City of Westminster (date received) 11/30/15*

- "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: The City disagrees partially with this finding. The City agrees that it has not put aside funds in an irrevocable trust to help pay for this future liability. The City disagrees that this is an imprudent level of contribution. The City continues to face recurring annual operating budget deficits and structural deficits in its General Fund. As a result, the City continues to address its retiree health care obligations on a pay-as-you-go basis. However, the City has taken proactive steps to control the amount of the unfunded liability for retiree healthcare. The City restructured its retiree healthcare benefit program to constrain the growth in future costs by reducing the benefit level for employees hired after January 1, 2011 and capping the benefit for employees hired prior to this date. This has resulted in a reduction in the accrued actuarial liability for each actuarial valuation conducted subsequent to these plan changes. As additional resources may become available in the future, the City will give strong consideration to establishing an irrevocable trust for this program. Given the fiscal challenges the City has faced in recent years, the City believes it has acted prudently in addressing its retiree healthcare obligation. 11/30/2015 MON 15:48 FAX 17143734684 2002/003

- "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 their annual required contribution in the Fiscal Year 2012-13. The remaining 26 agencies were not in compliance." City Response: The City disagrees wholly with this finding. There is no Generally Accepted Accounting Principles (GAAP), Governmental Accounting Standards Board (GASB) or legal requirement to contribute 100% or more of the annual required contribution (ARC) for any given year.

- "All agencies surveyed (except Anaheim) do not disclose retiree health benefits as part of employee compensation per GAAP standards." City Response: The City disagrees partially with this finding. Although not separately disclosed, the City does include retiree healthcare costs as part of employee compensation expenditures in its financial statements. As evidenced by the City's unqualified audit opinions, the City was in compliance with GAAP standards for its financial statement presentation and disclosure of other post-employment benefits.