ESBD_564831_1791234405017_GASB Valuation.pdf

TEXAS A&M UNIVERSITY SYSTEM

RETIREE GROUP INSURANCE PROGRAM

Cover

ACTUARIAL VALUATION OF OTHER POST-EMPLOYMENT BENEFITS

PROVIDED UNDER THE RETIREE GROUP INSURANCE PROGRAM

GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENT NO. 75

FOR THE FISCAL YEAR ENDING AUGUST 31, 2025

W. Lee Bello, A.S.A.

Mitchell L. Bilbe, F.S.A.

Evan L. Dial, F.S.A.

Philip S. Dial, F.S.A.

Charles V. Faerber, F.S.A., A.C.A.S.

Mark R. Fenlaw, F.S.A.

Brandon L. Fuller, F.S.A.

Christopher S. Johnson, F.S.A.

Oliver B. Kiel, F.S.A.

Dustin J. Kim, F.S.A.

Xiuyu Li, A.C.A.S.

Edward A. Mire, F.S.A.

Rebecca B. Morris, A.S.A.

Amanda L. Murphy, F.S.A.

Michael J. Muth, F.S.A.

Khiem Ngo, F.S.A., A.C.A.S.

Timothy B. Seifert, F.S.A.

Raymond W. Tilotta

Ronald W. Tobleman, F.S.A.

David G. Wilkes, F.S.A.

9500 Arboretum Blvd., Suite 200 Austin, Texas 78759 www.ruddwisdom.com Phone: (512) 346-1590 Fax: (512) 345-7437

December 4, 2025 Cover Letter

Mr. Joseph Duron Executive Director, Budgets and Accounting Moore/Connally Building 301 Tarrow, 3rd Floor College Station, TX 77840-7896

Dear Mr. Duron:

Attached is our Actuarial Valuation of Other Post-Employment Benefits (OPEB) provided under the Texas A&M University System (the A&M System) retiree group insurance program (the Program) for the Fiscal Year ending August 31, 2025 (FY25). The purpose of this valuation is to provide accounting information that is required by the Governmental Accounting Standards Board Statement No. 75 (GASB No. 75) which sets forth the financial reporting standards for state and local government employers that provide post-employment benefits other than pension benefits.

Such benefits are referred to collectively as OPEB. The results of this valuation are appropriate only for purposes of GASB No. 75.

The Program provides OPEB for retired employees of the A&M System as specified in Chapter 1601 of the Texas Insurance Code. The A&M System has determined that the Program is a single-employer plan as defined under GASB No. 75.

Please refer to the glossary in Section VII of this report for the definitions of certain GASB No.

75 terms which are indicated below in boldface type the first time they appear.

Income Statement and Balance Sheet Information

This report provides the GASB No. 75 OPEB expense for income statement purposes (see Section II.D.). In addition, this report provides the Total OPEB Liability to be reported on the employer’s balance sheet (see Section II.B.).

Biennial Valuations

Under paragraph 147 of GASB No. 75, an actuarial valuation is required at least biennially. In the second year of the biennium, update procedures can be used to roll forward the liability from the prior actuarial valuation date to the current measurement date. If update procedures are used and significant changes occur between the actuarial valuation date and the measurement date, professional judgment should be used to determine the extent of procedures needed to roll forward the measurement from the actuarial valuation date to the measurement date, and consideration should be given to whether a new actuarial valuation is needed. Q/A #4.357 of GASB Implementation Guide No. 2017-3 states that the Total OPEB Liability should include all significant effects of transactions and other events between the actuarial valuation date and the measurement date.

Mr. Joseph Duron

Pursuant to the A&M System’s direction, valuations are performed biennially rather than annually.

The previous valuation was performed as of September 1, 2023. We believe that no significant changes (other than the Discount Rate) have occurred since the previous valuation that would affect the results of the FY25 valuation. Therefore, a new valuation as of September 1, 2024 has not been performed. The FY25 plan liabilities presented in this report have been determined by applying standard actuarial roll-forward techniques to plan liabilities calculated as of September 1, 2023 using a discount rate of 3.87%.

Measurement Date

As permitted under Paragraph No. 146 of GASB No. 75, the A&M System has elected to use a measurement date that is twelve months in advance of the fiscal year end. Thus, for purposes of GASB No. 75 reporting for FY25, the measurement date is September 1, 2024. The table below summarizes the measurement dates and discount rates for the past two fiscal years:

2024 Fiscal Year 2025 Fiscal Year Measurement

Date Discount

Rate Measurement

Date Discount

Rate Beginning of Fiscal Year September 1, 2022 3.64% September 1, 2023 3.81% End of Fiscal Year September 1, 2023 3.81% September 1, 2024 3.87%

Consistency with Assumptions Used for Retirement Plan Valuations

Most of the employees and retirees covered by the Program are also covered by the Teacher Retirement System (TRS) retirement plan that is subject to periodic actuarial valuations. Where appropriate, for purposes of this report, we have utilized assumptions previously adopted by the TRS Board for use in performing the retirement plan valuations, provided such assumptions are adopted on or before the OPEB valuation date. However, certain aspects of the OPEB valuation process require the use of assumptions that are unique to OPEB; for example, the discount rate and the Health Benefit Cost Trend assumption as discussed below.

Changes in Actuarial Assumptions and Other Inputs

Since the last valuation was prepared for this plan, the discount rate was changed from 3.81% to 3.87% as a result of requirements by GASB No. 75 to utilize the yield or index rate for 20-year, tax-exempt general obligation municipal bonds rated AA/Aa (or equivalent) or higher in effect on the measurement date. The increase in the discount rate decreased the Total OPEB Liability by approximately $0.04 billion.

Aside from the OPEB specific assumptions, all other demographic and economic assumptions are based on assumptions adopted by the TRS Board on or before the OPEB valuation date.

For a complete list of assumptions and other inputs, see Section V of this report.

Health Benefit Cost Trend

For purposes of this valuation, the health benefit cost trend represents the annual rate of increase in per capita health benefit costs, excluding the effects of changes in demographics and changes in plan provisions.

The health benefit cost trend has exceeded the rate of price increases in the general economy, as measured by changes in the Consumer Price Index (CPI), for many decades. Although this pattern is expected to continue for the foreseeable future, many economists anticipate that the degree to which the health benefit cost trend exceeds general inflation will gradually decline. These economists believe that the health benefit cost trend will reach an ultimate level that still exceeds general inflation, but not by as wide a margin as in past decades.

The health benefit cost trend assumption used in this report begins with our short-term expectations of expected health benefit cost increases in the next year and gradually declines to a rate that exceeds the assumed rate of general price inflation by 2.0%.

Benefit and Eligibility Provisions

The benefit and eligibility provisions used in this valuation have not changed since the prior valuation. For a complete description of the benefit and eligibility provisions, see Section VI of this report.

Medicare Part D

The Medicare Prescription Drug Improvement and Modernization Act of 2003 introduced a prescription drug benefit under Medicare (Medicare Part D) as well as a federal subsidy, the Retiree Drug Subsidy (RDS), to sponsors of retiree healthcare benefit plans that provide a prescription drug benefit that is at least actuarially equivalent to the basic coverage provided under Medicare Part D. The A&M System previously applied for and received this subsidy in connection with prescription drug benefits provided to Medicare-eligible retirees covered under the Program.

For purposes of GASB No. 75, the valuation of future OPEB may not reflect the anticipated receipt of future RDS payments as required under GASB Technical Bulletin No. 2006-1. The Bulletin requires that RDS payments to an employer be reported by the employer as revenue, rather than being netted against the employer’s OPEB cost for prescription drug coverage.

The A&M System implemented an Employer Group Waiver Plan (EGWP) plus Wrap on January 1, 2019 in order to provide the plan with the benefit of increased subsidies and discounts available under such an arrangement. The A&M System is no longer eligible for the RDS for retirees enrolled in the EGWP plus Wrap. As a result, the RDS has been eliminated.

The projected cost of the EGWP plus Wrap reflects the subsidies to the administrator of the plan which are expected to be provided by the Federal government under Medicare Part D and the discounts expected to be provided by drug manufacturers as required under the Affordable Care Act.

December 4, 2025

Variability in Future Actuarial Measurement

Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following:

• Plan experience differing from that anticipated by the economic or demographic assumptions;

• Changes in economic or demographic assumptions or other inputs;

• Increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period); and

• Changes in plan provisions, applicable law or applicable accounting standards.

Retiree group benefits models necessarily rely on the use of approximations and estimates and are sensitive to changes in these approximations and estimates. Small variations in these approximations and estimates may lead to significant changes in actuarial measurements.

Aside from the required sensitivities of the Total OPEB Liability to changes in the discount rate and healthcare cost trend rates presented in Section II, we have not been asked to perform and have not performed any stochastic or deterministic sensitivity analyses of the potential ranges of such future measurements. If you have an interest in the results of any such analysis, please let us know.

Please let us know if you have any questions or need additional information concerning this report.

Respectfully submitted, Evan Dial, F.S.A.

Mitchell L. Bilbe, F.S.A.

Christopher S. Johnson, F.S.A.

ED/MLB/CSJ:nm Enclosures GASB75-Final_TAMU_RMDB_2025_ACCTVAL.docx

GASB STATEMENT NO. 75

ACTUARIAL VALUATION AS OF SEPTEMBER 1, 2023

FOR THE SEPTEMBER 1, 2024 MEASUREMENT DATE

FOR THE FISCAL YEAR ENDING AUGUST 31, 2025

FOR THE

OTHER POST-EMPLOYMENT BENEFITS UNDER THE

RUDD AND WISDOM, INC.

AUSTIN, TEXAS

DECEMBER 2025

FY25 GASB NO. 75 ACTUARIAL VALUATION

RUDD AND WISDOM, INC. DECEMBER 2025

TABLE OF CONTENTS

Page No.

Section I: Certification of GASB No. 75 Actuarial Valuation ................................................. I-1

Section II: Notes to the Financial Statements

A. OPEB Plan Description .................................................................................... II-1 B. Total OPEB Liability ........................................................................................ II-2 C. Changes in the Total OPEB Liability ............................................................... II-5 D. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB............................................................ II-6

Section III: Required Supplementary Information

A. Schedule of Changes in the Employer’s Total OPEB Liability and Related Ratios ...........................................................................................III-1

Section IV: Additional Information .......................................................................................... IV-1

Section V: Actuarial Methods and Assumptions ....................................................................... V-1

Section VI: Outline of Principal Eligibility and Benefit Provisions ......................................... VI-1

Section VII: Glossary ................................................................................................................. VII-1

Appendix A: Amortization Schedules of Outflows and Inflows of Resources ............................ A-1

Appendix B: Determination of Balances of Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB ................................................... B-1

Appendix C: Detailed Valuation Results ...................................................................................... C-1

RUDD AND WISDOM, INC. I-1 DECEMBER 2025

Section I - Certification of GASB No. 75 Actuarial Valuation

At the request of the Texas A&M University System (the A&M System), we have performed an actuarial valuation of the Other Post-Employment Benefits provided under the A&M System’s retiree group insurance program (the Program) for purposes of employer reporting requirements for the twelve-month period ending August 31, 2025. The purpose of this report is to present the results of our valuation and provide the information necessary to determine financial statement entries consistent with the Governmental Accounting Standards Board Statement No. 75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (GASB No. 75).

Actuarial computations under GASB No. 75 are for purposes of fulfilling governmental employer financial accounting requirements. The calculations reported herein have been made on a basis consistent with our understanding of GASB No. 75 and the Program. The information presented in this report is solely for purposes of compliance with GASB No. 75. This report does not provide any advice with respect to the manner in which the benefits are funded (i.e., pay-as-you go funding as opposed to prefunding the benefits).

The A&M System has elected to use a measurement date that is 12 months earlier than the end the fiscal year as permitted under Paragraph No. 146 of GASB No. 75. Thus, a measurement date of September 1, 2024 will be used to report information for the 2025 fiscal year.

For FY25, we have based our valuation on current employee, former employee and retiree data as of September 1, 2023 provided by the A&M System, certain vested terminated employee data as of September 1, 2023 provided by the Teachers Retirement System (TRS) and plan provisions provided by the A&M System. The plan benefit obligations as of September 1, 2024 have been determined based on an actuarial roll-forward of the benefit obligations calculated as of September 1, 2023. We have used the actuarial methods and assumptions described in Section V of this report. The actuarial valuation has been performed on the basis of the plan benefits described in Section VI.

To the best of our knowledge, all current active and retired employees eligible to participate in the plan as of the valuation date and all other individuals who have a vested benefit under the plan have been included in the valuation. Furthermore, to the best of our knowledge and belief, all plan benefits have been considered in the development of costs.

The A&M System and TRS remain solely responsible for the accuracy and comprehensiveness of the data provided. However, to the best of our knowledge, no material biases exist with respect to any imperfections in the data provided by these sources. To the extent that any imperfections exist in the data records, we have relied on best estimates provided by the A&M System and TRS. We have not audited the data provided, but have reviewed it for reasonableness and consistency relative to previously provided information. We have utilized software licensed from Winklevoss Technologies, LLC in the development of the liabilities summarized in this report. We have independently confirmed the model developed by Winklevoss and have sufficiently tested it to ensure the model is an accurate representation of the plan’s liabilities.

RUDD AND WISDOM, INC. I-2 DECEMBER 2025

To the best of our knowledge, the actuarial information supplied in this report is complete and accurate.

In our opinion, each of the assumptions used is reasonably related to the experience of the plan and to reasonable expectations and represents our best estimate of anticipated experience under the plan solely with respect to that individual assumption. We are neither aware of any material inconsistencies among the assumptions nor are we aware of any unreasonable results caused by the aggregation of the assumptions. All of our work conforms to generally accepted actuarial principles and practices and to the Actuarial Standards of Practice issued by the Actuarial Standards Board.

The undersigned individuals are members of the American Academy of Actuaries who meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein.

Mitchell L. Bilbe, F.S.A. Evan Dial, F.S.A.

Member of American Academy of Actuaries Member of American Academy of Actuaries

Christopher S. Johnson, F.S.A.

Member of American Academy of Actuaries

RUDD AND WISDOM, INC. II-1 DECEMBER 2025

Section II - Notes to the Financial Statements

Pursuant to Paragraphs No. 165 through 169 of GASB No. 75, the following information should be included in the Notes to the Financial Statements.

A. OPEB Plan Description

1. Plan Name

Texas A&M University System Other Post-Employment Benefits (the “Program”)

2. Plan Type

The Program is a single-employer defined benefit OPEB plan.

3. Contributions and Reserves

a. The authority under which the obligations of the plan members and Employer are established and may be amended is Chapter 1601, Texas Insurance Code.

b. The Employer and member contribution rates are determined annually by the A&M System based on the recommendations of the Office of Risk Management and Benefits Administration (ORMBA) staff and consulting actuary. The contribution rates are determined based on the benefit and administrative costs expected to be incurred and (i) the funds appropriated and (ii) the funding policy established by the Texas Legislature in connection with benefits provided through the Program. The A&M System revises benefits when necessary to match expected benefit and administrative costs with available revenue.

c. The plan is operated on a pay-as-you-go basis.

4. Other Reporting

Because the OPEB plan described herein is not administered through a trust as defined under Paragraph No. 3 of GASB No. 74, GASB No. 74 accounting is not required for this plan.

5. Benefits Provided

See Section VI of this report for complete details of the benefits provided.

RUDD AND WISDOM, INC. II-2 DECEMBER 2025

6. Employees Covered by Benefit Terms

At the most recent valuation date, the following employees were covered by the benefit terms:

Valuation Date

09/01/2023

a. Inactive employees or beneficiaries currently receiving benefit payments 11,496

b. Inactive employees entitled to but not yet receiving benefit payments 3,629

c. Active employees 25,506

d. Total 40,631

7. No Assets

There are no assets accumulated in a trust that meets the criteria in Paragraph No. 4 of

GASB No. 75.

B. Total OPEB Liability

The Employer’s Total OPEB Liability of $2,973,132,7881 reported for the fiscal year ending August 31, 2025 was measured as of September 1, 2024 and was determined by an actuarial valuation as of September 1, 2023 and rolled forward twelve months to September 1, 2024.

1. Actuarial Assumptions and Other Inputs

The Total OPEB Liability as of September 1, 2024 was determined by an actuarial valuation as of September 1, 2023 and rolled forward twelve months to September 1, 2024 using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

Inflation 2.30% Salary increases 2.95% to 8.95%2 Discount rate 3.87%

Healthcare cost trend rates Medical A&M Care/A&M Care 65+: 5.60% for FY25, 5.50% for FY26, 5.25% for FY27, 5.00% for FY28, 4.75% for FY29, 4.60% for FY30, 4.50% for FY31, 4.40% for FY32 and 4.30% for FY33 and later years

65 Plus Medicare Advantage: 0.00% for FY25, 0.00% for FY26, 5.25% for FY27, 5.00% for FY28, 4.75% for FY29, 4.60% for FY30, 4.50% for FY31, 4.40% for FY32 and 4.30% for FY33 and later years

1 Comprised of a current portion of $90,941,401 and a long-term portion of $2,882,191,387.

2 Includes inflation.

RUDD AND WISDOM, INC. II-3 DECEMBER 2025

Pharmacy 11.00% for FY25, 10.00% for FY26, 9.50% for FY27, 9.00% for FY28, 8.00% for FY29, 7.00% for FY30, 6.00% for FY31, 5.00% for FY32 and 4.30% for FY33 and later years

Mortality: a. Service Retirees, Survivors and other Inactive Members:

Tables based on TRS experience with Ultimate MP-2021 Projection Scale from the year 2021.

b. Disability Retirees:

Tables based on TRS experience with Ultimate MP-2021

Projection Scale from the year 2021 using a 3-year set forward and minimum mortality rates of four per 100 male members and two per 100 female members.

c. Active Members:

Sex Distinct Pub-2010 Amount-Weighted Below-Median

Income Teacher Mortality with a 2-year set forward for males with Ultimate MP-2021 Projection Scale from the year 2010.

Many of the actuarial assumptions used in this valuation were based on the results of an actuarial experience study performed by the TRS retirement plan actuary as of August 31, 2021.

One or more assumptions or other inputs have been updated since the prior valuation as shown in Section V of this report.

2. Discount Rate

a. The discount rate used to measure the Total OPEB Liability as of September 1, 2024 was 3.87%.

b. Municipal Bond Rate: 3.87% as of September 1, 2024; the source of the municipal bond rate is the Bond Buyer Index of general obligation bonds with 20 years to maturity and mixed credit quality. In describing their index, the Bond Buyer notes that the bonds’ average credit quality is roughly equivalent to Moody’s Investors Service’s Aa2 rating and Standard & Poor’s Corp.’s AA.

3. Other Information

As of the measurement date of September 1, 2024, no changes in benefit terms have occurred.

Accordingly, the benefit terms used in this valuation have not been changed since the prior valuation.

For a complete description of the benefit provisions, see Section VI of this report.

RUDD AND WISDOM, INC. II-4 DECEMBER 2025

4. Sensitivity of the Total OPEB Liability to Changes in the Discount Rate

The following presents the Total OPEB Liability reported as of August 31, 2025 and measured as of September 1, 2024, as well as what the Total OPEB Liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.87%) or 1-percentage-point higher (4.87%) than the FY25 discount rate:

1% Decrease

(2.87%) Discount Rate

(3.87%) 1% Increase

(4.87%) Total OPEB Liability $ 3,476,185,949 $ 2,973,132,788 $ 2,569,899,192

5. Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates

The following presents the Total OPEB Liability reported as of August 31, 2025 and measured as of September 1, 2024, as well as what the Total OPEB Liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the assumed healthcare cost trend rates1:

1% Decrease1 Healthcare Cost

Trend Rates1 1% Increase1

Total OPEB Liability $ 2,511,921,437 $ 2,973,132,788 $ 3,571,355,704

1 Healthcare Cost Trend Rates and -1%/+1% sensitivities are shown below:

Medical (A&M Care/

A&M Care 65+) Medical (65 Plus

Medicare Advantage) Pharmacy

Fiscal Year

1% Decrease

Healthcare Cost Trend

Rates 1%

Increase 1%

Decrease

Healthcare Cost Trend

Rates 1%

Increase 1%

Decrease

Healthcare Cost Trend

Rates 1%

Increase 2025 4.60% 5.60% 6.60% -1.00% 0.00% 1.00% 10.00% 11.00% 12.00% 2026 4.50% 5.50% 6.50% -1.00% 0.00% 1.00% 9.00% 10.00% 11.00% 2027 4.25% 5.25% 6.25% 4.25% 5.25% 6.25% 8.50% 9.50% 10.50% 2028 4.00% 5.00% 6.00% 4.00% 5.00% 6.00% 8.00% 9.00% 10.00% 2029 3.75% 4.75% 5.75% 3.75% 4.75% 5.75% 7.00% 8.00% 9.00% 2030 3.60% 4.60% 5.60% 3.60% 4.60% 5.60% 6.00% 7.00% 8.00% 2031 3.50% 4.50% 5.50% 3.50% 4.50% 5.50% 5.00% 6.00% 7.00% 2032 3.40% 4.40% 5.40% 3.40% 4.40% 5.40% 4.00% 5.00% 6.00%

2033 and beyond 3.30% 4.30% 5.30% 3.30% 4.30% 5.30% 3.30% 4.30% 5.30%

RUDD AND WISDOM, INC. II-5 DECEMBER 2025

C. Changes in the Total OPEB Liability

Increase (Decrease) in Total OPEB Liability for Measurement Year from 09/01/2023 to

09/01/2024 Balance at Beginning of Measurement Year $ 2,862,383,927 1

Changes for the year:

Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions or other inputs Benefit payments (employer) Other changes Net changes

$ 119,085,916 111,969,993 (35,057,297) (85,249,751) $ 110,748,861

Balance at End of Measurement Year $ 2,973,132,788 2

1 Information for the fiscal year ending August 31, 2024 was taken as of the measurement date of September 1, 2023 based on an actuarial valuation as of that same date as permitted by Paragraph Nos. 146 and 147 of GASB No. 75.

2 Information for the fiscal year ending August 31, 2025 was taken as of the measurement date of September 1, 2024 based on an actuarial valuation as of September 1, 2023 rolled forward twelve months as permitted by Paragraph Nos. 146 and 147 of GASB No. 75.

RUDD AND WISDOM, INC. II-6 DECEMBER 2025

D. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

The Employer recognized OPEB expense/(income) of $(15,171,797) for the fiscal year ending August 31, 2025.

1. Components of OPEB Expense

For Fiscal Year Ending

08/31/2025 Service Cost1 $ 119,085,916 Interest on the Total OPEB Liability1 111,969,9932

Changes in benefit terms 0 Amortization of differences between expected and actual experience3,4 (81,624,949) Amortization of changes of assumptions or other inputs3,5 (165,089,112) OPEB plan administrative expense6 486,355 Total OPEB expense $ (15,171,797)

At the fiscal year-end7 the Employer reported deferred outflows of resources and deferred inflows of resources related to OPEB from the sources listed in the table on the following page.

1 See the Schedule of Changes in Total OPEB Liability in Section II.C.

2 For the detailed calculation of this amount, see Section IV.A.

3 Per Paragraph No. 157.a. of GASB No. 75, amortized over a straight-line closed period equal to the average remaining service period for all employees (active and inactive) who are provided with benefits through the OPEB plan determined as of the beginning of the measurement period.

4 For the detailed calculation of this amount, see the Schedule of Differences between Expected and Actual Experience in Appendix A.

5 For the detailed calculation of this amount, see the Schedule of Changes in Assumptions or Other Inputs in Appendix A.

6 Costs incurred by the employer related to the administration of OPEB during the measurement period.

7 Amounts recognized in the fiscal year represent changes between the current and prior measurement dates.

RUDD AND WISDOM, INC. II-7 DECEMBER 2025

2. Balances of Deferred Outflows of Resources and Deferred Inflows of Resources

As of 08/31/2025

Deferred Outflows of Resources

Deferred Inflows of Resources

Differences between expected and actual experience Changes of assumptions or other inputs Total excluding post-measurement date transactions Post-measurement date transactions Total including post-measurement date transactions

$ 0 298,795,053 $ 298,795,053 75,186,791 1,2

$ 373,981,844

$ 142,253,229 1,593,951,311 $ 1,736,204,540 N/A $ 1,736,204,540

1 Amounts paid by the employer for OPEB as the benefits come due (excluding amounts associated with the employer from non-employer contributing entities that are not in a special funding situation) and amounts incurred by the employer for OPEB administrative expenses after the measurement date and before the fiscal year-end need to be recognized as deferred outflows in accordance with Paragraph No. 159 of GASB No. 75.

2 Benefit payments and administrative expenses between the September 1, 2024 measurement date and August 31, 2025 were $74,668,182 and $518,609, respectively.

3. Amounts reported as Deferred Outflows/(Inflows) of Resources will be recognized in OPEB expense as follows:

Fiscal Year Ending August 31 Amount

Thereafter

$ (247,591,936) (301,465,466) (354,400,179) (357,056,494) (168,667,679) (8,227,733)

RUDD AND WISDOM, INC. III-1 DECEMBER 2025

Section III – Required Supplementary Information

Pursuant to Paragraph No. 170 of GASB No. 75, the following information should be included in the Required Supplementary Information.

A. Schedule of Changes in the Employer’s Total OPEB Liability and

Related Ratios

Last 10 Fiscal Years1,2,3

FYE

08/31/2025

FYE

08/31/2024

FYE

08/31/2023

FYE

08/31/2022

1. Total OPEB Liability

a. Service cost

b. Interest

c. Changes of benefit terms4

d. Differences between expected and actual experience

e. Changes of assumptions or other inputs5

f. Benefit payments (employer)

g. Net Change in Total OPEB Liability

h. Total OPEB Liability – Beginning

i. Total OPEB Liability – Ending

2. Covered-Employee Payroll

3. Total OPEB Liability as a Percentage of

Covered-Employee Payroll

$ 119,085,916 111,969,993

(35,057,297)

(85,249,751) $ 110,748,861

2,862,383,927 $ 2,973,132,788

$ 2,085,669,357

142.55%

$ 153,684,662 146,641,344

(15,814,599) (1,252,797,857)

(88,506,626) $ (1,056,793,076)

3,919,177,003 $ 2,862,383,927

$ 2,023,929,679

141.43%

$ 234,264,396 107,638,271

(1,177,391,225)

(81,791,614) $ (917,280,172)

4,836,457,175 $ 3,919,177,003

$ 1,790,848,230

218.84%

$ 193,377,282 101,058,395

(373,017,868) 552,761,843 (75,817,197) $ 398,362,455 4,438,094,720 $ 4,836,457,175

$ 1,738,640,324

278.17%

FYE

08/31/2021

FYE

08/31/2020

FYE

08/31/2019

FYE

08/31/2018

FYE

08/31/2017

1. Total OPEB Liability

a. Service cost

b. Interest

c. Changes of benefit terms4

d. Differences between expected and actual experience

e. Changes of assumptions or other inputs5

f. Benefit payments (employer)

g. Net Change in Total OPEB Liability

h. Total OPEB Liability – Beginning

i. Total OPEB Liability – Ending

2. Covered-Employee Payroll

3. Total OPEB Liability as a Percentage of

Covered-Employee Payroll

$ 149,149,136 115,359,693

473,100,718

(69,060,900) $ 668,548,647 3,769,546,073 $ 4,438,094,720

$ 1,833,340,585

242.08%

$ 127,111,791 137,392,673

(111,379,650) 309,033,766 (70,025,346) $ 392,133,234 3,377,412,839 $ 3,769,546,073

$ 1,770,956,637

212.85%

$ 173,615,238 163,592,751 (1,050,344,311)

(361,070,898) (71,053,711) $ (1,145,260,931) 4,522,673,770 $ 3,377,412,839

$ 1,619,640,239

208.53%

$ 248,902,172 159,722,409

(95,294,632) (1,128,792,181) (73,980,605) $ (889,442,837) 5,412,116,607 $ 4,522,673,770

$ 1,607,610,763

281.33%

$ 179,600,034 163,953,381

954,180,526 (63,928,074) $ 1,233,805,867 4,178,310,740 $ 5,412,116,607

$ 1,515,327,329

357.16%

See Notes to Schedule on following page.

RUDD AND WISDOM, INC. III-2 DECEMBER 2025

Notes to Schedule:

1 This schedule is presented using the optional format of combining the required schedules in Paragraph Nos. 170.a. and 170.b. of GASB

No. 75. Until a full 10-year trend is compiled, governments should present information for those years for which information is available.

2 Information is presented using measurement date which precedes the fiscal year end by twelve months.

3 No assets are accumulated in a trust that meets the criteria in Paragraph No. 4 of GASB No. 75 to pay related benefits.

4 Changes in benefit terms: Adopted in January 2018 and effective January 1, 2019, prescription drug coverage for all Medicare-primary participants is provided through a self-funded Employer Group Waiver Plan with Commercial Wrap (EGWP plus Wrap).

5 Changes in assumptions or other inputs: Changes of assumptions and other inputs reflect the changes in the discount rate each period.

The following are the discount rates used in each period:

FY2025 3.87% FY2020 2.97%

FY2024 3.81% FY2019 3.96%

FY2023 3.64% FY2018 3.51%

FY2022 2.14% FY2017 2.84%

FY2021 2.20%

In FY2024, amounts reflect updated assumed rates of retirement, disability, termination and mortality, assumed salary increases, assumed expenses, assumed per capita health benefit costs and assumed trend for health benefit costs and retiree contributions.

In FY2022, amounts reflect updated assumed rates of participation by eligible terminated employees as a result of A&M System being their last State employer, adjustments to assumptions for expenses, assumed per capita health benefit costs and assumed trend for health benefit costs and retiree contributions.

In FY2020, amounts reflect updated assumed rates of retirement, disability, termination and mortality, assumed inflation and salary increases, assumed expenses, assumed per capita health benefit costs and assumed trend for health benefit costs, retiree contributions and expenses.

In FY2019, the Assumed Per Capita Health Benefit Costs were updated to reflect the changes in benefit terms due to the implementation of EGWP plus Wrap.

In FY2018, amounts reflect a 1-percentage-point decrease in the assumed rate of general inflation and adjustments to assumptions for expenses, assumed per capita health benefit costs and assumed trend for health benefit costs, retiree contributions and expenses.

RUDD AND WISDOM, INC. IV-1 DECEMBER 2025

Section IV – Additional Information

A. Detailed Calculation of Interest on Total Liability Component of OPEB Expense

For Fiscal Year Ending 08/31/2025

1. Total OPEB Liability on prior Measurement Date (September 1, 2023) $ 2,862,383,927

2. Service Cost $ 119,085,916

3. Benefit Payments $ (85,249,751)

4. Discount Rate as of prior Measurement Date (September 1, 2023) 3.81%

5. Interest on Total OPEB Liability [(1.) + (2.) + 50% x (3.)] x (4.) $ 111,969,993

B. Change in Deferred Outflows of Resources and Deferred Inflows of

Resources

For Fiscal Year Ending 08/31/2025

Change in Deferred

Outflows of Resources

Change in Deferred Inflows of Resources

Differences between expected and actual experience Changes of assumptions or other inputs Total excluding post-measurement date transactions Prior year post-measurement date transactions Current year post-measurement date transactions Total including post-measurement date transactions

$ 0 (215,356,051) $ (215,356,051) (85,736,106) 1,2

75,186,791 1,3

$ (225,905,366)

$ (81,624,949) (345,387,866) $ (427,012,815) N/A

$ (427,012,815)

1 Amounts paid by the employer for OPEB as the benefits come due (excluding amounts associated with the employer from non-employer contributing entities that are not in a special funding situation) and amounts incurred by the employer for OPEB administrative expenses after the measurement date and before the fiscal year-end need to be recognized as deferred outflows in accordance with Paragraph No. 159 of GASB No. 75.

2 Benefit payments and administrative expenses between the September 1, 2023 measurement date and August 31, 2024 were $85,249,751 and $486,355, respectively.

3 Benefit payments and administrative expenses between the September 1, 2024 measurement date and August 31, 2025 were $74,668,182 and $518,609, respectively.

RUDD AND WISDOM, INC. IV-2 DECEMBER 2025

C. Change in Balance Sheet Items

For Fiscal Year Ending

08/31/2025 Change in Total OPEB Liability $ 110,748,861 Change in deferred outflows1 215,356,051 Change in deferred inflows (427,012,815) Employer Contributions 85,736,106 Total OPEB expense $ (15,171,797)

1 Does not reflect post-measurement date transactions (i.e., benefits paid and administrative expenses incurred after the measurement date and before the fiscal year-end). See Sections II.D.2. and IV.B. for additional details.

RUDD AND WISDOM, INC. V-1 DECEMBER 2025

Section V – Actuarial Methods and Assumptions

A. Actuarial Cost Method

The Entry Age (or Entry Age Normal as generally used in the Actuarial Standards of Practice) Actuarial Cost Method is used in determining the liabilities for the plan. The actuarial cost method is the procedure by which the actuary attributes the Actuarial Present Value of Projected Benefit Payments to periods.

The Normal Cost for the plan is the sum of individually determined Normal Costs for each active member. Each active member's Normal Cost is the current annual contribution in a series of annual contributions which, if made throughout the member's total period of employment, would fund his expected benefits from the plan. Each member's Normal Cost is calculated to be a constant percentage of his expected compensation in each year of employment.

The plan's Total OPEB Liability is the excess of the actuarial present value of projected benefit payments over the present value of all future remaining Normal Cost contributions for all active members. The Total OPEB Liability is recalculated each time a valuation is performed. Actuarial Gains and Losses, which represent deviations of the Total OPEB Liability from its expected value based on the prior valuation, are determined at each valuation and are amortized as part of the OPEB expense.

The plan benefit obligations as of September 1, 2024 have been determined based on an actuarial roll-forward of the benefit obligations calculated as of September 1, 2023.

B. Actuarial Assumptions

The actuarial valuation of the Program requires the use of numerous actuarial assumptions many of which are similar to the assumptions used in performing the actuarial valuations of the retirement plan in which the Program members participate. Most of the employees and retirees covered by the Program participate in the TRS retirement plan. For consistency with that valuation, we have utilized the applicable assumptions previously adopted by the TRS Trustees for purposes of our valuation of Program OPEB, provided such assumptions are adopted on or before the OPEB valuation date. In other words, except as indicated below, we have used TRS retirement plan assumptions for the valuation of OPEB. It should be noted that we have applied the TRS assumptions to all higher education members including those who have opted to participate in the optional retirement plan (ORP) instead of TRS.

Although it may be preferable to eventually develop a body of data that would enable ORP specific assumptions to be used, such data does not presently exist. In the absence of such data, it is our opinion that the TRS demographic and pay-related assumptions can be reasonably applied to ORP participants.

In addition to the assumptions used in the retirement plan valuation, the OPEB valuation also requires numerous unique assumptions developed as follows.

The following assumptions are based on actual Program experience:

• Percentages of future retired members electing coverage for a spouse and/or dependent children.

• Percentages of future retirees and future retiree spouses assumed to use tobacco.

• Program administrative expenses.

RUDD AND WISDOM, INC. V-2 DECEMBER 2025

• Per Capita Health Benefit Cost (Medical) for Fiscal Year 2024 for Covered Retirees, Spouses and Dependent Children.

• Per Capita Health Benefit Cost (Prescription Drugs) for Fiscal Year 2024 for Covered

Retirees, Spouses and Dependent Children.

Fully insured Medicare Advantage Plan premium rate for medical coverage for all eligible Medicare-primary retirees beginning January 1, 2024.

Health Benefit Cost Trend, Trend Rate for Retiree Contributions and Expense Trend Rate are based on current experience and reasonable expectations concerning future experience.

Assumed Commencement Age if Eligible for OPEB following Termination is based upon reasonable expectations concerning future experience.

The following assumptions are based on actuarial judgment:

• Period of coverage for dependent children of current and future retirees.

• Percentages of current and future retiree spouses and dependent children expected to continue coverage after the death of the retiree.

• Percentages of future retirees assumed to elect coverage at retirement and remain covered until death.

• Rates of participation by eligible terminated employees as a result of A&M System being their last State employer.

The assumptions used in this report are summarized below.

1. Demographic Assumptions

The tables of decrements below contain rates (not probabilities) of decrement. Decrements are assumed to occur mid-year.

a. Mortality: The members of the Program are expected to exhibit mortality in accordance with the following mortality tables:

i. Service Retirees, Survivors and other Inactive Members:

Tables based on TRS experience with Ultimate MP-2021 Projection Scale projected from the year 2021. Illustrative base rates before applying the projection scale are shown in the table below.

Annual Rates of Inactive Member

Mortality per 100 Members Age Male Female

50 0.1782 0.1096 60 0.6049 0.4261 70 1.3223 0.8454 80 4.4291 3.0552 90 15.6994 11.5687 100 38.0070 31.7033

RUDD AND WISDOM, INC. V-3 DECEMBER 2025

ii. Disability Retirees:

The same mortality as described in B.1.a.i. above but using a 3-year set forward and minimum mortality rates of four per 100 male members and two per 100 female members.

iii. Active Members:

Sex Distinct Pub-2010 Amount-Weighted Below-Median Income Teacher Mortality with a 2-year set forward for males with Ultimate MP-2021 Projection Scale projected from the year 2010.

b. Retirement: A member is assumed to retire in accordance with the following annual rates:

Early Retirement Normal Retirement

Annual Service Retirement

Rates Per 100 Members Annual Service Retirement

Rates Per 100 Members Age Male Female Age Male Female 45 0.6 0.6 50 11 10.6 46 0.6 0.6 51 11 10.6 47 0.6 0.6 52 11 11.4 48 0.6 0.6 53 11 12.2 49 0.6 0.6 54 11 13 50 0.6 0.6 55 11 13.8 51 0.6 0.6 56 12 14.6 52 0.6 0.6 57 13 15.4 53 0.6 0.6 58 14 16.2 54 0.6 0.6 59 15 17 55 0.6 0.6 60 15 17.8 56 0.6 0.6 61 16 18.6 57 0.6 0.6 62 17 19.4 58 0.6 0.6 63 18 20.2 59 0.6 0.6 64 19 21 60 1 1 65 23 25 61 2 2 66 23 25 62 3 3 67 23 25 63 4 4 68 23 25 64 5 5 69 23 25 65 5 5 70 25 25

71 25 25 72 25 25

73 25 25 74 25 25 75 100 100

For members hired after August 31, 2007 and who are vested as of August 31, 2014, the retirement rates for members once they reach unreduced retirement eligibility at age 60 are increased 10% for each year the member is beyond the Rule of 80 (i.e., if the member reached the Rule of 80 at age 58, then the probability of retirement at age 60 is 120% of the rate shown above).

RUDD AND WISDOM, INC. V-4 DECEMBER 2025

For members hired after August 31, 2007 and who are not vested as of August 31, 2014, or, for members hired after August 31, 2014, the retirement rates for members once they reach unreduced retirement eligibility at age 62 are increased 10% for each year the member is beyond the Rule of 80 (i.e., if the member reached the Rule of 80 at age 58, then the probability of retirement at age 62 is 140% of the rate shown above).

c. Disability Retirement: Active members are expected to become disabled as defined under the plan in accordance with annual rates as illustrated below.

Annual Disability Retirement Rates Per 100 Members

Years of Service < 10 Years of Service >= 10 Age Male Female Male Female 20 0.000596 0.000596 0.014900 0.014900 30 0.000996 0.000996 0.024900 0.024900 40 0.001328 0.001328 0.033200 0.033200 50 0.006768 0.006768 0.169200 0.169200 55 0.013428 0.013428 0.335700 0.335700 60 0.023780 0.023780 0.594500 0.594500 65 0.038624 0.038624 0.965600 0.965600 70 0.058764 0.058764 1.469100 1.469100

Disability rates for members who reach the Rule of 80 but are not eligible for unreduced retirement rates are increased by an additional 1% (i.e., 0.01 is added to the otherwise applicable rate).

d. Termination: The active members are assumed to terminate their employment for causes other than death, disability or retirement in accordance with annual rates as illustrated below.

i. Select Period:

Rate of Decrement Due to Termination Per 100 Members Based on First 10 Years of Service

Years of Service Male Female

1 14.3011 14.3011 2 12.1016 12.1016 3 10.1138 10.1138 4 8.0224 8.0224 5 7.2583 7.2583 6 6.4553 6.4553 7 5.6077 5.6077 8 4.9875 4.9875 9 4.4869 4.4869 10 4.1029 4.1029

RUDD AND WISDOM, INC. V-5 DECEMBER 2025

ii. Ultimate Rates after the first 10 Years of Service:

Rate of Decrement Due to Termination Per 100 Members Based on Years from Normal Retirement

Years from Normal

Retirement Male Female

Years from Normal

Retirement Male Female 1 1.6910 1.6910 17 2.6005 2.6005 2 1.8788 1.8788 18 2.6231 2.6231 3 1.9981 1.9981 19 2.6448 2.6448 4 2.0874 2.0874 20 2.6654 2.6654 5 2.1593 2.1593 21 2.6853 2.6853 6 2.2200 2.2200 22 2.7043 2.7043 7 2.2726 2.2726 23 2.7226 2.7226 8 2.3191 2.3191 24 2.7403 2.7403 9 2.3610 2.3610 25 2.7573 2.7573

10 2.3991 2.3991 26 2.7738 2.7738 11 2.4341 2.4341 27 2.7898 2.7898 12 2.4664 2.4664 28 2.8052 2.8052 13 2.4966 2.4966 29 2.8202 2.8202 14 2.5249 2.5249 30 2.8348 2.8348 15 2.5515 2.5515 31 2.8489 2.8489 16 2.5766 2.5766 32 2.8627 2.8627

e. Withdrawal of Contributions: Members eligible to receive a deferred annuity are assumed to withdraw their contributions in accordance with the rates illustrated below.

Annual Rates of Withdrawal of Employee Contributions per 100 New Vested Terminations Male and Female

Years of Service Age 5-10 10-15 15-20 20+ 20-24 100 100 25-34 80 80 60 35-44 50 40 30 25 45-54 28 28 25 18 55+ 0 0 0 0

RUDD AND WISDOM, INC. V-6 DECEMBER 2025

f. Last State Employer Assumption: Members who terminate employment are assumed to participate in the Program (i.e., as a result of A&M System being their last State employer), provided all other eligibility requirements are satisfied, according to the following schedule:

Age at

Termination Participation

Rate <20 15%

20-24 15% 25-34 15% 35-44 30% 45-54 60% ≥55 100%

g. Salary Increases: Increases are assumed to occur at the beginning of the valuation year.

The components of the annual increases are:

Years of Service

Merit, Promotion, Longevity General1 Total

1 6.00% 2.95% 8.95% 2 2.50 2.95 5.45 3 1.90 2.95 4.75 4 1.50 2.95 4.45 5 1.40 2.95 4.25 6 1.20 2.95 4.15 7 1.10 2.95 4.05 8 1.00 2.95 3.95 9 1.00 2.95 3.90

10 1.00 2.95 3.85 11 0.90 2.95 3.80 12 0.90 2.95 3.75 13 0.80 2.95 3.70 14 0.70 2.95 3.60 15 0.60 2.95 3.55 16 0.50 2.95 3.50 17 0.50 2.95 3.40 18 0.40 2.95 3.35 19 0.30 2.95 3.30 20 0.30 2.95 3.25 21 0.20 2.95 3.20 22 0.20 2.95 3.15 23 0.10 2.95 3.10 24 0.10 2.95 3.05

25 or more 0.00 2.95 2.95

1 Comprised of general price inflation assumption of 2.30% and general productivity increases of 0.65%.

RUDD AND WISDOM, INC. V-7 DECEMBER 2025

h. Payroll Growth: For purposes of total member projected payroll, payroll is assumed to increase 3.00% per year.

i. Dependency Status: Marital status and spouse/dependent children coverage elections in accordance with Program records were used for current retired members.

For future retired members and their spouses:

i. Females are assumed to be three years younger than males.

ii. 50% of the male members are assumed to be married and electing coverage for their spouse, and 20% of the female members are assumed to be married and electing coverage for their spouse.

iii. The proportion of future retirees covering dependent children is based upon the retiree’s age at retirement as follows:

Age at Retirement Percentage of Retirees

Covering Dependent Children <50 25%

50-54 25% 55-59 15% 60-64 8% 65-69 3% >70 1%

iv. Current retirees covering dependent children are assumed to continue such coverage until the child reaches age 23. Future retirees who cover dependent children are expected to cover dependent children for a period of eight years on average.

v. 40% of current and future retiree spouses are assumed to continue health coverage for their lifetime after the death of the retiree. No dependent children are assumed to continue health coverage after the death of the retiree.

j. Declinations:

85% of future Service Retirees are assumed to elect health coverage at retirement and remain covered until death. The remaining 15% of future Service Retirees are expected to demonstrate outside health coverage and receive an Employer contribution towards certain other optional benefits (i.e., Opt-Out Credit).

100% of future retirees who leave employment due to Disability are assumed to elect health coverage at retirement and remain covered until death. (However, employees hired before September 1, 2003, who become disabled with less than 10 years of service are eligible for health coverage for a period not longer than their employment service prior to becoming disabled.)

Future retirees who leave employment due to Termination (without account balance withdrawal) are assumed to elect health coverage at retirement and remain covered until death subject to the Withdrawal of Contributions assumption in item B.1.e. and the Last State Employer assumption in item B.1.f.

RUDD AND WISDOM, INC. V-8 DECEMBER 2025

Future retirees from the current population of eligible vested terminated members who have been reported as not having withdrawn their account balance1 are assumed to elect health coverage at retirement and remain covered until death subject to the following:

i. If terminated one year or more before the valuation date, subject to the Last State

Employer assumption in item B.1.f. and

ii. If terminated less than one year before the valuation date, subject to the

Withdrawal of Contributions assumption in item B.1.e. and the Last State Employer assumption in item B.1.f.

1 Those whose account balance withdrawal status is unknown are subject to an additional factor of 50%.

k. Plan Enrollment Assumption:

i. Current Retirees, Covered Dependents and Surviving Spouses

a) If currently enrolled in A&M Care Plan, then assumed to enroll in 65 Plus Medicare Advantage Plan at first eligibility

b) If currently enrolled in A&M Care 65+ Plan, then assumed to enroll in 65 Plus Medicare Advantage Plan at first eligibility

ii. Future Retirees, Covered Spouses and Surviving Spouses

Assumed to enroll in A&M Care Plan until first eligibility for 65 Plus Medicare Advantage Plan at which point assumed to enroll in 65 Plus Medicare Advantage Plan

l. Tobacco Usage:

i. 7.0% of current retirees and 4.0% of current retiree spouses are assumed to use tobacco.

ii. 7.0% of future retirees and 4.0% of future retiree spouses are assumed to use tobacco.

RUDD AND WISDOM, INC. V-9 DECEMBER 2025

m. Assumed Commencement Age upon Termination: Current terminated members and active members who terminate employment are assumed to commence benefits according…