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PROCESS �acroA Part 2 Asset Valuation Method In the retiree health setting, the first issue to be determined is whether the assets will be set aside in an irrevocable trust. If assets are not in an irrevocable trust, then they will not be valued as part of the OPEB valuation and this particular point is moot. However, if assets are in an irrevocable trust, then they can be considered in the calculations and accounting the same as in a pension trust. We will work with Indian River County to discuss the pros and cons of using a straight market value or a smoothed asset method (a method that takes the gains and losses and "smoothes" those results over a certain number of years). Smoothing makes contribution rates more stable than using market value. Similar to the discussion above, the outcome of this issue will depend on the funding policy of Indian River County. Amortization Method There are different methods that can be used to amortize the unfunded accrued liability. Again, the final determination of the method will depend on the funding policy of Indian River County, and our discussion with Indian River County on amortization will include the different methods available as well as the risks associated with each method. There are flat dollar and level percent-of-pay methods. There are open and closed methods (open is where the "years to pay off' stay the same each year, and closed means the years decline each year) . AMBIGUITY RELATED TO THE SUBSTANTIVE PLAN Describe how the,firm would assist in the interpretation of the plan and value the associated costs in situations where there is ambiguity related to the substantive plan. We recognize the utmost importance of the clarity of the substantive plan and we are aware of the potential ambiguities . This is why crafting the substantive plan is the first step of our valuation. (Please refer to our Work Plan starting on page 30 .) The valuation will not proceed until the substantive plan is completely clear to all parties . Once the Plan Summary document is approved and signed by the County, we will begin the programming and actuarial valuation. The process of crafting the substantive plan begins with a conference call which includes all parties that have a part in the benefit plan structure. This includes finance, HR, benefits and/or risk management, and IT staff. This meeting will ensure that all parties are "on the same page." Our team will thoroughly question the County' s personnel on all aspects of the benefit plan structures, helping the County' s personnel to work out issues that they may not have considered. This process will be aided by our experience with many other counties and government entities , as well as our thorough knowledge of FRS procedures. (Please see page 5 for more information on our unique experience with FRS .) Gig Gabriel Roeder Smith & Company 38