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11 20 S. 10151 StreetSuite 400Omaha, NE 68124ll MillimanUSATelFax 1 402 393.9400 1 402 393.1037milliman.comApril 25, 201 4ACTUARIAL CERTIFICATIONMs. Jana BodeDirector of Human ResourcesCity of Scottsbluff2525 Circle Dr.Scottsbluff, NE 69361Re: City of Scottsbluff Police Officers Retirement PlanDear Ms. Bode:In accord ance with your request, we have perform ed an Actuarial Valuation of the City of ScottsbluffPolice Officers Retirement Plan as of January 1, 2014 . The major findings of the valuation are containedin this report. This report reflects the benefit provision and contribution rates in effect as of January 1,201 4.In preparing this report, we relied, without audit, on inform ation (some oral and some in writing) suppliedby the System's staff. This inform ation includes, but is not limited to, statutory provisions, employee data,and financial inform ation. In our examination of these data, we have found them to be reasonablyconsistent and comparable with data used for other purposes. Since the valuation results are dependenton the integrity of the data supplied, the results can be expected to differ if the underlying data isincomplete or missing. It shou ld be noted that if any data or other information is inaccurate or incomplete,our calculations may need to be revised.All costs, liabilities, rates of interest, and other factors for the System have been determined on the basisof actuarial assumptions and methods which are individually reasonable (taking into account theexperience of the System and reasonable expectations); and which, in combination, offer our bestestimate of anticipated experi ence affecting the System. Further, in our opinion, the actuarialassum ptions in the aggregate are reasonable and are related to the experi ence of the Plan and toreasonable expectations and represent our best estimate of anticipated experience under the Plan.Future actuarial measurements may differ significantly from the current measurements presented in thisreport due to such factors as the following: plan experience differing from that anticipated by theeconomic or demographic assum ptions; changes in economic or demographic assum ptions; increases ordecreases expected as part of the natural operation of the methodology used for these measurements(such as the end of an amortization period or additional cost or contribution requirements based on theplan's funded status); and changes in plan provisions or applicable law. Due to the limited scope of ourassignment, we did not perform an analysis of the potential range of future measurements. The Board ofTrustees has the final decision regardin g the appropriateness of the assum ptions and adopted them asindicated on page 6.Offices in Principal Cities W orldwide

Ms. Jana BodeApril 25, 2014Page 2t; MillimanMilliman's work is prepared solely for the internal business use of the City of Scottsbluff ("System"). Tothe extent that Milliman's work is not subject to disclosure under applicable public records laws , Milliman'swork may not be provided to third parties without Milliman's prior written consent. Milliman does not intendto benefit or create a legal duty to any third party recipient of its work product. Milliman's consent torelease its work product to any third party may be conditioned on the third party signing a Release,subject to the following exceptions:(a) The System may provide a copy of Milliman's work, in its entirety, to the System'sprofessional service advisors who are subject to a duty of confidentiality and who agree to notuse Millim an's work for any purpose other than to benefit the System .(b) The System may provide a copy of Milliman's work, in its entirety, to other governmentalentities, as required by law.No third party recipient of Milliman's work product should rely upon Mi llim an's work product. Suchrecipients should engage qualified professionals for advice appropriate to their own specific needs .The consultants who worked on this assignment are pension actuaries. Milliman's advice is not intendedto be a substitute for qualified legal or accounting counsel.On the basis of the foregoing, we hereby certify that, to the best of our knowledge and belief, this report iscomplete and accurate and has been prepared in accordance with generally recognized and acceptedactuarial principles and practices. We are members of the American Academy of Actuaries and meet theQualification Standard s to render the actuarial opinion contained herein.We respectfull y submit the following report, and we look forward to discussing it with you.I, Gregg Rueschhoff, am a consulting actuary for Milliman. I am a member of the American Academy ofActuaries and meet the Qualification Standard s of the American Academy of Actuaries to render theactuarial opinion contained herein.I, Charles Erickson, am a member of the American Academy of Actuaries and meet the QualificationStandard s of the American Academy of Actuaries to render the actu arial opinion contained herein.Sincerely,Gregg Rueschhoff, ASAPrincipal & Consulting ActuaryEnclosuresCharles Erickson, ASAAssociate Actuary

Milliman Actuarial ValuationTable of ContentsSection I- Valuation SummaryReport SummaryDisplay of Annual Cost12Section II -Valuation DetailFund AssetsAnnual Normal Costs34Section Ill- Valuation BasisActuarial MethodsActuarial AssumptionsSummary of Retirement System ProvisionsParticipant Census StatisticsJanuary 1, 2014 Actuarial ValuationCity of Scottsbluff Retirement System For Police Officers5679

Milliman Client ReportValuation SummaryJanuary 1, 2014 Actuarial ValuationCity of Scottsbluff Retirement System For Police Officers

Milliman Actuarial ValuationReport SummaryOn January 1, 1984, the Retirement Systems for Police Officers of First Class Cities in the State ofNebraska were revised. The system that became effective was a Defined Contri bution system, with theemployees and the City each making annual contributions to the Pension Funds.Pre-84 HiresOfficers who were hired prior to January 1, 1984 were assured of receiving retirement benefits under thenew system at least as great as those that would have been available under the prior system. Thisactuarial valuation has been prepared to evaluate the additional funding requ ired, if any, to provide thesebenefit guarantees.Based on the actuari al valuation, it is anticipated that the unallocated account is NOT sufficient to providethe minimum defined benefits for the remaining pre-84 hire. We have estim ated the present value of theshortfall is 46,173 for the remaining active member. If this shortfall were amortized over the workingcareer of the remaining active Police Officer hired prior to 1984, then 66.0% of their pay would need to becontributed each year.Post-84 HiresPolice Officers hired after January 1, 1984 are eligible for special duty-related death and disabilitybenefits. However, the expected number of occurrences is considerably less than 1.0. Therefore, anyprefunding of the benefit will generate way too little funds (if an actual death or disability occurs), or willcreate unneeded fund s (if none occur). We have not included a specific liability for the post-84 benefit.January 1, 201 4 Actuarial ValuationCity of Scottsbluff Retirement System For Police Officers

Mill iman Actuarial ValuationDisplay of Annual CostThe annual cost for the year beginning January 1, 2014 is displayed below. 46,1731.Annual Normal Cost for 20142.Projected 201 4 Payroll for pre-84 Hires69,9363.Total Annual Contributions as a Percentage of Pay (1 2)66.0%January 1, 201 4 Actuarial ValuationCity of Scottsbluff Retirement System For Police Officers2

Milliman Client ReportValuation DetailJanuary 1, 2014 Actuarial ValuationCity of Scottsbluff Retirement System For Police Officers

Milliman Actuarial ValuationFund AssetsFund Assets on December 31, 201 3Employer and Employee Contribution Accounts*Unallocated AccountTotal Assets 319,473o 319,473* Balance as of January 23, 2014January 1, 201 4 Actuarial ValuationCity o f Scottsbluff Retirement System For Police Officers3

Milliman Actuarial ValuationAnnual Normal CostThe annual normal cost is determined by following the steps outlined below. The annual normal cost isthe portion of the total plan costs assigned to the current plan year by the Actuarial Cost Method.January 1, 20141.Actuarial Present Value of Future Minimum BenefitsActive Participants*Retired ParticipantsTotal2.Unallocated Assets3.Actuarial Present Value of Future Normal Costs(1 - 2, but not less than zero)4.Expected Future Service of Participant5.Annual Normal Cost (3 -:- 4) 46,173Q 46,173046,1731.0 46,173* Reflects estimated reduction to reflect QDRO payment to the participants'former spouse.January 1, 2014 Actuarial ValuationCity of Scottsbluff Retirement System For Police Officers4

Milliman Client ReportValuation BasisJanuary 1, 2014 Actuarial ValuationCity of Scottsbluff Retirement System For Police Officers

Milliman Actuarial ValuationActuarial MethodsActuarial Cost MethodThe Aggregate Actuarial Cost Method was used to determine annual plan costs. Using this method, thepresent value of benefits to be funded by future annual costs is determined by subtracting plan assetsfrom the present value of projected benefits. This result, the present value of unfunded costs, is dividedby the present value of future salaries of employees included in the valuation to determine a normal costaccru al rate . The normal cost accru al rate is multiplied by the total of current annual salaries ofemployees in the valuation to determine the normal cost.Using the Aggregate Method , gains and losses that arise due to actual experience are not directlydetermined and recognized each year. Gains and losses are included in the unfunded costs and affectthe normal cost accrual rate . As a result, gains and losses are spread over the remaining period toretirement of employees in the valuation and are recog nized as a portion of future annual costs.Asset Valuation MethodAssets are valued at market value.January 1, 2014 Actua rial ValuationCity of Scottsbluff Retirement System For Police Officers5

Milliman Actuarial ValuationActuarial AssumptionsInvestment Return5% - pre-retirement4%- post-retirem entMortality2014 41 7(e) Mortality Table.Salary Scale4%Retirement AgeMembers who are eligible to retire are assumed to retire at age 60.DisabilityNoneTerminationNone prior to retirement eligibilityMarital Status100% married, males assumed to be 3 years older than females.Load for Lump SumsLiabilities were loaded by 15% to reflect the potential adverse interest and mortality selection withparticipants choosing the lump sum option.January 1, 2014 Actuarial ValuationCity of Scottsbluff Retirement System For Police Officers6

Mill iman Actuarial ValuationSummary of Retirement System ProvisionsParticipationAll first-class city paid police officers are covered autom atically. There are no eligibility requirements.DefinitionsCredited ServiceMost recent period of uninterrupted service as a City of Scottsbluff police officer.Average CompensationAverage of the regul ar monthly pay of a police officer during the final 5-year period prior to normalretirement, earl y retirement, disability or death.Normal Retirement DateAge 60 and 25 years of service (21 years before November 18, 1965).Early Retirement DateAge 55 and 25 years of service.Reti rement ValueThe Retirement Value consists of the following com ponents, all accumulated at the net rate of interestearned by the Fund:1. Police officer contributions made prior to January 1, 1984 with interest accumulated to that date.2. Matching 6% police officer/City contributions made after January 1, 1984.BenefitsNormal RetirementThe monthly benefit that can be provided by the officer's Retirement Value at the time of retirem ent. Forofficers participating in the system prior to January 1, 1984, and satisfying the requirements for normalretirement, the monthly benefit is to be no less than 50% of Average Compensation.Early RetirementSame as Norm al Retirement, except that for officers participating in the system prior to January 1, 1984,and satisfying the requirements for early retirement, the minimum benefit is 40% of AverageCompensation.Duty-Related Disabi lityMonthly annuity equal to 50% of Average Compensation, reduced by the amount of Workmen'sCompensation benefits.Non-Duty Related DisabilityIf not el igible to retire, same as termination benefit. If eligible to retire, same as retirement benefit.Duty-Related DeathMonthly annuity, payable to spouse or dependent children, equal to 50% of Average Compensation,reduced by the amount of Workmen's Compensation benefits. The monthly benefit will be the amountthat can be purchased by the Retirement Value, if greater.January 1, 2014 Actuarial ValuationCity of Scottsbluff Retirement S ystem For Police Officers7

rrrrrrrrrrMilliman Actuarial ValuationNon Duty-Related DeathFor officers participating in the system prior to January 1, 1984, a minimum monthly annuity, payable tospouse or dependent children, equal to 25% of Average Compensation, if death occurs between ages 55and 60, after 21 years of service. Otherwise, benefit is same as termination benefit, except that theofficer will be considered to be fully vested at the date of death. If eligible to retire on date of death,benefit is same as duty-related.Termination BenefitBenefits upon termination equal to the officer's vested Retirement Value. The vesting percentages aredetermined according to the following schedule and are applicable only to that portion of the RetirementValue attributable to City contributions:Years of ServiceLess than 445678910Vested Percentage0%405060708090100Contribution MemberPolice officers contribute at the rate of 6% of compensation.CityThe City contributes 6% of each police officer's compensation plus any additional amounts needed tofund system benefits.rrrrrrIrrrJanuary 1, 2014 Actuarial ValuationCity of Scottsbluff Retirement System For Police Officers8

Milliman Actuarial ValuationParticipant Census StatisticsPolice OfficersJanuary 1, 2014ACTIVE PARTIC IPANTS INCLUDED IN VALUATION - PRE-84 HI RES ONLYAge atValu ation DateUnder 2020-2425-2930-3435-3940-4445-4950-5455-5960-6465 & 00001QQQ0NON-ACTIVE PARTICIPANTS INCLUDED IN VALU ATIONNumberRetired Partic ipants or BeneficiariesTotalJanuary 1, 2014 Actuarial ValuationCity of Scottsbluff Retirement System For Police OfficersAnnual Benefits0 00 09

NAME OF FUND Wells Fargo Stable Return Fund N4 Federated Total Return Government Inst Svc PIMCO Total Return Fund Admin MFS Value R3 Wells Fargo Advtg Index Admin T. Rowe Price Growth Stock Adv JP Morgan Large Cap Growth A JHancock3 Disciplined Value Mid Cap A Columbia Mid Cap Index A Artisan Mid Cap Inv RS Partners A Dreyfus Small Cap Stock Index