The budget director says, I know the governor is going to ask what the state would have to do to bail out the current system. So, assume the conditions of the base case, except for the state contribution factor. Run a what-if scenario with that factor until you reach a ratio of 80 percent. How big a factor is needed? Call this question the rescue case. How much extra money would the state have to contribute versus the base case contribution by the state?

How would you explain this rescue case scenario? What do this mean?

TEACHERS PENSION FUND 2016 2018 2020 2022 CONSTANTS Retiree Years of Service Average Increase in Teacher Salary Retiree Rate Mortality Rate Expected Average Final Salary Expected Administrative Expense 25 0.01 0.04 0.05 82,000 $ 2017 25 0.01 0.04 0.05 82,820 $ $25,000,000 25 0.01 0.04 0.05 83,648 $ $25,250,000 2019 25 0.01 0.04 0.05 84,485 $ $25,502,500 25 0.01 0.04 0.05 85,330 $ $25,757,525 2021 25 0.01 0.04 0.05 86,183 $ $26,015,100 25 0.01 0.04 0.05 87,045 $26,275,251 $ NA Value INPUTS Cost of Living Adjustment Long Term Rate of Return Productivity Factor Employee Contribution Rate Final Salary Give Back State Contribution Factor 0.03 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 $ 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 $ 2019 70,576 $ 131,014 5266 102,118 9,246,394,082 $ 878,407,438 $ 2,196,018,595 $ 47,861 $ 4,887,425,928 $ 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 $ 2022 72,714 129,057 5188 102,423 9,384,267,516 891,505,414 2,228,763,535 49,311 5,050,559,613 NA NA 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 2016 NA $ NA $ NA $ NA $ NA $ NA 40,000,000,000 $ 2017 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 $ 2019 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 $ 2020 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 $ 2019 2020 2016 NA $ FUND LIABILITY Expected Benefits Payout Net Present Value of Payouts NPV of Unfunded Liability Ratio of Assets to Liability NPV NA 2017 4,773,624,090 $ $62,105,345,371 20,859,733,467 $ 66% 2018 4,831,074,605 $ $61,989,622,184 19,447,616,581 $ 69% 4,887,425,928 $ $61,807,769,243 17,913,615,614 $ 71% 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% $ NA NA Conservative Moderate Aggresive 4.0 8.0 12.0 Scenario Summary Current Values: Changing Cells: State_Contribution_Factor 2.5 Result Cells: Beginning_Balance_2017 $ 40,000,000,000 $ NPV_Unfunded_Liability $ 20,859,733,467 $ Ratio_of_Assets_to_Liability_NP 66% Notes: Current Values column represents values of changing cells at time Scenario Summary Report was created. Changing cells for each scenario are highlighted in gray. 40,000,000,000 $ 19,555,060,898 $ 69% 40,000,000,000 $ 16,075,934,047 $ 74% 40,000,000,000 12,596,807,197 80% TEACHERS PENSION FUND 2016 2018 2020 2022 CONSTANTS Retiree Years of Service Average Increase in Teacher Salary Retiree Rate Mortality Rate Expected Average Final Salary Expected Administrative Expense 25 0.01 0.04 0.05 82,000 $ 2017 25 0.01 0.04 0.05 82,820 $ $25,000,000 25 0.01 0.04 0.05 83,648 $ $25,250,000 2019 25 0.01 0.04 0.05 84,485 $ $25,502,500 25 0.01 0.04 0.05 85,330 $ $25,757,525 2021 25 0.01 0.04 0.05 86,183 $ $26,015,100 25 0.01 0.04 0.05 87,045 $26,275,251 $ NA Value INPUTS Cost of Living Adjustment Long Term Rate of Return Productivity Factor Employee Contribution Rate Final Salary Give Back State Contribution Factor 0.03 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 $ 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 $ 2019 70,576 $ 131,014 5266 102,118 9,246,394,082 $ 878,407,438 $ 2,196,018,595 $ 47,861 $ 4,887,425,928 $ 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 $ 2022 72,714 129,057 5188 102,423 9,384,267,516 891,505,414 2,228,763,535 49,311 5,050,559,613 NA NA 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 2016 NA $ NA $ NA $ NA $ NA $ NA 40,000,000,000 $ 2017 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 $ 2019 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 $ 2020 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 $ 2019 2020 2016 NA $ FUND LIABILITY Expected Benefits Payout Net Present Value of Payouts NPV of Unfunded Liability Ratio of Assets to Liability NPV NA 2017 4,773,624,090 $ $62,105,345,371 20,859,733,467 $ 66% 2018 4,831,074,605 $ $61,989,622,184 19,447,616,581 $ 69% 4,887,425,928 $ $61,807,769,243 17,913,615,614 $ 71% 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% $ NA NA Conservative Moderate Aggresive 4.0 8.0 12.0 Scenario Summary Current Values: Changing Cells: State_Contribution_Factor 2.5 Result Cells: Beginning_Balance_2017 $ 40,000,000,000 $ NPV_Unfunded_Liability $ 20,859,733,467 $ Ratio_of_Assets_to_Liability_NP 66% Notes: Current Values column represents values of changing cells at time Scenario Summary Report was created. Changing cells for each scenario are highlighted in gray. 40,000,000,000 $ 19,555,060,898 $ 69% 40,000,000,000 $ 16,075,934,047 $ 74% 40,000,000,000 12,596,807,197 80%