Loading...
HomeMy WebLinkAboutAgenda Police Pension 061914 (Special Meeting) Agenda City of Palm Beach Gardens Police Officers’ Pension Fund SPECIAL MEETING OF JUNE 19, 2014 LOCATION: City Council Chambers’ 10500 North Military Trail Palm Beach Gardens, FL 33410 TIME: 9 AM 1. Call Meeting To Order 2. Roll Call: • Jay Spencer, Chairman • David Pierson, Secretary • Brad Seidensticker, Trustee • Marc Glass, Trustee 3. Presentation of the 9/30/2013 Actuarial Valuation Report – Pete Strong (GRS) 4. Other Business • Update on Ordinance 9, 2014 & Impact Statement 5. Public Comments 6. 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. 1 ORDINANCE 9, 2014 2 , 3 4 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM 5 BEACH GARDENS, FLORIDA AMENDING CHAPTER 50. POLICE. 6 OF THE CODE OF ORDINANCES OF THE CITY OF PALM BEACH 7 GARDENS, FLORIDA AT ARTICLE III. POLICE OFFICERS' 8 RETIREMENT TRUST FUND. BY REPEALING SUBSECTION 50- 9 62(c) AND READOPTING SAME, AS REVISED; BY REPEALING 10 SECTION 50 -116. NORMAL RETIREMENT. AND READOPTING 11 SAME, AS REVISED; AND BY REPEALING SECTION 50 -151. 12 ELIGIBILITY TO PARTICIPATE. AND READOPTING SAME, AS 13 REVISED IN ORDER TO IMPLEMENT THE TERMS OF THE 14 COLLECTIVE BARGAINING AGREEMENT BETWEEN THE CITY 15 OF PALM BEACH GARDENS AND THE PALM BEACH COUNTY 16 POLICE BENEVOLENT ASSOCIATION; PROVIDING THAT EACH 17 AND EVERY OTHER SECTION AND SUB - SECTION OF CHAPTER 18 50. POLICE. SHALL REMAIN IN FULL FORCE AND EFFECT AS 19 PREVIOUSLY ADOPTED; PROVIDING A CONFLICTS CLAUSE, A 20 SEVERABILITY CLAUSE, AND AUTHORITY TO CODIFY; 21 PROVIDING AN EFFECTIVE DATE; AND FOR OTHER PURPOSES. 22 23 24 WHEREAS, the City of Palm Beach Gardens and the Palm Beach County Police 25 Benevolent Association recently entered into a collective bargaining agreement; and 26 27 WHEREAS, the collective bargaining agreement contains certain changes to the 28 Police Officers' Retirement Trust Fund; and 29 30 WHEREAS, to implement the collective bargaining agreement it is necessary to 31 amend the Police Officers' Retirement Trust Fund Ordinance; and 32 33 WHEREAS, the City Council deems approval of this Ordinance to be in the best 34 interests of the health, safety, and welfare of the residents and citizens of the City of 35 Palm Beach Gardens and the public at large. 36 37 38 NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF COUNCIL OF THE 39 CITY OF PALM BEACH GARDENS that: 40 41 SECTION 1. The foregoing recitals are hereby affirmed and ratified. 42 43 SECTION 2. Chapter 50. Police. of the Code of Ordinances of the City of Palm 44 Beach Gardens, Florida is hereby amended at Article 111. Police Officers' Retirement 45 Trust Fund. by repealing subsection 50 -62(c) and readopting same, as revised; 46 providing that Section 50 -62. shall hereafter read as follows: Page 1 of 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Ordinance 9, 2014 Sec. 50 -62. Establishment and maintenance of retirement system. (a) — (b) (These subsections shall remain in full force and effect as previously adopted.) (c) The fund shall be maintained in the following manner: (1) By payment to the fund of the new proceeds of the 0.85 percent excise tax which may be imposed by the city upon certain casualty insurance companies on their gross receipts of premiums from holders of policies, which policies cover property within the corporate limits of the city as authorized in Chapter 185, Florida Statutes, as amended. (2) By payment to the fund of eight and sixty one hundredths percent (8.60 %) of the salary of each full-time police officer duly appointed and enrolled as a member of the city police department; which eight and sixty one hundredths percent (8.60 %) shall be deducted by the city from the compensation due to the police officer and paid over to the board of trustees of the pension fund immediately. Notwithstanding the preceding sentence, effective June 5, 2014, the police officer contribution shall be increased by eleven percent (11 %) of salary (equal to a total increase of $538,552 for all contributing police officers). Also effective on June 5, 2014, and immediately following the increase in the police officer contribution provided in the preceding sentence, the police officer contribution shall be reduced back to eight and sixty one hundredths percent (8.60 %) of salary, using $538,552 from the Accumulated Excess Chapter 185 Premium Tax Reserve to fund the reduction in police officer contributions. In implementing the foregoing, no police officer shall be required to contribute more than eight and sixty one hundredths percent (8.60 %) of salary to the Plan, and the City's annual pension contribution requirement for the 2013 -14 plan year shall be reduced by an amount equal to $538,552. (3) By all fines and forfeitures imposed and collected from any police officer because of the violation of any rule and regulation promulgated by the board of trustees. (4) By mandatory payment annually by the city and other sources of a sum equal to the normal costs and amount required to fund over a 30 -year basis any actuarial deficiency shown by a triennial actuarial valuation. The first such actuarial valuation shall be conducted for the year ending September 30, 1986. (5) By all gifts, bequests, and devises when donated to the fund. Page 2 of 6 Ordinance 9, 2014 1. (6) By all accretions to the fund by way of interest or dividends on bank 2 deposits, or otherwise. 3 4 (7) By all other sources or income now or hereafter authorized by law for the 5 augmentation of the pension fund. 6 7 (d) (This subsection shall remain in full force and effect as previously adopted.) 8 9 SECTION 3. Chapter 50. Police. of the Code of Ordinances of the City of Palm 10 Beach Gardens, Florida is hereby amended at Article III. Police Officers' Retirement 11 Trust Fund by repealing Section 50 -116. Normal Retirement. and readopting same, as 12 revised; providing that Section 50 -116. shall hereafter read as follows: 13 14 Sec. 50 -116. Normal retirement. 15 16 (a) Date. A member's normal retirement date shall be upon the attainment of age fifty - 17 two (52), provided the officer has at least ten (10) years of service, or upon completion 18 of twenty (20) years of service, regardless of age. Notwithstanding the preceding 19 sentence, for police officers with less than ten (10) years of creditable service on 20 September 13, 2012, and police officers hired on or after that date, the normal 21 retirement date shall be upon the attainment of age fifty -nine (59) and at least ten (10) 22 years of creditable service, and effective July 1, 2016, the normal retirement date for 23 police officers with less than ten (10) years of creditable service on September 13, 24 2012 and police officers hired on or after that date, shall be age fifty -five (55) with at 25 least ten (10) years of creditable service, or twenty- five'(25) years of creditable service 26 regardless of age. 27 28 (b) Benefit. The monthly amount of normal retirement benefit payable to a police 29 officer who retires on the normal retirement date shall be an amount equal to 3.5 30 percent multiplied by the number of years of credited service, up to a maximum of one 31 hundred (100) percent, multiplied by average monthly earnings. Notwithstanding the 32 preceding sentence, for police officers who are employed and have not attained the 33 normal retirement date prior to September 13, 2012, the monthly amount of normal 34 retirement benefit payable to a police officer who retires on or after the normal 35 retirement date shall be an amount equal to 3.5 percent multiplied by the number of 36 years of credited service prior to September 13, 2012 the — effeetive date of this 37 erd+eaRGe, plus 2.75 percent multiplied by the number of years of credited service on 38 and after September 13, 2012 the e#e^tiye Elmo of this GFdinan%, up to a maximum of 39 seventy -five (75) percent, multiplied by the police officer's average monthly earnings; 40 and for police officers hired on or after September 13, 2012 the- e#estive date --o of 41 efd+nanGe, the monthly amount of normal retirement benefit payable to a police officer 42 who retires on or after the normal retirement date shall be an amount equal to 2.75 43 percent multiplied by the number of years of credited service on and after September 44 13, 2012 the - effective date of this eFdin,nno, up to a maximum of seventy -five (75) 45 percent, multiplied by the police officer's average monthly earnings. In no event will the 46 benefit paid be less than two (2) percent per year of service. Page 3 of 6 Ordinance 9, 2014 1 (c) Payment. A retired police officer's retirement benefit normally shall be payable in 2 the form of a monthly life annuity with one hundred twenty (120) monthly payments 3 guaranteed. This form of annuity provides for a retirement benefit payable monthly to 4 the retired employee during their lifetimes with a guarantee that not less than one 5 hundred twenty (120) monthly retirement benefits shall be paid, even if the retired 6 employee dies prior to the receipt of one hundred twenty (120) payments. 7 8 SECTION 4. Chapter 50. Police. of the Code of Ordinances of the City of Palm 9 Beach Gardens, Florida is hereby amended at Article III. Police Officers' Retirement 10 Trust Fund by repealing Section 50 -151. Eligibility to Participate. and readopting same, 11 as revised; providing that Section 50 -151. shall hereafter read as follows: 12 13 Sec. 50 -151. Eligibility to participate. 14 15 (a) Any member who is eligible to receive a normal retirement pension may enter into 16 the (DROP) for no more than five (5) years. Members shall elect to participate by 17 applying to the board of trustees on a form provided for that purpose. 18 19 (b) Election to participate shall be forfeited if not exercised within the first twenty -five 20 (25) years of credited service. Notwithstanding the preceding sentence, effective July 1, 21 2016, a member who becomes eligible to participate in the DROP may delay the 22 election to participate in the DROP until such time as the member has accrued the 23 maximum benefit percentage of seventy -five (75) percent. For members who delay the. 24 election to participate in the DROP in accordance with the preceding sentence, the 25 election to participate in the DROP shall be forfeited if not exercised within thirty (30) 26 days following the date on which the member has accrued the maximum benefit 27 percentage of seventy -five (75) percent. 28 29 (c) A member shall not participate in the DROP beyond the time of attaining thirty (30) 30 years of service. Notwithstanding the preceding sentence, effective July 1, 2016, a 31 member who delays the election to participate in the DROP until such time as the 32 member has accrued the maximum benefit percentage of seventy -five (75) percent may 33 participate in the DROP for a maximum of five (5) years from the date of entry into the 34 DROP. 43 44 45 46 (d) Upon a member's election to participate in the DROP, he shall cease to be a member, and is precluded from accruing any additional benefit under the pension fund. For all fund purposes, the member becomes a retirant. The amount of credited service and final average monthly earnings freeze as of the date of entry into the DROP. SECTIONS. All ordinances or parts of ordinances in conflict be and the same are hereby repealed. Page 4 of 6 Ordinance 9, 2014 1 SECTION 6. Should any section or provision of this Ordinance or any portion 2 thereof, any paragraph, sentence, or word be declared by a Court of competent 3 jurisdiction to be invalid, such decision shall not affect the validity of the remainder of 4 this Ordinance. 5 6 SECTION 7. Specific authority is hereby given to codify this Ordinance. 7 8 SECTION 8. This Ordinance shall become effective immediately upon adoption. 9 10 11 (The remainder of this page intentionally left blank) 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Page 5 of 6 Ordinance 9, 2014 1 PASSED this day of , 2014, upon first reading. 2 3 PASSED AND ADOPTED this day of 2014, upon 4 second and final reading. 5 6 7 CITY OF PALM BEACH GARDENS FOR 8 9 10 BY: 11 Robert G. Premuroso, Mayor 12 13 14 Eric Jablin Vice Mayor, 15 16 17 Joseph R. Russo, Councilmember 18 19 20 Marcie Tinsley, Councilmember 21 22 23 David Levy, Councilmember 24 25 26 ATTEST: 27 28 29 BY: 30 Patricia Snider, CMC, City Clerk 31 32 33 APPROVED AS TO FORM AND 34 LEGAL SUFFICIENCY 35 36 37 BY: 38 R. Max Lohman, City Attorney 39 40 41 42 43 44 45 46 47 G:lattorney_ share \OR DINANCES120141Ordinance 9 2014 - PBG Police Pension.docx Page 6 of 6 AGAINST ABSENT CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, 2013 ANNUAL EMPLOYER CONTRIBUTION FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2015 TABLE OF CONTENTS Section Title Page A Discussion of Valuation Results 1. Discussion of Valuation Results 1 2. Chapter Revenue 4 B Valuation Results 1. Participant Data 5 2. Annual Required Contribution 6 3. Actuarial Value of Benefits and Assets 7 4. Calculation of Employer Normal Cost 8 5. Liquidation of Unfunded Actuarial Accrued Liability 9 6. Actuarial Gains and Losses 11 7. Recent History of Required and Actual Contributions 15 8. Actuarial Assumptions and Cost Method 16 9. Glossary of Terms 20 C Pension Fund Information 1. Statement of Plan Assets at Market Value 23 2. Reconciliation of Plan Assets 24 3. Reconciliation of DROP Accounts 25 4. Calculation of Actuarial Value of Assets 26 5. Investment Rate of Return 27 D Financial Accounting Information 1. FASB No. 35 28 2. GASB No. 25 29 3. GASB No. 27 31 4. GASB No. 67 33 E Miscellaneous Information 1. Reconciliation of Membership Data 44 2. Active Participant Distribution 45 3. Inactive Participant Distribution 46 F Summary of Plan Provisions 47 SECTION A DISCUSSION OF VALUATION RESULTS 1 DISCUSSION OF VALUATION RESULTS Comparison of Required Employer Contributions A comparison of the required employer contribution developed in this year's actuarial valuation and the previous valuation is as follows. Required Employer/State Contribution $3,194,990 $3,125,279 $69,711 As % of Covered Payroll 62.10 %60.62 %1.48 % Allowable Credit for State Contribution $412,644 *$412,644 *$0 As % of Covered Payroll 8.02 %8.00 %0.02 % Required Employer Contribution $2,782,346 $2,712,635 $69,711 As % of Covered Payroll 54.08 %52.62 %1.46 % For FYE 9/30/2015 For FYE 9/30/2014 Based on 10/1/2012 Based on 10/1/2013 Valuation Valuation (Decrease) Increase The required employer contribution has been adjusted for interest on the basis that contributions are made in equal payments at the end of each quarter. The contribution has also been computed under the assumption that the amount to be received from the State on behalf of police officers and credited towards the required contribution in 2014 and 2015 will be the same as the prior base amount of $412,644. If the actual amount differs from this amount, then the net City contribution should be adjusted by the difference. Actual employer and allowable State contributions during the year ending September 30, 2013 were $2,700,762 and $412,644, respectively, for a total of $3,113,406. The annual required contribution was $3,113,406. 2 Revisions in Benefits There have been no changes in benefits since the prior valuation. Revisions in Actuarial Assumptions or Methods The investment return assumption was lowered from 7.3% to 7.2%. This rate will continue to be lowered by 0.1% each year until 6.5% is reached. This change has increased the required employer contribution by 2.06% of covered payroll. There have been no other changes in assumptions or methods since the prior valuation. Actuarial Experience There was a net actuarial gain of $151,072 for the year, which means that actual experience was more favorable than expected. The gain is due to lower than expected salary increases (actual average salary increases were 4.8% versus assumed salary increases of 7.5%) and gains due to recognized investment return above the assumed rate of 7.3%. The gain was partially offset by more retirements (DROP entries) than expected. The investment return was 14.2% based on market value of assets and 8.4% based on actuarial value of assets. The net actuarial gain has decreased the required employer contribution by 0.34% of covered payroll. Funded Ratio This year’s funded ratio is 69.9% compared to 69.1% last year. The funded ratio was 70.7% before the change in the investment return assumption. The ratio is equal to the actuarial value of assets divided by the actuarial accrued (past service) liability. Analysis of Change in Employer Contribution The components of change in the employer contribution rate are as follows: Contribution rate last year 52.62 % Change in assumptions 2.06 Payment on unfunded liability 0.71 Experience (gain)/loss (0.34) Change in Normal Cost Rate (0.78) Change in administrative expense (0.17) Change in State revenue (0.02) Contribution rate this year 54.08 3 Variability of Future Contribution Rates The Actuarial Cost Method used to determine the contribution rate is intended to produce contribution rates which are generally level as a percent of payroll. Even so, when experience differs from the assumptions, as it often does, the employer’s contribution rate can vary significantly from year- to-year. Over time, if the year-to-year gains and losses offset each other, the contribution rate would be expected to return to the current level, but this does not always happen. The Market Value of Assets exceeds the Actuarial Value of Assets by $2,459,102 as of the valuation date (see Section C). This difference will be gradually recognized in the absence of offsetting losses. In turn, the computed employer contribution rate will decrease by approximately 5.4% of covered payroll. Another area of variability has to do with the annual payment on the unfunded accrued liability (UAL). This payment is computed as a level percent of covered payroll under the assumption that covered payroll will rise by 5% per year. According to Chapter 112, Florida Statutes, this payroll growth assumption may not exceed the average growth over the last ten years, which was (1.99%) during the ten- year period ending September 30, 2013 and (1.26%) during the ten-year period ending September 30, 2012. Therefore, the UAL is again being amortized as a level dollar amount this year. Relationship to Market Value If Market Value had been the basis for the valuation, the required net City contribution rate would have been 48.64% and the funded ratio would have been 73.15%. The market value-based funded ratio was 68.1% last year. In the absence of other gains and losses, and before recognition of the additional phase-in of the change in the investment return assumption, the City contribution rate should decrease to that level over the next few years. Conclusion The remainder of this Report includes detailed actuarial valuation results, financial information, miscellaneous information and statistics, and a summary of plan provisions. 4 CHAPTER REVENUE Additional premium tax revenue over that received in 1998 may be used toward the required contribution if it is less than the cost to fund Chapter minimum benefits. Once minimums are met and additional premium tax revenue exceeds the cost to fund Chapter minimum benefits, any subsequent additional Chapter revenue must be used to provide extra benefits. As of the valuation date, the only minimum benefit requirement not currently being met is the Normal Retirement eligibility for members with less than 10 years of services as of September 13, 2012. 1.Base Amount Previous Plan Year $412,644 2.Amount Received for Previous Plan Year 475,215 3.Benefit Improvements Made in Previous Plan Year 0 4.Excess Funds for Previous Plan Year: (2) - (1) - (3)62,571 5.Accumulated Excess at Beginning of Previous Year 538,552 6.Prior Excess Used in Previous Plan Year 0 7.Accumulated Excess as of Valuation Date (Available for Benefit Improvements): (4) + (5) - (6)601,123 8.Base Amount This Plan Year: (1) + (3)412,644 Actuarial Confirmation of the Use of State Chapter Money The Accumulated Excess shown in line 7 is being held in reserve to pay for additional benefits. The reserve is subtracted from Plan assets (see Section C of this Report). The Base Amount in line 8 is the former maximum amount the employer has historically taken as a credit against its required contribution; in no event may the employer take credit for more than the actual amount of Chapter revenue received. SECTION B VALUATION RESULTS 5 ACTIVE MEMBERS Number 75 74 Covered Annual Payroll $4,899,915 $4,910,023 Average Annual Payroll $65,332 $66,352 Average Age 39.1 40.2 Average Past Service 10.3 10.7 Average Age at Hire 28.8 29.5 RETIREES, BENEFICIARIES & DROP* Number 57 54 Annual Benefits $4,179,994 $3,934,797 Average Annual Benefit $73,333 $72,867 Average Age 55.2 54.8 DISABILITY RETIREES Number 10 10 Annual Benefits $272,822 $272,822 Average Annual Benefit $27,282 $27,282 Average Age 57.2 56.2 TERMINATED VESTED MEMBERS Number 2 1 Annual Benefits $124,164 $49,452 Average Annual Benefit $62,082 $49,452 Average Age 42.7 41.0 * Does not include deferred supplemental benefits for DROP members PARTICIPANT DATA October 1, 2013 October 1, 2012 6 A.Valuation Date October 1, 2013 October 1, 2013 B.ARC to Be Paid During Fiscal Year Ending 9/30/2015 9/30/2015 9/30/2014 C.Assumed Dates of Employer Contributions Quarterly Quarterly Quarterly D.Annual Payment to Amortize Unfunded Actuarial Liability $1,991,364 $1,918,464 $1,905,316 E.Employer Normal Cost 923,576 898,365 944,743 F.ARC if Paid on the Valuation Date: D+E 2,914,940 2,816,829 2,850,059 G.ARC Adjusted for Frequency of Payments 3,042,673 2,941,924 2,976,630 H.ARC as % of Covered Payroll 62.10 %60.04 %60.62 % I.Assumed Rate of Increase in Covered Payroll to Contribution Year 5.00 %5.00 %5.00 % J.Covered Payroll for Contribution Year 5,144,911 5,144,911 5,155,524 K.ARC for Contribution Year: H x J 3,194,990 3,089,005 3,125,279 L.Allowable Credit for State Revenue in Contribution Year 412,644 *412,644 *412,644 * M.Required Employer Contribution (REC) in Contribution Year 2,782,346 2,676,361 2,712,635 N.REC as % of Covered Payroll in Contribution Year: M ÷ J 54.08 %52.02 %52.62 % ANNUAL REQUIRED CONTRIBUTION (ARC) After Change Before Change October 1, 2012 7 A.Valuation Date October 1, 2013 October 1, 2013 October 1, 2012 B.Actuarial Present Value of All Projected Benefits for 1.Active Members a. Service Retirement Benefits $ 26,465,192 $ 25,943,789 $ 26,846,938 b. Vesting Benefits 1,194,728 1,167,208 1,217,271 c. Disability Benefits 4,314,995 4,234,288 4,133,242 d. Preretirement Death Benefits 436,427 427,981 457,605 e. Return of Member Contributions 22,950 22,906 14,349 f. Total 32,434,292 31,796,172 32,669,405 2.Inactive Members a. Service Retirees & Beneficiaries 52,641,668 52,123,919 48,572,874 b. Disability Retirees 2,894,330 2,871,233 2,920,636 c. Terminated Vested Members 820,252 805,368 279,574 d. Total 56,356,250 55,800,520 51,773,084 3. Total for All Members 88,790,542 87,596,692 84,442,489 C.Actuarial Accrued (Past Service) Liability per GASB No. 25 76,093,054 75,256,736 72,156,731 D.Actuarial Value of Accumulated Plan Benefits per FASB No. 35 73,313,409 72,493,271 70,152,684 E.Plan Assets 1.Market Value 55,660,784 55,660,784 49,144,436 2. Actuarial Value 53,201,682 53,201,682 49,859,298 F.Unfunded Actuarial Accrued Liability: C - E2 22,891,372 22,055,054 22,297,433 G.Actuarial Present Value of Projected Covered Payroll 54,983,080 54,565,653 52,548,809 H.Actuarial Present Value of Projected Member Contributions 4,728,545 4,692,646 4,519,197 I.Accumulated Value of Contributions for Active Members 4,089,690 4,089,690 4,190,494 J.Funded Ratio: E2 ÷ C 69.9%70.7%69.1% ACTUARIAL VALUE OF BENEFITS AND ASSETS Before ChangeAfter Change 8 CALCULATION OF EMPLOYER NORMAL COST A.Valuation Date October 1, 2013 After Change Before Change B.Normal Cost for 1.Service Retirement Benefits $868,732 $849,088 $887,980 2.Vesting Benefits 88,474 86,690 89,091 3.Disability Benefits 239,706 236,191 230,964 4.Preretirement Death Benefits 22,828 22,489 25,544 5.Return of Member Contributions 9,941 10,012 9,859 6.Total for Future Benefits 1,229,681 1,204,470 1,243,438 7.Assumed Amount for Administrative Expenses 115,288 115,288 123,567 8.Total Normal Cost 1,344,969 1,319,758 1,367,005 9.Total as a % of Covered Payroll 27.45%26.93%27.84% C.Expected Member Contribution 421,393 421,393 422,262 D.Employer Normal Cost: B8-C 923,576 898,365 944,743 E.Employer Normal Cost as a % of Covered Payroll 18.85%18.33%19.24% October 1, 2012October 1, 2013 9 LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY A. UAAL Amoritzation Period and Payments Amortization Period Years Years (Years)Amount Remaining Amount After Change Before Change 7/1/1986 30 4,147$ 3 921$ 329$ 329$ 10/1/1991 30 (1,504)8 (770)(121)(122) 10/1/1991 30 286,223 8 145,922 22,973 23,040 10/1/1992 30 122,611 9 68,372 9,873 9,905 10/1/1993 30 (194,444)10 (117,958)(15,812)(15,870) 10/1/1995 30 796,975 12 667,019 79,176 79,522 10/1/1996 30 (189,977)13 (174,106)(19,654)(19,746) 10/1/2000 30 3,639,273 17 4,080,756 395,317 397,668 10/1/2005 30 975,210 22 1,090,986 93,538 94,220 10/1/2005 30 5,273,728 22 5,899,817 505,834 509,521 10/1/2006 30 12,571,515 23 13,718,676 1,154,755 1,163,450 10/1/2007 15 (251,668)9 (198,606)(28,678)(28,773) 10/1/2008 15 3,319,494 10 2,763,667 370,457 371,816 10/1/2009 15 (137,951)11 (118,074)(14,835)(14,895) 10/1/2010 15 348,981 12 308,936 36,671 36,831 10/1/2011 15 (718,288)13 (651,846)(73,582)(73,929) 10/1/2011 15 847,054 13 768,701 86,773 87,182 10/1/2011 15 (6,706,717)13 (6,086,344)(687,046)(690,278) 10/1/2012 15 (751,599)14 (735,758)(79,424)(79,823) 10/1/2012 15 792,519 14 775,815 83,748 84,169 10/1/2013 15 (151,072)15 (151,072)(15,669)(15,753) 10/1/2013 15 836,318 15 836,318 86,741 N/A 20,710,828$ 22,891,372$ 1,991,364$ 1,918,464$ Original UAAL Current UAAL Payment 10 B. Amortization Schedule The UAAL is being amortized as a level percent of payroll, but is currently being amortized as a level dollar amount due to 10-year historical average payroll growth rate. The expected amortization schedule is as follows: 2013 $22,891,372 2014 22,404,809 2015 21,883,213 2016 21,324,062 2017 20,725,005 2018 20,082,815 2023 16,138,622 2028 11,537,735 2033 4,395,287 2036 0 Year Expected UAAL Amortization Schedule 11 ACTUARIAL GAINS AND LOSSES The assumptions used to anticipate mortality, employment turnover, investment income, expenses, salary increases, and other factors have been based on long range trends and expectations. Actual experience can vary from these expectations. The variance is measured by the gain and loss for the period involved. If significant long term experience reveals consistent deviation from what has been expected and that deviation is expected to continue, the assumptions should be modified. The net actuarial gain (loss) for the past year is computed as follows: 1.Last Year's UAAL $22,297,433 2.Last Year's Employer Normal Cost 1,367,005 3.Last Year's Contributions 3,113,406 4. Interest at the Assumed Rate on: a.1 and 2 for one year 1,727,504 b.3 from dates paid 72,410 c. a - b 1,655,094 5.This Year's Expected UAAL Prior to Revision: 1 + 2 - 3 + 4c 22,206,126 6.Change in UAAL Due to Plan Amendments and/or Changes in Actuarial Assumptions 836,318 7.This Year's Expected UAAL: 5 + 6 23,042,444 8.This Year's Actual UAAL 22,891,372 9.Net Actuarial Gain (Loss): 7 - 8 151,072 10.Gain (Loss) Due to Investments 614,775 11.Gain (Loss) from Other Sources (463,703) 12 Experience gains/losses for the past few years are as follows: Year Ending September 30 Gain (Loss) 1996 $(284,232) 1997 (994,552) 1998 (674,477) 1999 (424,754) 2000 68,592 2001 (435,534) 2002 (2,162,823) 2003 (949,324) 2004 (246,347) 2005 (1,006,694) 2006 (1,517,294) 2007 251,668 2008 (3,319,494) 2009 137,951 2010 (348,981) 2011 718,288 2012 751,599 2013 151,072 13 The fund earnings and salary increase assumptions have considerable impact on the cost of the Plan so it is important that they are in line with the actual experience. The following table shows the actual fund earnings and salary increase rates compared to the assumed rates for the last few years: Year Ending 9/30/1990 9.1 %8.0 %9.1 %6.5 % 9/30/1991 8.6 8.0 9.5 6.5 9/30/1992 8.2 8.0 10.9 6.5 9/30/1993 8.8 8.0 14.1 6.5 9/30/1994 2.4 8.0 0.6 6.5 9/30/1995 18.2 8.0 12.8 6.5 9/30/1996 5.2 8.0 3.6 6.5 9/30/1997 10.3 8.0 11.5 *6.5 9/30/1998 9.2 8.0 10.0 6.5 9/30/1999 9.6 8.0 8.4 6.5 9/30/2000 9.0 8.0 5.9 6.5 9/30/2001 6.3 8.5 1.1 6.0 9/30/2002 (1.6)8.5 11.8 6.0 9/30/2003 3.7 8.5 7.4 6.0 9/30/2004 3.9 8.5 16.4 6.0 9/30/2005 4.8 8.5 3.6 6.0 9/30/2006 6.5 8.5 9.7 6.0 9/30/2007 8.1 7.5 8.8 7.5 9/30/2008 3.6 7.5 13.8 7.5 9/30/2009 4.4 7.5 1.0 7.5 9/30/2010 5.6 7.5 7.7 7.5 9/30/2011 4.6 7.5 (1.9)7.5 9/30/2012 7.0 7.4 0.4 7.5 9/30/2013 8.4 7.3 4.8 7.5 Average for Years Shown 6.8 N/A 7.4 N/A Salary IncreasesInvestment Return Actual Assumed Actual Assumed * Actual raises during the year were less than 10.0%. However, there was a problem of underreporting of compensation in the previous year that resulted in the 11.5% average increase. The actual investment return rates shown above are based on the actuarial value of assets. The actual salary increase rates shown above are the increases received by those active members who were included in the actuarial valuations both at the beginning and the end of each year. 14 Active Members Year Vested Other End of Ended A E A E A E A E A A A E Year 9/30/2002 10 5 2 4 0 0 0 0 1 2 3 2 90 9/30/2003 14 9 3 5 1 0 0 0 1 4 5 3 95 9/30/2004 10 7 2 6 1 0 0 0 1 3 4 3 98 9/30/2005 11 4 2 8 0 0 0 0 0 2 2 3 105 9/30/2006 7 5 1 9 0 1 0 0 0 4 4 3 107 9/30/2007 5 5 3 6 0 1 0 0 1 1 2 3 107 9/30/2008 2 3 3 5 0 1 0 0 0 0 0 3 106 9/30/2009 5 7 6 8 0 1 0 0 1 0 1 3 104 9/30/2010 3 14 11 5 0 1 0 0 1 2 3 3 93 9/30/2011 4 13 11 2 0 1 0 0 0 2 2 2 84 9/30/2012 2 12 8 1 0 0 1 0 0 3 3 2 74 9/30/2013 7 6 4 0 0 0 0 0 1 1 2 2 75 9/30/2014 1 0 0 2 12 Yr Totals *80 90 56 59 2 6 1 0 7 24 31 32 * Totals are through current Plan Year only. Totals During DROP Year Retirement Retirement Death Service & Disability Actual (A) Compared to Expected (E) Decrements Among Active Employees Number Added Terminations Amount Amount Amount Employer State Total 10/1/1993 9/30/1994 $242,083 8.36 %$135,153 4.67 %$106,930 3.69 %$117,381 $151,324 $268,705 10/1/1994 9/30/1995 244,317 7.76 148,072 4.70 96,245 3.06 96,245 162,247 258,492 10/1/1995 9/30/1996 404,856 12.02 162,247 4.82 242,609 7.20 242,609 195,597 438,206 10/1/1996 9/30/1997 438,074 12.24 195,597 5.47 242,477 6.78 242,477 227,106 469,583 10/1/1997 9/30/1998 592,522 15.30 227,106 5.86 365,416 9.44 365,416 235,819 601,235 10/1/1998 9/30/1999 760,142 16.98 235,819 5.27 524,323 11.71 524,323 236,636 760,959 10/1/1999 9/30/2000 853,790 18.09 235,819 5.00 617,971 13.09 638,017 215,773 853,790 10/1/2000 9/30/2001 935,273 18.14 215,773 4.18 719,500 13.95 719,500 225,892 945,392 10/1/2001 9/30/2002 1,005,662 20.49 225,892 4.60 779,770 15.89 779,770 235,818 1,015,588 10/1/2002 9/30/2003 1,425,328 25.58 235,818 4.23 1,189,510 21.35 1,189,510 235,818 1,425,328 10/1/2002 9/30/2004 1,475,340 25.58 235,818 4.09 1,239,522 21.49 1,239,522 235,818 1,475,340 10/1/2003 9/30/2005 1,704,041 27.49 235,818 3.80 1,468,223 23.69 1,468,223 235,818 1,704,041 10/1/2004 9/30/2006 1,931,054 27.62 235,818 3.37 1,695,236 24.25 1,695,236 412,644 2,107,880 10/1/2005 9/30/2007 3,176,791 41.86 412,644 5.44 2,764,147 36.42 2,764,147 412,644 3,176,791 10/1/2006 9/30/2008 3,556,548 40.70 412,644 4.72 3,143,904 35.98 3,143,904 412,644 3,556,548 10/1/2007 9/30/2009 3,762,323 40.19 412,644 4.41 3,349,679 35.78 3,349,679 412,644 3,762,323 10/1/2008 9/30/2010 4,368,612 42.27 412,644 3.99 3,955,968 38.28 3,955,968 412,644 4,368,612 10/1/2009 9/30/2011 4,298,216 44.06 412,644 4.23 3,885,572 39.83 3,885,572 412,644 4,298,216 10/1/2010 9/30/2012 4,198,183 47.04 412,644 4.62 3,785,539 42.42 3,785,539 412,644 4,198,183 10/1/2011 9/30/2013 3,113,406 51.80 412,644 6.87 2,700,762 44.93 2,700,762 412,644 3,113,406 10/1/2012 9/30/2014 3,125,279 60.62 412,644 8.00 2,712,635 52.62 --------- 10/1/2013 9/30/2015 3,194,990 62.10 412,644 8.02 2,782,346 54.08 --------- Required Contributions RECENT HISTORY OF REQUIRED AND ACTUAL CONTRIBUTIONS End of Year To Which Valuation Applies Actual Contributions Valuation Date % of Payroll Net Employer % of Payroll Estimated State % of Payroll Employer & State 15 16 ACTUARIAL ASSUMPTIONS AND COST METHOD Valuation Methods Actuarial Cost Method - Normal cost and the allocation of benefit values between service rendered before and after the valuation date were determined using an Individual Entry-Age Actuarial Cost Method having the following characteristics: (i) the annual normal cost for each individual active member, payable from the date of employment to the date of retirement, is sufficient to accumulate the value of the member’s benefit at the time of retirement; (ii) each annual normal cost is a constant percentage of the member’s year by year projected covered pay. Actuarial gains/(losses), as they occur, reduce (increase) the Unfunded Actuarial Accrued Liability. Financing of Unfunded Actuarial Accrued Liabilities - Unfunded Actuarial Accrued Liabilities (full funding credit if assets exceed liabilities) were amortized by level (principal & interest combined) percent-of-payroll contributions over a reasonable period of future years. Actuarial Value of Assets - The Actuarial Value of Assets phase in the difference between the expected actuarial value and actual market value of assets at the rate of 20% per year. The Actuarial Value of Assets will be further adjusted to the extent necessary to fall within the corridor whose lower limit is 80% of the Market Value of plan assets and whose upper limit is 120% of the Market Value of plan assets. During periods when investment performance exceeds the assumed rate, Actuarial Value of Assets will tend to be less than Market Value. During periods when investment performance is less than assumed rate, Actuarial Value of Assets will tend to be greater than Market Value. Valuation Assumptions The actuarial assumptions used in the valuation are shown in this Section. Economic Assumptions The investment return rate assumed in the valuation is 7.2% per year, compounded annually (net after investment expenses). This assumption is being lowered by 0.1% each year until 6.5% is reached. The Wage Inflation Rate assumed in this valuation was 3% per year. The Wage Inflation Rate is defined to be the portion of total pay increases for an individual that are due to macro-economic forces including productivity, price inflation, and labor market conditions. The wage inflation rate does not include pay changes related to individual merit and seniority effects. The assumed real rate of return over wage inflation is defined to be the portion of total investment return that is more than the assumed wage inflation rate. Considering other economic assumptions, the 7.2% investment return rate translates to an assumed real rate of return over wage inflation of 4.2%. 17 The rate of salary increase used for individual members is 7.5% per year. Part of the assumption is for merit and/or seniority increase, and 3% recognizes wage inflation, including price inflation, productivity increases, and other macroeconomic forces. This assumption is used to project a member’s current salary to the salaries upon which benefits will be based. For purposes of financing the unfunded liabilities, total payroll is assumed to grow at 5% per year. According to Chapter 112, Florida Statutes, this payroll growth assumption may not exceed the average growth over the last ten years which was (1.99%). Therefore, unfunded liabilities are being amortized this year as a level dollar amount, with no assumed payroll growth. Demographic Assumptions The mortality table was the RP-2000 Combined Healthy Participant Mortality Tables for males and females. Mortality improvement is being projected to all future years from the year 2000 using Scale AA, making it a fully generational mortality table. Sample Attained Ages (in 2013)Men Women Men Women 50 0.17 %0.13 %34.17 35.58 55 0.28 0.24 29.05 30.61 60 0.55 0.47 24.13 25.84 65 1.06 0.91 19.53 21.35 70 1.82 1.57 15.35 17.24 75 3.15 2.53 11.58 13.52 80 5.65 4.19 8.38 10.22 Probability of Future Life Dying Next Year Expectancy (years) This assumption is used to measure the probabilities of each benefit payment being made after retirement. For active members, the probabilities of dying before retirement were based upon the same mortality table as members dying after retirement (75% of deaths are assumed to be service-connected). For disabled retirees, the regular mortality tables are set forward 5 years in ages to reflect impaired longevity. 18 The rates of retirement used to measure the probability of eligible members who were not affected by the change in normal retirement eligibility (who had at least 10 years of service as of September 13, 2012) retiring during the next year are as follows: Age 42 - 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 10 0.0%0.0%0.0%0.0%0.0%2.5%2.5%20.0%20.0%20.0%55.0%65.0%65.0%65.0%65.0%100.0% 11 0.0%0.0%0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%60.0%60.0%100.0% 12 0.0%0.0%0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%60.0%60.0%100.0% 13 0.0%0.0%0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%60.0%60.0%100.0% 14 0.0%0.0%0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%60.0%60.0%100.0% 15 0.0%0.0%0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%60.0%60.0%100.0% 16 0.0%0.0%0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%60.0%60.0%100.0% 17 0.0%0.0%0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%60.0%60.0%100.0% 18 0.0%0.0%0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%60.0%60.0%100.0% 19 0.0%0.0%0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%60.0%60.0%100.0% 20 20.0%22.5%22.5%22.5%22.5%25.0%27.5%30.0%40.0%45.0%70.0%80.0%80.0%80.0%80.0%100.0% 21 5.0%5.0%5.0%10.0%10.0%12.5%12.5%12.5%15.0%15.0%47.5%65.0%65.0%65.0%65.0%100.0% 22 5.0%5.0%5.0%10.0%10.0%12.5%12.5%12.5%15.0%15.0%47.5%65.0%65.0%65.0%65.0%100.0% 23 5.0%5.0%5.0%10.0%10.0%15.0%15.0%15.0%15.0%15.0%47.5%65.0%65.0%65.0%65.0%100.0% 24 5.0%5.0%5.0%10.0%10.0%15.0%15.0%15.0%15.0%15.0%47.5%65.0%65.0%65.0%65.0%100.0% 25 100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0% S e r v i c e The probability of normal retirement for members affected by the change in normal retirement eligibility (to age 59 with 10 years of service) is 100% when first eligible. The probability of early retirement for these members is 2.5% for each year eligible. Rates of separation from active membership were as shown below (rates do not apply to members eligible to retire and do not include separation on account of death or disability). This assumption measures the probabilities of members remaining in employment. Sample Ages 20 6.0 % 25 5.7 30 5.0 35 3.8 40 2.6 45 1.6 50 0.8 55 0.3 % of Active Members Separating Within Next Year Rates of disability among active members (75% of disabilities are assumed to be service-connected). Sample Ages 20 0.21 % 25 0.23 30 0.27 35 0.35 40 0.45 45 0.77 50 1.50 55 2.32 % Becoming Disabled within Next Year 19 Miscellaneous and Technical Assumptions Administrative & Investment Expenses The investment return assumption is intended to be the return net of investment expenses. Annual administrative expenses are assumed to be equal to the average of the prior two years’ expenses. Assumed administrative expenses are added to the Normal Cost. Benefit Service Exact fractional service is used to determine the amount of benefit payable. Decrement Operation Disability and mortality decrements operate during retirement eligibility. Decrement Timing Decrements of all types are assumed to occur at the beginning of the year. Eligibility Testing Eligibility for benefits is determined based upon the age nearest birthday and service nearest whole year on the date the decrement is assumed to occur. Forfeitures For vested separations from service, it is assumed that 0% of members separating will withdraw their contributions and forfeit an employer financed benefit. It was further assumed that the liability at termination is the greater of the vested deferred benefit (if any) or the member’s accumulated contributions. Incidence of Contributions Employer contributions are assumed to be made in equal installments at the end of each quarter. Member contributions are assumed to be received continuously throughout the year based upon the computed percent of payroll shown in this report, and the actual payroll payable at the time contributions are made. Liability Load Projected normal and early retirement benefits are loaded based on the dollar amount of each active member’s frozen accrued leave as of September 13, 2012 to allow for the inclusion of unused sick and vacation pay (frozen as of September 13, 2012) in final average earnings. Marriage Assumption 100% of males and 100% of females are assumed to be married for purposes of death-in-service benefits. Male spouses are assumed to be three years older than female spouses for active member valuation purposes. Normal Form of Benefit A 10-year certain and life annuity is the normal form of benefit. Pay Increase Timing Middle of fiscal year. This is equivalent to assuming that reported pays represent amounts paid to members during the year ended on the valuation date. Service Credit Accruals It is assumed that members accrue one year of service credit per year. 20 GLOSSARY Actuarial Accrued Liability (AAL) The difference between the Actuarial Present Value of Future Benefits, and the Actuarial Present Value of Future Normal Costs. Actuarial Assumptions Assumptions about future plan experience that affect costs or liabilities, such as: mortality, withdrawal, disablement, and retirement; future increases in salary; future rates of investment earnings; future investment and administrative expenses; characteristics of members not specified in the data, such as marital status; characteristics of future members; future elections made by members; and other items. Actuarial Cost Method A procedure for allocating the Actuarial Present Value of Future Benefits between the Actuarial Present Value of Future Normal Costs and the Actuarial Accrued Liability. Actuarial Equivalent Of equal Actuarial Present Value, determined as of a given date and based on a given set of Actuarial Assumptions. Actuarial Present Value (APV) The amount of funds required to provide a payment or series of payments in the future. It is determined by discounting the future payments with an assumed interest rate and with the assumed probability each payment will be made. Actuarial Present Value of Future Benefits (APVFB) The Actuarial Present Value of amounts which are expected to be paid at various future times to active members, retired members, beneficiaries receiving benefits, and inactive, nonretired members entitled to either a refund or a future retirement benefit. Expressed another way, it is the value that would have to be invested on the valuation date so that the amount invested plus investment earnings would provide sufficient assets to pay all projected benefits and expenses when due. Actuarial Valuation The determination, as of a valuation date, of the Normal Cost, Actuarial Accrued Liability, Actuarial Value of Assets, and related Actuarial Present Values for a plan. An Actuarial Valuation for a governmental retirement system typically also includes calculations of items needed for compliance with GASB No. 25, such as the Funded Ratio and the Annual Required Contribution (ARC). Actuarial Value of Assets The value of the assets as of a given date, used by the actuary for valuation purposes. This may be the market or fair value of plan assets or a smoothed value in order to reduce the year-to-year volatility of calculated results, such as the funded ratio and the actuarially required contribution (ARC). 21 Amortization Method A method for determining the Amortization Payment. The most common methods used are level dollar and level percentage of payroll. Under the Level Dollar method, the Amortization Payment is one of a stream of payments, all equal, whose Actuarial Present Value is equal to the UAAL. Under the Level Percentage of Pay method, the Amortization Payment is one of a stream of increasing payments, whose Actuarial Present Value is equal to the UAAL. Under the Level Percentage of Pay method, the stream of payments increases at the rate at which total covered payroll of all active members is assumed to increase. Amortization Payment That portion of the plan contribution or ARC which is designed to pay interest on and to amortize the Unfunded Actuarial Accrued Liability. Amortization Period The period used in calculating the Amortization Payment. Annual Required Contribution (ARC) The employer’s periodic required contributions, expressed as a dollar amount or a percentage of covered plan compensation, determined under GASB No. 25. The ARC consists of the Employer Normal Cost and Amortization Payment. Closed Amortization Period A specific number of years that is reduced by one each year, and declines to zero with the passage of time. For example if the amortization period is initially set at 30 years, it is 29 years at the end of one year, 28 years at the end of two years, etc. Employer Normal Cost The portion of the Normal Cost to be paid by the employer. This is equal to the Normal Cost less expected member contributions. Equivalent Single Amortization Period For plans that do not establish separate amortization bases (separate components of the UAAL), this is the same as the Amortization Period. For plans that do establish separate amortization bases, this is the period over which the UAAL would be amortized if all amortization bases were combined upon the current UAAL payment. Experience Gain/Loss A measure of the difference between actual experience and that expected based upon a set of Actuarial Assumptions, during the period between two actuarial valuations. To the extent that actual experience differs from that assumed, Unfunded Actuarial Accrued Liabilities emerge which may be larger or smaller than projected. Gains are due to favorable experience, e.g., the assets earn more than projected, salaries do not increase as fast as assumed, members retire later than assumed, etc. Favorable experience means actual results produce actuarial liabilities not as large as projected by the actuarial assumptions. On the other hand, losses are the result of unfavorable experience, i.e., actual results that produce Unfunded Actuarial Accrued Liabilities which are larger than projected. 22 Funded Ratio The ratio of the Actuarial Value of Assets to the Actuarial Accrued Liability. GASB Governmental Accounting Standards Board. GASB No. 25 and GASB No. 27 These are the governmental accounting standards that set the accounting rules for public retirement systems and the employers that sponsor or contribute to them. Statement No. 27 sets the accounting rules for the employers that sponsor or contribute to public retirement systems, while Statement No. 25 sets the rules for the systems themselves. Normal Cost The annual cost assigned, under the Actuarial Cost Method, to the current plan year. Open Amortization Period An open amortization period is one which is used to determine the Amortization Payment but which does not change over time. In other words, if the initial period is set as 30 years, the same 30-year period is used in determining the Amortization Period each year. In theory, if an Open Amortization Period is used to amortize the Unfunded Actuarial Accrued Liability, the UAAL will never completely disappear, but will become smaller each year, either as a dollar amount or in relation to covered payroll. Unfunded Actuarial Accrued Liability The difference between the Actuarial Accrued Liability and Actuarial Value of Assets. Valuation Date The date as of which the Actuarial Present Value of Future Benefits are determined. The benefits expected to be paid in the future are discounted to this date. SECTION C PENSION FUND INFORMATION 23 Statement of Plan Assets at Market Value Item 2013 2012 A.Cash and Cash Equivalents (Operating Cash)849,326$ 1,285,425$ B.Receivables: 1.Member Contributions 30,655$ 34,753$ 2.Employer Contributions - - 3.State Contributions - - 4.Investment Income and Other Receivables 261,309 240,411 5.Total Receivables 291,964$ 275,164$ C.Investments 1.Short Term Investments 1,896,360$ 3,499,191$ 2.Domestic Equities 37,998,999 30,327,759 3.International Equities 5,016,371 3,680,875 4.Domestic Fixed Income 15,373,981 14,463,030 5.International Fixed Income 1,502,285 1,545,948 6.Real Estate 1,696,507 557,928 7.Private Equity - - 8.Total Investments 63,484,503$ 54,074,731$ D.Liabilities 1.Benefits Payable -$ -$ 2.Accrued Expenses and Other Payables (50,340) (374,168) 3.Total Liabilities (50,340)$ (374,168)$ E.Total Market Value of Assets Available for Benefits 64,575,453$ 55,261,152$ F.Reserves 1.State Contribution Reserve (601,123)$ (538,552)$ 2.DROP Accounts (8,313,546) (5,578,164) 3.Total Reserves (8,914,669)$ (6,116,716)$ G.Market Value Net of Reserves 55,660,784$ 49,144,436$ H.Allocation of Investments 1.Short Term Investments 3.0%6.5% 2.Domestic Equities 59.8%56.1% 3.International Equities 7.9%6.8% 4.Domestic Fixed Income 24.2%26.7% 5.International Fixed Income 2.4%2.9% 6.Real Estate 2.7%1.0% 7.Private Equity 0.0%0.0% 8.Total Investments 100.0%100.0% September 30 24 Reconciliation of Plan Assets Item 2013 2012 A.Market Value of Assets at Beginning of Year 55,261,152$ 44,279,384$ B.Revenues and Expenditures 1.Contributions a.Member Contributions 432,301$ 559,305$ b.Employer Contributions 2,700,762 3,785,539 c.State Contributions 475,215 445,534 d.Total 3,608,278$ 4,790,378$ 2.Investment Income a.Interest, Dividends, and Other Income 752,092$ 773,887$ b.Net Realized/Unrealized Gains/(Losses)*7,347,888 7,589,148 c.Investment Expenses (174,307) (152,703) d.Net Investment Income 7,925,673$ 8,210,332$ 3.Benefits and Refunds a.Regular Monthly Benefits (1,974,719)$ (1,679,226)$ b.Refunds (32,872) - c.Lump Sum Benefits - - d.DROP Distributions (93,400) (227,800) e.Total (2,100,991)$ (1,907,026)$ 4.Administrative and Miscellaneous Expenses (118,659)$ (111,916)$ 5.Transfers -$ -$ C.Market Value of Assets at End of Year 64,575,453$ 55,261,152$ D.Reserves 1.State Contribution Reserve (601,123)$ (538,552)$ 2.DROP Accounts (8,313,546) (5,578,164) 3.Total Reserves (8,914,669)$ (6,116,716)$ E.Market Value Net of Reserves 55,660,784$ 49,144,436$ September 30 * Breakdown between realized and unrealized gains/(losses) was not provided. 25 Year Ended 9/30 Balance at Beginning of Year Credits Interest Distributions Adjustments Balance at End of Year 2002 -$ 25,536$ 559$ -$ -$ 26,095$ 2003 26,095 35,048 962 (33,734) - 28,371 2004 28,371 67,278 4,210 - - 99,859 2005 99,859 107,716 9,307 (54,224) - 162,658 2006 162,658 88,332 13,653 - - 264,643 2007 264,643 164,844 22,183 - - 451,670 2008 451,670 188,434 24,255 (215,043) 2,665 451,981 2009 451,981 557,339 46,178 - - 1,055,498 2010 1,055,498 993,753 96,296 (91,000) - 2,054,547 2011 2,054,547 1,426,393 167,922 (254,626) - 3,394,236 2012 3,394,236 2,128,627 283,101 (227,800) - 5,578,164 2013 5,578,164 2,387,180 441,602 (93,400) - 8,313,546 Reconciliation of DROP Accounts 26 Calculation of Actuarial Value of Assets Item A. Beginning of Year Assets* 1. Market Value $55,261,152 *$44,279,384 * 2. Actuarial Value 55,976,014 49,609,638 B. End of Year Market Value of Assets*64,575,453 55,261,152 C. Net of Contributions Less Disbursements 1,388,628 *2,771,436 * D. Actual Net Investment Earnings 7,925,673 8,210,332 E. Expected Investment Earnings 4,136,934 3,773,656 F. End of Year Expected Actuarial Value 61,501,576 56,154,730 G. End of Year Market Value Less Expected Actuarial Value: B - F 3,073,877 (893,578) H. 20% of Difference 614,775 (178,716) I. End of Year Assets 1. Actuarial Value: F + H 62,116,351 55,976,014 2. Final Actuarial Value Within 80% to 120% of Market Value 62,116,351 55,976,014 J. State Contribution Reserve 601,123 538,552 K. DROP Accounts 8,313,546 5,578,164 L. Final Actuarial Value of Assets: I2 - J - K 53,201,682 49,859,298 M. Recognized Investment Earnings 4,751,709 3,594,940 N. Recognized Rate of Return 8.4%7.0% 2013 2012 Year Ending September 30 * Before offset of DROP Account Balances and State Contribution Reserve. 27 1990 9.1 % 9.1 % 1991 8.6 8.6 1992 8.2 8.2 1993 8.8 8.8 1994 2.4 2.4 1995 18.2 18.2 1996 5.2 5.2 1997 24.2 10.3 1998 5.3 9.2 1999 11.6 9.6 2000 6.7 9.0 2001 (7.8) 6.3 2002 (6.5) (1.6) 2003 12.7 3.7 2004 8.6 3.9 2005 9.6 4.8 2006 6.4 6.5 2007 11.5 8.1 2008 (13.9) 3.6 2009 6.7 4.4 2010 9.8 5.6 2011 (0.4) 4.6 2012 18.0 7.0 2013 14.2 8.4 Average Returns: Last 5 Years 9.5 % 6.0 % Last 10 Years 6.7 % 5.7 % All Years 7.1 % 6.8 % Investment Rate of Return Actuarial ValueMarket Value * Year Ending September 30 The above rates are based on the retirement system’s financial information reported to the actuary. They may differ from figures that the investment consultant reports, in part because of differences in the handling of administrative and investment expenses, and in part because of differences in the handling of cash flows. SECTION D FINANCIAL ACCOUNTING INFORMATION 28 A.Valuation Date B.Actuarial Present Value of Accumulated Plan Benefits 1.Vested Benefits a.Members Currently Receiving Payments $55,535,998 $51,493,510 b.Terminated Vested Members 820,252 279,574 c.Other Members 15,964,054 17,138,300 d.Total 72,320,304 68,911,384 2.Non-Vested Benefits 993,105 1,241,300 3.Total Actuarial Present Value of Accumulated Plan Benefits: 1d + 2 73,313,409 70,152,684 4.Accumulated Contributions of Active Members 4,089,690 4,190,494 C.Changes in the Actuarial Present Value of Accumulated Plan Benefits 1.Total Value at Beginning of Year 70,152,684 66,770,064 2.Increase (Decrease) During the Period Attributable to: a.Plan Amendment and Change in Actuarial Assumptions 820,138 684,655 c.Latest Member Data, Benefits Accumulated and Decrease in the Discount Period 6,735,358 6,505,818 d.Benefits Paid (net basis)(4,394,771)(3,807,853) e.Net Increase 3,160,725 3,382,620 3.Total Value at End of Period 73,313,409 70,152,684 D.Market Value of Assets 55,660,784 49,144,436 E.Actuarial Assumptions - See page entitled Actuarial Assumptions and Methods October 1, 2013 October 1, 2012 FASB NO. 35 INFORMATION SCHEDULE OF FUNDING PROGRESS (GASB Statement No. 25) 10/1/1993 $2,424,981 $2,479,049 $54,068 97.8 %$2,896,359 1.9 % 10/1/1994 2,714,651 2,552,412 (162,239)106.4 3,148,412 (5.2) 10/1/1995 3,517,565 3,807,393 289,828 92.4 3,367,324 8.6 10/1/1996 4,443,592 4,855,280 411,688 91.5 3,578,473 11.5 10/1/1997 5,511,310 6,954,077 1,442,767 79.3 3,872,799 37.3 10/1/1998 6,700,726 8,988,231 2,287,505 74.5 4,476,807 51.1 10/1/1999 8,162,736 11,019,072 2,856,336 74.1 4,720,813 60.5 10/1/2000 9,795,534 14,097,068 4,301,534 69.5 5,156,136 83.4 10/1/2001 11,417,844 16,106,731 4,688,887 70.9 4,908,315 95.5 10/1/2002 12,303,486 19,140,962 6,837,476 64.3 5,572,514 122.7 10/1/2003 14,231,515 22,196,413 7,964,898 64.1 5,989,146 133.0 10/1/2004 16,405,794 24,962,551 8,556,757 65.7 6,755,078 126.7 10/1/2005 18,950,104 35,004,203 16,054,099 54.1 7,332,448 218.9 10/1/2006 22,740,838 46,503,218 23,762,380 48.9 8,322,332 285.5 10/1/2007 27,799,386 52,230,511 24,431,125 53.2 8,915,563 274.0 10/1/2008 32,261,274 60,450,441 28,189,167 53.4 9,842,874 286.4 10/1/2009 36,834,622 65,550,027 28,715,405 56.2 9,290,829 309.1 10/1/2010 41,948,009 71,341,740 29,393,731 58.8 8,499,722 345.8 10/1/2011 45,709,740 68,822,738 23,112,998 66.4 5,724,225 403.8 10/1/2012 49,859,298 72,156,731 22,297,433 69.1 4,910,023 454.1 10/1/2013 (b)53,201,682 75,256,736 22,055,054 70.7 4,899,915 450.1 10/1/2013 (a)53,201,682 76,093,054 22,891,372 69.9 4,899,915 467.2 Actuarial Valuation Date UAAL As % of Covered Payroll (b - a) / c Covered Payroll (c) Funded Ratio (a) / (b) Actuarial Value of Assets (a) Unfunded AAL (UAAL) (b) - (a) Actuarial Accrued Liability (AAL) - Entry Age (b) (a) = After changes (b) = Before changes 29 30 SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER AND THE STATE OF FLORIDA (GASB Statement No. 25) Year Ending September 30 1994 $242,083 $268,705 111.0 % 1995 244,317 258,492 105.8 1996 404,856 438,206 108.2 1997 438,074 469,583 107.2 1998 592,522 601,235 101.5 1999 760,142 760,959 100.1 2000 853,790 853,790 100.0 2001 935,273 945,392 101.1 2002 1,005,662 1,015,588 101.0 2003 1,425,328 1,425,328 100.0 2004 1,475,340 1,475,340 100.0 2005 1,704,041 1,704,041 100.0 2006 1,931,054 2,107,880 109.2 2007 3,176,791 3,176,791 100.0 2008 3,556,548 3,556,548 100.0 2009 3,762,323 3,762,323 100.0 2010 4,368,612 4,368,612 100.0 2011 4,298,216 4,298,216 100.0 2012 4,198,183 4,198,183 100.0 2013 3,113,406 3,113,406 100.0 Contribution Percentage Contributed Annual Required Contribution Actual 31 Employer FYE September 30 2014 2013 2012 Annual Required Contribution (ARC)*3,125,279$ 1 3,113,406$ 4,198,183$ Interest on Net Pension Obligation (NPO)(13,513) (14,017) (14,872) Adjustment to ARC (17,537) (18,347) (23,829) Annual Pension Cost (APC)3,129,303 3,117,736 4,207,140 Contributions made **3,113,406 4,198,183 Increase (decrease) in NPO **4,330 8,957 NPO at beginning of year (187,686) (192,016) (200,973) NPO at end of year **(187,686) (192,016) * Includes expected State contribution. ** To be determined. ANNUAL PENSION COST AND NET PENSION OBLIGATION (GASB STATEMENT NO. 27) 1 This amount is an estimate. The final required contribution should be no less than the percent of payroll requirement multiplied by the actual covered payroll for the fiscal year. Fiscal Annual Pension Actual Year Ending Cost (APC)Contribution 9/30/2011 4,308,678$ 4,298,216$ 99.8 %(200,973)$ 9/30/2012 4,207,140 4,198,183 99.8 (192,016) 9/30/2013 3,117,736 3,113,406 99.9 (187,686) APC Contributed Obligation THREE YEAR TREND INFORMATION Percentage of Net Pension 32 REQUIRED SUPPLEMENTARY INFORMATION GASB Statement No. 25 and No. 27 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: Valuation Date October 1, 2013 Contribution Rates Employer (and State) 62.10% Plan Members 8.60% Actuarial Cost Method Entry Age Normal Amortization Method Level percent, closed Remaining Amortization Period 23 years Asset Valuation Method Recognizes 20% of difference between market value of assets and expected actuarial asset value Actuarial Assumptions Investment rate of return 7.2% Projected salary increases 7.5% Includes inflation and other general increases at 3.0% Cost-of-living adjustments Not Applicable 33 SCHEDULE OF CHANGES IN THE EMPLOYER’S NET PENSION LIABILITY AND RELATED RATIOS GASB Statement No. 67 Fiscal year ending September 30,2014* Total pension liability Service Cost 1,229,681$ Interest 6,045,113 Benefit Changes - Difference between actual & expected experience - Assumption Changes Benefit Payments (4,550,123) Refunds (4,866) Net Change in Total Pension Liability 2,719,805 Total Pension Liability - Beginning 85,007,723 Total Pension Liability - Ending (a)87,727,528$ Plan Fiduciary Net Position Contributions - Employer and State 2,712,635$ Contributions - Member 421,393 Net Investment Income 4,593,981 Benefit Payments (4,550,123) Refunds (4,866) Administrative Expense (119,366) Other - Net Change in Plan Fiduciary Net Position 3,053,654 Plan Fiduciary Net Position - Beginning 64,575,453 Plan Fiduciary Net Position - Ending (b)67,629,107$ Net Pension Liability - Ending (a) - (b)20,098,421 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 77.09 % Covered Employee Payroll 4,899,915$ Net Pension Liability as a Percentage of Covered Employee Payroll 410.18 % * These figures are estimates only. Actual figures will be provided after the end of the fiscal year. 34 SCHEDULE OF THE EMPLOYER’S NET PENSION LIABILITY GASB Statement No. 67 Total Plan Net Position Net Pension Liability FY Ending Pension Plan Net Net Pension as a % of Total Covered as a % of September 30,Liability Position Liability Pension Liability Payroll Covered Payroll 2014*87,727,528$ 67,629,107$ 20,098,421$ 77.09%4,899,915$ 410.18% * These figures are estimates only. Actual figures will be provided after the end of the fiscal year. 35 SCHEDULE OF CONTRIBUTIONS GASB Statement No. 67 Actuarially Contribution Actual Contribution FY Ending Determined Actual Deficiency Covered as a % of September 30,Contribution Contribution (Excess)Payroll Covered Payroll 2014*3,125,279$ 3,125,279$ -$ 4,899,915$ 63.78% * These figures are estimates only. Actual figures will be provided after the end of the fiscal year. 36 NOTES TO SCHEDULE OF CONTRIBUTIONS GASB Statement No. 67 Valuation Date:October 1, 2013 Notes Actuarially determined contribution rates are calculated as of October 1, which is two year(s)prior to the end of the fiscal year in which contributions are reported. Methods and Assumptions Used to Determine Contribution Rates: 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 Inflation 3.0% Salary Increases 7.50% Investment Rate of Return 7.20% Retirement Age Experience-based table of rates that are specific to the type of eligibility condition Mortality RP-2000 Combined Healthy Participant Mortality Table for males and females with mortality improvement projected to all future years after 2000 using Scale AA Other Information: Notes See Discussion of Valuation Results on Page 1 37 SINGLE DISCOUNT RATE GASB Statement No. 67 A single discount rate of 7.20% was used to measure the total pension liability. This single discount rate was based on the expected rate of return on pension plan investments of 7.20%. The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the total actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments (7.20%) was applied to all periods of projected benefit payments to determine the total pension liability. Regarding the sensitivity of the net pension liability to changes in the single discount rate, the following presents the plan’s net pension liability, calculated using a single discount rate of 7.20%, as well as what the plan’s net pension liability would be if it were calculated using a single discount rate that is 1-percentage-point lower or 1-percentage-point higher: Sensitivity of the Net Pension Liability to the Single Discount Rate Assumption* Current Single Discount 1% Decrease Rate Assumption 1% Increase 6.20%7.20%8.20% 29,418,983$ 20,098,421$ 12,338,638$ * These figures are estimates only. Actual figures will be provided after the end of the fiscal year. 38 GASB 67 – Projection of Contributions Single Discount Rate Determination: 50-Year Year Payroll for Current Employees Contributions from Current Employees Service Cost and Expense Contributions UAL Contributions Total Contributions (a)(b)(c)(d)(e)=(b)+(c)+(d) 0 4,722,810$ 1 4,899,915 421,393$ 971,067$ 1,847,494$ 3,239,954$ 2 5,009,734 430,837 988,924 1,847,493 3,267,254 3 5,107,763 439,268 1,004,172 1,847,493 3,290,932 4 4,999,544 429,961 964,295 1,847,152 3,241,408 5 5,052,905 434,550 965,980 1,847,152 3,247,682 6 5,060,003 435,160 957,037 1,847,152 3,239,350 7 4,918,254 422,970 914,761 1,847,152 3,184,883 8 4,850,635 417,155 893,162 1,847,152 3,157,468 9 4,213,788 362,386 735,458 1,823,492 2,921,336 10 4,194,699 360,744 724,165 1,842,962 2,927,871 11 4,061,271 349,269 690,387 1,475,772 2,515,428 12 3,855,271 331,553 636,660 1,491,131 2,459,345 13 3,800,881 326,876 618,165 1,371,186 2,316,227 14 3,662,265 314,955 586,682 2,089,228 2,990,864 15 3,542,636 304,667 560,492 2,084,751 2,949,910 16 3,500,120 301,010 544,626 2,011,165 2,856,801 17 3,418,853 294,021 525,594 2,011,165 2,830,780 18 3,434,403 295,359 522,888 1,601,864 2,420,110 19 3,343,101 287,507 499,280 1,601,864 2,388,650 20 3,225,765 277,416 474,850 1,601,864 2,354,129 21 3,065,160 263,604 446,918 1,601,864 2,312,385 22 2,907,184 250,018 416,310 1,601,864 2,268,192 23 2,482,862 213,526 343,648 981,289 1,538,464 24 2,424,345 208,494 333,424 - 541,918 25 2,352,387 202,305 323,956 - 526,261 26 2,186,876 188,071 291,230 - 479,301 27 2,117,219 182,081 281,529 - 463,610 28 1,781,311 153,193 218,965 - 372,158 29 1,824,350 156,894 224,211 - 381,106 30 1,600,031 137,603 193,207 - 330,810 31 1,225,875 105,425 147,523 - 252,948 32 1,109,685 95,433 136,292 - 231,725 33 860,212 73,978 109,076 - 183,055 34 880,457 75,719 111,515 - 187,235 35 899,344 77,344 113,782 - 191,126 36 782,358 67,283 97,944 - 165,227 37 389,109 33,463 43,975 - 77,439 38 260,190 22,376 26,547 - 48,924 39 129,341 11,123 11,652 - 22,775 40 132,424 11,388 11,929 - 23,318 41 135,297 11,636 12,192 - 23,828 42 137,910 11,860 12,422 - 24,282 43 140,246 12,061 12,638 - 24,699 44 142,258 12,234 12,818 - 25,052 45 - - - - - 46 - - - - - 47 - - - - - 48 - - - - - 49 - - - - - 50 - - - - - 39 GASB 67 Single Discount Rate Determination: 100-Year Projection of Cash Flows Year Projected Beginning Plan Net Position Projected Total Contributions Projected Benefit Payments Projected Administrative Expenses Projected Investment Earnings at 7.20% Projected Ending Plan Net Position (a)(b)(c)(d)(e)(f)=(a)+(b)-(c)-(d)+(e) 1 55,660,784$ 3,239,954$ 4,554,989$ 119,366$ 3,956,836$ 58,183,219$ 2 58,183,219 3,267,254 4,640,822 122,041 4,136,286 60,823,895 3 60,823,895 3,290,932 4,863,195 124,429 4,319,301 63,446,504 4 63,446,504 3,241,408 5,008,170 121,793 4,501,342 66,059,291 5 66,059,291 3,247,682 5,168,282 123,093 4,683,975 68,699,573 6 68,699,573 3,239,350 5,404,443 123,265 4,865,420 71,276,634 7 71,276,634 3,184,883 5,579,701 119,812 5,042,964 73,804,967 8 73,804,967 3,157,468 6,018,483 118,165 5,208,571 76,034,359 9 76,034,359 2,921,336 6,174,507 102,651 5,355,764 78,034,300 10 78,034,300 2,927,871 6,415,550 102,186 5,491,481 79,935,915 11 79,935,915 2,515,428 6,676,818 98,936 5,604,680 81,280,269 12 81,280,269 2,459,345 6,804,546 93,918 5,695,149 82,536,299 13 82,536,299 2,316,227 6,983,657 92,592 5,774,231 83,550,508 14 83,550,508 2,990,864 7,151,227 89,216 5,865,311 85,166,240 15 85,166,240 2,949,910 7,256,990 86,302 5,976,556 86,749,415 16 86,749,415 2,856,801 7,367,769 85,265 6,083,369 88,236,551 17 88,236,551 2,830,780 7,418,102 83,286 6,187,812 89,753,755 18 89,753,755 2,420,110 7,524,157 83,664 6,278,759 90,844,803 19 90,844,803 2,388,650 7,650,376 81,440 6,351,815 91,853,452 20 91,853,452 2,354,129 7,804,545 78,582 6,417,864 92,742,318 21 92,742,318 2,312,385 7,926,731 74,670 6,476,202 93,529,504 22 93,529,504 2,268,192 8,213,544 70,822 6,521,306 94,034,637 23 94,034,637 1,538,464 8,242,105 60,484 6,531,217 93,801,729 24 93,801,729 541,918 8,272,299 59,059 6,478,178 92,490,467 25 92,490,467 526,261 8,337,385 57,306 6,380,973 91,003,010 26 91,003,010 479,301 8,336,382 53,274 6,272,393 89,365,047 27 89,365,047 463,610 8,487,658 51,577 6,148,614 87,438,036 28 87,438,036 372,158 8,371,432 43,395 6,011,035 85,406,402 29 85,406,402 381,106 8,424,662 44,442 5,863,153 83,181,557 30 83,181,557 330,810 8,558,472 38,978 5,696,645 80,611,562 31 80,611,562 252,948 8,488,398 29,863 5,511,653 77,857,901 32 77,857,901 231,725 8,483,309 27,033 5,312,918 74,892,203 33 74,892,203 183,055 8,273,805 20,955 5,105,292 71,885,790 34 71,885,790 187,235 8,049,969 21,449 4,896,879 68,898,486 35 68,898,486 191,126 7,904,100 21,909 4,687,075 65,850,678 36 65,850,678 165,227 7,930,812 19,059 4,465,872 62,531,906 37 62,531,906 77,439 7,734,001 9,479 4,231,116 59,096,982 38 59,096,982 48,924 7,539,041 6,339 3,989,801 55,590,326 39 55,590,326 22,775 7,216,663 3,151 3,747,913 52,141,200 40 52,141,200 23,318 6,877,277 3,226 3,511,598 48,795,613 41 48,795,613 23,828 6,540,826 3,296 3,282,633 45,557,953 42 45,557,953 24,282 6,195,089 3,360 3,061,766 42,445,552 43 42,445,552 24,699 5,860,092 3,417 2,849,536 39,456,278 44 39,456,278 25,052 5,642,035 3,465 2,642,032 36,477,861 45 36,477,861 - 5,304,229 - 2,438,772 33,612,404 46 33,612,404 - 4,963,305 - 2,244,520 30,893,619 47 30,893,619 - 4,638,746 - 2,060,248 28,315,121 48 28,315,121 - 4,322,265 - 1,885,791 25,878,647 49 25,878,647 - 4,020,570 - 1,721,038 23,579,114 50 23,579,114 - 3,729,267 - 1,565,776 21,415,623 40 GASB 67 Single Discount Rate Determination: 100-Year Projection of Cash Flows (cont'd) 51 21,415,623 - 3,449,296 - 1,419,908 19,386,236 52 19,386,236 - 3,181,507 - 1,283,265 17,487,994 53 17,487,994 - 2,926,364 - 1,155,617 15,717,247 54 15,717,247 - 2,678,985 - 1,036,874 14,075,137 55 14,075,137 - 2,449,231 - 926,770 12,552,676 56 12,552,676 - 2,231,329 - 824,861 11,146,209 57 11,146,209 - 2,026,271 - 730,849 9,850,786 58 9,850,786 - 1,833,160 - 644,410 8,662,036 59 8,662,036 - 1,650,965 - 565,265 7,576,336 60 7,576,336 - 1,480,226 - 493,134 6,589,244 61 6,589,244 - 1,320,291 - 427,721 5,696,674 62 5,696,674 - 1,171,995 - 368,702 4,893,381 63 4,893,381 - 1,034,994 - 315,711 4,174,097 64 4,174,097 - 908,032 - 268,414 3,534,480 65 3,534,480 - 791,353 - 226,489 2,969,615 66 2,969,615 - 684,609 - 189,595 2,474,601 67 2,474,601 - 587,300 - 157,396 2,044,697 68 2,044,697 - 499,395 - 129,552 1,674,855 69 1,674,855 - 420,609 - 105,711 1,359,956 70 1,359,956 - 351,034 - 85,499 1,094,422 71 1,094,422 - 290,877 - 68,509 872,054 72 872,054 - 238,636 - 54,346 687,764 73 687,764 - 193,655 - 42,669 536,778 74 536,778 - 155,709 - 33,140 414,209 75 414,209 - 123,755 - 25,445 315,899 76 315,899 - 97,196 - 19,307 238,010 77 238,010 - 75,524 - 14,465 176,951 78 176,951 - 57,769 - 10,697 129,879 79 129,879 - 43,745 - 7,804 93,937 80 93,937 - 32,669 - 5,608 66,876 81 66,876 - 23,934 - 3,968 46,910 82 46,910 - 17,384 - 2,763 32,288 83 32,288 - 12,404 - 1,886 21,770 84 21,770 - 8,616 - 1,263 14,416 85 14,416 - 5,912 - 829 9,333 86 9,333 - 3,952 - 532 5,913 87 5,913 - 2,540 - 336 3,709 88 3,709 - 1,611 - 210 2,308 89 2,308 - 1,011 - 130 1,428 90 1,428 - 627 - 81 881 91 881 - 387 - 50 545 92 545 - 239 - 31 336 93 336 - 148 - 19 207 94 207 - 92 - 12 126 95 126 - 57 - 7 76 96 76 - 35 - 4 46 97 46 - 21 - 3 27 98 27 - 13 - 2 16 99 16 - 8 - 1 9 100 9 - 10 - 0 - 41 GASB 67 Single Discount Rate Determination: 100-Year Projection to Determine Cross-over Date Year Projected Beginning Plan Net Position Projected Benefit Payments Funded Portion of Benefit Payments Unfunded Portion of Benefit Payments Present Value of Funded Benefit Payments using Expected Return Rate (v) Present Value of Unfunded Benefit Payments using Municipal Bond Rate (vf) Present Value of Benefit Payments using Single Discount Rate (sdr) (a)(b)(c)(d)(e)(f)=(d)*v^((a)-.5)(g)=(e)*vf ^((a)-.5)(h)=((c)/(1+sdr)^(a-.5) 1 55,660,784$ 4,554,989$ 4,554,989$ -$ 4,399,364$ -$ 4,399,364$ 2 58,183,219 4,640,822 4,640,822 - 4,181,218 - 4,181,218 3 60,823,895 4,863,195 4,863,195 - 4,087,283 - 4,087,283 4 63,446,504 5,008,170 5,008,170 - 3,926,425 - 3,926,425 5 66,059,291 5,168,282 5,168,282 - 3,779,808 - 3,779,808 6 68,699,573 5,404,443 5,404,443 - 3,687,055 - 3,687,055 7 71,276,634 5,579,701 5,579,701 - 3,550,952 - 3,550,952 8 73,804,967 6,018,483 6,018,483 - 3,572,943 - 3,572,943 9 76,034,359 6,174,507 6,174,507 - 3,419,374 - 3,419,374 10 78,034,300 6,415,550 6,415,550 - 3,314,236 - 3,314,236 11 79,935,915 6,676,818 6,676,818 - 3,217,542 - 3,217,542 12 81,280,269 6,804,546 6,804,546 - 3,058,857 - 3,058,857 13 82,536,299 6,983,657 6,983,657 - 2,928,519 - 2,928,519 14 83,550,508 7,151,227 7,151,227 - 2,797,377 - 2,797,377 15 85,166,240 7,256,990 7,256,990 - 2,648,086 - 2,648,086 16 86,749,415 7,367,769 7,367,769 - 2,507,938 - 2,507,938 17 88,236,551 7,418,102 7,418,102 - 2,355,477 - 2,355,477 18 89,753,755 7,524,157 7,524,157 - 2,228,687 - 2,228,687 19 90,844,803 7,650,376 7,650,376 - 2,113,875 - 2,113,875 20 91,853,452 7,804,545 7,804,545 - 2,011,635 - 2,011,635 21 92,742,318 7,926,731 7,926,731 - 1,905,904 - 1,905,904 22 93,529,504 8,213,544 8,213,544 - 1,842,225 - 1,842,225 23 94,034,637 8,242,105 8,242,105 - 1,724,469 - 1,724,469 24 93,801,729 8,272,299 8,272,299 - 1,614,540 - 1,614,540 25 92,490,467 8,337,385 8,337,385 - 1,517,951 - 1,517,951 26 91,003,010 8,336,382 8,336,382 - 1,415,828 - 1,415,828 27 89,365,047 8,487,658 8,487,658 - 1,344,702 - 1,344,702 28 87,438,036 8,371,432 8,371,432 - 1,237,209 - 1,237,209 29 85,406,402 8,424,662 8,424,662 - 1,161,452 - 1,161,452 30 83,181,557 8,558,472 8,558,472 - 1,100,652 - 1,100,652 31 80,611,562 8,488,398 8,488,398 - 1,018,321 - 1,018,321 32 77,857,901 8,483,309 8,483,309 - 949,357 - 949,357 33 74,892,203 8,273,805 8,273,805 - 863,724 - 863,724 34 71,885,790 8,049,969 8,049,969 - 783,915 - 783,915 35 68,898,486 7,904,100 7,904,100 - 718,013 - 718,013 36 65,850,678 7,930,812 7,930,812 - 672,052 - 672,052 37 62,531,906 7,734,001 7,734,001 - 611,356 - 611,356 38 59,096,982 7,539,041 7,539,041 - 555,919 - 555,919 39 55,590,326 7,216,663 7,216,663 - 496,406 - 496,406 40 52,141,200 6,877,277 6,877,277 - 441,288 - 441,288 41 48,795,613 6,540,826 6,540,826 - 391,511 - 391,511 42 45,557,953 6,195,089 6,195,089 - 345,911 - 345,911 43 42,445,552 5,860,092 5,860,092 - 305,229 - 305,229 44 39,456,278 5,642,035 5,642,035 - 274,134 - 274,134 45 36,477,861 5,304,229 5,304,229 - 240,411 - 240,411 46 33,612,404 4,963,305 4,963,305 - 209,850 - 209,850 47 30,893,619 4,638,746 4,638,746 - 182,955 - 182,955 48 28,315,121 4,322,265 4,322,265 - 159,023 - 159,023 49 25,878,647 4,020,570 4,020,570 - 137,988 - 137,988 50 23,579,114 3,729,267 3,729,267 - 119,394 - 119,394 42 GASB 67 Single Discount Rate Determination: 100-Year Projection to Determine Cross-over Date (cont'd) Year Projected Beginning Plan Net Position Projected Benefit Payments Funded Portion of Benefit Payments Unfunded Portion of Benefit Payments Present Value of Funded Benefit Payments using Expected Return Rate (v) Present Value of Unfunded Benefit Payments using Municipal Bond Rate (vf) Present Value of Benefit Payments using Single Discount Rate (sdr) (a)(b)(c)(d)(e)(f)=(d)*v^((a)-.5)(g)=(e)*vf ^((a)-.5)(h)=((c)/(1+sdr)^(a-.5) 51 21,415,623$ 3,449,296$ 3,449,296$ -$ 103,013$ -$ 103,013$ 52 19,386,236 3,181,507 3,181,507 - 88,634 - 88,634 53 17,487,994 2,926,364 2,926,364 - 76,051 - 76,051 54 15,717,247 2,678,985 2,678,985 - 64,946 - 64,946 55 14,075,137 2,449,231 2,449,231 - 55,388 - 55,388 56 12,552,676 2,231,329 2,231,329 - 47,071 - 47,071 57 11,146,209 2,026,271 2,026,271 - 39,874 - 39,874 58 9,850,786 1,833,160 1,833,160 - 33,651 - 33,651 59 8,662,036 1,650,965 1,650,965 - 28,271 - 28,271 60 7,576,336 1,480,226 1,480,226 - 23,645 - 23,645 61 6,589,244 1,320,291 1,320,291 - 19,674 - 19,674 62 5,696,674 1,171,995 1,171,995 - 16,291 - 16,291 63 4,893,381 1,034,994 1,034,994 - 13,420 - 13,420 64 4,174,097 908,032 908,032 - 10,983 - 10,983 65 3,534,480 791,353 791,353 - 8,929 - 8,929 66 2,969,615 684,609 684,609 - 7,206 - 7,206 67 2,474,601 587,300 587,300 - 5,766 - 5,766 68 2,044,697 499,395 499,395 - 4,574 - 4,574 69 1,674,855 420,609 420,609 - 3,594 - 3,594 70 1,359,956 351,034 351,034 - 2,798 - 2,798 71 1,094,422 290,877 290,877 - 2,163 - 2,163 72 872,054 238,636 238,636 - 1,655 - 1,655 73 687,764 193,655 193,655 - 1,253 - 1,253 74 536,778 155,709 155,709 - 940 - 940 75 414,209 123,755 123,755 - 697 - 697 76 315,899 97,196 97,196 - 510 - 510 77 238,010 75,524 75,524 - 370 - 370 78 176,951 57,769 57,769 - 264 - 264 79 129,879 43,745 43,745 - 186 - 186 80 93,937 32,669 32,669 - 130 - 130 81 66,876 23,934 23,934 - 89 - 89 82 46,910 17,384 17,384 - 60 - 60 83 32,288 12,404 12,404 - 40 - 40 84 21,770 8,616 8,616 - 26 - 26 85 14,416 5,912 5,912 - 17 - 17 86 9,333 3,952 3,952 - 10 - 10 87 5,913 2,540 2,540 - 6 - 6 88 3,709 1,611 1,611 - 4 - 4 89 2,308 1,011 1,011 - 2 - 2 90 1,428 627 627 - 1 - 1 91 881 387 387 - 1 - 1 92 545 239 239 - 0 - 0 93 336 148 148 - 0 - 0 94 207 92 92 - 0 - 0 95 126 57 57 - 0 - 0 96 76 35 35 - 0 - 0 97 46 21 21 - 0 - 0 98 27 13 13 - 0 - 0 99 16 8 8 - 0 - 0 100 9 10 9 0 0 0 0 Totals 88,790,544$ -$ 88,790,544$ 43 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 10 0 $ [thousands] Year Projection of Plan Net Position and Benefit Payments Projected Plan Net Position Projected Benefit Payments for Current Members SECTION E MISCELLANEOUS INFORMATION 44 A. 1.Number Included in Last Valuation 74 84 2.New Members 7 2 3.Non-Vested Employment Terminations (1)(3) 4.Vested Employment Terminations (1)0 5.Service Retirements 0 0 6.DROP Retirement (4)(8) 7.Disability Retirements 0 0 8.Deaths 0 (1) 9.Other -- Data Corrections 0 0 10.Number Included in This Valuation 75 74 B. 1.Number Included in Last Valuation 1 1 2.Additions from Active Members 1 0 3.Lump Sum Payments/Refund of Contributions 0 0 4.Payments Commenced 0 0 5.Deaths 0 0 6.Other 0 0 7.Number Included in This Valuation 2 1 1.Number Included in Last Valuation 28 24 2.Additions from Active Members 4 8 3.Retirements (1)(4) 4.Deaths Resulting in No Further Payments 0 0 5.Other 0 0 6.Number Included in This Valuation 31 28 D. 1.Number Included in Last Valuation 36 32 2.Additions from Active Members 0 0 3.Additions from Terminated Vested Members 0 0 4.Additions from DROP 1 4 5.Deaths Resulting in No Further Payments (1)0 6.Deaths Resulting in New Survivor Benefits 0 0 7.End of Certain Period - No Further Payments 0 0 8.Other 0 0 9.Number Included in This Valuation 36 36 RECONCILIATION OF MEMBERSHIP DATA Active Members Service Retirees, Disability Retirees and Beneficiaries Terminated Vested Members From 10/1/11From 10/1/12 To 10/1/12To 10/1/13 C. DROP Plan Members 45 ACTIVE PARTICIPANT DISTRIBUTION d Age Group 0-1 1-2 2-3 3-4 4-5 5-9 10-14 15-19 20-24 25 & Up Totals 15-24 NO.4 1 1 0 0 0 0 0 0 0 6 TOT PAY 185,519 45,748 45,748 0 0 0 0 0 0 0 277,015 AVG PAY 46,380 45,748 45,748 0 0 0 0 0 0 0 46,169 25-29 NO.0 1 0 0 0 3 0 0 0 0 4 TOT PAY 0 45,748 0 0 0 150,643 0 0 0 0 196,391 AVG PAY 0 45,748 0 0 0 50,214 0 0 0 0 49,098 30-34 NO.2 0 0 0 1 6 1 0 0 0 10 TOT PAY 93,221 0 0 0 48,526 312,543 68,185 0 0 0 522,475 AVG PAY 46,610 0 0 0 48,526 52,090 68,185 0 0 0 52,248 35-39 NO.1 0 0 0 0 7 5 2 0 0 15 TOT PAY 46,149 0 0 0 0 393,635 287,784 138,696 0 0 866,264 AVG PAY 46,149 0 0 0 0 56,234 57,557 69,348 0 0 57,751 40-44 NO.0 0 0 0 0 6 9 8 0 0 23 TOT PAY 0 0 0 0 0 329,029 545,527 678,700 0 0 1,553,256 AVG PAY 0 0 0 0 0 54,838 60,614 84,838 0 0 67,533 45-49 NO.0 0 0 0 0 3 2 4 0 0 9 TOT PAY 0 0 0 0 0 176,577 130,179 302,589 0 0 609,345 AVG PAY 0 0 0 0 0 58,859 65,090 75,647 0 0 67,705 50-54 NO.0 0 0 1 0 0 1 5 0 0 7 TOT PAY 0 0 0 121,385 0 0 59,980 457,091 0 0 638,456 AVG PAY 0 0 0 121,385 0 0 59,980 91,418 0 0 91,208 55-59 NO.0 0 0 0 0 0 1 0 0 0 1 TOT PAY 0 0 0 0 0 0 59,608 0 0 0 59,608 AVG PAY 0 0 0 0 0 0 59,608 0 0 0 59,608 60-64 NO.0 0 0 0 0 0 0 0 0 0 0 TOT PAY 0 0 0 0 0 0 0 0 0 0 0 AVG PAY 0 0 0 0 0 0 0 0 0 0 0 65-69 NO.0 0 0 0 0 0 0 0 0 0 0 TOT PAY 0 0 0 0 0 0 0 0 0 0 0 AVG PAY 0 0 0 0 0 0 0 0 0 0 0 TOT NO.7 2 1 1 1 25 19 19 0 0 75 TOT AMT 324,889 91,496 45,748 121,385 48,526 1,362,427 1,151,263 1,577,076 0 0 4,722,810 AVG AMT 46,413 45,748 45,748 121,385 48,526 54,497 60,593 83,004 0 0 62,971 Years of Service to Valuation Date 46 INACTIVE PARTICIPANT DISTRIBUTION Disabled Retired* Total Total Total Total Age Group Number Benefits Number Benefits Number Benefits Number Benefits Under 20 - - - - - - - - 20-24 - - - - - - - - 25-29 - - - - - - - - 30-34 - - - - - - - - 35-39 - - - - - - - - 40-44 2 124,164 - - 2 122,783 - - 45-49 - - 1 23,392 17 1,394,613 - - 50-54 - - 3 87,331 15 1,328,640 - - 55-59 - - 4 108,311 9 670,067 - - 60-64 - - 1 35,937 5 285,848 2 65,847 65-69 - - 1 17,851 3 144,237 - - 70-74 - - - - 4 167,959 - - 75-79 - - - - - - - - - 80-84 - - - - - - - - 85-89 - - - - - - - - 90-94 - - - - - - - - 95-99 - - - - - - - - 100 & Over - - - - - - - - Total 2 124,164 10 272,822 55 4,114,147 2 65,847 Average Age 43 57 55 63 Terminated Vested Deceased with Beneficiary * Does not include deferred supplemental benefits for DROP members SECTION F SUMMARY OF PLAN PROVISIONS 47 SUMMARY OF PLAN PROVISIONS A. Ordinances The Plan was established under the Code of Ordinances for the City of Palm Beach Gardens, Florida, Chapter 50, Article III, and was most recently amended under Ordinance No. 24, 2012 passed and adopted on September 13, 2012. The Plan is also governed by certain provisions of Chapter 185, Florida Statutes, Part VII, Chapter 112, Florida Statutes and the Internal Revenue Code. B. Effective Date July 1, 1972 C. Plan Year October 1 through September 30 D. Type of Plan Qualified, governmental defined benefit retirement plan; for GASB purposes it is a single employer plan. E. Eligibility Requirements All full-time police officers are eligible for membership on the first day of the month coincident with or next following date of employment. F. Credited Service Service is measured as the total number of full years (and fraction thereof) of continuous service from the date of employment to the date of termination. No service is credited for any periods of employment for which the member received a refund of employee contributions. G. Compensation Base pay, but not less than the amount of total W-2 Compensation prior to September 13, 2012. H. Average Monthly Earnings (AME) The average of Compensation over the last 5 years of Credited Service; includes a lump sum payment of unused leave pay (no more than the dollar amount of unused leave accrued as of September 13, 2012). 48 I. Normal Retirement Eligibility: A member with at least ten years of service on September 13, 2012 may retire on the first day of the month coincident with or next following the earlier of: (1) age 52 and 10 years of Credited Service, or (2) 20 years of Credited Service regardless of age. A member with less than ten years of service on September 13, 2012 may retire on the first day of the month coincident with or next following: age 59 and 10 years of Credited Service. Benefit: For service accrued before September 13, 2012, 3.5% of AME multiplied by years of Credited Service. For service accrued after September 13, 2012, 2.75% of AME multiplied by years of Credited Service. The maximum benefit is equal to 75% of AME, or the percentage earned as of September 13, 2012, if greater. Normal Form of Benefit: 10 Years Certain and Life thereafter; other options are also available. Supplemental Benefit: A monthly supplemental benefit of $12.50 per year of Credited Service is payable to all retirees and their beneficiaries in pay status. COLA: None J. Early Retirement Eligibility: A member may elect to retire earlier than the Normal Retirement Eligibility upon attainment of age 50 and 10 years of Credited Service. Benefit: The Normal Retirement Benefit is reduced by 3.0% for each year by which the Early Retirement date precedes the Normal Retirement date. Normal Form of Benefit: 10 Years Certain and Life thereafter; other options are also available. Supplemental Benefit: A monthly supplemental benefit of $12.50 per year of Credited Service is payable to all retirees and their beneficiaries in pay status. COLA: None K. Delayed Retirement Same as Normal Retirement taking into account compensation earned and service credited until the date of actual retirement. 49 L. Service Connected Disability Eligibility: Any member who becomes totally and permanently disabled and unable to render useful and efficient service as a police officer for a period of at least 6 months resulting from an act occurring in the performance of service for the City is eligible for a disability benefit. Benefit: 60% of the current rate of pay, but no less than the accrued Normal Retirement Benefit taking into account compensation earned and service credited until the date of disability. Disability benefits, when combined with Social Security, Worker’s Compensation or any other local, state or federal government benefits, cannot exceed and will be limited to the AME on the date of disability. Normal Form of Benefit: 10 Years Certain and Life thereafter; other options are also available. Supplemental Benefit: A monthly supplemental benefit of $12.50 per year of Credited Service is payable to all retirees and their beneficiaries in pay status. COLA: None M. Non-Service Connected Disability Eligibility: Any member with 10 years of Credited Service who becomes totally and permanently disabled and unable to render useful and efficient service as a police officer for a period of at least 6 months is eligible for a disability benefit. Benefit: 2.5% of AME multiplied by Credited Service, but not less than 25% of salary or the accrued Normal Retirement Benefit taking into account compensation earned and service credited until the date of disability. Disability benefits, when combined with Social Security, Worker’s Compensation or any other local, state or federal government benefits, cannot exceed and will be limited to the AME on the date of disability. Normal Form of Benefit: 10 Years Certain and Life thereafter; other options are also available. Supplemental Benefit: A monthly supplemental benefit of $12.50 per year of Credited Service is payable to all retirees and their beneficiaries in pay status. COLA: None 50 N. Death in the Line of Duty Eligibility: Members who die as a result of personal injury or disease arising out of the member’s actual performance of duties are eligible for survivor benefits regardless of Credited Service. Benefit: The surviving spouse will receive the greater of: (1) 50% of the member’s AME, or (2) the member’s accrued Normal Retirement Benefit as of the date of death with no actuarial reduction for Early Retirement. If there is no spouse, or if the surviving spouse dies, the spouse’s benefit determined above shall be distributed equally among any eligible children. If there is no spouse or eligible children, the benefit will be paid to the deceased member’s estate. Normal Form of Benefit: Spouse’s benefits are payable until death; children’s benefits are payable until age 18 (24 if a full-time student), marriage, death, or adoption. Benefits paid to a member’s estate may be paid as a lump sum at the discretion of the Board of Trustees. Supplemental Benefit: A monthly supplemental benefit of $12.50 per year of Credited Service is payable to all retirees and their beneficiaries in pay status. COLA: None O. Other Pre-Retirement Death Eligibility: Members are eligible for survivor benefits after the completion of 5 or more years of Credited Service. Benefit: The survivor benefit payable to the designated beneficiary is the member’s accrued Normal Retirement Benefit. Benefit is payable at the member’s Early or Normal retirement date and will be actuarially reduced for Early Retirement when applicable. Normal Form of Benefit: For member’s eligible for Normal or Delayed Retirement on the date of death, the designated beneficiary’s benefit will be paid for life. For members not yet eligible, benefits will be paid for 10 years. Supplemental Benefit: A monthly supplemental benefit of $12.50 per year of Credited Service is payable to all retirees and their beneficiaries in pay status. COLA: None The beneficiary of a plan member with less than 5 years of Credited Service at the time of death will receive a refund of the member’s accumulated contributions without interest. 51 P. Post Retirement Death Benefit determined by the form of benefit elected upon retirement. Q. Optional Forms In lieu of electing the Normal Form of benefit, the optional forms of benefits available to all retirees are a Single Life Annuity or the 50%, 66 2/3%, 75% and 100% Joint and Survivor options. R. Vested Termination Eligibility: A member has earned a non-forfeitable right to Plan benefits after the completion of 5 years of Credited Service (see vesting table below). Years of Credited Service Vested % Under 5 5 6 7 8 9 10 or more 0% 25 40 55 70 85 100 Benefit: The benefit is the member’s vested accrued Normal Retirement Benefit as of the date of termination. Benefit begins at the member’s Normal Retirement date. Alternatively, members with at least 10 years of Credited Service may elect to receive an actuarially reduced Early Retirement Benefit any time after age 50. Normal Form of Benefit: 10 Years Certain and Life thereafter; other options are also available. Supplemental Benefit: A monthly supplemental benefit of $12.50 per year of Credited Service is payable to all retirees and their beneficiaries once in pay status. COLA: None Members terminating employment with less than 5 years of Credited Service will receive a refund of their own accumulated contributions without interest. S. Refunds Eligibility: All members terminating employment with less than 5 years of Credited Service are eligible. Optionally, vested members (those with 5 or more years of Credited Service) may elect a refund in lieu of the vested benefits otherwise due. Benefit: Refund of the member’s contributions without interest. 52 T. Member Contributions 8.6% of Compensation U. State Contributions Chapter 185 Premium Tax Refunds V. Employer Contributions Any additional amount needed to fund the plan properly according to State laws. W. Cost of Living Increases None. X. 13th Check Not Applicable Y. Deferred Retirement Option Plan Eligibility: A member who had at least ten years of Credited Service as of September 13, 2012 may enter the DROP on the first day of the month coincident with or next following the earlier of: (1) age 52 and 10 years of Credited Service, or (2) 20 years of Credited Service regardless of age. Members with less than ten years of Credited Service on September 13, 2012 may enter the DROP on the first day of the month coincident with or next following: age 59 and 10 years of Credited Service. Members who meet eligibility must submit a written election to participate in the DROP. The election to participate must be made within the first 28.5 years of Credited Service and members can no longer participate after attaining 33.5 years of employment service. Benefit: The member’s Credited Service and AME are frozen upon entry into the DROP. The monthly retirement benefit as described under Normal Retirement is calculated based upon the frozen Credited Service and AME. Maximum DROP Period: 60 months Interest Credited: The member's DROP account is credited quarterly at an interest rate based upon the option chosen by the member. Members must elect from 1 of the 2 following options: 1. Gain or loss at the same rate earned by the Plan, or 2. Guaranteed rate of 6.5% per annum. 53 Normal Form of Benefit: Lump Sum; member may also elect that the DROP distribution be paid in 3 equal payments over 3 years or used to purchase an annuity to be paid in monthly installments. COLA: None Z. Other Ancillary Benefits There are no ancillary retirement type benefits not required by statutes but which might be deemed a City of Palm Beach Gardens Police Officers’ Pension Fund liability if continued beyond the availability of funding by the current funding source. AA. Changes from Previous Valuation There have been no changes in benefits since the previous valuation. CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND Actuarial Impact Statement – June 10, 2014 Description of Amendments Proposed Ordinance 9, 2014 would implement the following changes in Plan provisions:  Effective July 1, 2016, for members who had less than ten years of service as of September 13, 2012, eligibility for normal retirement would change from attainment of age 59 with 10 years of service to the earlier of attainment of age 55 with 10 years of service or completion of 25 years of service regardless of age.  Effective July 1, 2016, the eligibility conditions for entry into the DROP would change such that a participant may delay entry into the DROP until he or she has accrued the maximum benefit of 75% of his or her Average Monthly Earnings.  Effective June 5, 2014, the member contribution rate shall be increased by 11% of pensionable salary (from 8.60% to 19.60%). Also effective June 5, 2014, immediately following this increase, the member contribution rate shall be reduced back to 8.60% of pensionable salary, using $538,552 from the Accumulated Excess Chapter 185 Premium Tax Reserve to fund the reduction in member contributions. Funding Implications of Amendment An actuarial cost estimate is attached. Certification of Administrator I believe the amendment to be in compliance with Part VII, Chapter 112, Florida Statutes and Section 14, Article X of the Constitution of the State of Florida. For the Board of Trustees as Plan Administrator SUPPLEMENTAL ACTUARIAL VALUATION REPORT Plan City of Palm Beach Gardens Police Officers’ Pension Fund Valuation Date October 1, 2013 Date of Report June 10, 2014 Report Requested by Board of Trustees Prepared by Peter N. Strong, FSA Group Valued All active and inactive members of the Plan. Plan Changes Being Considered for Change  Effective July 1, 2016, for members who had less than ten years of service as of September 13, 2012, eligibility for normal retirement would change from attainment of age 59 with 10 years of service to the earlier of attainment of age 55 with 10 years of service or completion of 25 years of service regardless of age.  Effective July 1, 2016, the eligibility conditions for entry into the DROP would change such that a participant may delay entry into the DROP until he or she has accrued the maximum benefit of 75% of his or her Average Monthly Earnings.  Effective June 5, 2014, the member contribution rate shall be increased by 11% of pensionable salary (from 8.60% to 19.60%). Also effective June 5, 2014, immediately following this increase, the member contribution rate shall be reduced back to 8.60% of pensionable salary, using $538,552 from the Accumulated Excess Chapter 185 Premium Tax Reserve to fund the reduction in member contributions. Participants Affected Members who had less than ten years of service on September 13, 2012 and whose Normal Retirement Date is subsequent to July 1, 2016 would be affected by the proposed changes. Actuarial Assumptions and Methods Same as October 1, 2013 Actuarial Valuation Report with the following exception: Currently, members who had less than ten years of service as of September 13, 2012 were assumed to retire with 100% probability upon reaching Normal Retirement eligibility. Effective July 1, 2016, members who had less than ten years of service as of September 13, 2012 are assumed to retire according to the retirement rates shown on the top of the next page. Age 42 - 49 50 - 54 55 56 57 58 59 60 10 0.0%2.5%20.0%20.0%20.0%55.0%65.0%100.0% 11 - 19 0.0%2.5%10.0%10.0%10.0%47.5%57.5%100.0% 20 0.0%2.5%30.0%40.0%45.0%70.0%80.0%100.0% 21 - 22 0.0%2.5%12.5%15.0%15.0%47.5%65.0%100.0% 23 - 24 0.0%2.5%15.0%15.0%15.0%47.5%65.0%100.0% 25 - 26 15.0%15.0%15.0%15.0%15.0%47.5%65.0%100.0% 27 100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0% Revised Retirement Rates S e r v i c e Also, if at any point a member reaches the maximum benefit of 75% of his or her Average Monthly Earnings, his or her probability of retirement is assumed to be 100%. Some of the key assumptions/methods are: Investment Return 7.2% Salary increase 7.5% per year Cost Method Entry Age Normal Amortization Period for Any Change in Actuarial Accrued Liability 15 years Summary of Data Used in Report See attached page. Same as data used in the October 1, 2013 Actuarial Valuation Report. Actuarial Impact of Proposal(s) See attached page(s). Special Risks Involved with the Proposal That the Plan Has Not Been Exposed to Previously None Other Cost Considerations As of October 1, 2013 the Market Value of Assets exceeds the Actuarial Value of Assets by $2,459,102. This difference will be gradually recognized over the next several years. In turn, the computed employer contribution rate will decrease by approximately 5.4% of covered payroll in the absence of offsetting losses. A.Valuation Date B.ARC to Be Paid During Fiscal Year Ending 9/30/2015 9/30/2015 C.Assumed Dates of Employer Contrib.Quarterly Quarterly D.Annual Payment to Amortize Unfunded Actuarial Liability $1,991,364 $2,069,763 $78,399 E.Employer Normal Cost 923,576 993,497 69,921 F.ARC as of the Valuation Date: D+E 2,914,940 3,063,260 148,320 G.ARC Adjusted for Frequency of Payments 3,042,673 3,197,492 154,819 H.ARC as % of Covered Payroll 62.10 %65.26 %3.16 % I.Assumed Rate of Increase in Covered Payroll to Contribution Year 5.00 %5.00 %- % J.Covered Payroll for Contribution Year 5,144,911 5,144,911 0 K.ARC for Contribution Year: HxJ 3,194,990 3,357,569 162,579 L.Estimate of State Revenue in Contribution Year 412,644 951,196 538,552 M.Required Employer Contribution (REC) in Contribution Year: K - L 2,782,346 2,406,373 (375,973) N.REC as % of Covered Payroll in Contribution Year: M ÷ J 54.08 %46.77 %(7.31) % Increase / (Decrease) ANNUAL REQUIRED CONTRIBUTION (ARC) Change Valuation October 1, 2013 Actuarial Impact Statement October 1, 2013 A.Valuation Date B.Actuarial Present Value of All Projected Benefits for 1.Active Members a. Service Retirement Benefits $26,465,192 $27,864,639 $1,399,447 b. Vesting Benefits 1,194,728 1,369,186 174,458 c. Disability Benefits 4,314,995 3,452,621 (862,374) d. Preretirement Death Benefits 436,427 369,554 (66,873) e. Return of Member Contributions 22,950 22,950 0 f. Total 32,434,292 33,078,950 644,658 2.Inactive Members a. Service Retirees & Beneficiaries 52,641,668 52,641,668 0 b. Disability Retirees 2,894,330 2,894,330 0 c. Terminated Vested Members 820,252 820,252 0 d. Total 56,356,250 56,356,250 0 3. Total for All Members 88,790,542 89,435,200 644,658 C.Actuarial Accrued (Past Service) Liability per GASB No. 25 76,093,054 76,848,944 755,890 D.Plan Assets 1.Market Value 55,660,784 55,660,784 0 2. Actuarial Value 53,201,682 53,201,682 0 E.Unfunded Actuarial Accured Liability 22,891,372 23,647,262 755,890 F.Actuarial Present Value of Projected Covered Payroll 54,983,080 49,399,426 (5,583,654) G.Actuarial Present Value of Projected Member Contributions 4,728,545 4,248,351 (480,194) H.Accumulated Value of Contributions for Active Members 4,089,690 4,089,690 0 H.Funded Ratio: D2 ÷ C 69.9 %69.2 %(0.7)% October 1, 2013 Valuation October 1, 2013 Actuarial Impact Statement Change Increase / (Decrease) ACTUARIAL VALUE OF BENEFITS AND ASSETS A.Valuation Date B.Normal Cost for 1.Service Retirement Benefits $868,732 $952,373 $83,641 2.Vesting Benefits 88,474 99,129 10,655 3.Disability Benefits 239,706 216,197 (23,509) 4.Preretirement Death Benefits 22,828 21,450 (1,378) 5.Return of Member Contributions 9,941 10,453 512 6.Total for Future Benefits 1,229,681 1,299,602 69,921 7.Assumed Amount for Administrative Expenses 115,288 115,288 0 8.Total Normal Cost 1,344,969 1,414,890 69,921 9.Total as a % of Covered Payroll 27.45 %28.88 %1.43 % C.Expected Member Contribution 421,393 421,393 0 D.Employer Normal Cost: B8-C 923,576 993,497 69,921 E.Employer Normal Cost as a % of Covered Payroll 18.85 %20.28 %1.43 % CALCULATION OF EMPLOYER NORMAL COST Change Increase / (Decrease) October 1, 2013 Valuation October 1, 2013 Actuarial Impact Statement ACTIVE MEMBERS Number 75 75 0 Covered Annual Payroll $4,899,915 $4,899,915 $0 Average Annual Payroll $65,332 $65,332 $0 Average Age 39.1 39.1 0 Average Past Service 10.3 10.3 0 Average Age at Hire 28.8 28.8 0.0 RETIREES & BENEFICIARIES Number 57 57 0 Annual Benefits $4,179,994 $4,179,994 $0 Average Annual Benefit $73,333 $73,333 $0 Average Age 55.2 55.2 0.0 DISABILITY RETIREES Number 10 10 0 Annual Benefits $272,822 $272,822 $0 Average Annual Benefit $27,282 $27,282 $0 Average Age 57.2 57.2 0.0 TERMINATED VESTED MEMBERS Number 2 2 0 Annual Benefits $124,164 $124,164 $0 Average Annual Benefit $62,082 $62,082 $0 Average Age 42.7 42.7 0.0 Change Increase / (Decrease) PARTICIPANT DATA October 1, 2013 Valuation October 1, 2013 Actuarial Impact Statement