011/2012: 8% 4. We assume no change in benefits under Sonoma or CalPERS. 5. We use the following CalPERS plan options in the calculation: PERSCare, PERS Choice, PORAC (for SCLEA, DSA, DSLEM, SCLEMA Only), Kaiser HMO and Blue Shield HMO 6. Plan costs are calculated by multiplying the plan rates by the enrollment for each plan. We derive the starting point enrollment by: a. Using the June 2007 enrollment by plan by coverage level (provided by the County) as the starting point. COBRA and affiliates are excluded. b. SCLEA, DSA, DSLEM and SCLEMA enrollment was estimated based on the July 2006 bargaining unit specific headcount provided by the County. This estimation applies to both active employees and retirees. c. Using the enrollment changes as a result of open enrollment (provided by the County), we modify our starting point enrollment accordingly to derive at the July 2007 enrollment d. Once we have the July 2007 enrollment, we assume this total enrollment will remain unchanged through 2012 7. We apply the following enrollment migration assumptions: a. All SCLEA, DSA, DSLEM and SCLEMA active employees who are in CHP will go to the PORAC plan b. 60% of the remaining CHP #1 active employees will go to PERSCare and 40% will go to PERS Choice Page 1 As of August 23, 2007 County of Sonoma Assumptions for CalPERS Analysis -- Option H Scenario 1A (Current Contribution) and Scenario 1B (All Y-Rated Contribution) Move to CalPERS Plans

CalPERS Analysis - Move to CalPERS 8 23 07 · Because CalPERS rates change on January 1, we average the 2007 and 2008 CalPERS rates ... Assumptions for CalPERS Analysis -- Option

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Page 1: CalPERS Analysis - Move to CalPERS 8 23 07 · Because CalPERS rates change on January 1, we average the 2007 and 2008 CalPERS rates ... Assumptions for CalPERS Analysis -- Option

Please note the following assumptions:

1. Estimated costs are presented for the following plan years: 2007/2008, 2008/2009, 2009/2010,2010/2011, 2011/2012

2. We assume the following cost increases for the County medical plans:a. Increase for 2008/2009: 10%b. Increase for 2009/2010: 8%c. Increase for 2010/2011: 8%d. Increase for 2011/2012: 8%

3. Because CalPERS rates change on January 1, we average the 2007 and 2008 CalPERS ratesto derive the 2007/2008 rates under the CalPERS option. Then, we assume the following costincreases for the CalPERS medical plans:a. Increase for 2008/2009: 10%b. Increase for 2009/2010: 8%c. Increase for 2010/2011: 8%d. Increase for 2011/2012: 8%

4. We assume no change in benefits under Sonoma or CalPERS.

5. We use the following CalPERS plan options in the calculation: PERSCare, PERS Choice,PORAC (for SCLEA, DSA, DSLEM, SCLEMA Only), Kaiser HMO and Blue Shield HMO

6. Plan costs are calculated by multiplying the plan rates by the enrollment for each plan. We derivethe starting point enrollment by:a. Using the June 2007 enrollment by plan by coverage level (provided by the County) as the

starting point. COBRA and affiliates are excluded.b. SCLEA, DSA, DSLEM and SCLEMA enrollment was estimated based on the July 2006

bargaining unit specific headcount provided by the County. This estimation applies toboth active employees and retirees.

c. Using the enrollment changes as a result of open enrollment (provided by the County), wemodify our starting point enrollment accordingly to derive at the July 2007 enrollment

d. Once we have the July 2007 enrollment, we assume this total enrollment will remainunchanged through 2012

7. We apply the following enrollment migration assumptions:a. All SCLEA, DSA, DSLEM and SCLEMA active employees who are in CHP will go to the

PORAC planb. 60% of the remaining CHP #1 active employees will go to PERSCare and 40% will go to

PERS Choice

Page 1 As of August 23, 2007

County of SonomaAssumptions for CalPERS Analysis -- Option H

Scenario 1A (Current Contribution) and Scenario 1B (All Y-Rated Contribution)Move to CalPERS Plans

Page 2: CalPERS Analysis - Move to CalPERS 8 23 07 · Because CalPERS rates change on January 1, we average the 2007 and 2008 CalPERS rates ... Assumptions for CalPERS Analysis -- Option

Please note the following assumptions:

7. We apply the following enrollment migration assumptions (continued):c. 60% of active employees in CHP #2 will go to PERSCare and 40% will go to PERC Choiced. All Kaiser active employees will remain in Kaisere. All PacifiCare active employees will go to Blue Shield HMOf. 60% of the under-65 retirees under CHP #2 and CHP #3 will go to PERSCare and 40% will

go to PERS Choiceg. 60% of the over-65 retirees under CHP #2 and CHP #3 will go to PERSCare and 40% will

go to PERS Choiceh. All PORAC retirees under CHP will go to the PORAC retiree plan optioni. All Kaiser retirees will remain in Kaiser retiree plan optionsj. All PacifiCare retirees will go to Blue Shield retiree plan options

8. Employee and retiree contribution amountsScenario 1A: County contribution for represented employees were calculated at 85% of the plan

rates and contribution for non-represented employees and retirees were calculatedbased on the Y-rated contribution at 85%. (The Y-rated contribution started inyear 2008/2009.)

Scenario 1B: County contribution for all employees and retirees were calculated based on theY-rated contribution at 85%

Y-rated methodology: County's contribution for each plan equal to the greater of a) 85% of thelowest cost plan, and b) 2006/2007 County's contribution for each plan. This means thatthe County's contribution for the CHP plans, Kaiser and PacifiCare is frozen at the 2006/2007contribution level for each plan. Once the 85% of the lowest cost plan equals to the frozenamount, then the 85% of the lowest cost plan becomes the County's contribution for that plan.

The lowest cost plan for each plan year is assumed to be the Kaiser plan with the highest copay.

For CHP #3, the County's contribution is assumed to be equal to the greater of a) 85% of thelowest cost plan, and b) 2007/2008 County's contribution for CHP #3.

When the Y-rated methodology was applied to the CalPERS plan options, the following Countycontributions were used:a. PERSCare: the greater of a) 85% of the lowest cost plan, and b) 2006/2007 County's

contribution for CHP #1 and CHP #2 (they are the same)b. PERS Choice: the greater of a) 85% of the lowest cost plan, and b) 2007/2008 County's

contribution for PERS Choice (PERS Choice rates are much lower than CHP plans. It does notmake sense to benchmark against the 2006/2007 County contribution for the CHP plans.)

Page 2 As of August 23, 2007

Assumptions for CalPERS Analysis -- Option H

Scenario 1A (Current Contribution) and Scenario 1B (All Y-Rated Contribution)Move to CalPERS Plans

County of Sonoma

Page 3: CalPERS Analysis - Move to CalPERS 8 23 07 · Because CalPERS rates change on January 1, we average the 2007 and 2008 CalPERS rates ... Assumptions for CalPERS Analysis -- Option

Please note the following assumptions:

8. Employee and retiree contribution amounts (continued)c. Kaiser: the greater of a) 85% of the lowest cost plan, and b) 2006/2007 County's

contribution for Kaiser $5d. Blue Shield: the greater of a) 85% of the lowest cost plan, and b) 2006/2007 County's

contribution for PacifiCare $5e. PORAC: 85% of the rates. (PORAC rates are the lowest of all plans starting with the 2007/2008

plan year. However, only safety employees can have access to PORAC plan.)

9. The County's enrollment report identifies the number of non-Medicare retirees with dependentsbut it does not identify the enrollment number for dependents with Medicare vs. dependentswithout Medicare. The following assumptions were used to estimate the enrollment number ineach category:

60% of non-Medicare retirees with 1 dependent have 1 non-Medicare dependent40% of non-Medicare retirees with 1 dependent have 1 Medicare dependent80% of non-Medicare retirees with 2+ dependents have no Medicare dependents20% of non-Medicare retirees with 2+ dependents have 1 Medicare dependent

Page 3 As of August 23, 2007

Scenario 1A (Current Contribution) and Scenario 1B (All Y-Rated Contribution)

County of SonomaAssumptions for CalPERS Analysis -- Option H

Move to CalPERS Plans

Page 4: CalPERS Analysis - Move to CalPERS 8 23 07 · Because CalPERS rates change on January 1, we average the 2007 and 2008 CalPERS rates ... Assumptions for CalPERS Analysis -- Option

2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 5-Year Total

Plan Costs under Current County Plan Options $74,147,000 $81,564,000 $88,088,000 $95,134,000 $102,744,000 $441,677,000

Plan Costs under CalPERS $65,936,000 $72,530,000 $78,330,000 $84,598,000 $91,365,000 $392,759,000

Annual Plan Cost Savings ($8,211,000) ($9,034,000) ($9,758,000) ($10,536,000) ($11,379,000) ($48,918,000)

County Costs

Assuming Current Contribution Strategy

County Costs under Current County Plans $63,025,000 $66,685,000 $70,451,000 $74,986,000 $80,075,000 $355,222,000(Current Mixed Contribution*) 85% 82% 80% 79% 78%

County Costs under CalPERS $56,045,000 $59,827,000 $63,526,000 $67,849,000 $72,694,000 $319,941,000(Current Mixed Contribution*) 85% 82% 81% 80% 80%

Annual County Cost Savings ($6,980,000) ($6,858,000) ($6,925,000) ($7,137,000) ($7,381,000) ($35,281,000)

Assuming All Y-Rated Contribution Strategy

County Costs under Current County Plans $63,025,000 $66,685,000 $70,451,000 $74,986,000 $80,075,000 $355,222,000(Current Mixed Contribution*) 85% 82% 80% 79% 78%

County Costs under CalPERS $56,045,000 $58,674,000 $61,073,000 $64,616,000 $68,823,000 $309,231,000(All Y-Rated Contribution) 85% 81% 78% 76% 75%

Annual County Cost Savings ($6,980,000) ($8,011,000) ($9,378,000) ($10,370,000) ($11,252,000) ($45,991,000)

Employee Costs

Assuming Current Contribution Strategy

Employee Costs under Current County Plans $11,122,000 $14,879,000 $17,635,000 $20,147,000 $22,671,000 $86,454,000(Current Mixed Contribution*) 15% 18% 20% 21% 22%

Employee Costs under CalPERS $9,888,000 $12,703,000 $14,806,000 $16,748,000 $18,666,000 $72,811,000(Current Mixed Contribution*) 15% 18% 19% 20% 20%

Annual Employee Cost Savings ($1,234,000) ($2,176,000) ($2,829,000) ($3,399,000) ($4,005,000) ($13,643,000)

Assuming All Y-Rated Contribution Strategy

Employee Costs under Current County Plans $11,122,000 $14,879,000 $17,635,000 $20,147,000 $22,671,000 $86,454,000(Current Mixed Contribution*) 15% 18% 20% 21% 22%

Employee Costs under CalPERS $9,890,000 $13,857,000 $17,259,000 $19,980,000 $22,538,000 $83,524,000(All Y-Rated Contribution) 15% 19% 22% 24% 25%

Annual Employee Cost Savings ($1,232,000) ($1,022,000) ($376,000) ($167,000) ($133,000) ($2,930,000)

Impact of All Y-Rated Contribution Methodology over 4-Years

Total County Costs under Current County Plans under Current Mixed Contribution $355,222,000Total County Costs under Current County Plans under All Y-Rated $325,310,0005-Year Impact of All Y-Rated Contribution under Current County Plans ($29,912,000)

Total County Costs under CalPERS Plans under Current Mixed Contribution $319,941,000Total County Costs under CalPERS Plans under All Y-Rated $309,231,0005-Year Impact of All Y-Rated Contribution under CalPERS Plans ($10,710,000)

* 85% County's contribution for represented employees and Y-rated at 85% contribution for non-represented employees and retirees.

County of SonomaMove to CalPERS Plans -- Option H

Saving Analysis

Page 4 As of August 23, 2007