Base Case: The budget director asks, What are the net present value of the unfunded liability and the ratio of assets to the net present value of the unfunded liability, given the current situation? This is the base case. How bad are things right now? Please explain logical reason.

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 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 0.04 0.04 0.05 82,000 $ 0.01 0.04 0.05 82,820 $ $25,000,000 0.01 0.04 0.05 84,485 S $25,502,500 0.05 0.01 0.04 0.05 85,330 $ $25,757,525 0.05 83,648 $ $25,250,000 0.01 0.04 0.05 87,045 $ $26,275,251 0.04 0.05 88,794 $ $26,803,384 $ 0.01 0.04 0.05 89,682 $27,071,418 0.05 87,915 $ $26,538,004 86,183 $ $26,015,100 NA Value 0.03 INPUTS Cost of Living Adjustment Long Term Rate of Return Productivity Factor Employee Contribution Rate Final Salary Give Back State Contribution Factor 0.075 0.005 0.095 $ 2.5 SUMMARY OF KEY RESULTS NPV of Unfunded Liability Ratio of Assets to Liability NPV $ Value 20,859,733,467 66% 2016 2019 2022 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 $ 46,918 $ 4,773,624,090 $ 2018 69,877 $ 131,673 5293 101,950 9,200,894,470 $ 874,084,975 $ 2,185,212,437 $ 47,387 $ 4,831,074,605 $ 2020 71,281 $ 130,358 5240 102,252 9,292,097,441 $ 882,749,257 $ 2,206,873,142 $ 48,339 $ 4,942,777,637 $ 2021 71,994 $ 129,706 5214 102,353 9,338,078,205 $ 887,117,429 $ 2,217,793,574 $ 48,823 $ 4,997,136,493 $ 70,576 $ 131,014 5266 102,118 9,246,394,082 $ 878,407,438 $ 2,196,018,595 $ 47,861 $ 4,887,425,928 $ 2023 73,441 $ 128,411 5162 102,463 9,430,667,130 $ 895,913,377 $ 2,239,783,443 $ 49,804 $ 5,103,057,365 $ NA NA NA 2024 74,176 $ 127,768 5136 102,475 9,477,278,836 $ 900,341,489 $ 2,250,853,724 $ 50,302 $ 5,154,691,562 $ 72,714 $ 129,057 5188 102,423 9,384,267,516 $ 891,505,414 $ 2,228,763,535 $ 49,311 $ 5,050,559,613 $ $ $ $ $ $ 74,917 127,129 5110 102,461 9,524,179,380 904,797,041 2,261,992,603 50,805 5,205,527,209 NA NA 2017 2019 2020 2024 FUND BALANCE STATEMENT Beginning Balance Add: Employee Contribution Add: State Contribution Add: Income on Investments Less: Benefits Payout Less: Administrative Expenses Ending Balance 2016 NA $ NA $ NA $ NA $ NA $ NA 40,000,000,000 $ 40,000,000,000 $ 869,781,713 $ 2,174,454,282 $ 3,000,000,000 $ 4,773,624,090 $ $25,000,000 41,245,611,904 $ 2018 41,245,611,904 $ 874,084,975 $ 2,185,212,437 $ 3,093,420,893 $ 4,831,074,605 $ $25,250,000 42,542,005,603 $ 42,542,005,603 $ 878,407,438 $ 2,196,018,595 $ 3,190,650,420 $ 4,887,425,928 $ $25,502,500 43,894,153,628 $ 43,894,153,628 $ 882,749,257 $ 2,206,873,142 $ 3,292,061,522 $ 4,942, 777,637 $ $25,757,525 45,307,302,388 $ 2021 45,307,302,388 $ 887,117,429 $ 2,217,793,574 $ 3,398,047,679 $ 4,997,136,493 $ $26,015,100 46,787,109,477 $ 2022 46,787,109,477 $ 891,505,414 $ 2,228,763,535 $ 3,509,033,211 $ 5,050,559,613 $ $26,275,251 48,339,576,773 $ 2023 48,339,576,773 $ 895,913,377 $ 2,239,783,443 $ 3,625,468,258 $ 5,103,057,365 $ $26,538,004 49,971,146,482 $ 49,971,146,482 $ 900,341,489 $ 2,250,853,724 $ 3,747,835,986 $ 5,154,691,562 $ $26,803,384 51,688,682,735 $ 2025 51,688,682,735 904,797,041 2,261,992,603 3,876,651,205 5,205,527,209 $27,071,418 53,499,524,957 $ 2025 FUND LIABILITY Expected Benefits Payout Net Present Value of Payouts NPV of Unfunded Liability Ratio of Assets to Liability NPV 2016 NA NA $ 2017 4,773,624,090 $ $62,105,345,371 20,859,733,467 $ 66% 2018 4,831,074,605 $ $61,989,622,184 19,447,616,581 $ 69% 2019 4,887,425,928 $ $61,807,769,243 17,913,615,614 $ 71% 2020 4,942,777,637 $ $61,555,926,008 16,248,623,620 $ 74% 2021 4,997,136,493 $ $61,229,842,822 14,442,733,345$ 76% 2022 5,050,559,613 $ $60,824,944,541 12,485,367,769 $ 79% 2023 5,103,057,365 $ $60,336,255,769 10,365,109,287 $ 83% 2024 5,154,691,562 $ $59,758,417,586 8,069,734,851 $ 86% 5,205,527,209 $59,085,607,342 5,586,082,385 91% 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 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 0.04 0.04 0.05 82,000 $ 0.01 0.04 0.05 82,820 $ $25,000,000 0.01 0.04 0.05 84,485 S $25,502,500 0.05 0.01 0.04 0.05 85,330 $ $25,757,525 0.05 83,648 $ $25,250,000 0.01 0.04 0.05 87,045 $ $26,275,251 0.04 0.05 88,794 $ $26,803,384 $ 0.01 0.04 0.05 89,682 $27,071,418 0.05 87,915 $ $26,538,004 86,183 $ $26,015,100 NA Value 0.03 INPUTS Cost of Living Adjustment Long Term Rate of Return Productivity Factor Employee Contribution Rate Final Salary Give Back State Contribution Factor 0.075 0.005 0.095 $ 2.5 SUMMARY OF KEY RESULTS NPV of Unfunded Liability Ratio of Assets to Liability NPV $ Value 20,859,733,467 66% 2016 2019 2022 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 $ 46,918 $ 4,773,624,090 $ 2018 69,877 $ 131,673 5293 101,950 9,200,894,470 $ 874,084,975 $ 2,185,212,437 $ 47,387 $ 4,831,074,605 $ 2020 71,281 $ 130,358 5240 102,252 9,292,097,441 $ 882,749,257 $ 2,206,873,142 $ 48,339 $ 4,942,777,637 $ 2021 71,994 $ 129,706 5214 102,353 9,338,078,205 $ 887,117,429 $ 2,217,793,574 $ 48,823 $ 4,997,136,493 $ 70,576 $ 131,014 5266 102,118 9,246,394,082 $ 878,407,438 $ 2,196,018,595 $ 47,861 $ 4,887,425,928 $ 2023 73,441 $ 128,411 5162 102,463 9,430,667,130 $ 895,913,377 $ 2,239,783,443 $ 49,804 $ 5,103,057,365 $ NA NA NA 2024 74,176 $ 127,768 5136 102,475 9,477,278,836 $ 900,341,489 $ 2,250,853,724 $ 50,302 $ 5,154,691,562 $ 72,714 $ 129,057 5188 102,423 9,384,267,516 $ 891,505,414 $ 2,228,763,535 $ 49,311 $ 5,050,559,613 $ $ $ $ $ $ 74,917 127,129 5110 102,461 9,524,179,380 904,797,041 2,261,992,603 50,805 5,205,527,209 NA NA 2017 2019 2020 2024 FUND BALANCE STATEMENT Beginning Balance Add: Employee Contribution Add: State Contribution Add: Income on Investments Less: Benefits Payout Less: Administrative Expenses Ending Balance 2016 NA $ NA $ NA $ NA $ NA $ NA 40,000,000,000 $ 40,000,000,000 $ 869,781,713 $ 2,174,454,282 $ 3,000,000,000 $ 4,773,624,090 $ $25,000,000 41,245,611,904 $ 2018 41,245,611,904 $ 874,084,975 $ 2,185,212,437 $ 3,093,420,893 $ 4,831,074,605 $ $25,250,000 42,542,005,603 $ 42,542,005,603 $ 878,407,438 $ 2,196,018,595 $ 3,190,650,420 $ 4,887,425,928 $ $25,502,500 43,894,153,628 $ 43,894,153,628 $ 882,749,257 $ 2,206,873,142 $ 3,292,061,522 $ 4,942, 777,637 $ $25,757,525 45,307,302,388 $ 2021 45,307,302,388 $ 887,117,429 $ 2,217,793,574 $ 3,398,047,679 $ 4,997,136,493 $ $26,015,100 46,787,109,477 $ 2022 46,787,109,477 $ 891,505,414 $ 2,228,763,535 $ 3,509,033,211 $ 5,050,559,613 $ $26,275,251 48,339,576,773 $ 2023 48,339,576,773 $ 895,913,377 $ 2,239,783,443 $ 3,625,468,258 $ 5,103,057,365 $ $26,538,004 49,971,146,482 $ 49,971,146,482 $ 900,341,489 $ 2,250,853,724 $ 3,747,835,986 $ 5,154,691,562 $ $26,803,384 51,688,682,735 $ 2025 51,688,682,735 904,797,041 2,261,992,603 3,876,651,205 5,205,527,209 $27,071,418 53,499,524,957 $ 2025 FUND LIABILITY Expected Benefits Payout Net Present Value of Payouts NPV of Unfunded Liability Ratio of Assets to Liability NPV 2016 NA NA $ 2017 4,773,624,090 $ $62,105,345,371 20,859,733,467 $ 66% 2018 4,831,074,605 $ $61,989,622,184 19,447,616,581 $ 69% 2019 4,887,425,928 $ $61,807,769,243 17,913,615,614 $ 71% 2020 4,942,777,637 $ $61,555,926,008 16,248,623,620 $ 74% 2021 4,997,136,493 $ $61,229,842,822 14,442,733,345$ 76% 2022 5,050,559,613 $ $60,824,944,541 12,485,367,769 $ 79% 2023 5,103,057,365 $ $60,336,255,769 10,365,109,287 $ 83% 2024 5,154,691,562 $ $59,758,417,586 8,069,734,851 $ 86% 5,205,527,209 $59,085,607,342 5,586,082,385 91% NA $ NA