Aggressive Case: The budget director says, In my dreams, I take an aggressive line with the union and I win the battles. The cost of living adjustment is reduced to 1 percent. The productivity factor doubles to 1 percent. The employee contribution rate is increased to 10 percent. The salary give-back is $4,000, and the stock market comes back, so we earn 10 percent on our money. That is the aggressive case. How good would things be? Surely the ratio gets to 80 percent then! Please explain logical reasons.

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 25 25 25 25 25 25 25 25 25 25 0.01 0.01 0.01 0.01 0.01 0.01 CONSTANTS Retiree Years of Service Average Increase in Teacher Salary Retiree Rate Mortality Rate Expected Average Final Salary Expected Administrative Expense 0.01 0.04 0.01 0.04 0.01 0.04 0.04 0.04 0.04 0.05 82,000 $ 0.04 0.05 83,648 $ $25,250,000 0.05 82,820 $ $25,000,000 0.01 0.04 0.05 85,330 $ $25,757,525 0.05 84,485 $ $25,502,500 $ 0.04 0.05 87,045 $ $26,275,251 0.05 86,183 $ $26,015,100 0.05 87,915 $ $26,538,004 0.04 0.05 89,682 $27,071,418 0.05 88,794 $ $26,803,384 NA Value INPUTS Cost of Living Adjustment Long Term Rate of Return Productivity Factor Employee Contribution Rate Final Salary Give Back State Contribution Factor 0.01 0.10 0.01 0.10 4,000 $ 2.5 SUMMARY OF KEY RESULTS NPV of Unfunded Liability Ratio of Assets to Liability NPV $ Value 13,346,833,337 76% 2016 2025 $ 68,500 $ 133,000 NA 101,500 CALCULATIONS Average Teacher Salary Number of Active Teachers Number of New Retirees Number of Retirees Total Teacher Compensation Employee Contribution to Fund State Contribution to Fund Average Retiree Benefit Expected Benefits Payout 2017 69,185 $ 132,335 5320 101,745 9,155,596,975 $ 869,781,713 $ 2,174,454,282 $ 42,007 $ 4,273,952,360 $ 2018 69,877 $ 131,673 5293 101,950 9,200,894,470 $ 874,084,975 $ 2,185,212,437 $ 42,467 $ 4,329,467,331 $ 2019 70,576 $ 131,014 5266 102,118 9,246,394,082 $ 878,407,438 $ 2,196,018,595 $ 42,931 $ 4,384,052,453 $ 2020 71,281 $ 130,358 5240 102,252 9,292,097,441 $ 882,749,257 $ 2,206,873,142 $ 43,401 $ 4,437,793,372 $ 2021 71,994 $ 129,706 5214 102,353 9,338,078,205 $ 887,117,429 $ 2,217,793,574 $ 43,875 $ 4,490,692,716 $ 2022 72,714 $ 129,057 5188 102,423 9,384,267,516 $ 891,505,414 $ 2,228,763,535 $ 44,353 $ 4,542,798,495 $ 2023 73,441 $ 128,411 5162 102,463 9,430,667,130 $ 895,913,377 $ 2,239,783,443 $ 44,837 $ 4,594,116,873 $ 2024 74,176 $ 127,768 5136 102,475 9,477,278,836 $ 900,341,489 $ 2,250,853,724 $ 45,325 $ 4,644,700,464 $ NA 74,917 127,129 5110 102,461 9,524,179,380 904,797,041 2,261,992,603 45,818 4,694,605,010 NA $ $ $ $ $ NA NA NA 2016 NA NA $ $ $ NA FUND BALANCE STATEMENT Beginning Balance Add: Employee Contribution Add: State Contribution Add: Income on Investments Less: Benefits Payout Less: Administrative Expenses Ending Balance 2017 40,000,000,000 $ 869, 781, 713 $ 2,174,454,282 $ 4,000,000,000 $ 4,273,952,360 $ $25,000,000 42,745, 283,634 $ 2018 42,745,283,634 $ 874,084,975 $ 2,185,212,437 $ 4,274,528,363 $ 4,329,467,331 $ $25,250,000 45,724,392,078 $ 2019 45,724,392,078 $ 878,407,438 $ 2,196,018,595 S 4,572,439,208 $ 4,384,052,453 $ $25,502,500 48,961,702,364 $ 2020 48,961,702,364 $ 882,749,257 $ 2,206,873,142 $ 4,896,170,236 $ 4,437,793,372 $ $25,757,525 52,483,944,103 $ 2021 52,483,944,103 $ 887,117,429 $ 2,217,793,574 $ 5,248,394,410 $ 4,490,692,716 $ $26,015,100 56,320,541,700 $ 2022 56,320,541,700 $ 891,505,414 S 2,228,763,535 $ 5,632,054,170 $ 4,542,798,495 $ $26,275,251 60,503,791,074 $ 2023 60,503,791,074 $ 895,913,377 $ 2,239,783,443 $ 6,050,379,107 $ 4,594,116,873 $ $26,538,004 65,069,212,125 $ 2024 65,069,212,125 $ 900,341,489 $ 2,250,853,724 $ 6,506,921,212 $ 4,644,700,464 $ $26,803,384 70,055,824,702 $ 2025 70,055,824,702 904,797,041 2,261,992,603 7,005,582,470 4,694,605,010 $27,071,418 75,506,520,388 NA $ NA $ NA 40,000,000,000 $ $ 2016 NA $ FUND LIABILITY Expected Benefits Payout Net Present Value of Payouts NPV of Unfunded Liability Ratio of Assets to Liability NPV NA 2017 4,273,952,360 $ $56,092,116,971 13,346,833,337 $ 76% 2018 4,329,467,331 $ $56,025,073,384 10,300,681,306 $ 82% 2019 4,384,052,453 $ $55,897,486,556 6,935,784,192 $ 88% 2020 4,437,793,372 $ $55,705,745,595 3,221,801,492 $ 94% 2021 4,490,692,716 $ $55,445,883,142 (874,658,558) $ 102% 2022 4,542,798,495 $ $55,113,631,662 (5,390,159,412) $ 110% 2023 4,594,116,873 $ $54,704,355,542 (10,364,856,583) $ 119% 2024 4,644,700,464 $ $54,213,065,335 (15,842,759,368) $ 129% 2025 4,694,605,010 $53,634,344,771 (21,872,175,618) 141% NA $ NA 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 25 25 25 25 25 25 25 25 25 25 0.01 0.01 0.01 0.01 0.01 0.01 CONSTANTS Retiree Years of Service Average Increase in Teacher Salary Retiree Rate Mortality Rate Expected Average Final Salary Expected Administrative Expense 0.01 0.04 0.01 0.04 0.01 0.04 0.04 0.04 0.04 0.05 82,000 $ 0.04 0.05 83,648 $ $25,250,000 0.05 82,820 $ $25,000,000 0.01 0.04 0.05 85,330 $ $25,757,525 0.05 84,485 $ $25,502,500 $ 0.04 0.05 87,045 $ $26,275,251 0.05 86,183 $ $26,015,100 0.05 87,915 $ $26,538,004 0.04 0.05 89,682 $27,071,418 0.05 88,794 $ $26,803,384 NA Value INPUTS Cost of Living Adjustment Long Term Rate of Return Productivity Factor Employee Contribution Rate Final Salary Give Back State Contribution Factor 0.01 0.10 0.01 0.10 4,000 $ 2.5 SUMMARY OF KEY RESULTS NPV of Unfunded Liability Ratio of Assets to Liability NPV $ Value 13,346,833,337 76% 2016 2025 $ 68,500 $ 133,000 NA 101,500 CALCULATIONS Average Teacher Salary Number of Active Teachers Number of New Retirees Number of Retirees Total Teacher Compensation Employee Contribution to Fund State Contribution to Fund Average Retiree Benefit Expected Benefits Payout 2017 69,185 $ 132,335 5320 101,745 9,155,596,975 $ 869,781,713 $ 2,174,454,282 $ 42,007 $ 4,273,952,360 $ 2018 69,877 $ 131,673 5293 101,950 9,200,894,470 $ 874,084,975 $ 2,185,212,437 $ 42,467 $ 4,329,467,331 $ 2019 70,576 $ 131,014 5266 102,118 9,246,394,082 $ 878,407,438 $ 2,196,018,595 $ 42,931 $ 4,384,052,453 $ 2020 71,281 $ 130,358 5240 102,252 9,292,097,441 $ 882,749,257 $ 2,206,873,142 $ 43,401 $ 4,437,793,372 $ 2021 71,994 $ 129,706 5214 102,353 9,338,078,205 $ 887,117,429 $ 2,217,793,574 $ 43,875 $ 4,490,692,716 $ 2022 72,714 $ 129,057 5188 102,423 9,384,267,516 $ 891,505,414 $ 2,228,763,535 $ 44,353 $ 4,542,798,495 $ 2023 73,441 $ 128,411 5162 102,463 9,430,667,130 $ 895,913,377 $ 2,239,783,443 $ 44,837 $ 4,594,116,873 $ 2024 74,176 $ 127,768 5136 102,475 9,477,278,836 $ 900,341,489 $ 2,250,853,724 $ 45,325 $ 4,644,700,464 $ NA 74,917 127,129 5110 102,461 9,524,179,380 904,797,041 2,261,992,603 45,818 4,694,605,010 NA $ $ $ $ $ NA NA NA 2016 NA NA $ $ $ NA FUND BALANCE STATEMENT Beginning Balance Add: Employee Contribution Add: State Contribution Add: Income on Investments Less: Benefits Payout Less: Administrative Expenses Ending Balance 2017 40,000,000,000 $ 869, 781, 713 $ 2,174,454,282 $ 4,000,000,000 $ 4,273,952,360 $ $25,000,000 42,745, 283,634 $ 2018 42,745,283,634 $ 874,084,975 $ 2,185,212,437 $ 4,274,528,363 $ 4,329,467,331 $ $25,250,000 45,724,392,078 $ 2019 45,724,392,078 $ 878,407,438 $ 2,196,018,595 S 4,572,439,208 $ 4,384,052,453 $ $25,502,500 48,961,702,364 $ 2020 48,961,702,364 $ 882,749,257 $ 2,206,873,142 $ 4,896,170,236 $ 4,437,793,372 $ $25,757,525 52,483,944,103 $ 2021 52,483,944,103 $ 887,117,429 $ 2,217,793,574 $ 5,248,394,410 $ 4,490,692,716 $ $26,015,100 56,320,541,700 $ 2022 56,320,541,700 $ 891,505,414 S 2,228,763,535 $ 5,632,054,170 $ 4,542,798,495 $ $26,275,251 60,503,791,074 $ 2023 60,503,791,074 $ 895,913,377 $ 2,239,783,443 $ 6,050,379,107 $ 4,594,116,873 $ $26,538,004 65,069,212,125 $ 2024 65,069,212,125 $ 900,341,489 $ 2,250,853,724 $ 6,506,921,212 $ 4,644,700,464 $ $26,803,384 70,055,824,702 $ 2025 70,055,824,702 904,797,041 2,261,992,603 7,005,582,470 4,694,605,010 $27,071,418 75,506,520,388 NA $ NA $ NA 40,000,000,000 $ $ 2016 NA $ FUND LIABILITY Expected Benefits Payout Net Present Value of Payouts NPV of Unfunded Liability Ratio of Assets to Liability NPV NA 2017 4,273,952,360 $ $56,092,116,971 13,346,833,337 $ 76% 2018 4,329,467,331 $ $56,025,073,384 10,300,681,306 $ 82% 2019 4,384,052,453 $ $55,897,486,556 6,935,784,192 $ 88% 2020 4,437,793,372 $ $55,705,745,595 3,221,801,492 $ 94% 2021 4,490,692,716 $ $55,445,883,142 (874,658,558) $ 102% 2022 4,542,798,495 $ $55,113,631,662 (5,390,159,412) $ 110% 2023 4,594,116,873 $ $54,704,355,542 (10,364,856,583) $ 119% 2024 4,644,700,464 $ $54,213,065,335 (15,842,759,368) $ 129% 2025 4,694,605,010 $53,634,344,771 (21,872,175,618) 141% NA $ NA