City Manager Mayor David Cavazos Miguel A. Pulido City Attorney*

Twenty one out of 32 agencies that provided June 30, 2013, data to the Grand Jury had not put aside funds in an irrevocable trust to help pay for the accrued actuarial liability of retiree healthcare costs in the future. This is an imprudent level of contribution. City Response: City of Santa Ana ("We") agrees with the finding that OC cities should establish and/or set- aside funds in an irrevocable trust to offset current and future retiree health costs. Findings of the Grand Jury

Anaheim, Buena Park, County of Orange, Huntington Beach, Lake Forest, and Stanton were in compliance with the requirement to contribute a full 100% or more of the City Annual Required Contribution in the FY 2012-13. The remaining 26 agencies were not in compliance. City Response: We agree with the finding that OC cities should contribute 100% of its Annual Required Contribution ("ARC"). However please note, the City recognizes on an annual basis the full ARC within its financial statements. Findings of the Grand Jury

All agencies surveyed (Except Anaheim) do not disclose retiree health benefits as part of employee compensation per GAAP standards. Orange County Grand Jury Orange County Unfunded Retiree Health Care Obligations City Response: We agree that OC cities should disclose retiree health benefits as part of employee compensation per GAAP standards. The City has disclosed its OPEB liability within its Notes Disclosure section of its FY 2012-13 Comprehensive Annual Financial Report ("CAFR") in accordance with GAAP, including but not limited to the following items: 1. Annual Required Contributions 2. Annual OPEB cost (expense) 3. OPEB obligation Recommendations of the Grand Jury [ ] Recommendations of the Grand Jury