HomeMy WebLinkAboutAgenda Police Pension 041714 Agenda
City of Palm Beach Gardens Police Officers’
Pension Fund
MEETING OF APRIL 17, 2014
LOCATION: City Council Chambers’
10500 North Military Trail
Palm Beach Gardens, FL 33410
TIME: 3:30 PM
1. Call Meeting To Order
2. Roll Call:
• Jay Spencer, Chairman
• David Pierson, Secretary
• Brad Seidensticker, Trustee
• Greg Mull, Trustee
• Marc Glass, Trustee
3. Investment Manager Report – ICC Capital (Steve Stack)
4. Investment Consultant Report – Thistle Asset Consulting (John McCann)
5. Attorney Report – Law Offices of Perry & Jensen (Bonni Jensen)
6. Administrator Report – Resource Centers (Audrey Ross)
• Approval of the 9/30/2013 Audited Financial Statements
7. Approval of Minutes
• February 18, 2014 Regular Meeting
• March 26, 2014 Special Meeting
8. Disbursements
9. Benefit Approvals
10. Financial Statements
11. Other Business
• Reappointment of the 5th Trustee (Jay Spencer)
• GASB 67 Implementation Package from GRS
12. Public Comments
13. Adjourn
Next Meeting Date:
To be determined…
PLEASE NOTE:
Should any interested party seek to appeal any decision of this Board with respect to any matter considered at such meeting or hearing, s/he
will need a record of the proceedings and for such purpose may need to ensure that a verbatim record of the proceedings is made, which
record includes the testimony and evidence upon which the appeal is to be based.
In accordance with the Americans With Disabilities Act of 1990, persons needing a special accommodation to participate in this meeting
should contact the The Pension Resource Center, LLC no later than four days prior to the meeting.
PALM BEACH GARDENS POLICE
PENSION FUND
Benefit Approvals
Meeting of April 17, 2014
APPLICATION FOR DISTRIBUTION OF DROP ACCOUNT
(3/15/2014)
GEORGE BETSCHA DATE OF RETIREMENT 09/30/2012
DATE OF BIRTH 07/21/1951
TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH
TOTAL GROSS DISTRIBUTION $5,000.00
TAX WITHHOLDING (20%) $1,000.00
TOTAL NET DISTRIBUTION $4,000.00
CURRET DROP ACCOUNT BALANCE $120,826.07
_________________________
JULES BARONE DATE OF RETIREMENT 09/30/2012
DATE OF BIRTH 05/28/1943
TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH
(DUE TO AGE 70 ½ MRD)
TOTAL GROSS DISTRIBUTION $7,251.46
TAX WITHHOLDING (20%) $1,450.29
TOTAL NET DISTRIBUTION $5,801.17
CURRET DROP ACCOUNT BALANCE $222,229.02
_________________________
APPLICATION TO ENTER THE DROP
GEORGE SMITH DATE OF BIRTH 03/10/1961
DATE OF HIRE 05/01/1996
DROP ENTRY DATE 03/12/2013
AGE AT RETIREMENT 52 YRS & 0 MTHS
YEARS AT SERVICE 16 YRS & 10 MTHS
FORM OF BENEFIT 50% J&S OPTION
MONTHLY BENEFIT AMOUNT $5,295.58
SUPPLEMENTAL BENEFIT $ 200.00
_________________________
CECIL WAGNER DATE OF BIRTH 08/25/1965
DATE OF HIRE 04/28/1993
DROP ENTRY DATE 04/28/2013
AGE AT RETIREMENT 47 YRS & 8 MTHS
YEARS AT SERVICE 20 YRS & 0 MTHS
FORM OF BENEFIT 100% J&S OPTION
MONTHLY BENEFIT AMOUNT $5,256.37
SUPPLEMENTAL BENEFIT $ 250.00
_________________________
MICHAEL STELICHA DATE OF BIRTH 03/01/1965
DATE OF HIRE 06/16/1993
DROP ENTRY DATE 06/30/2013
AGE AT RETIREMENT 48 YRS & 4 MTHS
YEARS AT SERVICE 20 YRS & 0 MTHS
FORM OF BENEFIT LIFE ANNUITY OPTION
MONTHLY BENEFIT AMOUNT $6,088.40
SUPPLEMENTAL BENEFIT $ 250.00
_________________________
__________________________________, CHAIRMAN
APPROVED _________________________________, SECRETARY
_________________________________, DATE
Pension Resource Centers
Accounts Payable Check Register
FOR: PALM BEACH GARDENS POLICE
Meeting 4/17/2014
Check Number Date Payee and Description Amount
2567March 1, 2014City of Palm Beach Gardens $13,718.02
Retiree Insurance
2568March 5, 2014Pension Resource Center $2,616.11
Administrative Fee - March 2014
2569March 5, 2014Gabriel Roeder Smith & Co $1,545.00
Actuarial Services Rendered through 1-31-2014
2570March 5, 2014Cherry Bekaert & Holland $5,000.00
Progress Billing year ending 9/30/13
2571March 5, 2014Perry & Jensen LLC $733.20
Legal Services Rendered through 2-15-14
2572March 5, 2014Marc Glass $385.38
Reimbursement for Conference Expense - Jacksonville, Fla.
2573April 1, 2014City of Palm Beach Gardens $13,718.02
Retiree Insurance
2574April 3, 2014Pension Resource Center $2,575.00
Administrative Fee - April 2014
2575April 3, 2014Gabriel Roeder Smith & Company $2,474.00
Actuarial Services through 2-28-14
2576April 3, 2014Perry & Jensen LLC $601.05
Legal Services Rendered through 3-15-14
Total:$43,365.78
Chair___________________________
Secretary___________________________
Date_______________________________
CITY OF PALM BEACH GARDENS
POLICE OFFICERS' PENSION FUND
A PENSION TRUST FUND OF THE
CITY OF PALM BEACH GARDENS, FLORIDA
FINANCIAL STATEMENTS AND
ACCOMPANYING INFORMATION
For the Years Ended September 30, 2013 and 2012
And Report of Independent Auditor
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
TABLE OF CONTENTS
Page
REPORT OF INDEPENDENT AUDITOR ..................................................................... 1 – 2
MANAGEMENT’S DISCUSSION AND ANALYSIS ......................................................... 3 - 8
BASIC FINANCIAL STATEMENTS
Statements of Plan Net Position ............................................................................................... 9
Statements of Changes in Plan Net Position ............................................................................ 10
Notes to Financial Statements .................................................................................................. 11 - 17
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
Schedule of Funding Progress and Schedule of
Contributions from the Employer and Others ........................................................................... 18
Notes to Schedule of Funding Progress and
Schedule of Contributions from the Employer
and Others ............................................................................................................................. 19 - 20
OTHER SUPPLEMENTARY INFORMATION
Schedule of Administrative and Investment Expenses............................................................. 21
OTHER REPORTS
Report of Independent Auditor on Internal Control Over Financial Reporting
And on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards .......................................... 22 - 23
Report of Independent Auditor
Board of Trustees
City of Palm Beach Gardens Police Officers' Pension Fund
Palm Beach Gardens, Florida
Report on the Financial Statements
We have audited the accompanying financial statements of the City of Palm Beach Gardens Police Officers'
Pension Fund (the “Fund”) which comprise the statements of plan net position as of September 30, 2013 and
2012, and the related statement of changes in plan net position for the years then ended, and the related notes
to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
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 and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the Plan’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Plan’s internal control. Accordingly, we express
no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the plan net
position of the City of Palm Beach Gardens Police Officers’ Pension Fund as of September 30, 2013 and 2012
and the changes in plan net position for the years then ended in accordance with accounting principles generally
accepted in the United States of America.
2
Emphasis of Matter
As discussed in Note 1 to the financial statements, the financial statements referred to above present only the
Fund and do not purport to, and do not, present fairly the financial position of the City of Palm Beach Gardens,
Florida, as of September 30, 2013 and 2012, and the changes in its financial position and its cash flows, where
applicable, for the years then ended in conformity with accounting principles generally accepted in the United
States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis and other required supplementary information listed on the accompanying table of
contents be presented to supplement the basic financial statements. Such information, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be
an essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management’s responses to our inquiries, the basic financial statements, and
other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming an opinion on the basic financial statements as a whole.
The other supplementary information listed on the accompanying table of contents is presented for purposes of
additional analysis and is not a required part of the basic financial statements.
The other supplementary information is the responsibility of management and was derived from and relate
directly to the underlying accounting and other records used to prepare the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit of the basic financial statements
and certain additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the basic financial statements or to the basic financial
statements themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. In our opinion, the other supplementary information is fairly stated in
all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 8, 2014 on our
consideration of the Plan’s internal control over financial reporting and our tests of its compliance with certain
provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the results of
that testing and not to provide an opinion on internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards in
considering the Plan’s internal control over financial reporting and compliance.
Orlando, Florida
April 8, 2014
MANAGEMENT'S DISCUSSION AND ANALYSIS
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
3
As management of the City of Palm Beach Gardens Police Officers' Pension Fund (the “Fund”), we offer readers
of the Fund’s financial statements this narrative overview of the financial activities of the Fund for the years
ended September 30, 2013 and 2012. This narrative is intended to supplement the Fund’s financial statements,
and we encourage readers to consider the information presented here in conjunction with these statements,
which begin on page 9.
Overview of the financial statements
The following discussion and analysis are intended to serve as an introduction to the Fund’s financial
statements. The financial statements are:
Statements of Plan Net Position
Statements of Changes in Plan Net Position
Notes to the Financial Statements
This report also contains the following “Required Supplementary Information” to the financial statements:
Schedule of Funding Progress
Schedule of Contributions from the Employer and Others
Notes to the Schedule of Funding Progress and Schedule of Contributions from the Employer and
Others
The financial statements contained in the report are described below:
The Statements of Plan Net Position is a point-in-time snapshot of account balances at fiscal
year-end. It reports the assets available for future payments to retirees and any current
liabilities that are owed as of the statement date. The resulting Net Position value (Assets –
Liabilities = Net Position) represents the value of assets held in trust for pension benefits.
The Statements of Changes in Net Position displays the effect of pension fund transactions that
occurred during the fiscal year, where Additions – Deductions = Net Increase (Decrease) in Net
Position. This Net Increase (Decrease) in Net Position reflects the change in the net asset
value of the Statement of Plan Net Position from the prior year to the current year. Both
statements are in compliance with Governmental Accounting Standards Board (GASB)
Pronouncements.
The Notes to the Financial Statements are an integral part of the financial statements and
provide additional information that is essential to the comprehensive understanding of the data
provided in the financial statements. These notes describe the accounting and administrative
policies under which the Fund operates and provide additional levels of detail for select financial
statement items (See Notes to Financial Statements on pages 11 to 17 of this report.)
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
4
Because of the long-term nature of a defined benefit pension plan, financial statements alone cannot provide
sufficient information to properly reflect the ongoing plan perspective. Therefore, in addition to the financial
statements explained above, this financial report includes two additional “Required Supplementary Information”
schedules with historical trend information.
The Schedule of Funding Progress (page 18) includes actuarial information about the status of
the plan from an ongoing, long-term perspective and the progress made in accumulating
sufficient assets to pay pension benefits when due. Valuation Assets in excess of Actuarial
Accrued Liabilities indicate that sufficient assets exist to fund future pension benefits of the
current members and benefits recipients.
The Schedule of Contributions from the Employer and Others (page 18) presents historical
trend information regarding the value of total annual contributions required to be paid by the City
and State and the actual performance of the City and State in meeting this requirement.
The Note to the Schedule of Funding Progress and Schedule of Contributions from the
Employer and Others provide background information and explanatory detail to aid in
understanding the required supplementary schedules.
Financial highlights
The net position of the Fund exceeded its liabilities at the close of the fiscal years ended
September 30, 2013 and 2012, with $64,575,453 and $55,261,152 in net position held in trust
for pension benefits, respectively.
Net position increased by $9,314,301 or 16.9 percent during 2013, primarily due to the current
year’s contributions and investment income.
Net position increased by $10,981,768 or 24.8 percent during 2012, primarily due to the current
year’s contributions and investment income.
The Fund’s funding objective is to meet long-term benefit obligations. As of October 1, 2012,
the date of the latest actuarial valuation, the funded ratio of the Fund was 69.1 percent. In
general, this means that for every dollar of pension benefits due, the Fund has $0.691 of net
position available for payment.
Additions to plan net position for the year ended September 30, 2013 were $11,533,951 which
includes member, employer and state contributions of $3,608,278 and net income from
investment activities totaling $7,925,673.
Additions to plan net position for the year ended September 30, 2012 were $13,000,710 which
includes member, employer and state contributions of $4,790,378 and net income from
investment activities totaling $8,210,332.
Deductions from plan net position increased from $2,018,942 during 2012 to $2,219,650 in
2013 or about 9.9 percent. Most of the increase relates to increased benefit payments made in
2013 compared to 2012.
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
5
Analysis of financial activities
The Fund’s funding objective is to meet long-term benefit obligations through investment income and
contributions. Accordingly, the collection of employer and member contributions, and the income from
investments provide the reserves needed to finance future retirement benefits.
Contributions from the City of Palm Beach Gardens are made at levels determined by the Fund’s actuary.
Because of projected benefit obligations, the City’s contribution requirement has increased. The Fund’s
investment portfolio produced lower returns in 2013 compared to 2012. Net position held in trust for pension
benefits increased by $9,314,301 in 2013, compared to an increase of $10,981,768 in 2012.
Net Position (Table 1)
As of September 30, 2013, 2012 and 2011
2013
2012
2011
Increase (Decrease)
2013 to 2012 2012 to 2011
$ % $ %
Current and other
assets
$ 1,141,290
$ 1,560,589
$ 1,524,390
$ (419,299)
(26.8)
$ 36,199 2.4
Investments, at fair
value
63,484,503
54,074,731
42,919,293
9,409,772
17.4
11,155,438 26.0
Total assets
64,625,793
55,635,320
44,443,683
8,990,473
16.2
11,191,637 25.2
Current liabilities
50,340
374,168
164,299
(323,828)
(86.5)
209,869 127.7
Net position
$64,575,453
$55,261,152
$44,279,384
$9,314,301
16.9
$10,981,768 24.8
As the years roll forward and total assets and liabilities grow, investment income will continue to play an
important roll in funding future retirement benefits. Therefore, investment return over the long term is critical to
the funding status of the retirement Fund.
During 2013, the Fund’s investment portfolio returned gains of approximately 14.5 percent. It is important to
remember that a retirement plan’s funding is based on a long time horizon, where temporary ups and downs in
the market are expected. The more critical factor is that the Fund be able to meet an expected earnings yield of
7.3 percent annual return on investments.
Based on our latest actuarial valuation as of October 1, 2012, the Fund’s actuarial value of liabilities exceeds its
actuarial value of assets by $22.3 million, producing a funded ratio of 69.1 percent. The funded ratio is a key
indication of financial strength of a retirement Fund and analyzing this percentage over time indicates whether
the Fund is becoming stronger or weaker. Investment and experience gains incurred in previous years have
caused an upward trend in the funded ratio.
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
6
Financial analysis – summary
As previously noted, net position viewed over time may serve as a useful indication of the Fund’s financial
position (See Table 1 above.) At the close of fiscal years 2013 and 2012, the assets of the Fund exceeded its
current liabilities by $64,575,453 and $55,261,152 respectively, shown as net position held in trust for pension
benefits. The net position is available to meet the Fund’s ongoing obligation to plan participants and their
beneficiaries.
Net position
The Fund’s net position is established from employer and member contributions, and the accumulation of
investment income, net of investment and administrative expenses and benefit payments.
Additions to plan net position
As noted above, net position needed to finance retirement benefits are accumulated through collecting employer
and member contributions and through investment earnings (net of investment expenses.) The additions totaled
$11,533,951 for the year ended September 30, 2013. This was $1,466,759 less than the prior year, primarily
due to decreased employer contributions. The additions totaled $13,000,710 for the year ended September 30,
2012.
Additions to Net Position (Table 2)
For the Years Ended September 30, 2013, 2012 and 2011
2013
2012
2011
Increase (Decrease)
2013 to 2012 2012 to 2011
$ % $ %
Employer contributions
$ 2,700,762
$ 3,785,539
$3,885,572
$(1,084,777)
(28.7)
$ (100,033) (2.6)
Member contributions
432,301
559,305
690,226
(127,004)
(22.0)
(130,921) (19.0)
State of Florida
contributions
475,215
445,534
435,787
29,681
6.7
9,747 2.2
Net investment income
(loss)
7,925,673
8,210,332
(155,456)
(284,659)
(3.5)
8,365,788 5,381.5
Total additions
$11,533,951
$13,000,710
$4,856,129
(1,466,759)
(11.3)
$8,144,581 167.7
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
7
Deductions from plan net position
The Fund was created to provide retirement, survivor and disability benefits to qualified members and their
beneficiaries. The cost of such programs includes recurring benefit payments, refunds of contributions to
employees who terminate employment, and the cost of administering the Fund.
Deductions from Net Position (Table 3)
For the Years Ended September 30, 2013, 2012 and 2011
2013
2012
2011
Increase (Decrease)
2013 to 2012 2012 to 2011
$ % $ %
Benefit payments
$ 2,068,119
$1,907,026
$1,823,405
$ 161,093
8.4
$ 83,621 4.6
Refunds of contributions
32,872
-
21,975
32,872
100.0 (21,975) (100.0)
Administrative expenses
118,659
111,916
135,217
6,743
6.0
(23,301) (17.2)
Total deductions
$ 2,219,650
$2,018,942
$1,980,597
$ 200,708
9.9
$ 38,345 1.9
Expenses for the year ended September 30, 2013 totaled $2,219,650, an increase of 9.9 percent from 2012.
The increase was primarily due to increased benefit payments in 2013. Expenses for the year ended
September 30, 2012 totaled $2,018,942, an increase of 1.9 percent from 2011. The increase was also primarily
due to increased benefit payments in 2012. Further analysis of benefit payments is provided in Table 4 below.
Benefit Payments (Table 4)
For the Year Ended September 30, 2013, 2012 and 2011
2013
2012
2011
Increase (Decrease)
2013 to 2012 2012 to 2011
$ % $ %
Normal retirement
payments
$ 1,701,897
$1,406,404
$1,295,957
$ 295,493
21.0
$110,447 8.5
Disability pension payments
272,822
272,822
272,822
-
-
- -
DROP account withdrawals
93,400
227,800
254,626
(134,400)
(59.0)
(26,826) (10.5)
Total benefit payments
$ 2,068,119
$1,907,026
$1,823,405
$ 161,093
8.4
$83,621 4.6
The deductions of plan net position of $2,219,650 and additions to plan net position of $11,533,951 resulted in
an overall increase of $9,314,301 in net position held in trust for pension benefits for the year ended September
30, 2013. The deductions of plan net position of $2,018,942 and additions to plan net position of $13,000,710
resulted in an overall increase of $10,981,768 in net position held in trust for pension benefits for the year ended
September 30, 2012.
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
8
Fiduciary responsibilities
The Board of Trustees is the fiduciary of the pension trust fund. Fiduciaries are charged with the responsibility of
assuring that the assets of the Fund are used exclusively for the benefit of plan participants and their
beneficiaries and defraying reasonable expenses of administering the Fund.
Requests for information
This financial report is designed to provide the Board of Trustees, our membership, taxpayers and investment
managers with an overview of the Fund’s finances and accountability for the money received. Questions
concerning any of the information provided in this report or requests for additional financial information should
be addressed to:
City of Palm Beach Gardens Police Officers' Pension Fund
c/o Pension Resource Center, L.L.C.,
4360 Northlake Boulevard, Suite 206
Palm Beach Gardens, FL 33410
BASIC FINANCIAL STATEMENTS
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
STATEMENTS OF PLAN NET POSITION
SEPTEMBER 30, 2013 AND 2012
20132012
ASSETS
Cash and cash equivalents849,326$ 1,285,425$
Receivables
Interest and dividends98,301 102,462
Pending trades20,869 -
Police officers30,655 34,753
Accounts Receivable - Other1,200 -
Total receivables151,025 137,215
Prepaid expenses140,939 137,949
Investments, at fair value
Money market funds1,896,360 3,499,191
U.S. Government obligations2,867,995 2,504,536
Mortgage/Asset backed securities1,348,340 2,179,774
Corporate obligations10,867,750 9,463,540
Municipal obligations289,896 315,180
Equity securities7,330,517 5,565,752
Pooled equity trust funds30,668,482 24,762,007
International equity mutual funds5,016,371 3,680,875
International bond mutual funds1,502,285 1,545,948
Commingled real estate funds1,696,507 557,928
Total investments63,484,503 54,074,731
Total assets 64,625,793 55,635,320
LIABILITIES
Accounts payable and accrued expenses50,340 52,085
Pending trades payable- 322,083
Total liabilities 50,340 374,168
Net position restricted for pension benefits 64,575,453$ 55,261,152$
See accompanying notes to financial statements 9
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
STATEMENTS OF CHANGES IN PLAN NET POSITION
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
20132012
Additions
Contributions
City of Palm Beach Gardens2,700,762$ 3,785,539$
State of Florida475,215 445,534
Police officers432,301 559,305
Total contributions3,608,278 4,790,378
Investment income
Net appreciation in fair value
of investments (realized and unrealized)7,347,888 7,589,148
Interest and dividends752,092 773,838
Other - 49
8,099,980 8,363,035
Less investment expenses174,307 152,703
Net investment income7,925,673 8,210,332
Total additions 11,533,951 13,000,710
Deductions
Participant benefit payments2,068,119 1,907,026
Refunds of participant contributions32,872 -
Administration expenses118,659 111,916
Total deductions 2,219,650 2,018,942
Net increase 9,314,301 10,981,768
Net position restricted for pension benefits
Beginning of year55,261,152 44,279,384
End of year64,575,453$ 55,261,152$
See accompanying notes to financial statements 10
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
11
Note 1 ‐ Summary of significant accounting policies
Reporting entity - The City of Palm Beach Gardens Police Officers' Pension Fund (the “Fund”) was established
to account for the financial activity of the City of Palm Beach Gardens Police Pension Fund. The Fund is
managed by a five member Board of Trustees comprised of two members appointed by the Council of the City
of Palm Beach Gardens, Florida (the “City”), two members elected by/from the plan membership and one
member elected by the other four members. The Fund is reported in the fiduciary funds (pension trust) in the
City's basic financial statements.
Basis of accounting - The Fund’s financial statements are prepared using the accrual basis of accounting.
Contributions from the Fund’s members are recognized as revenue in the period in which the contributions are
due. Contributions from the City of Palm Beach Gardens, as calculated by the Fund’s actuary, are recognized
as revenue when due and when the City has made a formal commitment to provide the contributions. Expenses
are recognized in the accounting period incurred, if measurable. Benefits and refunds are recognized when due
and payable in accordance with the terms of the plan.
Method used to value investments - Investments are reported at fair value. Money market mutual funds are
reported at cost which approximates fair value. Securities traded on national or international exchanges are
valued at the last reported sales price or exchange rates. Net asset values of the pooled trust funds and
commingled real estate funds are determined by the fund managers using fair market values of the underlying
investments of the fund. Net appreciation (depreciation) in fair value of investments includes the difference
between cost and fair value of investments held as well as the net realized gains and losses for securities which
are sold. Interest and dividend income are recognized on the accrual basis when earned. Purchases and sales
of investments are recorded on a trade date basis.
Use of estimates - The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires the plan administrator to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those
estimates.
Reclassifications - Certain amounts in the prior year financial statements have been reclassified to conform to
the current year’s presentation. The reclassifications were to provide more detailed information about
investment classification and did not involve a prior period adjustment or change in accounting principal.
New Accounting Principles - During the year, the Plan adopted GASB Statement No. 63, Financial Reporting of
Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, which revised certain
presentation and terminology matters in the financial statements of defined benefit pension plans sponsored by
governmental entities. As this guidance related principally to matters of presentation, the implementation of the
standard had no effect on previously reported plan net position.
Note 2 ‐ Plan description and contribution information
Plan description
The following brief description of the Fund is provided for general information purposes only. Participants
should refer to City ordinances for more complete information.
The City of Palm Beach Gardens, Florida adopted this single employer defined benefit pension plan. The Fund
is governed by Florida Statutes Chapter 185, as revised by ordinances passed by the Palm Beach Gardens City
Council. All full time police officers are covered under the plan.
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
12
Note 2 ‐ Plan description and contribution information (continued)
Plan description (continued)
The Plan provides retirement, death and disability benefits for its members. Benefit provisions are established
and may be amended by the City of Palm Beach Gardens, in conjunction with the Palm Beach County Police
Benevolent Association. A member hired before September 13, 2012 may retire with normal benefits after the
earlier of age 52 with 10 years of credited service, or 20 years of credited service regardless of age. A member
hired on or after September 13, 2012 may retire with normal benefits upon the attainment of age 59 and 10
years of credited service. Reduced early retirement benefits are available once a member reaches age 50 and
accumulates 10 years of credited service. For members retiring prior to September 13, 2012, normal retirement
benefits are 3.5% of the member's average monthly earnings times his or her credited service years, up to a
maximum of 100% of average monthly earnings, plus a monthly supplemental benefit of $12.50 per year of
service. For members hired prior to September 13, 2012 and retiring on or after September 13, 2012, but not
having attained the normal retirement date prior to September 13, 2012, normal retirement benefits are 3.5% of
the member's average monthly earnings times his or her credited service years earned prior to September 13,
2012 plus 2.75% of the member's average monthly earnings times his or her credited service years earned on
or after September 13, 2012, up to a maximum of 75% of average monthly earnings, plus a monthly
supplemental benefit of $12.50 per year of service. For members hired on or after September 13, 2012, normal
retirement benefits are 2.75% of the member's average monthly earnings times his or her credited service
years, up to a maximum of 75% of average monthly earnings, plus a monthly supplemental benefit of $12.50 per
year of service. Early retirement benefits are the same as normal retirement benefits, reduced by 3.0% for each
year by which early retirement precedes the normal retirement date. Average monthly earnings for purposes of
calculating benefits is the average of salary during the last five years of employment producing the highest
average.
Salary means the average monthly earnings reported to the Internal Revenue Service for income tax purposes,
plus deferred compensation. Beginning with salary after December 31, 2008, the definition of salary includes
amounts paid by the City as differential wages to members who are absent from employment while in qualified
military service. Notwithstanding the preceding two sentences, effective September 13, 2012, salary will
henceforth mean base pay, excluding all other compensation, provided that the salary of any member employed
on September 13, 2012 shall include payment for unused accrued sick and annual leave up to the dollar amount
of unused sick and annual leave that the member has accrued as of September 13, 2012. However, in no event
will the salary of any member who is employed on September 13, 2012 be less than the member's salary on
September 12, 2012 as determined in accordance with the definition of salary in effect on September 12, 2012.
Any member who attains 20 years of service or age 52 with 10 years of service may elect to participate in a
deferred retirement option plan (DROP) while continuing his or her active employment as a police officer. The
election to enter the DROP must be made prior to completing 25 years of credited service. Upon participation in
the DROP, the member becomes a retiree for all Plan purposes so that he or she ceases to accrue any further
benefits under the Plan. Normal retirement payments that would have been payable to the member as a result
are accumulated and invested in the DROP plan to be distributed to the member upon his or her termination of
employment. Participation in the DROP plan ceases for a member at the first to occur of: termination of
employment, 30 years of credited service or 5 years of participation.
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
13
Note 2 ‐ Plan description and contribution information (continued)
Plan description (continued)
Eligibility for disability benefits begins from the member's date of hire, if the disability is service connected, or
after 10 years of service if non-service connected. Service-incurred disability benefits are 60% of the member's
current compensation, and not less than the accrued pension benefit. Non-service incurred disability benefits
are calculated the same as a normal retirement pension based on average monthly earnings and credited
service at the time of disability, but not less than 25% of average monthly earnings or the accrued pension
benefit, whichever is greater.
Pre-retirement death benefits for service related deaths are paid to the member’s beneficiary for life. Benefits
are calculated at 50% of the member’s average monthly earnings, with a minimum equal to the accrued pension
benefit (with no early retirement reduction).
Pre-retirement death benefits for non-service related deaths are paid to the member’s beneficiary for life. For
members with less than 5 years of contributing service at the date of death, the benefit is the return of the
member’s contributions without interest. For members with 5 years or more of contributing service at the date of
death, the benefit is equal to that payable at early or normal retirement age. If the member is eligible for normal
retirement, the benefit is equal to his or her accrued pension benefit, and is payable for life.
Termination benefits for unvested members are the return of the member's contributions. For members who are
vested when they terminate, their vested accrued pension benefit is payable at the early or normal retirement
date. Full vesting occurs at the completion of 10 years of credited service.
Membership in the Fund consisted of the following at October 1, 2012, the date of the latest actuarial valuation:
Retirees, beneficiaries, and DROP participants receiving benefits 64
Terminated employees entitled to benefits but not yet receiving them 1
Active members 74
Total 139
Contributions
Contribution requirements are established and may be amended by the City of Palm Beach Gardens in
conjunction with the Palm Beach County Police Benevolent Association. Contribution requirements are based
on the benefit structure established by the City. Members are required to contribute 8.6% of their covered
salary. Pursuant to Chapter 185 of Florida Statutes, a premium tax on certain casualty insurance contracts
written on Palm Beach Gardens properties is collected by the state and remitted to the Fund for the state's
annual contribution amount. The City is required to contribute the remaining amounts necessary to finance the
benefits through periodic contributions at actuarially determined rates. Administrative costs are financed
through investment earnings.
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
14
Note 2 ‐ Plan description and contribution information (continued)
Contributions (continued)
A rehired member may buy back one or more years of continuous past service by paying into the Fund the
amount of contributions the employee would otherwise have paid for such service, plus the investment earnings
that would have been earned had such funds been invested by the Fund during that time.
In accordance with Florida Statutes, additional premium tax revenues received by the Fund are reserved to
provide future minimum or extra benefits and may not be used to reduce or offset the contribution requirements
of the employers. As of September 30, 2013, the cumulative balance of additional premium tax revenues
reserved to provide future benefit improvements totals $601,123.
Note 3 ‐ Deposits and investments
Deposits
Custodial credit risk – Florida Statutes require the Fund to maintain its deposits with financial institutions in a
qualified public depository, as determined by the Treasurer of the State of Florida. The Fund’s accounts
maintained in qualified public depositories are covered by federal depository insurance for an amount equal to
the aggregate of each participant's ascertainable, non-contingent interest in the Fund (up to $250,000 per
participant). Amounts in excess of federal depository insurance are secured by the Public Depository Trust
Fund (the “Trust Fund”) maintained by the Treasurer. The Trust Fund is a multiple financial institution pool with
the ability to assess its member financial institutions for collateral shortfalls if a member fails.
Investments
Authorized investments – Florida Statutes and the Fund’s investment policy limit investments to certificates of
deposit up to $100,000 maximum value; money market deposit accounts; obligations issued by the United
States Government or by an agency of the United States Government; bonds issued by the State of Israel;
corporate stocks and bonds; mutual funds; commingled stock, bond, and money market funds; real estate
investments and securities; and to be announced (TBA) securities that are issued by a Federal Agency or are of
investment grade. The following investments are permissible with approval from the Board of Trustees:
securities paying interest only (ID’s), securities representing principal only (PO’s), accrual bonds (z-tranches),
inverse or reverse floaters with a multiple greater than 1.00 or less than -1.00, asset pools not domiciled in the
Unites States, Collateralized Bond Obligations (CBO’s), Collateralized Debt Obligations (CDO’s), Collateralized
Loan Obligations (CLO’s), and companion bonds. Investments in companies identified as scrutinized
companies by the Florida State Board of Administration (SBA) are prohibited, with the exception of investments
in scrutinized companies that are held within commingled funds (if the commingled fund sponsor does not offer
a similar fund that does not hold investments in scrutinized companies). Investments in unhedged and/or
leveraged derivatives are prohibited.
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
15
Note 3 ‐ Deposits and investments (continued)
At September 30, 2013, the Fund had the following investments:
Investment type
Credit rating
(S&P) Fair value
Investment maturity (in years)
Less than
1 1-5 5-10
More than
10
Money market funds AAAm $ 1,896,360 $ 1,896,360 $ - $ - $ -
U.S. Government obligations AA+ 2,867,995 - 2,350,507 517,488 -
Mortgage/Asset backed
securities
AA+
1,348,340
-
78,942
82,077 1,187,321
Corporate obligations AAA…BBB+ 10,867,750 385,220 5,255,837 4,980,488 246,205
Municipal obligations AAA…AA- 289,896 - - - 289,896
Fixed income subtotal
$17,270,341 $2,281,580 $7,685,286 $5,580,053 $1,723,422
Equity securities
N/R
7,330,517
Pooled equity trust funds N/R 30,668,482
Int’l equity mutual funds N/R 5,016,371
Int’l bond mutual funds N/R 1,502,285
Commingled real estate funds N/R 1,696,507
Total investments
$63,484,503
Interest rate risk – This is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to
changes in market interest rates. Although the Fund’s investment policy does not provide limitations as to
maturities, the Fund minimizes risk of fair value losses in its fixed income portfolio due to rising interest rates by
structuring its investment portfolio so that securities mature to meet ongoing cash requirements, thereby
avoiding the need to sell securities on the open market prior to maturity; and by investing operating funds
primarily in shorter-term securities or by cash flow projections.
Credit risk – This is the risk that a security or a portfolio will lose some or all of its value due to a real or
perceived change in the ability of the issuer to repay its debt. This risk is generally measured by the assignment
of a rating by a nationally recognized statistical rating organization (NSRO), such as Moody’s or Standard &
Poor’s. The Fund's investment policy limits investments in fixed income securities, with the exception of
international bond mutual funds, to securities with a Moody’s rating of Aaa, Aa, or A or a Standard & Poor's
rating of AAA, AA, or A. Equity investments must be traded on one or more of the recognized national
exchanges and have a Value Line Investment Survey Rank for Safety rating of 1, 2, or 3 or a Standard & Poor's
rating of A+, A, or A-. Money market deposits must have a Moody’s rating of P1 or a Standard & Poor's rating of
A1.
Custodial credit risk – This is the risk that in the event of the failure of the counterparty, the Fund will not be able
to recover the value of its investments or collateral securities that are held by the counterparty. The Fund's
policy is to maintain its investments in custodial accounts that identify securities held as assets of the Fund by
registering securities in the name of the Fund, or in street name or nominee name as the Fund's agent.
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
16
Note 3 ‐ Deposits and investments (continued)
Concentration of credit risk – The Fund’s investment policy limits investments in the stock of any one issuing
company to 5% of the Fund’s assets, and to 5% of the outstanding capital stock of any issuing company.
Furthermore, investments in corporate common stock, international equities, convertible bonds, and convertible
preferred issues shall not exceed 65% of the Fund’s assets at cost.
Note 4 ‐ Designations
Portions of the plan net position are designated for benefits that accrue in relation to the DROP plan described
in Note 2. Plan net position at September 30, 2013 and 2012 consist of the following:
2013 2012
Designated for DROP benefits (fully funded) $ 8,313,546 $ 5,578,164
Undesignated plan net position 56,261,907 49,682,988
Total plan net position $ 64,575,453 $ 55,261,152
Note 5 ‐ Funding status and funding progress
The Plan provides retirement, death and disability benefits for its members. Benefit provisions are established
and may be amended by the City of Palm Beach Gardens, in conjunction with the Palm Beach County Police
Benevolent Association.
The funded status of the Fund as of October 1, 2012, the most recent actuarial valuation date, was as follows:
Actuarial
Value of
Assets
(a)
Actuarial
Accrued
Liability (AAL)
Entry-Age
(b)
Unfunded
AAL
(b) – (a)
Funded Ratio
(a)/(b)
Active Member
Covered
Payroll
(c)
Unfunded AAL
as a
Percentage of
Active Member
Covered
Payroll
((b-a)/c)
$49,859,298 $72,156,731 $22,297,433 69.1 % $4,910,023 454.1%
The schedule of funding progress, presented as required supplemental information (RSI) following the notes to
the financial statements, present multi-year trend information about whether the actuarial values of plan assets
are increasing or decreasing over time relative to the AALs for benefits.
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
17
Note 5 ‐ Funding status and funding progress (continued)
Additional information as of latest actuarial valuation follows:
Valuation date October 1, 2012
Actuarial cost method Entry Age Normal
Amortization method Level percent, closed
Remaining amortization period 24 years
Asset valuation method Recognizes 20% of
difference between market
value of assets and
expected actuarial
asset value
Actuarial assumptions:
Investment rate of return 7.3%
Projected salary increases 7.5%
Includes inflation and other general increases at 3.0%
Cost of living adjustments Not Applicable
Note 6 ‐ Income taxes
The Fund’s tax counsel believes that the Fund is designed and is currently being operated in compliance with
applicable requirements of the Internal Revenue Code and that, therefore, the Fund continues to qualify under
Section 401 (a) as a tax-exempt as of September 30, 2013. Therefore, no provision for income taxes is included
in the Fund’s financial statements.
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
SCHEDULE OF FUNDING PROGRESS
(Unaudited)
18
Actuarial
Accrued UAAL As
Actuarial Liability Unfunded Percentage
Actuarial Value (AAL) AAL Funded Covered of Covered
Valuation of Assets Entry Age (UAAL) Ratio Payroll Payroll
Date (a) (b) (b - a) (a/b) (c) ((b-a)/c)
10/1/07 $27,799,386 $52,230,511 $24,431,125 53.2% $8,915,563 274.0%
10/1/08 32,261,274 60,450,441 28,189,167 53.4 9,842,874 286.4
10/1/09 36,834,622 65,550,027 28,715,405 56.2 9,290,829 309.1
10/1/10 41,948,009 71,341,740 29,393,731 58.8 8,499,722 345.8
10/1/11 45,709,740 68,822,738 23,112,998 66.4 5,724,225 403.8
10/1/12 49,859,298 72,156,731 22,297,433 69.1 4,910,023 454.1
SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER AND OTHERS
(Unaudited)
Fiscal Annual
Year Ended Required Percentage
September 30 Contributions Contributed
2008 $3,556,548 100.0%
2009 3,762,323 100.0
2010 4,368,612 100.0
2011 4,298,216 100.0
2012 4,198,183 100.8
2013 3,113,406 102.0
Note: Annual required contributions reported above include contributions from both the City of Palm Beach
Gardens and the State of Florida.
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
NOTES TO THE SCHEDULE OF FUNDING PROGRESS
AND SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER
AND OTHERS
19
Note 1 ‐ Required Information
The information presented in the required supplementary schedules was determined as part of the actuarial
valuations at the dates indicated. Additional information as of the latest actuarial valuation follows:
Valuation date October 1, 2012
Actuarial cost method Entry Age Normal
Amortization method Level percent, closed
Remaining amortization period 22 years
Asset valuation method Recognizes 20% of
difference between market
value of assets and
expected actuarial
asset value
Actuarial assumptions:
Investment rate of return 7.3%
Projected salary increases 7.5%
Includes inflation and other general increases at 3.0%
Cost of living adjustments Not Applicable
Note 2 ‐ Significant factors affecting trends in actuarial information
2012 Changes in plan provisions and actuarial methods since prior valuations
Under Ordinance 24, 2012, adopted on September 13, 2012, the following changes were made:
o The benefit multiplier was lowered from 3.50% to 2.75% per year of service for service accrued
after September 13, 2012. This change did not apply to members who were eligible for normal
retirement as of September 13, 2012.
o The total maximum benefit that may be accrued under the Plan was reduced from 100% to 75%
of Average Final Compensation. However, any member who had accrued a greater percentage
as of September 13, 2012 retains that percentage but will not accrue an increased percentage.
This change did not apply to members who are eligible for normal retirement as of September
13, 2012.
o Compensation was changed from total W-2 earnings to base pay excluding all other pay.
However, compensation for pension purposes after September 13, 2012 will not be less than
the compensation on the day before September 13, 2012 under the previous definition.
o The amount of unused leave pay included in compensation is limited to the dollar amount
accrued on September 13, 2012.
o The normal retirement date was changed to age 59 with 10 years of service from the earlier of
age 52 with 10 years of service or 20 years of service regardless of age. This change did not
apply to members who had at least ten years of service as of September 13, 2012.
o The COLA provided by actuarial gains was eliminated. Since this plan provision is not pre-
funded, this change had no impact on the required contribution.
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
NOTES TO THE SCHEDULE OF FUNDING PROGRESS
AND SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER
AND OTHERS
20
Note 2 ‐ Significant factors affecting trends in actuarial information (continued)
2011 Changes in plan provisions and actuarial methods since prior valuations
The investment return assumption was lowered from 7.5% to 7.4% and will continue to be lowered by
0.1% each year until 6.5% is reached.
2010 Changes in plan provisions and actuarial methods since prior valuations
None
2009 Changes in plan provisions and actuarial methods since prior valuations
None
2008 Changes in plan provisions and actuarial methods since prior valuations
None
2007 Changes in plan provisions and actuarial methods since prior valuations
None
OTHER SUPPLEMENTARY INFORMATION
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
SCHEDULE OF ADMINISTRATIVE AND INVESTMENT EXPENSES
YEARS ENDED SEPTEMBER 30, 2013 AND 2012
20132012
Administrative Expenses
Accounting services14,850$ 14,500$
Actuarial services39,198 42,653
Legal services12,747 14,966
Administrative services31,010 27,976
Fiduciary liability insurance7,064 8,017
Annual membership fees600 600
Trustee expenses12,901 2,067
Postage 114 149
Bank charges 175 988
Total administrative expenses 118,659$ 111,916$
Investment Expenses
Investment management fees138,122$ 114,521$
Custodial fees16,457 14,642
Performance monitoring fees19,728 23,540
Total investment expenses 174,307$ 152,703$
21
OTHER AUDITORS’ REPORT
22
Report of Independent Auditor on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of the Financial Statements
Performed in Accordance with Government Auditing Standards
Board of Trustees
City of Palm Beach Gardens Police Officers' Pension Fund
Palm Beach Gardens, Florida
We have audited, in accordance with the auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards issued by the
Comptroller General of the United States, the financial statements of City of Palm Beach Gardens Police
Officers’ Pension Fund (the “Fund”) as of and for the year ended September 30, 2013, and the related notes to
the financial statements, and have issued our report thereon, dated April 8, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Fund’s internal control over
financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances
for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an
opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the Fund’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial
statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section
and was not designed to identify all deficiencies in internal control over financial reporting that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit, we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may
exist that have not been identified.
23
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Fund’s financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and
grant agreements, noncompliance with which could have a direct and material effect on the determination of
financial statement amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and
the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not
suitable for any other purpose.
Orlando, Florida
April 8, 2014
TO:
FROM:
SUBJECT:
DATE:
CITY OF PALM BEACH GARDENS
MEMORANDUM
City of Palm Beach Gardens Police Officers' irement Trust Fund Board
Allan Owens, Finance Administrator
GASB 68 Information and Actuarial Impact Study Request
April17, 2014
The City of Palm Beach Gardens is currently preparing for implementation of
Government Accounting Standards Board r'GASB") Statement 68, which must be
implemented in the City's fiscal year beginning October 1, 2014. As you know, this new
standard will require substantial additional disclosure of certain pension fund data in
the City's financial statements. One of the most important disclosures deals with the
investment return assumption. In order to prepare the required footnote regarding the
discount rate, staff is respectfully requesting the target asset allocation weight and
expected rate of return for each asset class. This is similar to information that will be
required when the Board implements GASB Statement 67, which substantially changes
the presentation of pension plan financial statements, and must be implemented in the
fiscal year ending September 30, 2014.
An illustrative example and format of the information requested is as follows:
**ILLUSTRATIVE EXAMPLE**
City of Palm Beach Gardens-Sample Footnote Disclosure
Investment Return Assumption Using Building-block Method
Police Officers Pension Fund
Investment Expected
Allocation Return
Domestic Equity 51% 7.75%
Foreign equity 9% 7.75%
Domestic Bond 24% 2.76%
Foreign Bond 3% 2.76%
Real Estate 7% 7.00%
Cash 6% 1.95%
Total 1000/o 6.00%
'
With this information, we will be able to begin preparation of pro-forma financial
statements, footnotes, related schedules and other disclosures, for inclusion in the
City's financial statements beginning October 1, 2014.
In order for the City's consultants to move forward with their GASB 68 implementation
project on a timely basis, I am respectfully requesting this information as soon as
possible, but no later than May 16, 2014.
In addition to the GASB 68 study, the City is also moving forward with an ordinance that
will implement changes that were recently ratified by the membership of the Police
Benevolent Association ('1 PBA''} and the City Council. Under the new contract, the
current Plan as modified in 2012 would continue, along with the following revisions to
certain benefits in the third year of the contract, effective July 1, 2016:
• Changes the eligibility for Normal Retirement for all employees with less than 10
years of creditable service on September 13, 2012, from age 59 with 10 or more
years of creditable service, to age 55 with 10 or more years of creditable service,
or 25 years of service regardless of age
• Changes the eligibility for entry into the Deferred Retirement Option Plan (DROP}
so that an employee may delay DROP entry until he/she has accrued the
maximum benefit of 75% of his/her Final Average Earnings. Currently, the
option to enter DROP is forfeited if not exercised within the first 25 years of
service.
In addition, both parties agreed that the Excess Chapter 185 Contribution Reserve as of
October 1, 2012, will be applied to reduce the City's annual pension contribution
requirement for the 2013-14 and/or 2014-15 plan years. This would be contingent upon
the Florida Division of Retirement's approval ofthe City's implementing Ordinance.
An ordinance is being prepared to incorporate these changes, and will be ready for first
reading by the City Council on May 1, 2014. Under State rules, an actuarial impact
statement on the proposed changes must be prepared prior to the second reading of
any enabling legislation; in this case, second reading is scheduled for June 5, 2014.
Accordingly, I am respectfully requesting the Board authorize its actuary to prepare the
required actuarial impact statement as soon as possible, but no later than May 31, 2014,
in order to make the deadline for submission of the agenda item for the June 5, 2014
Council Meeting.
If you have any questions, please do not hesitate to contact me.
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