Take a look at the Pension Growth graph below and how it represents the 8.16% Actuarial Rate nice and smooth. The reason I like the graph so much is because it is simple. It is just a smooth growth that does not care about assumption or Inflation factors. It all actuality that 8.16% is the all inclusive number, so why are the pension audits an the explanations that people give about them always trying to lose us with additional numbers and factors?

Look at the 20 Net Return on Assets picture above to the right that shows a annual 10.10% return on investments. If that data was added to the graph on the left the line representing 10.10% it would show that 600 million dollars more was earned for the pension than the 8.16%. Then if you add some more money because of the unfunded future pension obligations (UAAL) like I did the pension should have earned a billion dollars more than the 8.16% would have. I have made my own work sheet showing the differences between Santa Barbara County's Pension Assumptions and the SBCERS Pensions Actual Performances.

I have two other work sheets showing assumptions v. actual earned return average. 1989-2008 9.6% represents the 20 YEAR NET RETURN ON ASSETS and 1988-2011 8.5% represents 24 YEARS of NET RETURN ON ASSETS. Both sheets can be found further down this posting.

SBCERS 20 YEARS of ECONOMIC ASSUMPTIONS
v. ACTUAL PENSION FUND PERFORMANCE 1988 2007
(A) Earnings Rate Assumption
(B) CPI Inflation Assumption
(C )Rate Of Return Assumption
(D)UAAL(unfunded actuarial accrued liability)
VAL/DATE..............A.................B.............C.................D
12/31/88...............8.50% ....5.50% ....3.00% .......3.18%
12/31/90 ..............8.50% ...5.50% ....3.00% .......4.61%
12/31/92...............8.25%... 5.00% ....3.25% .......4.72%
12/31/94...............8.00%... 4.75% ....3.25% .......6.06%
12/31/95...............8.00% ...4.75%.... 3.25% .......8.12%
12/31/96 ..............8.00%... 4.75% ....3.25% .......5.20%
12/31/97...............8.00%... 4.75% ....3.25%...... .6.08%
12/31/98...............8.00% ...4.75%.....3.25%.......1.03%
12/31/99 ..............8.00% ...4.75% ....3.25%...... -0.09%
12/31/00 ..............8.00%... 4.50% .....3.50%...... 0.08%
12/31/02 ..............8.00% ...4.50% .....3.50%...... 2.29%
6/30/03.................8.00% ....4.50% ....3.50%....... 3.65%
6/30/04 ................8.00% ...4.50% .....3.50%....... 6.63%
6/30/05 ................8.00% ...4.50% .....3.50%....... 8.40%
6/30/06 ................8.00% ...4.00% .....4.00% .......9.29%
6/30/07 ................8.16% ....3.50% .....4.66% ......11.74%
Assumptions Averaged over 20 Years
8.15% AVG. (A) 4.75%AVG.(B) 3.40%AVG.(C) A-B=C 4.02%AVG.(D)

Actual Pension Performance Out Earns 20 Year Assumption Average By More Than One Billion Dollars. See examples under chart Actual 20 Year (E) Average Return on Assets 10.10% 20% Greater Than Assumption
Actual 20 Year (F) CPI Index Averaged 3.10% 35% Lower Than Assumption
(G)Real Rate of Return Earned 7.00% 51.5% Greater Than Assumption E-F = G
(H) UAAL Average Monthly Cost 7 Million a Year 580,000.00 (F) A Monthly Deposit/Payment

1-Using assumption factor; $270,540,000 X 8.15% (A) X 20 years = $ 1.34 billion dollars.
2- Using Actual Performance Factor; $270,540,000 X 10.10% (E.) X 20 years = $1.94 billion dollars,
3-Same as example 2 plus a monthly deposit; Again a starting value of $270,540,000 but adding a monthly (H) deposit of 580,000 X 10.10% (E) X 20 years = $2.37 billion dollars.

SBCERS 20 YEARS of ECONOMIC ASSUMPTIONS v. ACTUAL PENSION FUND PERFORMANCE 1989-2008

(A) Earnings Rate Assumption
(B) CPI Inflation Assumption
(C )Rate Of Return Assumption
(D)UAAL (unfunded actuarial accrued liability)
Val/Date..........A.................B.................C...................D.
12/31/89......8.50% .......5.50%.........3.00% .........3.18%
12/31/90,.....8.50%........5.50% ........3.00% ........4.61%
12/31/92......8.25% .......5.00% ........3.25%.........4.72%
12/31/94.......8.00%.......4.75%.........3.25%.........6.06%
12/31/95.......8.00%.......4.75%.........3.25%.........8.12%
12/31/96.......8.00% ......4.75% ........3.25% ........5.20%
12/31/97.........8.00% ......4.75% ........3.25% ........6.08%
12/31/98......8.00% .......4.75%........3.25%..........1.03%
12/31/99 .....8.00% .......4.75%.........3.25%........-0.09%
12/31/00..... 8.00% .......4.50% ........3.50%.........0.08%
12/31/02..... 8.00% ........4.50% .......3.50% .........2.29%
6/30/03 .......8.00%........4.50% ........3.50% .........3.65%
6/30/04 .......8.00% .......4.50% ........3.50% .........6.63%
6/30/05 .......8.00%........4.50%.........3.50% .........8.40%
6/30/06 .......8.00% .......4.00% ........4.00%... ......9.29%
6/30/07 .......8.16% .......3.50%.........4.66%.. .......11.74%
6/30/08 .......8.16% .......3.50%........ 4.66% ..........9.10%

Assumptions Averaged over 20 Years
8.12% AVG. (A) 4.65%AVG.(B) 3.47%AVG.(C) A-B=C 4.31%AVG.(D)
Actual Pension Performance Out Earns 20 Year Assumption Average By More Than 900 Million Dollars. See examples under chart
Actual 20 Year (E) Average Return on Assets 9.60% 15% Greater Than Assumption
Actual 20 Year (F) CPI Index Averaged 3.10% 33% Lower Than Assumption
(G)Real Rate of Return Earned 6.50% 46% Greater Than Assumption E-F = G
(H) UAAL Average Monthly Cost 8 Million a Year 666,000.00 (F) A Month Deposit/Payment

1-Using assumption factor; $270,540,000 X 8.12% (A) X 20 years = $ 1.3 billion dollars.
2- Using Actual Performance Factor; $270,540,000 X 9.60% (E.) X 20 years = $1.765 billion dollars,
3-Same as example 2 plus a monthly deposit; Again a starting value of $270,540,000 but adding a monthly (H) deposit of 666,000 X 9.60% (E) X 20 years = $2.23 billion dollars.

1988-2011 8.5% represents 24 YEARS of NET RETURN ON ASSETS

SBCERS 24 YEARS of ECONOMIC ASSUMPTIONS v. ACTUAL PENSION FUND PERFORMANCE 1988-2011
(A) Earnings Rate Assumption
(B) CPI Inflation Assumption
(C )Rate Of Return Assumption
(D)UAAL (unfunded actuarial accrued liability)
Val/Date...........A................B.....................C......................D...
12/31/88 .....8.50% ........5.50% ...........3.00% ...........3.18%
12/31/90 .....8.50% ........5.50% ...........3.00% ...........3.18%
12/31/92 .....8.25% ........5.00% ...........3.25% ...........4.72%
12/31/94......8.00% ........4.75% ...........3.25% ...........6.06%
12/31/95..... 8.00% ........4.75% ...........3.25% ...........8.12%
12/31/96..... 8.00% ........4.75% ...........3.25% ...........5.20%
12/31/97..... 8.00% ........4.75% ...........3.25% ...........6.08%
12/31/98..... 8.00% ........4.75% ...........3.25% ...........1.03%
12/31/99..... 8.00% ........4.75% ...........3.25%............0.09%
12/31/00..... 8.00% ........4.50% ...........3.50% ...........0.08%
12/31/02..... 8.00% ........4.50% ...........3.50%...........2.29%
06/30/03..... 8.00% ........4.50% ...........3.50% ..........3.65%
06/30/04..... 8.00% ........4.50% ...........3.50% ..........6.63%
06/30/05.. ...8.00% ........4.50% ...........3.50%.... ......8.40%
06/30/06 .....8.16% ........3.50% ..........4.66% .........11.74%
06/30/08 .....8.16% ........3.50% ..........4.66% ...........9.10%
06/30/09......8.16%.........3.50%...........4.66%...........14.67%
06/30/10......7.75%.........3.25%...........4.50%...........16.00%
06/30/11......7.75%........3.25%............4.50%...........16.00%

Assumptions Averaged over 24 Years
8.10% AVG. (A) 4.50%AVG.(B) 3.60%AVG.(C) A-B=C  6.02%AVG.(D)
Actual Pension Performance Out Earns 24 Year Assumption Average By More Than One Billion Dollars. See examples under chart
Actual 24 Year (E) Average Return on Assets 8.50% 5% Greater Than Assumption
Actual 24 Year (F) CPI Index Averaged 2.90% 35% Lower Than Assumption

(G)Real Rate of Return Earned 5.60% 45% Greater Than Assumption E-F = G
(H) UAAL Average Monthly Cost 13 Million a Year /1,008,000. (F) A Month Deposit/Payment

1-Using Assumption Factor; $270,540,000 X 8.10% (A) X 24 years = $ 1.82 Billion dollars.

2- Using Actual Performance Factor; $270,540,000 X 8.50% (E.) X 24 years = $1.99 Billion dollars,
3-Same as example 2 plus a monthly deposit; Again a starting value of $270,540,000 but adding a monthly (F) deposit of 1,008,000 X 8.50% (E) X 24 years = $2.91 Billion dollars