Our actuarial consultant, Gabriel, Roeder, Smith & Company, concluded that the 2007 valuation was made in accordance with relevant state laws and rules and actuarial standards. It further concluded that the assumptions and methods used in the 2007 valuation were generally reasonable. However, our consultant also made several noteworthy observations and recommendations.

• Our consultant noted that the 2007 valuation disclosed the actuarial present value of future benefits and the actuarial present values of future pay. However, these values do not take into account an assumption for the probability that system members will participate in the Deferred Retirement Option Program (DROP). As a result, our consultant recommended that future valuations include such disclosures that fully reflect the effect of expected DROP participation.
• Additionally, our consultant continues to recommend that the valuation be improved by providing prior-year results in a side-by-side comparison with current-year results as appropriate. This information would provide a ready comparison of changes in values and percentage changes in the Florida Retirement System's membership, assets, and benefits.

Our consultant also continues to note that the amortization of the system's surplus determined using the system's rate stabilization method may not produce an equivalent result to amortizing the surplus over a 30-year period as set forth in Governmental Accounting Standards Board standards. For example, our consulting actuary pointed out that for the 2007 actuarial valuation, the amortization of the surplus using the rate stabilization method was $174 million, while an amortization of the surplus over a 30-year period was $357 million. However, our consultant also commented that this difference may not be considered a material amount in light of the size of the Florida Retirement System. To address this concern, we recommend that in future valuations, the Department of Management Services' consulting actuary monitor the rate stabilization mechanism for consistency with Governmental Accounting Standards Board standards and report the results of its monitoring activities.