Oakland Police & Fire Retirement System

2004–06 Annual Report

Oakland Police & Fire Retirement System

INTRODUCTION

President of the Board: Letter of Transmittal to the City Council ..................................................................7

Manager: Letter of Transmittal to the Board of Trustees .....................................................................................8

Members of the Board of Administration ...............................................................................................................12

Administrative Organization Chart ...............................................................................................................................13

FINANCIAL

Independent Auditor’s Report for Years Ended June 30, 2006 and 2005 ...............................................16

Independent Auditor’s Report for Year Ended June 30, 2005 and 2004 .................................................18

Management’s Discussion and Analysis .......................................................................................................................20

Financial Statements

Statements of Plan Net Assets—June 30, 2006, 2005, and 2004 ................................................................22

Statements of Changes in Plan Net Assets—Years Ended June 30, 2006, 2005, and 2004 .........23

Notes to the Financial Statements for Years Ended June 30, 2006 and 2005

1. Description of the Oakland Police and Fire Retirement System ........................................25

2. Summary of Significant Accounting Policies ....................................................................................26

3. Contributions ....................................................................................................................................................27

4. Cash, Deposits and Investments ............................................................................................................27

5. Receivables from Retirees and Beneficiaries ..................................................................................31

6. Reserves ..............................................................................................................................................................32

7. Administration Expense ..............................................................................................................................32

Required Supplementary Information .........................................................................................................................33

Note to Required Supplementary Information .....................................................................................................33

Contents

| 3

Cover photo, top, by Clyde Sunderland Aerial Photographs; Aerial View of Oakland, c. 1970; Collection of the Oakland Museum of California, City of Oakland. Board of Administration photos by Richard Morgenstein Photography. Other images cour tesy of the Oakland Police and Fire Depar t-ments and Oakland Library History Room. Design and Production by Tobi Designs, tobidesigns.com.

Notes to the Financial Statements for Years Ended June 30, 2005 and 2004

1. Description of the Oakland Police and Fire Retirement System ........................................34

2. Summary of Significant Accounting Policies ....................................................................................35

3. Contributions ....................................................................................................................................................36

4. Cash and Investments ..................................................................................................................................36

5. Reserves ..............................................................................................................................................................41

6. Administration Expense ..............................................................................................................................41

Required Supplementary Information .........................................................................................................................42

Note to Required Supplementary Information .....................................................................................................42

INVESTMENT

Investment Consultant’s Report .....................................................................................................................................44

List of Investment Professionals .......................................................................................................................................46

Investment Manager Fees and Other Investment Expenses ...........................................................................46

Investment Performance ......................................................................................................................................................47

Asset Allocation as of June 30, 2006, 2005, and 2004 ........................................................................................47

Investment Summary by Type as of June 30, 2006, 2005, and 2004 ...........................................................48

Largest Stock Holdings (by Market Value) as of June 30, 2006, 2005, and 2004 ................................49

Largest Bond Holdings (by Market Value) as of June 30, 2006, 2005, and 2004 .................................50

ACTUARIAL

Actuary’s Certification Letter ...........................................................................................................................................52

Summary of Assumptions and Funding Method ...................................................................................................54

Membership Summary .........................................................................................................................................................56

Summary of Plan Provisions ..............................................................................................................................................56

Estimated City Contributions as of July 2011..........................................................................................................57

STATISTICAL

Additions to Plan Net Assets by Source for Years Ended June 30, 2006, 2005, and 2004 .........................................................................................................................................60

Plan Deductions by Type for Years Ended June 30, 2006, 2005, and 2004 .............................................60

Benefit Expenses by Type for Years Ended June 30, 2006, 2005, and 2004 ............................................60

Contents (continued)

4 |

SECT ION ONEINTRODUCTION

★ ★ ★

Relief Time c. 1985 (left to right): Jim Cole, Forrest Thornberry,

Tony Parrino, Bob Aven, Jim Lear, Dwight Sundahl

Coffee Break: Art Ambrose and Pete Primak

Recruit Class, c. 1980

Introduction | 7

June 1, 2007

Mayor Ronald V. DellumsOakland City Council1 Frank H. Ogawa PlazaOakland, CA 94612

Honorable Mayor Dellums and Members of the City Council:

I am pleased to present a three-year annual report of the Oakland Police and Fire Retirement Sys-tem (PFRS) for the fiscal years ended June 30, 2004, June 30, 2005, and June 30, 2006. The report has been prepared in compliance with Ordinance Number 713 C.M.S. Provided in this report are the Plan’s financial information, investment performance, actuarial valuations, and statistical information for the corresponding years.

The members of the Board express their appreciation to the Mayor, City Council, City Administra-tor, City Attorney, the various City agencies and departments, and the members of their staff for their cooperation and assistance.

Respectfully submitted,

Robert P. CrawfordPresident, Board of TrusteesPolice and Fire Retirement System

Letters of Transmittal

8 | Introduction

Letters of Transmittal

June 1, 2007

Oakland Police and Fire Retirement System Board of Trustees150 Frank H. Ogawa Plaza, Suite 3341Oakland, CA 94612

Board of Trustees:

I am pleased to present the Annual Financial Report of the Oakland Police and Fire Retirement System (PFRS) for the fiscal years ending June 30, 2004, June 30, 2005, and June 30, 2006.

ACCOUNTING SYSTEM

The accompanying financial statements have been prepared in compliance with Section 2600 of the City Charter and in accordance with the accounting and reporting principles set forth in Govern-mental Accounting Standards Board Statement (GASB) No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans. This Statement establishes financial reporting standards for defined benefit plans and for the Notes to the Financial Statements of defined contribution plans of state and local government entities.

Revenues and expenses are recorded on an accrual basis: revenue is taken into account when earned, regardless of the date of collection, and expenses are recorded when the corresponding liabilities are incurred rather than when payment is made. Amortization of bond premiums and discounts are over the life of the investment security, and actuarial reserves are funded via the aggregate cost method.

ADDITIONS

Additions to the Plan are generated by contributions from the members and investment income. The addition for June 30, 2004 totaled $77,880,387. Due to the issuance of Pension Obligation Bonds, the City’s contribution is deferred until July 1, 2011. However, the City made a voluntary contribution of $17,709,888 in the fiscal year ending June 30, 2005. Including the City’s contribu-tion, the total addition to the plan in the fiscal year ending June 30, 2005 was $65,011,532. In the fiscal year ended June 30, 2006 the addition to the Plan was $42,330,899.

Introduction | 9

DEDUCTIONS

The principal deductions of the Plan relate to the purpose for which it is created, namely the payment of retirement benefits. The deductions to the Plan in the fiscal year ended June 30, 2006, totaled $72,124,174. This total included not only the recurring benefit payments mandated by the Plan, but also contributions to transfer employees, investment advisory fees, and administrative expenses.

In fiscal year 2006, the Police and Fire Retirement System management discovered an overpay-ment to the Fire retirees and beneficiaries. Three years of overpayments are being recovered from these retirees through a reduction of their individual retirement benefit payments over a 20-month period, which became effective in August 2006. The three years of overpayments, which are esti-mated to total $665,078, are included in the Retirement System’s June 30, 2006 financial statement as a receivable.

RESERVES AND FUNDING

The Police and Fire Retirement System is 69.6% funded, and the actuarial present value of future City contributions is $268.7 million as of July 1, 2005. The funded status is defined as the difference between the projected City liability and the actuarial value of assets. The Fund was 69.8% funded as of July 1, 2004, and 69.1% funded as of July 1, 2003. As previously mentioned, City contributions are deferred until July 1, 2011.

INVESTMENTS

The Police and Fire Retirement System Investment Policy is used as a guideline for all investment activities. The Investment Policy includes an asset allocation plan. The plan consists of five asset classes: Large, Mid, and Small Capitalization Domestic Stocks, International Stocks, and Fixed Income Instruments. In addition, the Investment Policy also allocates investments among the dif-ferent investment management styles.

In 2004, PFRS began to review the portfolio structure of each of its asset classes. As a result, in fiscal year 2004, the PFRS Board adopted a policy to transition a portion of the investments from Index Money Managers to Active Money Managers. In fiscal year 2005, six new Active Managers were hired: four Domestic Money Managers and two International Managers.

10 | Introduction

As of June 30, 2006, the investment styles for the Retirement System’s equity managers are Large Enhanced Index, Large Value, Large Growth, Mid Cap Core, Small Value, Small Growth, and International Equity. The style for the fixed income managers is Active Fixed Core.

Investment income was $44.2 million in fiscal year 2006, $48.6 million in fiscal year 2005, and $79.4 million in fiscal year 2004. GASB Statement No. 25 requires that investments be reported at fair value. The appreciation (depreciation) in fair value of investments held by PFRS is recorded as an increase (decrease) in investment income based on the valuation of investments at year-end.

The rate of return on the portfolio for the fiscal years 2004, 2005, and 2006 is as follows:

1-Year Rate of Return

6/30/06 6/30/05 6/30/04Total Fund 7.4% 8.3% 12.7%

TAX INFORMATION

The Internal Revenue Service has ruled that the Plan qualifies under Section 401(a) of the Internal Revenue Code and is therefore not subject to tax under present income tax laws. Accordingly, no provision for income taxes has been made in the accompanying financial statements, as the Plan is exempt from Federal and State income taxes under the provisions of the Internal Revenue Code, Section 501 and California Revenue and Taxation Code, Section 23701, respectively.

Payments received under Section 2608 (Retirement for Service) of the Oakland City Charter are taxable to the recipient, since the retirement allowance is based on age and length of service. Under 2610(a) (Disability Retirement), retirement allowances are not taxable; however, the portion of a retiree’s retirement allowance in excess of 50% of the compensation attached to the rank is taxable.

ACKNOWLEDGMENTS

This report was compiled through the combined efforts of the Retirement System’s administrative staff, the Board of Trustees, and various professional consultants. Its goals are to provide complete and reliable information to the beneficiaries of the Plan, to serve as a basis for making management decisions, and to ensure compliance with legal provisions affecting the administration of the Plan.

Respectfully submitted,

Yvonne S. HudsonManager, Retirement and Benefits

Introduction | 11

PROFESSIONALS

Over the past three years, the Board of Administration has engaged the following consultants to assist in maintaining a sound retirement plan:

ActuAry Milliman USA

Auditors Macias, Gini & Company, LLP

Williams, Adley & Company, LLP

Yano Accountancy Corporation A complete list of Investment Professionals is included on page 46 of this Annual Report.

The Board meets on the Wednesday of each month and holds special meetings as they are necessary. The meetings are currently held at 1 Frank H. Ogawa Plaza, Oakland, California 94612. Members of the Retirement Plan and the general public may attend any of the meetings.

12 | Introduction

Members of the Board of Administration

Sergeant Robert P. CrawfordPresidentActive Police Department Representa-tive

Jaime Godfrey Vice PresidentBank Representative

Kenneth BrooksCommunity Representative

John Speakman*Fire Department Representative

Ken Bullock**Insurance Representative

William J. Hubartt***Fire Department Representative Alternating Police/Fire Representative

Deborah EdgerlyMayoral Designate

* Replaced David McArthur on September 28, 2005 ** Joined the Board on July 26, 2006 *** Replaced James Cooper Police Representative on October 27, 2004

Introduction | 13

City of Oakland Retirement Systems

Marcia MeyersDirector, Office of Personnel

Yvonne HudsonManager, Retirement and Benefits

Gloria AlcalaBenefits Representative

Jennifer FosterAdministrative Assistant II

Téir JenkinsRetirement Systems Accountant

Sandra TongAccountant II

Back Row (left to right): Yvonne Hudson, Retirement and Benefits Manager; Jennifer Foster, Administrative Assistant II; Front Row (left to right): Rey Abellera, Accountant II (recently retired); Sandra Tong, Accoun-tant II; Gloria Alcala, Retirement Benefits Representative; Téir Jenkins, Retirement Systems Accountant

ADMINISTRATIVE ORGANIzATION CHART

SECT ION TWO FINANCIAL★ ★ ★

Callout 1958

Inspector Don Iverson

Watchroom at 22 Engine, c. 1948

16 | Financial

Independent Auditors’ Report

Yano Accountancy CorporationLitigation and Financial Consulting • Forensic Accounting

Certified Public Accountants

1

Independent Accountants’ Report

The Board of Administrationof the Oakland Police and Fire Retirement System

We have audited the accompanying statement of plan net assets of the Oakland Police and FireRetirement System (the System), a pension trust fund of the City of Oakland, California (the City), as of June 30, 2006, and the related statement of changes in plan net assets for the years then ended. These financial statements are the responsibility of the System’s management. Our responsibility is to express an opinion on these financial statements based on our audits. The System’s financial statements as of and for the year ended June 30, 2005 were audited by other auditors, whose report dated November 16, 2005 expressed an unqualified opinion on those financial statements.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes considerationof internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the System’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As discussed in Note 2, the financial statements of the System are intended to present only the plan net assets and changes in plan net assets of the System. They do not purport to, and do not, present fairly the financial position of the City as of June 30, 2006 and 2005, and the changes in its financial position for the years then ended in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the financial statements referred to above present fairly, in all material respects, the plan net assets of the System as of June 30, 2006, and changes in plan net assets for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Financial | 17

Yano Accountancy Corporation 2

The management’s discussion and analysis on pages 3 through 8, and the schedule of employercontributions and related note to supplementary information on pages 20 and 21, are not required parts of the basic financial statements, but are supplementary information required by the GovernmentalAccounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the requiredsupplementary information. However, we did not audit the information and express no opinion on the required supplementary information.

Oakland, CaliforniaOctober 3, 2006

Years Ended June 30, 2006 and 2005

18 | Financial


The Board of AdministrationCity of Oakland Police and Fire Retirement System

We have audited the accompanying statements of plan net assets of the Oakland Police and Fire Retirement System (the System), a pension trust fund of the City of Oakland, California (the City), as of June 30, 2005 and 2004, and the related statements of changes in plan net assets for the years then ended. These financial statements are the responsibility of the System’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the System’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2, the financial statements of the System are intended to present only the plan net assets and changes in plan net assets of the System. They do not purport to, and do not, present fairly the financial position of the City as of June 30, 2005 and 2004, and the changes in its financial position for the years then ended in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the financial statements referred to above present fairly, in all material respects, the plan net assets of the System as of June 30, 2005 and 2004, and changes in plan net assets for the years then ended in conformity with accounting principles generally accepted in the United States of America.


Financial | 19

As described in Note 2 to the financial statements, the System adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 40, Deposit and Investment Risk Disclosures, an amendment of GASB Statement No. 3, as of June 30, 2005.

The schedule designated as required supplementary information in the table of contents is not a required part of the financial statements, but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it.

Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole. The additional information in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements. The additional information has not been subjected to the auditing procedures applied in the audits of the financial statements and, accordingly, we express no opinion on it.

Macias Gini & Company LLP Williams, Adley & Company, LLPNovember 18, 2005 November 18, 2005


20 | Financial

Management is pleased to offer this overview and analysis of the financial activities of the Police and Fire Retirement System (System) for the fiscal years ended June 30, 2006, 2005, and 2004. The information presented here, in conjunction with the Notes to the

Financial Statements beginning on page 25, provides a clear picture of the System’s overall financial status.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the System’s financial state-ments for the years ended June 30, 2006, 2005, and 2004, which consist of these components:

1. Statements of Plan Net Assets2. Statements of Changes in Plan Net Assets3. Notes to the Financial Statements

The Statements of Plan Net Assets and the Statements of Changes in Plan Net Assets summarize the System’s net assets and the activities that caused changes in the net assets, respectively, during the three fiscal years under review. These statements report information as to whether the System’s finances as a whole have improved or deteriorated as a result of a particular year’s activities.

The Statements of Plan Net Assets present information on all System assets and liabilities, with the difference between the two reported as net assets held in trust for pension benefits. Over time, increases or decreases in net assets held in trust for pension benefits may serve as a useful indicator of whether the financial condition of the System is improving or deteriorating.

While the Statements of Plan Net Assets provide information about the nature and amount of resources and obligations at year-end, the Statements of Changes in Plan Net Assets present the results of the System’s activities during each fiscal year and information as to how the net assets held in trust for pension benefits have changed during the year. The Statements of Changes in Plan Net Assets measure the results of the System’s investment performance as well as any additions from contributions and deductions for payment of benefits and administrative expenses.

The Statements of Changes in Plan Net Assets can be used as indicators of how the System has progressed to or regressed from the twin goals of fully funding all current and past service costs along with having sufficient additional revenue to pay for current refunds of contributions and administrative and investment expenses.

The Notes to Financial Statements and Required Supplementary Information provide additional information to facilitate a fuller understanding of the data provided in the financial statements. See Notes to Financial Statements and the Note to Required Supplementary Information on page 25 and page 33, respectively.

Management Discussion and Analysis

Financial | 21

FINANCIAL ANALYSIS

The System’s net assets held in trust for pension benefits were $585,104,429, $614,897,704, and $621,582,820 as of June 30, 2006, 2005, and 2004 respectively. Table 1 and Table 2 present con-densed information about the System’s financial results—plan net assets and changes in plan net assets—for the years ending June 30, 2006, 2005, and 2004.

NET ASSETS

Net assets held in trust decreased $29,793,275 from FY 2005 to FY 2006. The main source of this decrease was the payout of monthly pension payments and a decrease in cash held by the System. The City’s advanced contribution of $17.7 million was made at the end of FY 2005 and was included in the FY 2005 cash. In FY 2006, the Retirement Board made a decision to intentionally decrease the System’s holding of cash and utilized the cash reserve to make monthly pension payments.

The fluctuations in receivables and investments payable are primarily due to investment trading at year-end, where the outstanding balances represent investments either sold or purchased, but not yet settled. In FY 2006, Management of the System discovered that overpayments of retiree holiday pay had been made to the Fire retirees and beneficiaries. Three years of overpayments will be recovered from the retirees through a reduction of individual retirement benefit payments over a 20-month period effective August 2006. Three years of fire holiday overpayments are estimated to total $665,078. These overpayments are included in the System’s June 30, 2006 receivables.

Net assets held in trust decreased $6,685,116 from FY 2004 to FY 2005, but had increased $6,477,796 from FY 2003 to FY 2004. The main cause of the fluctuations between the three years is the volatility of investment returns over the past few years. The amount of benefits payable increased as a result of the timing of the year-end payments. The payable to CalPERS has decreased over the past few years as the System has been making payments to CalPERS to cover participants who transferred coverage to CalPERS. These payments concluded in FY 2004, and there were no participants who transferred to CalPERS in FY 2005.

Changes In Net Assets for FY 2006The System’s total additions were $42,330,899 in FY 2006 versus $65,011,532 in FY 2005. The change in net assets held for benefit payments for FY 2006 was a decrease of $29,793,275.

The City is currently not required to make any contributions until July 1, 2011 due to a holiday period granted as part of the Pension Obligation bond issued in 1997. No contributions were made in FY 2006.

Total investment income was $44,171,089 in FY 2006. Excluding monthly pension payment withdrawals, the System had a total annual portfolio return of 7.4%. This return was higher than the Policy Benchmark of 6.9%, but was lower than the 8% Actuarial Expected Rate of Return. The System paid $71,351,523 in Police and Fire Retiree pension payments.

22 | Financial

Table 1: Statements of Plan Net Assets Fiscal Years Ending June 30

2006 2005 2004Assets

Cash and deposits $ 3,471,130 $ 34,523,910 $ 24,448,546

Cash collateral - securities lending 581,555 93,612 3,555,666

Total cash and cash equivalents 4,052,685 34,617,522 28,004,212

receivAbles:

Interest receivable 2,303,266 1,967,747 2,079,148

Dividends receivable 263,106 235,171 141,900

Investments receivable 78,786,120 74,732,179 71,202,293

Member contributions 1,346 1,954 1,100

Retired members and beneficiaries 665,078 - -

Total receivables 82,018,916 76,937,051 73,424,441

investments, At FAir vAlue:

Short-term investments 63,566,898 56,613,649 6,951,536

Bonds 268,492,346 308,287,161 322,970,785

Domestic equities and mutual funds 204,106,927 191,674,699 219,048,012

International equities and mutual funds 89,323,609 83,336,843 98,191,312

Real estate mortgage loans 56,351 59,470 62,114

Securities collateral - securities lending 57,077,290 50,500,000 40,000,000

Total investments 682,623,421 690,471,822 687,223,759

Total assets 768,695,022 802,026,395 788,652,412

Liabilities

Accounts payable 4,751 6,513 3,686

Benefits payable 5,956,090 5,894,707 5,810,386

Investments payable 119,247,882 130,273,276 117,314,033

Accrued investment management fees 723,025 360,583 385,821

Securities lending liabilities 57,658,845 50,593,612 43,555,666

Total liabilities 183,590,593 187,128,691 167,069,592

Net assets held in trust for pension benefits $ 585,104,429 $ 614,897,704 $ 621,582,820

Financial | 23

Table 2: Statements of Changes in Plan Net Assets Fiscal Years Ending June 30

2006 2005 2004Additions

contributions

Contributions of plan members $ 25,452 $ 24,236 $ 21,581

Contributions from the City - 17,709,888 -

Total contributions 25,452 17,734,124 21,581

investment income:

Net appreciation in fair value of investments 25,832,672 34,201,445 63,448,575

Interest 13,756,411 11,619,968 11,599,738

Dividends 4,582,006 2,758,763 4,362,935

Total investment income 44,171,089 48,580,176 79,411,248

Less: Investment expenses (1,974,602) (1,457,828) (1,735,665)

Net investment income, before net securities lending income

42,196,487 47,122,348 77,675,583

securities lending income:

Income from securities lending transactions 2,020,000 910,629 632,733

Less: Expenses from securities lending activities (1,911,040) (793,400) (449,510)

Net securities lending Income 108,960 117,229 183,223

Net Investment income 42,305,447 47,239,577 77,858,806

Other income - 37,831 -

Total additions 42,330,899 65,011,532 77,880,387

Deductions

beneFits to members And beneFiciAries:

Retirement 43,046,461 42,888,610 43,764,738

Disability 26,115,649 25,837,264 24,451,938

Death 2,189,413 2,234,968 2,117,227

Total benefits to members and beneficiaries 71,351,523 70,960,842 70,333,903

AdministrAtion And other expenses

Administrative expenses 772,651 735,806 888,652

Termination refunds of members’ contributions - - 180,036

Total administration and other expenses 772,651 735,806 1,068,688

Total deductions 72,124,174 71,696,648 71,402,591

Change in net assets $ (29,793,275) $ (6,685,116) $ 6,477,796

net Assets held in trust For pension beneFits:

Beginning of year 614,897,704 621,582,820 615,105,024

End of year $ 585,104,429 $ 614,897,704 $ 621,582,820

24 | Financial

Changes In Net Assets for FY 2005 and FY 2004The System’s total additions were $65,011,532 in FY 2005 versus $77,880,387 in FY 2004. The change in net assets held for benefit payments for FY 2005 was a decrease of $6,685,116.

As previously stated, the City is currently not required to make any contributions due to the funding status of the plan. However, the City made an advance contribution of $17,709,888 to the System in FY 2005. The City transferred proceeds from the Oakland Joint Powers Financing Authority Refunding Revenue 2005 Series B Bond to fund a portion of the City’s future obligation to the System.

Total investment income was $47,239,577 in FY 2005 and $77,858,806 in FY 2004. The fair market value of the System’s investments continued to appreciate in FY 2005, but not at the robust level of FY 2004. Benefit payments and administrative expenses remained level in FY 2005.

FIDUCIARY RESPONSIBILITIES

The Police and Fire Retirement System fund is managed and administered by the Police and Fire Retirement System Board in accordance with the provisions of Article XXVI of the Charter of the City of Oakland. The Board consists of the following seven members: (1) the Mayor of Oakland (or designee), (2) an active member of the Police Department or a retired member elected by the active and retired members of the Police Department if no active member of the Police Department is elected to serve on the Board, (3) an active member of the Fire Department or a retired member of the Fire Department if no active member of the Fire Department is elected to serve on the Board, (4) a Police-Fire retired member who is alternately be elected by the retired Police members and the retired Fire members, (5) a life insurance executive of a local office, (6) a senior officer of a local bank, and (7) a community representative. The Board serves without compensation.

Pursuant to Article XVI, Section 17 of the California Constitution and the City Charter and other applicable laws, the Board and its advisors, including but not limited to investment managers, investment counsel and investment consultants, are fiduciaries of the PFRS and are required to manage and administer the Plan assets solely in the interest of and for the exclusive purposes of providing benefits to Plan members and their beneficiaries, minimizing employer contributions to the Plan and defraying reasonable expenses of administering the PFRS.

REqUESTS FOR INFORMATION

This financial report is designed to provide a general overview of the System’s finances and to account for the money that the System receives. Please address questions concerning any informa-tion provided in this report or requests for additional information to:

Office of Personnel Retirement Systems City of Oakland150 Frank H Ogawa PlazaOakland, CA 94612

Financial | 25

Notes to Basic Financial StatementsYears Ended June 30, 2006 and 2005

1. DESCRIPTION OF THE OAKLAND POLICE AND FIRE RETIREMENT SYSTEM

The Oakland Police and Fire Retirement System (the System) is a closed, single-employer defined benefit plan established by the City of Oakland (City) Charter. The System is governed by a board of seven trustees—four are appointed by the Mayor, with the approval of the City Council, one is elected from the active members and two are elected from the retired members of the System. Trustees receive no compensation. The System covers the City’s uniformed employees. As a result of a City Charter amendment, known as Measure R approved by the electorate on June 8, 1976, membership in the plan is limited to uniformed employees hired prior to July 1, 1976. All subse-quent hires are covered under the California Public Employees’ Retirement System (CalPERS). Active members are permitted to terminate their membership in the System and become members of CalPERS under certain conditions.

The System is exempt from the regulations of the Employee Retirement Income Security Act of 1974 (ERISA). The System is also exempt from federal income taxes and California franchise tax.

System MembershipAt June 30, 2006 and 2005, the System membership consisted of:

2006 2005

Retirees and beneficiaries currently receiving benefits:

Police 725 740

Fire 586 613

Total 1,311 1,353

Current employees (all vested):

Police 3 3

Basic Benefit ProvisionsThe City Charter establishes plan membership, contribution, and benefit provisions. The System provides that any member who completes at least 25 years of service, regardless of age, or completes 20 years of service and attains age 55, or has attained age 65 is eligible for retirement benefits. The basic retirement allowance equals 50% of the compensation attached to the average rank held during the three years immediately preceding retirement, plus an additional allowance of 2/3-1% of such compensation for each year of service (up to ten) subsequent to (a) qualifying for retirement and (b) July 1, 1951. However, any member retiring at age 65 with less than 20 years of service shall receive a reduced retirement allowance based upon the number of years of service. A member is eligible for early retirement benefits after 20 to 24 years of service with a retirement allowance based

26 | Financial

upon 40% to 48% of the compensation attached to the average rank held during the three years preceding retirement. Additionally, a member with 10 to 19 years of service may retire and, on or after the 25th anniversary of his/her date of employment may receive a retirement allowance based upon 20% to 38% of the compensation attached to the average rank held during the three years preceding retirement. The System also provides for various death, disability and survivors’ benefits.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of PresentationThe System is reported as a pension trust fund in the City’s basic financial statements. The financial statements of the System present only the financial activities of the System and are not intended to present the financial position and changes in financial position of the City in conformity with accounting principles generally accepted in the United States of America.

Measurement Focus and Basis of AccountingThe financial statements are prepared on a flow of economic resources measurement focus using the accrual basis of accounting. Contributions are recognized in the period in which the contributions are due pursuant to formal commitments as well as statutory or contractual requirements, and benefits and refunds are recognized when payable under plan provisions.

Methods Used to Value InvestmentsInvestments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Mortgages are reported based on the remaining principal balances.

The System adopted Governmental Accounting Standards Board (GASB) Statement No. 40, Deposit and Investment Risk Disclosures – an amendment to GASB Statement No. 3, effective July 1, 2004. GASB Statement No. 40 is designed to inform financial statement users about deposit and investment risks that could affect a government’s ability to provide services and meet its obligations as they become due. There are risks inherent in all deposits and investments, and GASB believes that the disclosures required by this Statement provide users of governmental financial statements with information to assess common risks inherent in deposit and investment transactions. Deposit and investment resources represent significant assets of the System, and these resources are neces-sary to carry out fiduciary responsibilities. Some key changes with GASB Statement No. 40 include disclosure of:

a. Common deposit and investment risks related to credit risk;b. Concentration of credit risk; c. Interest rate risk;d. Foreign currency risk;e. Investments that have fair values that are highly sensitive to changes in interest rates; andf. Deposit and investment policies related to those risks.

Notes to Basic Financial Statement

Financial | 27

Use of EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

3. CONTRIBUTIONS

In accordance with the City Charter, active members hired after July 1, 1951, and prior to July 1, 1976, contribute a percentage of their earned salaries based upon entry age as determined by consulting actuaries. During the years ended June 30, 2006 and 2005, these contributions ranged from 5.47% to 6.05%. The City Charter limits employee contributions to 13.00% of earned salaries. Employee contributions are refundable with interest at 4.00% per year if an employee elects to withdraw from the System upon termination of employment with the City.

The City contributes, at a minimum, such amounts as are necessary, on an actuarial basis, using the aggregate actuarial cost method, to provide assets sufficient to meet benefits to be paid to plan members. The City is required to fund all liabilities for future benefits for all members by June 30, 2026. In order to do so, the City makes contributions at rates established by consulting actuaries based upon plan valuations using various assumptions as to salary progression, inflation, and rate of return on investments. The City’s contributions are based on a level percentage of all uniformed employees’ compensation. Significant actuarial assumptions used to compute actuarially determined contribution requirements are the same as those used to compute the pension benefit obligation.

The City issued pension obligation bonds in the amount of $417,173,300 to fund the System during the year ended June 30, 1998 and, as a result, no employer contributions are required through the year ending June 30, 2011.

The City transferred proceeds of $17,709,888 during the year ended June 30, 2005 from the Oakland Joint Powers Financing Authority Refunding Revenue 2005 Series B Bond to fund a portion of the City’s future obligation to the System.

There was no identified unfunded actuarial accrued liability as of July 1, 2005 (the last actuarial valuation date).

4. CASH, DEPOSITS AND INVESTMENTS

Investment PolicyThe System’s investment policy authorizes investment in U.S. equities, international equities, U.S. fixed income, instruments including U.S. Treasury notes and bonds, government agency mortgage backed securities, U.S. corporate notes and bonds, collateralized mortgage obligations, yankee bonds and non U.S.-issued fixed income securities denominated in foreign currencies. The System’s invest-ment portfolio is managed by external investment managers. During the years ended June 30, 2006 and 2005, the number of external investment managers was nine and seven, respectively.


28 | Financial

The System’s Investment Policy limits fixed income investments to a maximum average duration of 10 years and a maximum remaining term to maturity (single issue) at purchase of 30 years, with targeted portfolio duration of between 3 to 8 years and targeted portfolio maturity of 15 years. The System’s investment policy with respect to fixed income investments also identifies two standards for credit quality. The policy allows the core style manager to invest in securities rated “BBB” or higher (investment grade using Standard & Poor’s or Moody’s ratings). The policy also allows the enhanced core style manager to invest in securities with a minimum rating of B or higher (non investment grade using Standard & Poor’s or Moody’s ratings) as long as the portfolio maintains an average credit quality of BBB.

The System’s investment policy states that investments in derivative securities known as Col-lateralized Mortgage Obligations (CMOs) shall be limited to a maximum of 20% of an account’s market value with no more than 5% in any one issue. CMOs are mortgage-backed securities that create separate pools of pass-through rates for different classes of bondholders with varying maturi-ties. The fair value of CMOs are considered sensitive to interest rate changes because they have embedded options.

The Investment Policy allows for each fixed asset manager to have a maximum of 10% of any single security investment in their individual portfolios with the exception of U.S. government securities, which is allowed to have a maximum of 25% in each manager’s portfolio.

Cash and Cash DepositsAs of June 30, 2006 and 2005, cash and cash deposits consisted of cash in treasury held in the City’s cash and investment pool. These funds are invested according to the investment policy adopted by the City Council. Interest earned on these pooled accounts is allocated monthly to all funds based on the average daily cash balance maintained by the respective funds. It is not possible to disclose relevant information about the System’s separate portion of the investment pool. Information regarding the characteristics of the entire investment pool can be found in the City’s June 30, 2006 basic financial statements. A copy of that report may be obtained by contacting the City Treasurer. As of June 30, 2006, the System’s share of the City’s investment pool totaled $3,471,130.

Interest Rate RiskInterest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. As described previously, the System’s Investment Policy limits fixed income invest-ments to a maximum average duration of 10 years and a maximum remaining term to maturity (single issue) at purchase of 30 years, with targeted portfolio duration of between 3 to 8 years and targeted portfolio maturity of 15 years. As of June 30, 2006 the average duration for the System’s fixed income investment portfolio was 4.28 years, excluding fixed income short-term investments and securities lending investments. The following summarizes the System’s fixed income invest-ments by category at June 30, 2006:


Financial | 29

Investment Type Fair ValueModified Duration

(Years)US Government Agencies (short-term) $ 31,044,956 0.0

Government Bonds

US Government Agencies 112,331,174 4.0

US Government Bonds 50,027,529 7.6

Total Government Bonds 162,358,703

Corporate and Other Bonds

Corporate Bonds 104,755,688 4.2

Other Government Bonds 1,377,955 7.3

Total Corporate and Other Bonds 106,133,643

$ 299,537,302 4.3

Fair Value Highly Sensitive to Change in Interest RatesThe terms of a debt investment may cause its fair value to be highly sensitive to interest rate changes. The fair values of CMOs are considered sensitive to interest rate changes because they have embed-ded options. The following are the System’s investments in CMOs at June 30, 2006:

Security Name Coupon RateFair Value (Millions)

Percent of Total Investments Fair Value

Commercial Mortgage Pass-Through 3.25% $1.19 0.83%

Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obliga-tion. The following table provides information as of June 30, 2006 concerning credit risk of fixed income securities.

S&P/Moody’s Rating Fair Value

Percent of Total Fair Value

AAA $ 232,131,851 77.50%

AA 9,738,422 3.25%

A 22,118,705 7.38%

BBB 25,217,188 8.42%

BB 2,344,559 0.78%

B 7,855,677 2.26%

Not Rated 130,900 0.04%

$ 299,537,302 100.00%


30 | Financial

Concentration of Credit RiskConcentration of credit risk is the risk of loss attributed to the magnitude of a government’s invest-ment in a single issuer. As of June 30, 2006, with the exception of mutual funds and United States Government securities, no investment exceeded 5% of the System’s net assets.

Custodial Credit RiskCustodial credit risk is the risk that, in the event of a failure of depository financial institution or counterparty to a transaction, the inability to recover the value of deposits, investments, or collateral securities in the possession of an outside party.

The California Government Code requires that governmental securities or first trust deed mort-gage notes be used as collateral for demand deposits and certificates of deposit at 110 percent and 150 percent, respectively, of all deposits not covered by federal deposit insurance. As the City holds all cash and certificates of deposit on behalf of the System, the collateral must be held by the pledg-ing financial institution’s trust department and is considered held in the City’s name.

The City, on behalf of the System, does not have any funds or deposits that are not covered by depository insurance, which are either uncollateralized, collateralized with securities held by the pledging financial institution, or collateralized with securities held by the pledging financial institution’s trust department or agent, but not in the City’s name. The System does not have any investments that are not registered in the name of System and are either held by the counterparty or the counterparty’s trust department or agent but not in the System’s name.

Foreign Currency RiskForeign currency risk is the risk that changes in foreign exchanges rates will adversely affect the fair values of an investment or deposit. The following summarizes the System’s investments denomi-nated in foreign currencies as of June 30, 2006:

Total Fair Value

Foreign currency:

Australian Dollar $2,024,124

British Pound Sterling 11,379,860

Canadian Dollar 1,850,249

Danish Krone 1,021,250

Euro 18,182,036

Hong Kong Dollar 2,639,329

Japanese Yen 12,226,008

Norwegian Krone 346,218

Singapore Dollar 1,097,114

Swedish Krona 226,945

Swiss Franc 6,198,399

$57,191,532


Financial | 31

Securities Lending TransactionsThe System’s investment policy authorizes participation in securities lending transactions, which are short-term collateralized loans of the System’s securities to broker-dealers with a simultaneous agreement allowing the System to invest and receive earnings on the loan rebate fee. All securities loans can be terminated on demand by either the System or the borrower, although the average term of loans is one week.

The administrator of the System’s securities lending activities is responsible for maintaining an adequate level of collateral in an amount equal to at least 102% (105% for international) of market value of loaned U.S. government securities. Collateral received may include cash, letters of credit, or securities. If securities collateral is received, the System cannot pledge or sell the collateral securities unless the borrower defaults.

As of June 30, 2006 and 2005, management believes the System has minimized its credit risk exposure to borrowers because the amounts held by the System as collateral exceeded the securities loaned by the System. The System’s contract with the administrator requires it to indemnify the System if the borrowers fail to return the securities (and if the collateral is inadequate to replace the securities borrowed) or fails to pay the System for income distributions by the securities’ issuers while the securities are on loan.

The following summarizes investments in securities lending transactions and collateral received at June 30, 2006:

Investments in securities lending transactions:

US Government and agencies $ 45,681,393

Corporate bonds 1,438,599

US equity 10,538,853

Total investments in securities lending transactions $ 57,658,845

Collateral received:

Cash $ 581,556

Corporate bonds 25,000,000

Repurchase agreements 34,000,000

Total collateral received $ 59,581,556

5. RECEIVABLES FROM RETIREES AND BENEFICIARIES

Management of the System determined that overpayments of retiree holiday pay had been made to certain Fire retirees and beneficiaries. The overpayments are to be recovered from the retirees through a reduction of retirement benefit payments over a 20-month period effective in August 2006. Non-interest bearing receivables from retirees with an aggregate amount of $665,078 have been recorded on the System’s financial statements as of June 30, 2006.


32 | Financial

6. RESERVES

Reserves are established from member and employer contributions and the accumulation of invest-ment income after satisfying investment and administrative expenses. The System’s major reserves are as follows:

Active Member Contribution Reserve represents total accumulated member contributions. Additions include member contributions and investment earnings; deductions include refunds of member contributions and transfers to the Retired Member Contribution Reserve.

Retired Member Contribution Reserve represents the total accumulated transfers from active member contributions and investments, less payments to retired members.

Employer Reserve represents the total accumulated employer contributions for retirement pay-ments. Additions include contributions from the employer and investment earnings; deductions include payments to retired members.

Market Stabilization Reserve represents unrealized gains and losses recognized in the financial statements as a result of reporting investments at fair value.

The aggregate total of the System’s major reserves as of June 30, 2006 and 2005 equals net assets held in trust for pension benefits and comprises the following:

2006 2005Active member contribution reserve $ 899,553 $ 840,031

Retired member contribution reserve 68,038,616 68,583,690

Employer reserve 496,362,061 501,580,212

Market stabilization reserve 19,804,199 43,893,771

$ 585,104,429 $614,897,704

7. ADMINISTRATIVE EXPENSES

The City provides the System with accounting and other administrative services. Staff salaries included in administrative expenses for the years ended June 30, 2006 and 2005 were $644,284 and $548,276, respectively. Other administrative expenses including accounting and audit services, legal fees and miscellaneous expense for the years ended June 30, 2006 and 2005 were $259,411 and $187,530, respectively.


Financial | 33

Required Supplementary Information


Schedule of Employer Contributions (dollars in millions)

Year Ended June 30,Annual Required Contribution ($)

Percentage (%) Contributed

2000 - -

2001 - -

2002 - -

2003 - -

2004 - -

2005 - -

Note to Required Supplementary Information


The information presented in the required supplementary schedule was determined as part of the actuarial valuations as of the dates indicated. Additional information as of the latest actuarial valu-ation date of July 1, 2005, is as follows:

The System uses the aggregate actuarial cost method for its actuarial calculations. Under this method, the unfunded actuarial accrued liability is not identified or separately amortized. For this reason, a schedule of funding progress is not required when the aggregate actuarial cost method is used. Instead, the excess of the actuarial present value of projected benefits of the group included in the actuarial valuation over the actuarial value of assets is allocated on a level basis over the earnings of the group between the valuation date and assumed exit. The allocation is performed for the group as a whole, not as a sum of individual allocations. The portion of the actuarial present value allocated to a valuation year is called the normal cost. Under this method, the actuarial gains (losses), as they occur, reduce (increase) future normal costs. If the actuarial value of assets exceeds the actuarial present value of projected benefits, the normal cost is set equal to zero.

The System uses fair value as its asset valuation method.

Actuarial assumptions:Investment rate of return 8.0%

Cost-of-living adjustments 3.0%

Inflation rate 3.5%


34 | Financial

Notes to Financial Statements (Continued)


1. DESCRIPTION OF THE OAKLAND POLICE AND FIRE RETIREMENT SYSTEM

The Oakland Police and Fire Retirement System (the System) is a closed, single- employer defined benefit plan established by the City of Oakland (City) Charter. The System is governed by a board of seven trustees – four are appointed by the Mayor, with the approval of the City Council, one is elected from the active members and two are elected from the retired members of the System. Trustees receive no compensation. The System covers the City’s uniformed employees. As a result of a City Charter amendment, known as Measure R approved by the electorate on June 8, 1976, membership in the plan is limited to uniformed employees hired prior to July 1, 1976. All subse-quent hires are covered under the California Public Employees’ Retirement System (CalPERS). Active members are permitted to terminate their membership in the System and become members of CalPERS under certain conditions.

The System is exempt from the regulations of the Employee Retirement Income Security Act of 1974 (ERISA). The System is also exempt from federal income taxes and California franchise tax.

System MembershipAt June 30, 2005 and 2004, the System membership consisted of:

2005 2004Retirees and beneficiaries currently receiving benefits:

Police 739 766

Fire 612 629

Total 1,351 1395

Current employees (all vested):

Police 3 3

Basic Benefit ProvisionsThe City Charter establishes plan membership, contribution, and benefit provisions. The System provides that any member who completes at least 25 years of service, regardless of age, or completes 20 years of service and attains age 55, or has attained age 65 is eligible for retirement benefits. The basic retirement allowance equals 50% of the compensation attached to the average rank held during the three years immediately preceding retirement, plus an additional allowance of 2/3-1% of such compensation for each year of service (up to ten) subsequent to (a) qualifying for retirement and (b) July 1, 1951. However, any member retiring at age 65 with less than 20 years of service shall receive a reduced retirement allowance based upon the number of years of service. A member is eligible for early retirement benefits after 20 to 24 years of service with a retirement allowance based

Financial | 35

upon 40% to 48% of the compensation attached to the average rank held during the three years preceding retirement. Additionally, a member with 10 to 19 years of service may retire and, on or after the 25th anniversary of his/her date of employment may receive a retirement allowance based upon 20% to 38% of the compensation attached to the average rank held during the three years preceding retirement. The System also provides for various death, disability and survivors’ benefits.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of PresentationThe System is reported as a pension trust fund in the City’s basic financial statements. The financial statements of the System present only the financial activities of the System and are not intended to present the financial position and changes in financial position of the City in conformity with accounting principles generally accepted in the United States of America.

Basis of AccountingThe financial statements are prepared using the accrual basis of accounting. Contributions are rec-ognized in the period in which the contributions are due pursuant to formal commitments as well as statutory or contractual requirements, and benefits and refunds are recognized when payable under plan provisions.

Methods Used to Value InvestmentsInvestments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Mortgages are reported based on the remaining principal balances.

Use of EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Transfers to CalPERSAt June 30, 2003, the System recorded a liability to CalPERS for an actuarially determined amount, representing employer and employee contributions, for members who became members of CalPERS. During the year ended June 30, 2004, the System made a payment in the amount of $15,004,000 to CalPERS to perfect the transfer.

Implementation of New Accounting PrincipleThe System adopted the provisions of Governmental Accounting Standards Board (GASB) State-ment No. 40, Deposit and Investment Risk Disclosures, an amendment of GASB Statement No. 3, during the fiscal year ended June 30, 2005. This statement addresses common deposit and invest-ment risks related to credit risk, concentration of credit risk, interest rate risk, and foreign currency


36 | Financial

risk. While comparative GASB 40 disclosures will be provided in succeeding years, such disclosures for the year ended June 30, 2005 are not available.

3. CONTRIBUTIONS

In accordance with the City Charter, active members hired after July 1, 1951, and prior to July 1, 1976, contribute a percentage of their earned salaries based upon entry age as determined by consulting actuaries. During the years ended June 30, 2005 and 2004, these contributions ranged from 5.47% to 6.05%. The City Charter limits employee contributions to 13.00% of earned salaries. Employee contributions are refundable with interest at 4.00% per year if an employee elects to withdraw from the System upon termination of employment with the City.

The City contributes, at a minimum, such amounts as are necessary, on an actuarial basis, using the aggregate actuarial cost method, to provide assets sufficient to meet benefits to be paid to plan members. The City is required to fund all liabilities for future benefits for all members by June 30, 2026. In order to do so, the City makes contributions at rates established by consulting actuaries based upon plan valuations using various assumptions as to salary progression, inflation, and rate of return on investments. The City’s contributions are based on a level percentage of all uniformed employees’ compensation. Significant actuarial assumptions used to compute actuarially determined contribution requirements are the same as those used to compute the pension benefit obligation.

The City issued pension obligation bonds in the amount of $417,173,300 to fund the System during the year ended June 30, 1998 and, as a result, no employer contributions are required through the year ending June 30, 2011.

The City transferred proceeds of $17,709,888 from the Oakland Joint Powers Financing Authority Refunding Revenue 2005 Series B Bond to fund a portion of the City’s future obligation to the System.

4. CASH AND INVESTMENTS

Cash and DepositsAs of June 30, 2005 and 2004, cash and deposits consisted of the following:

2005 2004Cash in treasury $34,523,910 $22,448,546

Certificates of deposit - $2,000,000

$34,523,910 $24,448,546

Cash in treasury is held in the City’s cash and investment pool. These funds are invested accord-ing to the investment policy adopted by the City Council. Interest earned on these pooled accounts is allocated monthly to all funds based on the average daily cash balance maintained by the respec-tive funds. Information regarding the custodial credit risk categorization of the City’s cash and investment pool can be found in the City’s basic financial statements.


Financial | 37

InvestmentsThe System’s investment policy authorizes investment in U.S. equities, international equities, U.S. fixed income, instruments including U.S. Treasury notes and bonds, government agency mortgage backed securities, U.S. corporate notes and bonds, collateralized mortgage obligations, yankee bonds and non U.S. issued fixed income securities denominated in foreign currencies. The System’s invest-ment portfolio is managed by external investment managers. During the years ended June 30, 2005 and 2004, the number of external investment managers was seven and six, respectively.

Interest Rate RiskThe System’s Investment Policy limits fixed income investments to a maximum average duration of 10 years and a maximum remaining term to maturity (single issue) at purchase of 30 years, with targeted portfolio duration of between 3 to 8 years and targeted portfolio maturity of 15 years. As of June 30, 2005 the duration for the System’s fixed income investment portfolio was 3.33, excluding the fixed income short-term investments and the securities lending investments.

As of June 30, 2005, the System had the following fixed income investments and maturities.

Descriptions Fair Value Modified DurationFixed Income Investments

US Government Agencies $ 152,446,491 2.4

US Government Agencies (short-term) 26,598,354 0.1

US Government Bonds 28,319,994 7.9

Other Government Bonds 6,787,034 0.6

Corporate Bonds 120,733,642 4.2

Corporate Bonds - securities lending 50,000,000 0.0

Repurchase Agreement - securities lending 500,000 0.0

Total Fixed Income Investments 385,385,515 2.9

Other Investments

Domestic equities 191,674,699

International equities fund 83,336,843

Real estate mortgage loans 59,470

Other short-term investments 30,015,295

Total Investments $ 690,471,822

Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligation. The System’s investment policy with respect to fixed income investments identifies two standards for credit quality. The policy allows the core style manager to invest in securities rated “BBB” or higher (investment grade using Standard & Poor’s or Moody’s ratings). The policy also allows the enhanced core style manager to invest in securities with a minimum rating of B or higher (non investment grade using Standard & Poor’s or Moody’s ratings) as long as the portfolio maintains an average credit quality of BBB. The following table provides information as of June 30, 2005 concerning credit risk.


38 | Financial

DescriptionsS&P / Moody’s

Rating Fair Value

Fair Value as a Percentage of Total Fixed Maturity Fair

ValueFixed Investments

AAA $213,934,131 55.5%

AA 12,109,005 3.1%

A 80,304,610 20.8%

BBB 26,488,970 6.9%

BB 6,087,610 1.6%

B 4,919,025 1.3%

CC 285,863 0.1%

Not Rated 41,256,301 10.7%

Total Fixed Investments 385,385,515 100.0%

Other Investments

Domestic equities 191,674,699

International equities fund 83,336,843

Real estate mortgage loans 59,470

Other short-term investments 30,015,295

Total Investments $690,471,822

Concentration of Credit RiskThe Investment Policy allows for each fixed asset manager to have a maximum of 10% of any single security investment in their individual portfolios with the exception of U.S. government securities, which is allowed to have a maximum of 25% in each manager’s portfolio. As of June 30, 2005, there was no concentration in excess of the System’s net assets.

Securities Lending TransactionsThe System’s investment policy authorizes participation in securities lending transactions, which are short-term collateralized loans of the System’s securities to broker-dealers with a simultaneous agreement allowing the System to invest and receive earnings on the loan rebate fee. All securities loans can be terminated on demand by either the System or the borrower, although the average term of loans is one week.

The administrator of the System’s securities lending activities is responsible for maintaining an adequate level of collateral in an amount equal to at least 102% (105% for international) of market value of loaned U.S. government securities. Collateral received may include cash, letters of credit, or securities. If securities collateral is received, the System cannot pledge or sell the collateral securities unless the borrower defaults.

As of June 30, 2005 and 2004, the System had no credit risk exposure to borrowers because the amounts held by the System as collateral exceeded the securities loaned by the System. The System’s contract with the administrator requires it to indemnify the System if the borrowers fail to return


Financial | 39

the securities (and if the collateral is inadequate to replace the securities borrowed) or fails to pay the System for income distributions by the securities’ issuers while the securities are on loan.

Securities LendingInvestments and Collateral Received (At Fair Value)

2005Type of Investments Lent

For Cash Collateral

US Government and agencies $42,345,335

Corporate bonds 230,117

US equity 7,321,148

Total Securities Lent $49,896,600

Type of Collateral Received

Cash Collateral

Cash $ 93,612

Corporate bond 50,000,000

Repurchase agreement 500,000

Total Collateral Received $50,593,612

Fair Value Highly Sensitive to Change in Interest RatesThe terms of a debt investment may cause its fair value to be highly sensitive to interest rate changes. Collateralized Mortgage Obligation (CMO) is a type of mortgage-backed security that creates separate pools of pass-through rates for different classes of bondholders with varying maturities. The fair value of mortgage-backed security pass throughs/CMOs are considered sensitive to inter-est rate changes because they have embedded options. The investment policy states that investments in derivative securities known as CMOs shall be limited to a maximum of 20% of an account’s market value with no more than 5% in any one issue.

Sensitive Interest Rate Analysis:As of June 30, 2005

Security NameCoupon

RateFair Value

(in millions)

Percent of accounts

market valueFederal Home Loan Mortgage Corp Structured Pass-Through 7.0% $2.32 1.60%

Commercial Mortgage Pass-Through 3.3% 1.32 0.91%



Federal Home Loan Mortgage Corp Structured Pass-Through 1.5% 0.12 0.09%

$4.39 3.03%


40 | Financial

Cash and Investment Disclosures as of June 30, 2004The System implemented the requirement of GASB Statement No. 40 for the year ended June 30, 2005 and, accordingly, has elected to disclose its cash and investments using the new standards as described above. However, the System elected not to retroactively apply those disclosures. Accord-ingly, the following disclosures related to cash and investments held as of June 30, 2004 do not include the disclosures required under GASB Statement No. 40.

System investments are categorized by type to give an indication of the level of custodial credit risk assumed at year-end. Category 1 includes investments that are insured or registered, or for which the securities are held by the System or its agent in the System’s name. Category 2 includes uninsured and unregistered investments for which the securities are held by the counterparty’s trust department or agent in the System’s name. Category 3 includes uninsured and unregistered investments with the securities held by the counterparty or its trust department or agent, but not in the System’s name.

Investments at fair value at June 30, 2004 consisted of the following:

Investments Category 2004Short-term investments:

Cash equivalents held by trustee n/a $6,025,414

Negotiable certificates of deposit 1 926,122

Bonds 1 291,110,839

Domestic equities 1 211,758,017

International equities 1 94,858,334

Mortgage loans n/a 62,114

Investments held by broker-dealers under securities loans with cash collateral:

Bonds n/a 31,859,946

Domestic equities n/a 7,289,995

International equities n/a 3,332,978

Total $647,223,759

Investments Made with Securities Lending Collateral

Cash equivalents held by trustee 1 $ 3,555,666

Repurchase agreements 1 40.000,000

Total $ 43,555,666


Financial | 41

5. RESERVES

Reserves are established from member and employer contributions and the accumulation of invest-ment income after satisfying investment and administrative expenses. The System’s major reserves are as follows:

Active Member Contribution Reserve represents total accumulated member contributions. Addi-tions include member contributions and investment earnings; deductions include refunds of member contributions and transfers to the Retired Member Contribution Reserve.

Retired Member Contribution Reserve represents the total accumulated transfers from the Active Member Contribution Reserve and investment earnings, less payments to retired members.

Employer Reserve represents the total accumulated employer contributions for retirement pay-ments. Additions include contributions from the employer and investment earnings; deduc-tions include payments to retired members.

Market Stabilization Reserve represents unrealized gains and losses recognized in the financial statements as a result of reporting investments at fair value.

The aggregate total of the System’s major reserves as of June 30, 2005 and 2004 equals net assets held in trust for pension benefits and comprises the following:

2005 2004Active Member Contribution Reserve $ 840,031 $ 783,982

Retired Member Contribution Reserve 68,583,690 69,154,045

Employer Reserve 501,580,212 515,338,813

Market Stabilization Reserve 43,893,771 36,305,980

Net assets held in trust for pension benefits $614,897,704 $ 621,582,820

6. ADMINISTRATIVE EXPENSES

The City provides the System with accounting and other administrative services. Staff salaries included in administrative expenses for the years ended June 30, 2005 and 2004 were $548,276 and $742,729, respectively. Other administrative expenses including accounting and audit services, legal fees and miscellaneous expense for the years ended June 30, 2005 and 2004 were $187,530 and $145,923, respectively.


42 | Financial

Required Supplementary Information


Schedule of Employer Contributions (dollars in millions)

Year Ended June 30,Annual Required Contribution ($)

Percentage (%) Contributed

2000 - -

2001 - -

2002 - -

2003 - -

2004 - -

2005 - -

Note to Required Supplementary Information


The information presented in the required supplementary schedule was determined as part of the actuarial valuations as of the dates indicated. Additional information as of the latest actuarial valu-ation date of July 1, 2005, is as follows:


The System uses fair value as its asset valuation method.

Actuarial assumptions:Investment rate of return 8.0%

Projected salary increases 4.5%

Inflation rate 3.5%

SECT ION THREEINVESTMENT

★ ★ ★

T.W. Johnson and Rich Brierly

Relief Slot, 1961

Tribune Tower Fire, January 31, 1954

Meal time at Station 15, c. 1980

44 | Investment

Investment Consultant’s Report

Investment | 45

46 | Investment

Current Investment Professionals domestic equity mAnAgers: Barrow, Hanley, Mewhinney & StraussEarnest PartnersFranklin PortfolioNWQRoxbury Capital Management

internAtionAl equity mAnAgers: New Star Institutional ManagersHansberger Global InvestorState Street Global–Advisors

Fixed income mAnAgers: Reams Asset ManagementSeneca Capital Management

investment consultAnt: Pension Consultant Alliance

custodiAn: Bank of New York

security lending: Metropolitan West Securities

Previous Investment Professionalsdomestic equity mAnAgers

Ariel Capital ManagementBrown Capital ManagementMcCullough & AssociatesRhumbline Advisers

internAtionAl equity: Invista

investment consultAnt: Watson Wyatt Worldwide

List of Investment Professionals

Investment Manager Fees and Other Investment ExpensesFiscal Years Ending June 30

2006 2005 2004Investment Manager Fees

Domestic Equity Managers $ 842,782 $ 351,804 $ 470,922

International Equity Managers 265,077 76,787 330,990

Domestic Fixed Income Managers 562,564 564,172 569,532

Total Investment Manager Fees 1,670,423 992,763 1,371,444

Other Investment Fees

Investment Consultant 125,000 181,250 75,000

Custodian Fees 179,178 283,815 289,221

Total Other Investment Fees 304,178 465,065 364,221

Total Investment Fees $1,974,602 $1,457,828 $1,735,665

Investment | 47

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

PFRS PlanPFRS Blend Bench (35% Russell 3000, 15% MSCI ACWI ex U.S., and 50% Lehman Universal)

Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06

Investment PerformanceRolling 3-Year Investment Performance from 7/1/04–6/30/06

Asset Allocations

Domestic Fixed Income 50.7%

Domestic Equities 31.8%

InternationalEquities 12.4%

Cash 5.1%




Cash 3.7%

June 30, 2006 June 30, 2005 June 30, 2004




Cash 0.5%

48 | Investment

Investment Summary by TypeFiscal Years Ending June 30

2006 2005 2004

Descriptions Fair Value % of

Portfolio Fair Value % of

Portfolio Fair Value % of

PortfolioEquity

Financial $ 81,576,486 13.0% $ 41,203,878 6.4% $ 23,216,836 3.6%

Materials and Services 57,728,967 9.2% 45,351,004 7.1% 31,527,741 4.9%

Consumer Non-Durables 40,709,655 6.5% 39,401,707 6.2% 24,450,887 3.8%

Technology 29,987,084 4.8% 26,112,069 4.1% 18,849,725 2.9%

Energy 19,517,440 3.1% 15,828,060 2.5% 5,214,814 0.8%

Utilities 14,157,770 2.3% 8,176,471 1.3% 5,784,069 0.9%

Capital Goods and Services 10,417,150 1.7% 7,446,089 1.2% 4,389,893 0.7%

Consumer Durables 2,115,604 0.3% 3,050,854 0.5% 2,241,656 0.3%

Transportation 5,431,284 0.9% 2,610,525 0.4% 998,660 0.2%

Real Estate Investment Trusts 2,785,707 0.4% 2,494,043 0.4% 1,672,178 0.3%

Total Equity Income Investments $264,427,147 42.3% $191,674,699 30.0% $118,346,459 18.3%

Fixed Income Investments

US Government Agencies $111,943,856 17.9% $ 179,044,845 28.0% $129,487,005 20.0%

Corporate Bonds 106,133,643 17.0% 120,733,642 18.9% 156,526,529 24.2%

US Treasury 50,414,847 8.1% 28,319,994 4.4% 33,004,428 5.1%

Other Government Bonds - 0.0% 6,787,034 1.1% 3,952,823 0.6%

Total Fixed Income Investments $268,492,345 42.9% $334,885,515 52.3% $322,970,785 49.9%

Mutual Funds

Domestic Mutual Funds $ 1,070,217 0.2% $ - 0.0% $100,701,553 15.6%

International Mutual Funds 27,933,173 4.5% 83,336,843 13.0% 98,191,312 15.2%

Total International Mutual Funds $ 29,003,390 4.6% $ 83,336,843 13.0% $198,892,865 30.7%

Other Investments

Short Term $63,566,898 10.2% $30,015,295 4.7% $6,951,536 1.1%

Residential Mortgage Loans 56,351 0.0% 59,470 0.0% 62,114 0.0%

Total Other Investments $63,623,249 10.2% $30,074,765 4.7% $7,013,650 1.1%

Total Investments $625,546,131 100.0% $639,971,822 100.0% $647,223,759 100.0%

Note: Table does not include investment in Security Lending

Investment | 49

Largest Stock Holdings (by Market Value) Issuer Shares Market Value

As of June 30, 2006

1 BANK AMER CORP 78,355 $3,768,876

2 EXXON MOBIL CORP 61,400 3,766,890

3 CONOCOPHILLIPS 44,400 2,909,532

4 GENERAL ELECTRIC CO 87,100 2,870,816

5 JOHNSON & JOHNSON COM 40,600 2,432,752

6 CITIGROUP INC 48,800 2,354,112

7 PFIZER INC COM 97,700 2,293,019

8 DUKE ENERGY HLDG CORP 69,900 2,052,963

9 INTERNATIONAL BUSINESS MACHINES CORP 26,400 2,028,048

10 ILLINOIS TOOL WORKS INC COM 42,600 2,023,500

As of June 30, 2005

1 EXXON MOBIL CORP 111,300 $6,396,411

2 GENERAL ELECTRIC CO 130,800 4,532,220

3 BANK AMER CORP 82,106 3,744,855


5 INTEL CORPORATION 110,600 2,882,236

6 CHEVRON CORPORATION 46,900 2,622,648

7 CITIGROUP INC 54,000 2,496,420

8 CONOCOPHILLIPS 41,000 2,357,090

9 CENDANT CORP 33,300 2,062,514

10 WACHOVIA CORP 41,158 2,041,437

As of June 30, 2004

1 GENERAL ELECTRIC CO 72,700 $2,355,480

2 EXXON MOBIL CORP 45,100 2,002,891

3 MICROSOFT CORP COM 63,200 1,804,992

4 PFIZER INC COM 52,600 1,803,128

5 CITIGROUP INC 35,600 1,655,400

6 BAXTER INTL INC COM 36,500 1,259,615

7 INTEL CORPORATION 44,500 1,228,200

8 BANK AMER CORP 14,053 1,189,165


10 AMERICAN INTERNATIONAL GROUP 15,900 1,133,352

Note: The above schedule does not reflect holdings in index funds. A complete list is available upon request.

50 | Investment

Largest Bond Holdings (by Market Value) Description Interest Rate Maturity Date Market Value

As of June 30, 2006

1 FNMA TBA SINGLE FAM (30 YEAR) 5.50% 8/1/2034 $18,833,867

2 FNMA POOL, 725866 4.50% 9/1/2034 13,036,823

3 U S TREASURY BONDS 5.25% 2/15/2029 11,638,856

4 FNMA TBA SINGLE FAM (30 YEAR) 6.00% 8/1/2034 9,492,072


6 WELLS FARGO MTG BACKED SECS 4.89% 8/25/2034 8,080,731


8 UNITED STATES TREAS NTS 4.75% 5/15/2014 6,882,223



As of June 30, 2005

1 FNMA POOL, 725866 4.50% 8/1/2034 $15,387,017






7 WELLS FARGO MTG BACKED SECS 4.92% 8/1/2034 9,930,389




As of June 30, 2004

1 FEDERAL HOME LOAN MTG CORP 2.88% 5/15/2007 $14,592,775






7 FNMA 4.25% 5/15/2009 5,186,475


9 MASTER ALTERNATIVE LOAN 6.50% 7/25/2034 3,564,792

10 MORGAN STANLEY 6.00% 7/17/2006 3,475,738

Note: The above schedule does not reflect holdings in index funds. A complete list is available upon request.

SECT ION FOURACTUARIAL

★ ★ ★

Jack Draper and Bill Boell, 1960

Engine 12: Dave Peterson, Carl Lendle, Lloyd Chandler, Chris Heath

Training on Pompier Ladders,

c. 1950

52 | Actuarial

Actuary’s Certification Letter

Actuarial | 53

54 | Actuarial

Summary of Assumptions and Funding Method The Police and Fire Retirement System (PFRS) pension plan was established by the Oakland elec-torate in the early 1950s when Article XXVI of the Charter of the City of Oakland was adopted. Article XXVI created the PFRS to provide retirement benefits for sworn members of the City of Oakland Police and Fire Departments. The plan is a defined benefit plan. Article XXVI requires the City of Oakland to make contributions necessary to fully fund the plan (i.e., actuarially fund all liabilities for all Plan members) by July 1, 2026 based on actuarial valuations. In 1976 the PFRS was closed. Following the closure, the City placed new police and fire employees in the Public Employees’ Retirement System (PERS) The PFRS pension plan is administered and managed by the Police and Fire Retirement Board in accordance with the provisions of Article XXVI of the City of Oakland, as it may be amended from time to time by the Oakland voters.

ORGANIzATIONAL OVERVIEW

The City of Oakland City Charter established the System and provides for its funding. Accord-ingly, the System is an integral part of the City of Oakland (the City) and its operations have been reported as a Pension Trust Fund in the City’s basic financial statements. The System is a closed, single-employer, defined-benefit pension plan that provides retirement, disability, and survivor benefits for eligible sworn safety employees of the City hired prior to July 1, 1976 who have not transferred to the California Public Employees’ Retirement System (CalPERS).

The System is governed by a board of seven trustees: the Mayor or his designate, three Mayoral appointees approved by the City Council, an elected active or retired member of the Police Depart-ment, an elected active or retired member of the Fire Department, and an elected member position that alternates between the Police Department and Fire Department membership. Trustees receive no compensation.

The System is funded by periodic employee and City contributions at actuarially determined amounts sufficient to accumulate the necessary assets to pay benefits when due as specified by ordinance. Active members contribute a percentage of earned salaries, which is determined by con-sulting actuaries based upon their entry age into the System. In accordance with the City Charter, active members hired after July 1, 1951, and prior to July 1, 1976, contribute a percentage of their earned salaries based upon entry age as determined by consulting actuaries. During the years ended June 30, 2006 and 2005, these contributions ranged from 5.47% to 6.05%. The City Charter lim-its employee contributions to 13.00% of earned salaries. Employee contributions are refundable with interest at 4.00% if an employee elects to withdraw from the System upon termination with the City.

Actuarial | 55

CONTRIBUTIONS TO THE SYSTEM

In March 1997, the City issued Pension Obligation Bonds in the amount of $417,173,300 to pay the City’s contributions to the System through June 2011. As a result, no contributions are required from the City to PFRS until July 1, 2011, at which time the contribution rate will be established based on the System’s July 1, 2010 assets and liabilities. During the year ended June 30, 2005, the City made an advance contribution of $17,709,888 to the System, transferring proceeds from the Oakland Joint Powers Financing Authority Refunding Revenue 2005 Series B Bond to fund a portion of the City’s future obligation to the System. There was no identified unfunded actuarial accrued liability as of July 1, 2005, the last actuarial valuation date.


The System uses fair value as its asset valuation method. The following are the actuarial assump-tions used to compute contribution requirements:

Investment rate of return 8.0%Projected salary increases 4.5%Inflation rate 3.5%

56 | Actuarial

MEMBERSHIP SUMMARY

The System’s membership as of June 30, 2006 was 1,314, which includes 3 active police employees, 954 police and fire retirees, and 354 beneficiaries. Membership as of June 30, 2005 and June 30, 2004 was 1,356 and 1,398 respectively.

The table summarizes key information about the System’s membership: the distribution of active police members, the distribution of police and fire retirees and beneficiaries, and the average benefit payment amounts:

Membership SummaryFiscal Years Ending June 30

2006 2005 2004Active

Police 3 3 3

Retirees

Police 555 571 589

Fire 402 430 447

Total Retirees 957 1,001 1,036

Survivors

Police 170 169 177

Fire 184 183 182

Total Survivor 354 352 359

Total Membership 1,314 1,356 1,398

SUMMARY OF PLAN PROVISIONS

The plan, which is a closed, defined-benefit plan with only a few active members, exists to pay the retirement benefits of active and retired members who are eligible to receive plan retirement benefits. This summary notes some basic provisions and is not intended to be nor should it be interpreted as a complete description of all plan provisions.

The City Charter establishes plan membership, contribution, and benefit provisions. Retirement eligibility is based upon a combination of years of service and age. Any member who completes at least 25 years of service, regardless of age, or completes 20 years of service and reaches age 55, or has reached age 65 is eligible for retirement benefits.

Retirement benefits are paid in the form of a monthly retirement allowance with various options for continuation of benefits to a surviving spouse following the retired participant’s death. The basic retirement allowance equals 50% of the compensation attached to the average rank held during the three years immediately preceding retirement, plus an additional allowance of 2/3-1% of such compensation for each year of service (up to ten) subsequent to (a) qualifying for retirement and (b) July 1, 1951. However, any member retiring at age 65 with less than 20 years of service receives

Actuarial | 57

a reduced retirement allowance based upon the number of years of service. A member is eligible for early retirement benefits after 20 to 24 years of service, with a retirement allowance based upon 40% to 48% of the compensation attached to the average rank held during the three years preceding retirement. In addition, a member with 10 to 19 years of service may retire and, on or after the 25th anniversary of his/her date of employment, may receive a retirement allowance based upon 20% to 38% of the compensation attached to the average rank held during the three years preceding retirement.

The System also provides early service retirement, disability, surviving-spouse, and post-retire-ment death benefits. The City Charter prescribes different benefits for members who retire due to a service-connected or non-service-connected disability.

The plan is financed as follows:

Employee contributions: Active members contribute a percentage of their salaries based upon entry age as determined by consulting actuaries but not to exceed 13.00% of salaries. Contri-butions are refundable if an employee elects to withdraw from the System.

City contributions: Due to the contribution “holiday”, the City is not scheduled to make another contribution until June of 2011.

In accordance with the City Charter, active members hired after July 1, 1951, and prior to July

1, 1976, contribute a percentage of their earned salaries based upon entry age as determined by consulting actuaries. During the years ended June 30, 2006, June 30, 2005, and June 30, 2004, these contributions ranged from 5.47% to 6.05%. The City Charter limits employee contributions to 13.00% of earned salaries. Employee contributions are refundable with interest at 4.00% per year if an employee elects to withdraw from the System upon termination of employment with the City.

The City contributes at a minimum amount as necessary, on an actuarial basis using the aggre-gate actuarial cost method, to provide assets sufficient to meet benefits to be paid to plan members. The City is required to fund all liabilities for future benefits for all members by June 30, 2026. To do so, the City makes contributions at rates established by consulting actuaries based upon plan valua-tions using various assumptions as to salary progression, inflation, and rate of return on investments. The City’s contributions are based on a level percentage of all uniformed employees’ compensation. Significant actuarial assumptions used to compute actuarially determined contribution require-ments are the same as those used to compute the pension benefit obligation.

Estimated City Contributions

Valuation dateJuly 1

Valuation Assumption Annual RequiredCity Contribution Amount Starting

July 1, 2011Investment

ReturnsWage

Growth2003 0.08 0.045 $44 million

2004 0.08 0.045 $40 million

2005 0.08 0.045 $37 million

Jim Boyle and Tony Parrino

Mike “Bone” Triplett of 5 Truck, c. 1990

Homicide, 1982

Will Pavon and Herb Spence, June 7, 1962

Policewomen, 1955

Working Together, 1973

SECT ION F IVE STAT IST IC AL

★ ★ ★

Oakland Police Department, 1962

Barry Deadder, 1962

OFD Retirement Dinner, c. 1985

Recruit Class, c. 1950

60 | Statistical

Additions to Plan Net Assets by SourceFiscal Years Ending June 30

Fiscal Year

Employee Contributions

Employer Contributions

Net Investment Income *

Other Income Total

2004 $ 21,581 - 77,858,806 - $ 77,880,387

2005 $ 24,236 17,709,888 47,239,577 37,831 $ 65,011,532

2006 $ 25,452 - 42,305,447 - $ 42,330,899

* Total Investment Income less Investment Expenses.

Plan Deductions by TypeFiscal Years Ending June 30

Fiscal Year

Service Allowances

Disability Allowances

Industrial Death

AllowancesDeath

BenefitsWithdrawal of Contributions

Administration Costs

Total Deductions

2004 $43,764,738 24,451,938 2,109,227 8,000 180,036 888,652 $71,402,591

2005 $42,888,610 25,837,264 2,221,968 13,000 - 735,806 $71,696,648

2006 $43,046,461 26,115,649 2,175,913 13,500 - 772,651 $72,124,174

Benefit Expenses by TypeFiscal Years Ending June 30

Type of Retirees

2006 2005 2004

# of Retirees

Gross Amount

# of Retirees

Gross Amount

# of Retirees

Gross Amount

Police

Service Allowance 472 $24,165,532 483 $23,725,071 497 $24,358,436

Disability Allowance 231 12,075,244 234 11,981,032 245 11,425,105

Death Allowance 22 1,128,652 23 1,206,156 24 1,150,204

Total 725 $37,369,428 740 $36,912,258 766 $36,933,745

Fire

Service Allowance 323 $18,880,929 341 $19,163,539 350 $19,406,302

Disability Allowance 243 14,040,405 252 13,856,232 259 13,026,833

Death Allowance 20 1,060,761 20 1,028,812 20 967,023

Total 586 $33,982,095 613 $34,048,584 629 $33,400,158

Total Police & Fire 1,311 $71,351,523 1,353 $70,960,842 1,395 $70,333,903

Oakland Police & Fire Retirement System

City of Oakland

Office of Personnel

150 Frank Ogawa Plaza, 3rd Floor

Oakland, CA 94612

Speed Cops, 1950

Documents

Oakland Police & Fire Retirement System