for the next year and going off without -- i'm concerned about someone who is going to care about being president for a year and want to fulfill that term and have a longer period to serve than five months. >> you know what, that's never happened. i have never seen a commission being president and going off as president. >> i'm hesitant to change the rules because i feel i have the same sense of like, you know, what would happen then if someone else, if you resigned in two months and then i would step forward and say well we just changed the rule the rules to fy could we change them to april so i could be president. >> either too long or too short. 18 months versus a five-month stint. >> the way i take it, and i don't really care because i'm not a commissioner, i'll just throw it out there, that anne could just say, well i'll do the same thing we did with victor

and i have 20 months. i just want to acknowledge the point that she's saying, why really want to do 20 minutes, i just want to do a year and i'm willing to give it to the vice president earlier. i think that's what she's saying. i do understand your point. about you want the cycle so that you know -- to me it's hurrying your cycle up sooner because the vice president could be president faster and then whoever is not can be vice president faster. you just need to think about it. she could just say ok, we're just going to do what we did in the past and i have 20 months. which could be great to have anne caen as president or maybe not, right. i just thought that was something that when she talked to me about it.

>> i agree. there's something to be said about keeping the calender as it exists. not altering the schedule as it stands. i would have no objection if you were president for 20 months straight. i think that i guess the question is, for the remaining of us who are not on the vice president or president schedule would we be willing to step in and a stop-gap measure in the first place and also does that require a formel amendment? >> does what require -- >> if someone is to step in temporarily to finish out convincvincecourtney's term? >> the by-laws are silent about what happens when a president resigns. it just says in the absence of the president the vice president. you could just do nothing and commissioner cane could act as vice press for however months until october. that's one option. the alternate option is you hold

an election in the next meeting and you could elect either commissioner caen or someone else to serve out the remainder until october and hold a new election in october. i don't think either one of those rules rules changes. >> can i ask you one other option, could it be possible -- could commissioner caen serve, if we elected her next meeting and again in october, could she make a decision in february that she would like to step out of the president's role and it still creates things off cycle a bit. that's an option too, right. and if you are enjoying it and you want to continue on for the 20 months. is that an option? >> the rules don't speak to it. one thing you want to consider is maybe the rules should speak to this question of what happens when there's an unexpected vacancy of the presidency. you could have a rule that says

the vice president automatically becomes president and there's no election. but right now the rules don't make that clear. >> what happens if a vice president resigns? is there an election? >> well, it's in the process that the next person in the rotation would come to vice president. i mean, it's the way it's always been. it's a good way to do it with the retation an rotation and evs the opportunity to serve as an officer and it's expected and, you know, you are prime to do it when your time is going to be. >> i think there were some exceptions to that. typically, you know, it's a cycle. >> i think that cycling is important. i think it creates a commission

where everybody understands the operation of the commission the same way. i think that's a powerful thing. it's not just that you have someone that can get the position and hold on to be it foon to for along time. it avoids unpleasant discussion about whose turn it should be. i think the practice has been very wise. in the current -- i think it might make some sense to take a look at the rules. i would be comfortable doing either one of the two things. this isn't helpful. i mean, there's the issue of the structure that makes the most sense in the long-term. that's one discussion. and the next discussion is ok,

here we are, in february. we have a resignation of a member who was president. what do we do about that? those are two very different discussions potentially. for the second one, i would be very comfortable with what commissioner caen suggests, that we're basically responding to the issue that we have in front of us and let's take it for a year. and, i suppose during that year we wanted to rethink how we do the process, we could -- i would be comfortable with that. i'm also very comfortable keeping the rules exactly as they are. if i don't have a strong opinion either way. that's why i say it's not very helpful. i am not a real advocate on that. if there were to be a motion to change the rules, i would probably not second it. if it were seconded i would probably vote for it.

>> a wishy washy group. >> we need more power-hungry people on the commission. >> i hope no one is watching this. >> what about what francesca mentioned that we go through the process of electing the next meeting a person, the vice president becomes the president and then you select the vice president but you can go on -- how would that work? >> it would have to happen again in october. >> would you be president and vice president? >> no. >> i'd be vice president. >> she's acting. there's no acting vice president right now, right? >> she is vice president. >> she's vice president. >> we haven't held an election or anything. >> i'm saying anne is vice president and she's acting president. there's no acting vice president because she's vice president

acting as president, right? >> she's just vice president. >> but she's acting as president, right. >> the rules don't speak to it. there's no concept of an acting president. the vice president presides in the outcome of the president. >> it sounds like we can have -- i mean we don't have to do an election, right. you would just be presiding as vice president to president. that's one option. >> i don't think i would like to be it for eight months a temporary president. >> eight months until when? >> i would prefer being elected as president, not serving as a substitute. >> ok. we're talking for five months, is that correct? five months. >> i think it's eight months. >> there's march -- it would be eight months. but the terms, so no one is

termed out this year as commissioners? >> that's correct. there's three of us being termed out in 2020. >> i think of termed out as you can't be reappointed. >> expired term. >> my presumption is you will be reappointed. >> correct. that's right. vince would have been. >> his replacement would term out the same time you would anyway. >> right. >> so you are right. >> so, fine. why don't we just stick with the way it is and we'll have an election next meeting for finishing out his term. here again, it's only a matter of four month's difference between october and february.

i'm sorry that i don't have the support of the commission to do so. we'll just leave it the way it is. >> we look forward to 20 months. >> just to be clear, you either can serve eight months or 20 months. >> correct. >> ok. >> there's no change of rule for election for president and vice president. >> correct. >> do you need to add something in the rules that addresses the vacancy that says if there's an vacancy there will be an election at the next meeting to fulfill the term? >> well, that negates tradition the way we have it. tradition is we have a rotation and everybody knows about it. >> rotation doesn't work if

someone resigns. that's the problem. >> what they're saying is that if someone leave unexpectedly, you just elect a person to fulfill that term. >> which is the -- that's what i'm saying, just for the term. even if a vice president resigned, we would have an election and theoretically it would be the next person in the rotation. >> that's what you are proposing to do is hold an election to fillel vacancy. fill the vacancy. if you wanted to say when there's an unexpect vacancy, the vice president automatically succeeds the president and you don't have to have an election. >> can i ask a question, anne and donna, when victor went to the police commission, you were elected president, right?

>> i don't remember. >> the question i had is was someone, you know, elected vice president? >> yes. it was a succession. i do remember that i was elected twice. >> so you were elected twice. >> i was elected twice. >> so the vice president was vice president for the same length of time. >> correct. >> ok. >> can i clarify something. the options on the table for vice president cane are not 8 and 20 but 12 and 20. >> eight to finish and then there's another election. >> well, yeah. here is my question, if in our next meeting that we vote for a president to finish out vince

courtney's term, in this case, they will be voting in as an official president, right. it's not a temporary thing. >> yeah. >> and vice president caen, you would rather fill just a limited 12 months as president and you would prefer not to be a temporary, a vice president with presidential responsibilities if you are officially voted in with president, would you be amenable to that. the eight month has president and another 12? >> that's ok? >> correct. >> good. >> all settled on that. >> so do we want to add something to the by-law or the rules or not? >> to clean this up in the event it happens again? >> we can do that. it's a good idea. >> right. >> and so, it's not calendered so we have to give it notice two weeks in add vans. >advance.>> we don't have to no- >> yes, you do. >> we're doing the election and

the rules amendment. >> oh, ok. >> so the rule amendment would be what? >> you would just have to add one sentence to that. in case of the vacancy. >> it depends what you want the rule to be. >> the concern i have you need to consider is that if the vice president becomes the president you have to hold elections for vice president. >> it doesn't say the vice president becomes the president right now. >> if you were to do that amendment you still have to do an election of a vice president. >> so in the event of a vacancy of an officer there will be an election held to fulfill the next term. does that address it? and then assuming that at the next meeting they'll be a president and vice president election and that would happen

any time if you resigned next week, when you don't have -- if an officer resigns, you have to basically have an election. if there's a vacancy of one of the officers. even if the vice president resigns, you would have to officially have an election that would be a new voic vice presid, right? >> right. >> makes sense. so if it's president or vice president there needs to be an election. >> taking it a step further, should we put in -- make it a rule about the rotation? >> i think that's already in here. >> it's not rotation in here. >> right now it says if the president and vice president are absent, the most senior member of the commission presides.

but that doesn't speak to rotation of officers. that is for that matter and who chairs the meeting. as both the chair and the most senior person, if you were not here we would go to the next most senior person. >> are we spending too much time on this. >> actually this is important. >> well, i think it gets complicated and especially if you put into the by-laws for rotations we have by custom. that has unintended consequences. >> i would be hesitant too. >> i would think if it is our

inclination to stick with the rules as they are this moment. we follow the rules as they are at this moment and schedule an election. and that when we get past that, and with more thought and time, to process it that it looks like we really ought to change the rules to plug this hole than we do that. >> all right. end of discussion. next item. >> is there public comment? >> item 12 prove number 4 to agreement number cs 9-1-1 r and authorization the general manager to negotiate and execute this amendment increasing the agreement by 3,800,000 and exceeding the term by 10 months.

>> director water capital programs the sfpuc. this amendment is to make one final amendment for the construction management contract for calaveras dam replacement project. we've known we would need to do this eventually but we wanted to wait until this time when we knew exactly what would be needed in terms of costs and duration. so this will allow us to finish the management of the construction contract as well as close out this very complex contract. if you have any questions, i would be happy to answer them. >> i'll move the item. >> i'll second. >> any public comments? all those if favor. >> aye. >> opposed. the motion carries.

>> next item. >> prior to public comment, and we'll read the closed session items. item 15 is unlitigated claims kin du truong 16 peter day ton versus city and county of san francisco, 17 han over insurance company asowyx holdings incorporated. and 18 is existing litigation david alfaro versus city and county of san francisco. item 19 existing litigation pacific gas and electric corporation and item 20 existing litigation city and council tee of san francisco versus pacific gas and electric company. item 21, existing litigation pacific gas and electric. 22 existing litigation pacific gas and electric. 23 existing litigation pacific gas and electric. 24 existing litigation pacific gas and electric. 25 existing litigation pacific gas and electric. 26 existing litigation city and

county of san francisco versus pacific gas and electric. >> is there any public comment on the items to be discussed in closed session? hearing none, may i have a motion to assert. >> move to assert. >> second. >> all those in favor. >> aye. >> aye. >> opposed. the m >> we have now come out of closed session. i would like to report on the items. 15, 16, 17 and 18 were settled and items 19-26 there's no action. may of a motion regarding whether to disclose? >> not to disclose. >> i need to make a clarification that on item 18,

item 2, was not heard in this closed session. >> thank you. >> is for the plaintiff, sanchez. >> i have a motion on the table. do i have a second. >> i'll second. >> all those in favor. >> aye. >> opposed. the motion carries. is there any new business? before we adjourn. >> so, this meeting is adjourned at 4:00. one of the major task

was asked to do is water system improvement program and one thing i looked at is about the 4.8 billion dollars wurthd of work and a lot of the work was regional. we looked at how can we make sure that we provide opportunities for san franciscan's and people in the region and so we looked at ways we can expand our local san

francisco lb program. so, we thought about it and worked with general manager at the time to form an advizry committee to talk about how to include local businesses in the region. >> i was on the first committee back about 10 years ago and the job changed over time. in the beginning, we just wanted people to know about it. we wanted to attract contractors to come into the system which is a bidding system and bid on some of these projects. our second job was to help the sfpuc to try to make themselves more user frndly. >> i like that they go out of their way, have contractors trying to teach and outreach to small businesses and lots of creative ways. help the community as well. there is so

much infrastructure going on and repair, new construction that i think is helping to get construction back on its feet. >> my faiv rlt part of the committee has been that we have played a opportunity for many small businesses. [inaudible] women owned business to come in and [inaudible] sfpuc. it is a great opportunity because some are so small they have been able to grow their companies and move up and bid other projects with the sfpuc. >> everyone i was talking about with any contractor [inaudible] and super markets and things like that and i realize the transition was on the sfpuc.

he got that first job and knows about the paperwork qu schedule and still works on this type of job, but he works with general contractors that also did other things. pretty soon it is like he did that one and that one. it completely changed his business. >> my name is nancy [inaudible] the office manager and bid coordinator for [inaudible] construction. worked on 10 plus puc, lbe contracts. today we are doing site maintenance on the [inaudible] chr site and currently the gentlemen behind me are working on every moving and basic specs of plants. in order to be success you need to work hard, bid low and keep a look at the sfpuc website for

future bidding opportunity. >> this is a successful program because it provides opportunities to regional communities that might not have opportunities to work for large scale projects. the sfpuc is a fortunate agency we have a lot of capital program that span over 7 counties who also to see how some businesses like [inaudible] and bio mass started as small micro businesses grow and expand and stay in the program and work on several projects before they graduate from the program. that is what warms my heart. >> my name is college willkerson, the principle for bio mass. bio mass has been in business since 2006. 3

partners. small businesses fill a niche but apply and being a part of the program helped us be more visible and show the city and county of san francisco we can also perform services. >> this program had tremendous impact to the region. in fact, the time we rolled the program out was during the recession. this has h a major positive impact and certified over 150 firms in the rejen and collectively awarded $50 million in contracts, and because of the lbe certification it open many opportunities to work with sfpuc. and, i significantly helped the business. it is one of the major contributors to our success.

>> we take a lot of pride in what we do. the electric shop covers all of waste water, so out of this location here, we cover everything from oceanside to southeast plant and all the computations including treasure island and yerba buena. we have all the preventative responsibility, maintaining maintenance and also keeping up with work orders from operations. i would say one of the things fortunately for me is the staff is incredibleably motivated. the staff here knows what to do, how to do the job safely, and it makes my job incredibly easy. >> they know the job, and they

know the challenges, and i think it's all about personal pride. they want to do a good job. from our maintenance group to our i.n.c., dedication to the people. when they're going home, and they're crossing the bay bridge, and they get a call that there's a problem with a pump station on treasure island, they return to work. they turnaround in westbound traffic and get back to work and get this pump back in line, and i can't tell you how much that means to me as a boss and the city and county of san francisco. >> as a group, if they didn't do what they do, the streets would be flooded with waste and gray water, and it could become a health hazard. we take a lot of pride in what we do, and we do the jobs right, and you walk away fulfilled that you've done the

city a >> we start with the pledge of allegiance. will everyone please rise and join us in the pledge of allegiance. [pledge of allegiance] >> president stansbury: roll call, please. [roll call]

>> president stansbury: great. thank you. in a moment, we're going to go into closed session. before we do so, we will call for public comment. being that there are no members of the public present, we will close public comment and go into closed >> president stansbury: we're just coming out of closed session. rememb we are returning to open session. is there a motion not to disclose? >> yeah, i move that. >> president stansbury: there's a motion by commissioner bridges, second by commissioner driscoll. is there any public comment on this? seeing no public comment, can we take this item without objection? great. item passes. [gavel]. >> president stansbury: we are going to go to item number four, general public comment. seeing none, we will close

general public comment. next item, please. [inaudibl [inaudible] >> president stansbury: is there a motion on the table? [inaudible] >> president stansbury: is there a second? >> second. >> president stansbury: motion by commissioner bridges, second by commissioner paskin-jordan. is there any public comment? seeing that there's no public comment -- oh, commissioner bridges? >> board member bridges: yeah. on the discussion of hiring boia, and there's a section in attributing to what i said, which is fine. i apologize for what was a waste of you all's time but none of that was captured. i was speaking about the r.f.p.

process. i'm not sure what direction is given to the person drafting the minutes. [inaudible] >> many, many minutes that we just sort of wanted to try to get the gist of what their comments were. but certainly, if you want us to go back and beef up your areas of discussion, we can certainly do that. but the issue was it was a long discussion. >> unequivocal sections, trying to capture what was said is what i want you to do. don't go backwards to that meeting. >> okay. i hear you. >> as for the termination of fidelity issues, i think there are other issues we want to capture other than just

performance. and i'll talk about that again when we get to the c.i.o.s report. it's just a comment on the minutes. i'm not voting against them or anything like that. >> okay. >> president stansbury: there's a motion. we have a second. we'll call for general public comment -- we'll call for public comment on this item. is there any public comment? seeing no public comment on this item, we'll close public comment. can we take this item without objection? great. item passes. item number six. >> clerk: item number six, action item, consent calendar. >> president stansbury: we'll call for any public comment. are there any members of the public that would like to address the commission on the consent calendar? seeing none, we'll close public comment. is there a motion? is there a second. okay. can we take this item without objection?

item passes. okay. why don't we go ahead and we will move onto item 15. is that where you'd like to start? you want to start on 14? did i miss one? item number 14 it is. >> thank you. good afternoon, commissioners. this recommended approval for a 2% july 1, 2019 basic cola impacts over 27,000 retirees bay area consumer price index increased almost 2.5% for 2018, so there is a nominal cola bank shown on exhibit b, and in years when the inpolice station is less than 2%, this cola bank would ensure benefits do increase up to that maximum 2% for most employees. >> what is the current bank at? >> i'm sorry? >> well, it varies on when you retired, so if you've been retired for a long time, it's almost certain that you're

going to always get that maximum 2% increase. yeah, it's on the last page. [inaudible] >> -- for folks who retire after 19893. that's a basic guaranteed of 2 22% of cola if even inflation is zero. >> your benefit would never decrease below your original -- i mean, from when you had first retired. >> okay. great. is there a motion? [inaudible] >> there's a motion by commissioner casciato, a second by commissioner bridges. we'll open it up to public comment. is there any public comment on this item? seeing none, we'll close public comment. can we take this item without

objection? item number 14 passes. item number 15. [agenda item read]. >> the rates have been quite a bit smaller than the 4% minimum insured in the carter, so we would like -- charter, so we would like the board to approve a credited 4% interest rate starting july 1, 2019. >> okay. do we have a motion? by commissioner casciato. seconded by commissioner chu. we'll open it up for public comment for this item. seeing no members of the public that would like to comment on this item, we'll close public comment. can we take this item without objection? item number 15 passes. item number 16. >> clerk: item number 16, action item.

review and adoption of july 1, 2018 actuarial evaluation report, presentation of employer contribution rate stress test projection. >> we have bill hallmark and ann harbor to present you the key results. >> good afternoon. we're going to run through the highlights of the results, talk about what the key changes were in the last year, and then, take a look going forward. on side 2, the chart shows last year's contribution rates compared to this year's contribution rates, and you can see that the average member rates stays about the same, and the employer rate goes up from

23.3% to 25.2%. the black line represents the normal cost. that's the expected costa tributed to the current year of service, and so -- cost attributed up to the current year of service. the teal line we're calling tread water line. that's the amount of contribution that needs to be made to keep the u.a.l., unfunded liability at the same dollar amount if all of our assumptions are met, you have to contribute to that level inform tread water, and a lot -- to tread water, and a lot of departments aren't contributing that amount. this shows the role this system has taken in contributing significantly above that level, and all of the contributions above that level are going directly to reduce the principle of the unfunded liability. those rates are before any of

the cost sharing adjustments, so they're in our appendix. we have the complex table array of all the cost sharing adjustments for all the different classifications and so forth. but after the cost sharing adjustments, the employer rate would be 27.8%, approximately, and there would be no change in the average member rate, but it would be 11%. the actuarial liability increased this year to about $27 billion. the chart shows the liability in bar form from the prior year and the current year. the blue portion of the bar is the liability for people who are currently receiving benefits. that little gold sliver is for people who no longer work in covered employment but are

entitled to a future benefit. and then, the red portion of the bar is the liability for current active employees. the lines show the market value of assets in green and the actuarial or smooth value of assets in the -- the teal. on the actuarial value whibasi we've increased to 87% funded level, and on the increase, we're up to about 97% funded. those are very good funding levels compared to other systems around the country. on a market value basis, the unfunded liability decreased from about 3.3 billion down to 2.8 billion. >> what is calpers currently at? >> much lower. something like that. >> in terms of our funding

status compared to other california pension systems, do you have any sort of sense of where we are? >> i would say you're probably in the top three or four. i would say three or four others -- contra costa are over 97%. >> the fresno systems are over 100, and then, there are a few around 90%. i think contra costa, a couple of l.a. systems are in place, but there are a lot of other systems that are much more poorly funded. >> thank you. >> but this chart identifies the sources of the change in the employer contribution rate from last valuation to this valuation, and i wanted to note that when we were here november and were showing you the projections, and you adopted

the 7.4% discount rate, this 24.2% contribution rate is actually 20 basis points lower than the projections we were showing back in november. and the main reason for that slight decrease is really the assets, the preliminary assets that we were using were lower than the draft -- or the final assets. the final assets were about $175 million higher than those preliminary assets. really, what i'm saying, nothing has changed much when we were back here in november in terms of the contribution rate. the main sources for the increase of the contribution rate are that july 1, 2018 supplemental cola, the discount rate change from 7.5 to 7.4%, and then, the fourth year of that five-year phase in for the

2015 assumption changes, those three things increase the contribution rate by 3%. and then, your favorable asset experience along with fully paying your charter -- a couple of charter amendments decreased the contribute rate by about -- contribution rate by about 1.4%. this graph is showing the changes in the unfunded liability in the past ten years. the bars represent the annual changes in the accrued liability and the components, and the line represents the net change in the unfunded accrued liability. and you'll notice the good news, in the last two years, you've seen decreased in your unfunded liability in 2017 and '18. so the u.a.l., though, has increased, and i apologize for the typo. it's by 4.1 billion, not 4.9 billion, over the last ten

years. the majority of that or nearly more than half of that is due to assumption and method changes, which are represented by the purple bars. in 2011-12, '14, and '18, those changes were all changes in the discount rate and they assumed rate of return. in 2007 and 2018, those were based on the demographic changes, the studies we do every five years. in 2018, there was a very large increase in the unfunded, and the majority of that is due to mortallity assumption changes that some of the national tables had, and at that point,

we needed to include mortallity changes, as well. the net last five years, you'v actually see actuarial investments gain from 2014 to 2019. but back in 2009 to 2013, you're seeing those gold bars, those are the actuarial losses on assets mainly due to the 2008 financial market crash. >> okay. while i see -- i see the dot on the line graph, but for 2018, what was the dollar value decrease in the u.a.l.? it's like 25, 50 million-ish, something like that? >> i think it's 45 to 50.

>> okay. >> it's in the report. >> okay. thank you. >> the supplemental cola represent 1.1 billion of that u.a.l. increase, and those are represented by the green bars. we had supplemental colas in 2010, '11, '17, and '18. and in 2016, there was no supplemental cola granted for that year, but those are those retroactive supplement cal col for 2013 and '14 that allow certain people those supplemental colas, even if they're not funded. the liability experience was about a decrease of .7 billion and that was mainly due to lower than expected salary increases and lower than expected colas for the old

safety cola group, but you can see they're very, very small compared to some of the other sources. and then, lastly is the fact that your contributions are in excess of the normal cost expenses and interest on the u.a.l. or in other words, your contributions are -- over the last ten years, you've been able to pay down your unfunded liability. specifically in the last five years, you can see the red bars from 2014 to '18, have contributed to decreasing that u.a.l., and that's when the new amortization kicked in.

>> can i ask a question on that. >> yes, absolutely. >> looking at the chart where it shows contributions as decreasing the u.a.l., can you explain the -- >> sure. >> -- why each year, it's so different. i mean, i would think that the contributions are consistent kind of across the board, right? >> so what we're measuring here is comparing the actual contribution to the normal cost plus the u.a.l. of normal market assets, and that fluctuates each year with the market value of assets. for contributions, we smooth things out, and so some of that volatility you're seeing here in the size of that bar is really just reflecting us smoothing the contributions while still trying to pay down the u.a.l. while the market

value fluctuates. >> is that from a method change? >> that's -- in part, that's -- well, that aspect has been there throughout because we smooth the assets over a five-year period. >> okay. i'll circle back offline. that went right over my head. >> it's just -- we try and keep the contributions as smooth as we can while trying to account for environmental changes, but they don't smooth as rapidly as the measure of interest on the u.a.l. >> okay. thank you. moving forward to slide eight, is the historical and projected contribution rates. and to note, the blue line is

the 2017 valuation projections, and you can see those projections from last year to this year have not changed much at all. there was investment gains this year that have overall reduced the projected contribution rates going forward, but they're slightly offset in the short-term because of the supplemental cola that was also granted, and that was paid over the next five years, you see the supplemental rate increase over the next five years, and also due to the 2015 assumption change. the last year for that will be fiscal year ending 2021. historically, from 2010 to 2015, you see that sharp increase in the contribution rates, and again, that's the investment losses from 2018 -- or i'm sorry, 2008, plus some of the assumption changes. and then, in 2016 and '17,

there's slight decreases in the contribution rate due to actuarial gains in the investments, and then, that graduate increase from 2017 to 2021 due to the gradual phase-in of those assumptions. >> so we wanted to point out, we've added a new section in the valuation report in advance of a new standard of practice that requires some assessment and disclosure of risk. so we're not going to go through -- well, a bunch of the stuff that is in that section is the projections that we have traditionally provided you, and so we will be going through that, but i just wanted to explain what this new section is and how it's laid out. the standard requires us to

identify the risks and assess the risk at some level. the assessment does not have to be very detailed at all. but we are required to recommend another assessment if we believe it would be significantly beneficial. in the draft, they didn't have the word "significant" in there, and my question was when would it not be beneficial? so we got some clarification, and you'll see some language in your report that says, you know, we're providing sufficient risk assessments at this time and we're not officially recommending a more detailed assessment. it also requires us to disclose some maturity measures that are relevant to understanding the

risks, so there's some assessments showing the maturity of your plans compared to other plans across the country. most of this information, it has been from the past reports and has moved into that section, but there's some new information and some new language explaining it and setting up the risks. these are some of the sample charts looking at some of the measures compared to other systems. the bars are the distribution of other systems, and the diamond is where esfers stands. the higher you are on these charts, the more sensitive you are to risks. we can go into that in more detail, and we did talk some about it in the july or august

board meeting, but we just kind of wants to summarize what we put in there. we identified three specific items to assess. investment returns are the obviously one, the risk that your actual future investment returns will be other than 7.4, and those assessments are the traditional projections we've done for the different scenarios and we'll touch on those in a minute. interest rate and assumption risk. one of the things that has caused the -- how much assumption changes have increased the unfunded liability, part of that was the moretality, and part of -- mortality, and par of it was changes in -- part of it was changes in the markets.

so we just put in, what if we had to reduce the expected rate of return by another 100 basis points, so you can get a sense of that sensitivity. then, the last thing was the supplemental colas. with the audit, they raised the question whether we were capturing the supplement cal colas and whether there was a risk there, so we thought we would show that risk and our assessment. the assessment and the report basically shows that our current methods do take care of the supplemental colas, even though we don't testify a liability for them in advance, we only recognize them in our contributions once they're granted. but then, we amortize it over a period of five years, and our stress tests show that methodology works. >> can i -- for the sake of time, a lot of this is stuff that we have -- things are

putting together the summary stuff. i know some of this is new. if you maybe can just hit on another one or two sort of high points, and we'll -- >> yeah, so our plan is this works for you, i'm just going to setup the scenarios, and we're going to go to the last page. we're not going to look at the different pieces here. so the scenarios we've done are based on the hypothetical scenarios that are not intended to give an actual projection of what would happen, but to give you an idea of the actual stresses in the system. those are based on five-year capital market assumptions, and we showed the distribution of those assumptions over one-year and five-year periods. we've created one-year shock

systems that are based on the 95 percentile turnover one years, and then one-year and five-year significants that are based on the 75th percentile and 95 percentile over five years. so what happens to funded status, what happens to contributions in each of those scenarios, and i'll let ann summarize them. >> so this is a summary of the scenarios that bill was just explaining, and you can see -- okay, the yellow are the one-year shock, so there's a one-year very negative or very positive shock. one-year moderate and one-year significant. what's interesting to point out in the short-term, the next one or two years, there's not a large difference in the

contributions in these scenarios. you're only seeing about a 6% range in that contribution rate where the return for that one year -- for the next year would be -15 for the negative scenario and a +15 for the positive scenario. so you have this cushion right here in your plan right now because you have about $700 million in the difference between your actuarial value of assets and your market value of assets. there is the scenario what your rates could be given market rate returns. >> so just in conclusion, the projections are similar to the

last valuation. next year is the last year we are increasing the 2015 assumption change cost, so there is an expectation of an increase next year, but that's -- after that, there's an expectation or a trend of much lower contribution rates, but that all hinges on investment returns, and there's a wide range based on what your actual returns are. >> what was our return last year? 13 -- >> 2008 was 11.5%. >> that's june 30. >> 11.5 was the -- >> it was 13.5 in 2017 -- june 30, 2017. >> i'm sorry. >> it was 13.5 for june 30, 2017. >> i lost the year. okay. thank