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HomeMy WebLinkAboutAgenda Police Pension 043015 Agenda City of Palm Beach Gardens Police Officers’ Pension Fund MEETING OF APRIL 30, 2015 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 • Brad Seidensticker, Trustee • Greg Mull, Trustee • Marc Glass, Trustee 3. Investment Manger Report – Cherry Bekaert (Jim Burdick) 4. Presentation of the 9/30/2014 Actuarial Valuation Report – GRS (Pete Strong) • Updated GASB 67 Disclosure Information 5. Custodian Update – Salem Trust (Brad Rinsem & Karen Russo) 6. Investment Manager Report – American Realty (Richelle Hayes) 7. Investment Consultant Report – Thistle Assets (Brendon Vavrica) 8. Attorney Report – KKJ&L (Bonni Jensen) 9. Administrator Report – Resource Centers (Audrey Ross) 10. Approval of Minutes • January 29, 2015 Regular Meeting 11. Disbursements 12. Benefit Approvals 13. Financial Statements 14. Other Business • DROP Statement Discussion 15. Public Comments 16. Adjourn Next Meeting Date: Wednesday August 26, 2015 @ 9AM PLEASE NOTE: Should any interested party seek to appeal any decision of this Board with respect to any matter considered at such meeting or hearing, s/he will need a record of the proceedings and for such purpose may need to ensure that a verbatim record of the proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based. In accordance with the Americans With Disabilities Act of 1990, persons needing a special accommodation to participate in this meeting should contact the The Pension Resource Center, LLC no later than four days prior to the meeting. PALM BEACH GARDENS POLICE PENSION FUND Benefit Approvals Meeting of April 30, 2015 APPLICATION TO EXIT THE DROP ROBERT THOMAS DATE OF BIRTH 07/16/1963 DATE OF HIRE 07/31/1988 DROP ENTRY DATE 09/30/2010 DATE OF TERMINATION 03/19/2015 FORM OF BENEFIT 10 YEAR CERTIAN MONTHLY BENEFIT AMOUNT $6,980.94 SUPPLEMENTAL BENEFIT $ 275.00 ERNEST CARR DATE OF BIRTH 02/26/1941 DATE OF HIRE 09/291997 DROP ENTRY DATE 04/30/2010 DATE OF TERMINATION 04/30/2015 FORM OF BENEFIT LIFE ANNUITY MONTHLY BENEFIT AMOUNT $5,889.28 SUPPLEMENTAL BENEFIT $ 150.00 RICK FACCHINE DATE OF BIRTH 10/04/1963 DATE OF HIRE 05/01/1986 DROP ENTRY DATE 05/01/2010 DATE OF TERMINATION 04/30/2015 FORM OF BENEFIT LIFE ANNUITY MONTHLY BENEFIT AMOUNT $10,686.89 SUPPLEMENTAL BENEFIT $ 300.00 JACK SEGRETO DATE OF BIRTH 02/02/1965 DATE OF HIRE 12/06/1989 DROP ENTRY DATE 05/01/2010 DATE OF TERMINATION 04/30/2015 FORM OF BENEFIT LIFE ANNUITY MONTHLY BENEFIT AMOUNT $6,242.40 SUPPLEMENTAL BENEFIT $ 250.00 APPLICATION FOR DISTRIBUTION OF DROP ACCOUNTS 4/15/2015) GWEN FLEMING DATE OF RETIREMENT 12/10/2014 DATE OF BIRTH 10/4/1963 TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH TOTAL GROSS DISTRIBUTION $65,000.00 TAX WITHHOLDING (20%) $13,000.00 TOTAL NET DISTRIBUTION $52,000.00 CURRENT DROP ACCOUNT BALANCE $259,617.88 ROBERT THOMAS DATE OF RETIREMENT 03/19/2015 DATE OF BIRTH 07/16/1963 TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH TOTAL GROSS DISTRIBUTION $15,000.00 TAX WITHHOLDING (20%) $ 3,000.00 TOTAL NET DISTRIBUTION $12,000.00 CURRENT DROP ACCOUNT BALANCE $409,295.08 SECRETARY APPROVED _________________________________, TRUSTEE DATE Oc t o b e r No v e m b e r De c e m b e r Ja n u a r y FebruaryMarch 10 0 0 BB T 36 1 0 6 2 9 0 27 7 5 1 8 9 7 31 6 9 3 8 1 4 64 2 6 4 9 2 4 12 1 5 A/ R E m p l o y e e B u y b a c k C o n t r i b u t i o n s 20 2 7 9 4 3 20 2 7 9 4 3 20 2 7 9 4 3 20 2 7 9 4 3 12 2 0 A/ R S t a t e C o n t r i b u t i o n s 54 6 7 4 8 7 5 0. 0 0 0. 0 0 0. 0 0 13 0 0 Pr e p a i d O t h e r 0. 0 0 15 5 6 6 6 2 5 17 4 2 3 5 2 8 16 1 5 4 0 4 6 Sa l e m T r u s t C o n s o l i d a t e d 14 0 0 Ca s h a n d E q u i v a l e n t s 59 3 9 2 2 2 9 77 3 3 0 7 3 4 1, 0 8 6 8 2 2 3 9 71 0 9 2 0 1 4 14 1 0 Eq u i t i e s 8, 7 6 5 0 4 7 9 6 9, 0 9 1 5 8 6 6 9 8, 7 6 7 1 0 0 9 5 8, 5 1 9 1 0 0 5 4 9, 14 2 0 Fi x e d I n c o m e 16 9 8 8 5 6 7 9 1 16 8 5 4 4 3 3 0 0 16 9 0 1 9 1 6 8 1 17 6 8 6 2 6 5 5 4 17 14 5 0 Ac c r u e d I n c o m e 10 9 2 8 2 0 9 11 0 0 3 4 3 9 99 3 1 7 4 8 10 1 4 9 6 7 4 14 6 0 Br o k e r A c c r u a l s 5 5 7 7 4 5 6 32 8 2 0 2 7 9 7 6 3 1 3 7 3 6 6 8 Sa l e m T r u s t T o t a l 26 4 0 1 0 4 5 6 9 27 1 5 7 5 6 4 2 1 26 8 5 4 3 9 4 5 0 27 0 1 7 0 4 6 2 8 27 16 0 4 Am e r i c a n C o r e R e a l t y 3, 1 7 7 3 3 1 7 9 3, 1 7 7 3 3 1 7 9 3, 7 0 5 7 1 1 1 3 3, 7 0 5 7 1 1 1 3 3, 16 1 6 Dr e y f u s I n t e r n a t i o n a l B o n d 81 5 1 8 7 9 5 81 8 6 6 9 1 8 80 9 3 4 5 2 8 80 9 3 4 5 2 8 16 2 8 Op p e n h e i m e r I n t e r n a t i o n a l B o n d 73 8 1 0 2 2 9 73 9 6 4 8 6 1 73 0 3 1 0 4 5 73 0 3 1 0 4 5 16 3 9 Va n g u a r d G l o b a l E q u i t y 2, 2 8 2 8 2 8 7 8 2, 2 8 2 8 2 8 7 8 2, 3 1 0 2 4 7 5 4 2, 3 1 0 2 4 7 5 4 2, 16 4 1 Va n g u a r d I n t e r n a t i o n a l G r o w t h 1, 6 4 4 9 4 1 4 0 1, 6 4 4 9 4 1 4 0 1, 5 9 6 7 3 1 0 1 1, 5 9 6 7 3 1 0 1 1, 16 4 2 Va n g u a r d I n t e r n a t i o n a l V a l u e 1, 4 8 4 8 2 1 5 5 1, 4 8 4 8 2 1 5 5 1, 4 0 0 5 0 6 7 2 1, 4 0 0 5 0 6 7 2 1, 16 5 4 Rh u m b L i n e A d v i s e r s 36 4 3 5 3 4 0 8 5 37 1 0 2 7 3 9 8 3 36 8 7 9 5 7 2 5 6 35 8 9 3 4 5 3 6 4 37 20 0 0 Ac c o u n t s P a y a b l e 3 8 1 6 6 8 3 0. 0 0 4 3 1 2 9 6 2 3 8 9 2 8 2 1 73 8 6 9 5 2 4 5 5 74 8 6 2 0 1 0 0 0 74 7 5 5 1 4 2 4 2 74 2 4 8 8 9 2 9 7 76 Pa l m B e a c h G a r d e n s P o l i c e Ba l a n c e S h e e t FY 2 0 1 5 Ac c o u n t D e s c r i p t i o n TO T A L R E S E R V E F U N D M A R K E T V A L U E En d O c t o b e r E n d N o v e m b e r E n d D e c e m b e r E n d J a n u a r y E n d Fe b r u a r y In c o m e 40 0 0 Em p l o y e r C o n t r i b u t i o n s 0. 0 0 0. 0 0 0. 0 0 60 1 5 9 3 2 5 0. 0 0 41 0 0 Em p l o y e e C o n t r i b u t i o n s 31 7 7 4 1 6 32 5 7 4 6 0 33 0 8 2 8 7 49 4 9 7 4 3 32 7 4 1 5 7 Re a l iz e d G a i n L o s s S a l e m T r u s t 42 1 0 Eq u it i e s 72 3 0 6 78 6 8 3 2 4 0 6 9 1 8 1 6 5 7 3 67 9 9 8 42 2 0 Fi x e d I n c o m e 8 2 1 4 4 3 7 9 1 1 1 9 6 8 7 1 4 8, 9 0 9 2 1 2 8 4 8 6 8 2 Un r e a l iz e d G a in L o s s S a l e m T r u s t 43 1 0 Eq u it i e s 19 0 4 5 1 5 6 24 6 3 7 0 9 6 2 0 3 8 9 8 5 1 3 8 0 9 1 1 3 67 9 3 1 9 0 2 43 2 0 Fi x e d I n c o m e 74 7 9 0 6 2 63 5 6 6 8 2 6 7 9 9 2 8 1 26 9 6 5 4 1 4 1 2 1 2 2 3 6 3 44 0 0 Re a l iz e d G a i n L o s s M g r H e l d 44 0 4 Am e r i c a n C o r e R e a l t y 0. 0 0 0. 0 0 3, 7 8 9 2 2 0. 0 0 0. 0 0 45 0 0 Un r e a l iz e d G a in L o s s M g r H e l d 45 0 4 Am e r i c a n C o r e R e a l t y 0. 0 0 0. 0 0 13 8 9 9 4 6 0. 0 0 0. 0 0 45 1 6 Dr e y f u s I n t e r n a t i o n a l B o n d 0. 0 0 0. 0 0 3 0 0 5 8 9 1 0. 0 0 0. 0 0 45 2 8 Op p e n h e i m e r I n t e r n a t io n a l B o n d 0. 0 0 0. 0 0 1 1 0 7 9 3 8 0. 0 0 0. 0 0 45 3 9 Va n g u a r d G l o b a l E q u i t y 0. 0 0 0. 0 0 7 9 7 0 2 8 0. 0 0 0. 0 0 45 4 1 Va n g u a r d I n t e r n a t i o n a l G r o w t h 0. 0 0 0. 0 0 8 6 6 1 8 9 2 0. 0 0 0. 0 0 45 4 2 Va n g u a r d I n t e r n a t i o n a l V a lu e 0. 0 0 0. 0 0 1 2 2 2 9 8 6 4 0. 0 0 0. 0 0 45 5 4 Rh u m b L in e A d v is e r s 1, 3 0 1 7 8 4 8 3 66 7 3 9 8 9 8 25 7 0 7 2 7 3 9 8 6 1 1 8 9 2 2, 0 2 8 1 8 7 0 4 46 0 0 In t e r e s t D iv i d e n d I n c o m e 45 5 9 7 9 2 54 6 1 2 5 7 21 8 7 4 3 5 6 44 5 4 6 7 0 51 4 2 6 9 1 47 0 0 Cl a s s A c t i o n S e t t l e m e n t s 0. 0 0 0. 0 0 0. 0 0 1, 5 6 6 6 5 0. 0 0 47 1 0 Se c u r i t i e s L i t ig a t i o n 0. 0 0 0. 0 0 11 4 3 2 0. 0 0 0. 0 0 48 0 0 Sa le m T r u s t A d j u s t m e n t s 0. 0 0 0. 0 0 0. 0 0 0. 0 0 0. 0 5 To t a l I n c o m e 1, 6 4 4 3 0 0 7 1 1 0 6 1 5 1 9 6 5 1 7 0 3 6 5 5 4 1 6 6 6 0 8 4 0 2 6 4 2 6 4 4 1 2 En d O c t o b e r E n d N o v e m b e r E n d D e c e m b e r E n d J a n u a r y E n d Fe b r u a r y Ex p e n s e 50 0 0 Be n e f i t P a y m e n t s 29 2 0 0 0 5 3 0. 0 0 14 8 4 6 7 2 8 14 8 4 8 2 5 9 14 8 4 8 2 5 9 50 1 0 Be n e f i c ia r y P a y m e n t s 14 5 7 2 7 8 0. 0 0 7, 2 8 6 3 9 7, 2 8 6 3 9 7, 2 8 6 3 9 50 2 0 Di s a b il it y P a y m e n t s 42 4 9 5 0 8 0. 0 0 22 7 3 5 1 4 22 7 3 5 1 4 22 7 3 5 1 4 53 0 0 DR O P D i s t r i b u t io n s 38 0 0 0 0 0 65 0 0 0 0 0 25 0 0 0 0 0 15 0 0 0 0 0 0 11 5 2 0 0 0 53 1 0 DR O P D i s t r i b u t io n s M o n t h l y 3, 4 0 0 0 0 0. 0 0 1, 7 0 0 0 0 1, 7 0 0 0 0 1, 7 0 0 0 0 60 0 0 Cu s t o d ia n F e e s 0. 0 0 0. 0 0 4, 2 0 1 4 1 0. 0 0 0. 0 0 60 2 0 In v e s t m e n t C o n s u l t a n t F e e s 0. 0 0 0. 0 0 5, 3 0 4 0 0 0. 0 0 0. 0 0 60 4 0 In v e s t m e n t M a n a g e m e n t F e e s 0. 0 0 0. 0 0 42 5 1 8 7 2 0. 0 0 0. 0 0 61 0 0 Ac t u a r y F e e s 0. 0 0 0. 0 0 10 4 8 0 0 0 0. 0 0 0. 0 0 61 1 0 Ad m i n i s t r a t o r F e e s 2, 5 7 5 0 0 2, 5 9 7 8 0 2, 5 7 5 0 0 2, 5 7 5 0 0 2, 6 2 2 7 8 61 2 0 Au d i t o r F e e s 0. 0 0 0. 0 0 0. 0 0 5, 0 0 0 0 0 0. 0 0 61 3 0 Ba n k C h a r g e s 19 9 3 0 13 8 9 0 15 8 4 1 18 3 6 2 12 2 3 8 61 5 0 Le g a l F e e s 0. 0 0 66 7 5 0 89 8 4 3 29 1 9 0 84 9 3 0 61 6 0 Po s t a g e 0. 0 0 0. 0 0 0. 0 0 0. 0 0 39 1 7 62 0 0 Tr u s t e e E x p e n s e C o n f e r e n c e 3, 9 2 0 8 1 0. 0 0 26 9 1 1 1, 3 8 6 4 1 0. 0 0 62 0 0 Tr u s t e e E x p e n s e C o n f e r e n c e 3, 1 5 0 0 0 30 0 0 60 0 0 0. 0 0 0. 0 0 62 2 0 An n u a l M e m b e r s h i p F e e s 0. 0 0 60 0 0 0 0. 0 0 0. 0 0 0. 0 0 63 0 0 Fi d u c i a r y L i a b i l it y I n s u r a n c e 92 7 8 1 0. 0 0 5, 5 7 9 2 3 0. 0 0 0. 0 0 To t a l E x p e n s e 40 1 2 4 1 3 1 6 9 0 3 4 2 0 2 7 7 2 3 3 1 2 3 3 9 6 4 1 0 5 1 9 5 3 5 7 7 5 Re s e r v e F u n d L a s t P e r io d 72 6 2 6 4 6 5 1 5 73 8 6 9 5 2 4 5 5 74 8 6 2 0 1 0 0 0 74 7 5 5 1 4 2 4 2 74 2 4 8 8 9 2 9 7 Ba l a n c e T o F r o m R e s e r v e 1, 2 4 3 0 5 9 4 0 99 2 4 8 5 4 5 1 0 6 8 6 7 5 8 5 0 6 2 4 9 4 5 2, 4 4 7 2 8 6 3 7 TO T A L R E S E R V E F U N D 7 3 8 6 9 5 2 4 5 5 7 4 8 6 2 0 1 0 0 0 7 4 7 5 5 14 2 4 2 7 4 2 4 8 8 9 2 9 7 7 6 6 9 6 1 7 9 3 4 Pa l m B e a c h G a r d e n s P o l i c e St a t e m e n t o f I n c o m e a n d E x p e n s e FY 2 0 1 5 Ac c o u n t D e s c r i p t i o n Ac c o u n t D e s c r i p t i o n CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, 2014 ANNUAL EMPLOYER CONTRIBUTION FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2016 TABLE OF CONTENTS Section Title Page A Discussion of Valuation Results 1. Discussion of Valuation Results 1 2. Chapter Revenue 5 B Valuation Results 1. Participant Data 6 2. Annual Required Contribution 7 3. Actuarial Value of Benefits and Assets 8 4. Calculation of Employer Normal Cost 9 5. Liquidation of Unfunded Actuarial Accrued Liability 10 6. Actuarial Gains and Losses 12 7. Recent History of Required and Actual Contributions 16 8. Recent History of UAAL and Funded Ratio 17 9. Actuarial Assumptions and Cost Method 18 10. Glossary of Terms 23 C Pension Fund Information 1. Statement of Plan Assets at Market Value 26 2. Reconciliation of Plan Assets 27 3. Reconciliation of DROP Accounts 28 4. Calculation of Actuarial Value of Assets 29 5. Investment Rate of Return 30 D Financial Accounting Information 1. FASB No. 35 31 2. GASB No. 27 32 3. GASB No. 67 34 E Miscellaneous Information 1. Reconciliation of Membership Data 39 2. Active Participant Distribution 40 3. Inactive Participant Distribution 41 F Summary of Plan Provisions 42 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 $3,310,398 $3,357,569 $(47,171) As % of Covered Payroll 67.88 %65.26 %2.62 % Allowable Credit for State Contribution $412,644 $951,196 $(538,552) As % of Covered Payroll 8.46 %18.49 %(10.03)% Required Employer Contribution $2,897,754 $2,406,373 $491,381 As % of Covered Payroll 59.42 %46.77 %12.65 % As % of Total Payroll including DROP participants 31.76 %26.90 %4.86 % Decrease) Increase10/1/2013 Based on 10/1/2014 Valuation Valuation* For FYE 9/30/2016 For FYE 9/30/2015 Based on From June 10, 2014 Actuarial Impact Statement 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 2015 and 2016 will be the $951,196 and $412,644, respectively. The amount for 2015 includes the use of $538,552 in accumulated excess Chapter 185 reserves. If the actual amounts differ from these amounts, then the net City contributions should be adjusted by the difference. Total payroll for the fiscal year ending September 30, 2016, including pay for members participating in the DROP, is expected to be approximately $9.12 million (compared to $4.88 million for expected non-DROP covered payroll). City contribution requirements have also been shown above as a percentage of total payroll (including DROP members.) 2 Actual employer and allowable State contributions during the year ending September 30, 2014 were 2,712,635 and $412,644, respectively, for a total of $3,125,279. The annual required contribution was 3,125,279. Revisions in Benefits Effective July 1, 2016, for members who had less than ten years of service as of September 13, 2012, eligibility for normal retirement will 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 will change to allow participants to delay entry into the DROP until they have accrued the maximum benefit of 75% of Average Monthly Earnings. Effective June 5, 2014, the member contribution rate was 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 was 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. Revisions in Actuarial Assumptions or Methods The investment return assumption was lowered from 7.2% to 7.1%. 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 2.25% 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 $1,184,221 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 1.0% versus assumed salary increases of 7.5%) and gains due to recognized investment return above the assumed rate of 7.2%. The investment return was 10.4% based on market value of assets and 8.7% based on actuarial value of assets. The gain was partially offset by more retirements (DROP entries) than expected and fewer terminations of employment than expected. The net 3 actuarial gain has decreased the required employer contribution by 2.76% of covered payroll. Funded Ratio This year’s funded ratio is 70.8% compared to 69.2% last year (based on the June 10, 2014 Actuarial Impact Statement). The funded ratio was 71.6% 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 46.77 % Change in assumptions 2.25 Payment on unfunded liability 3.52 Experience (gain)/loss (2.76) Change in Normal Cost Rate (0.55) Change in administrative expense 0.16 Change in State revenue 10.03 Contribution rate this year 59.42 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 $3,792,466 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 8.8% 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 4 assumption may not exceed the average growth over the last ten years, which was (3.68%) during the ten- year period ending September 30, 2014 and (1.99%) during the ten-year period ending September 30, 2013. Therefore, the UAL continues to be 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 50.63% and the funded ratio would have been 75.57%. The market value-based funded ratio was 73.15% 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 It is important to note that system assets are not sufficient to cover the liability for current inactive members. As of October 1, 2014 the market value of assets is $60.5 million and the liability for current inactive members is $61.2 million. Some steps have been taken to address this issue, such as lowering the investment return assumption and shortening the amortization period for bases established on or after October 1, 2007. The Board may want to consider further steps, such as updating the retirement rate assumption to more closely match experience. An experience study is recommended. The remainder of this Report includes detailed actuarial valuation results, financial information, miscellaneous information and statistics, and a summary of plan provisions. 5 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. However, this minimum benefit requirement will be met effective July 1, 2016, due to the passage of Ordinance 9, 2014. 1.Base Amount Previous Plan Year $412,644 2.Amount Received for Previous Plan Year 546,749 3.Benefit Improvements Made in Previous Plan Year 0 4.Excess Funds for Previous Plan Year: (2) - (1) - (3)134,105 5.Accumulated Excess at Beginning of Previous Year 601,123 6.Prior Excess Used in Previous Plan Year 0 7.Accumulated Excess as of Valuation Date Available for Benefit Improvements): (4) + (5) - (6)735,228 * 8.Base Amount This Plan Year: (1) + (3)412,644 Actuarial Confirmation of the Use of State Chapter Money Before reflecting the use of $538,552 to offset the required City contribution for fiscal year ending September 30, 2015. 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 6 ACTIVE MEMBERS Number 74 75 Covered Annual Payroll $4,644,608 $4,899,915 Average Annual Payroll $62,765 $65,332 Average Age 38.9 39.1 Average Past Service 9.9 10.3 Average Age at Hire 29.0 28.8 RETIREES, BENEFICIARIES & DROP** Number 62 57 Annual Benefits $4,532,481 $4,179,994 Average Annual Benefit $73,105 $73,333 Average Age 55.5 55.2 DISABILITY RETIREES Number 10 10 Annual Benefits $272,822 $272,822 Average Annual Benefit $27,282 $27,282 Average Age 58.2 57.2 TERMINATED VESTED MEMBERS Number 3 2 Annual Benefits $148,392 $124,164 Average Annual Benefit $49,464 $62,082 Average Age 42.1 42.7 From June 10, 2014 Actuarial Impact Statement Does not include deferred supplemental benefits for DROP members PARTICIPANT DATA October 1, 2014 October 1, 2013* 7 A.Valuation Date October 1, 2014 October 1, 2014 B.ARC to Be Paid During Fiscal Year Ending 9/30/2016 9/30/2016 9/30/2015 C.Assumed Dates of Employer Contributions Quarterly Quarterly Quarterly D.Annual Payment to Amortize Unfunded Actuarial Liability $2,073,095 $1,996,502 $2,069,763 E.Employer Normal Cost 948,963 923,769 993,497 F.ARC if Paid on the Valuation Date: D+E 3,022,058 2,920,271 3,063,260 G.ARC Adjusted for Frequency of Payments 3,152,671 3,048,237 3,197,492 H.ARC as % of Covered Payroll 67.88 %65.63 %65.26 % I.Assumed Rate of Increase in Covered Payroll to Contribution Year 5.00 %5.00 %5.00 % J.Covered Payroll for Contribution Year 4,876,838 4,876,838 5,144,911 K.ARC for Contribution Year: H x J 3,310,398 3,200,669 3,357,569 L.Allowable Credit for State Revenue in Contribution Year 412,644 412,644 951,196 M.Required Employer Contribution (REC) in Contribution Year 2,897,754 2,788,025 2,406,373 N.REC as % of Covered Payroll in Contribution Year: M ÷ J 59.42 %57.17 %46.77 %ANNUAL REQUIRED CONTRIBUTION (ARC)After Change Before Change October 1, 2013*From June 10, 2014 Actuarial Impact Statement 8 A.Valuation Date October 1, 2014 October 1, 2014 October 1, 2013* B.Actuarial Present Value of All Projected Benefits for 1.Active Members a. Service Retirement Benefits $ 26,174,328 $ 25,661,099 $ 27,864,639 b. Vesting Benefits 1,326,687 1,294,418 1,369,186 c. Disability Benefits 3,421,435 3,364,913 3,452,621 d. Preretirement Death Benefits 356,601 350,362 369,554 e. Return of Member Contributions 27,175 27,129 22,950 f. Total 31,306,226 30,697,921 33,078,950 2.Inactive Members a. Service Retirees & Beneficiaries 57,408,045 56,842,578 52,641,668 b. Disability Retirees 2,865,007 2,842,487 2,894,330 c. Terminated Vested Members 967,399 949,934 820,252 d. Total 61,240,451 60,634,999 56,356,250 3. Total for All Members 92,546,677 91,332,920 89,435,200 C.Actuarial Accrued (Past Service) Liability per GASB No. 25 80,119,974 79,243,383 76,848,944 D.Actuarial Value of Accumulated Plan Benefits per FASB No. 35 77,156,150 76,298,516 73,313,409 E.Plan Assets 1.Market Value 60,549,803 60,549,803 55,660,784 2. Actuarial Value 56,757,337 56,757,337 53,201,682 F.Unfunded Actuarial Accrued Liability: C - E2 23,362,637 22,486,046 23,647,262 G.Actuarial Present Value of Projected Covered Payroll 48,544,365 48,235,525 49,399,426 H.Actuarial Present Value of Projected Member Contributions 4,174,816 4,148,255 4,248,351 I.Accumulated Value of Contributions for Active Members 3,889,790 3,889,790 4,089,690 J.Funded Ratio: E2 ÷ C 70.8%71.6%69.2%ACTUARIAL VALUE OF BENEFITS AND ASSETS Before ChangeAfterChangeFrom June 10, 2014 Actuarial Impact Statement 9 CALCULATION OF EMPLOYER NORMAL COST A.Valuation Date October 1, 2014 After Change Before Change B.Normal Cost for 1.Service Retirement Benefits $897,771 $877,751 $952,373 2.Vesting Benefits 93,337 91,318 99,129 3.Disability Benefits 210,294 207,388 216,197 4.Preretirement Death Benefits 20,751 20,451 21,450 5.Return of Member Contributions 9,867 9,918 10,453 6.Total for Future Benefits 1,232,020 1,206,826 1,299,602 7.Assumed Amount for Administrative Expenses 116,379 116,379 115,288 8.Total Normal Cost 1,348,399 1,323,205 1,414,890 9.Total as a % of Covered Payroll 29.03%28.49%28.88% C.Expected Member Contribution 399,436 399,436 421,393 D.Employer Normal Cost: B8-C 948,963 923,769 993,497 E.Employer Normal Cost as a % of Covered Payroll 20.43%19.89%20.28% October 1, 2013*October 1, 2014 From June 10, 2014 Actuarial Impact Statement 10 LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY A. UAAL Amoritzation Period and Payments Amortization Period Years Years (Years)Amount Remaining Amount After Change Before Change 7/1/1986 30 4,147$ 2 720$ 372$ 373$ 10/1/1991 30 (1,504)7 (727)(126)(127) 10/1/1991 30 286,223 7 137,786 23,955 24,016 10/1/1992 30 122,611 8 65,283 10,248 10,278 10/1/1993 30 (194,444)9 (113,620)(16,352)(16,407) 10/1/1995 30 796,975 11 650,793 81,438 81,767 10/1/1996 30 (189,977)12 (170,693)(20,173)(20,261) 10/1/2000 30 3,639,273 16 4,053,774 403,334 405,622 10/1/2005 30 975,210 21 1,093,632 94,998 95,670 10/1/2005 30 5,273,728 21 5,914,124 513,728 517,362 10/1/2006 30 12,571,515 22 13,769,348 1,171,960 1,180,546 10/1/2007 15 (251,668)8 (189,634)(29,767)(29,855) 10/1/2008 15 3,319,494 9 2,662,028 383,123 384,392 10/1/2009 15 (137,951)10 (114,537)(15,297)(15,353) 10/1/2010 15 348,981 11 301,421 37,719 37,871 10/1/2011 15 (718,288)12 (639,068)(75,527)(75,858) 10/1/2011 15 847,054 12 753,631 89,066 89,457 10/1/2011 15 (6,706,717)12 (5,967,029)(705,200)(708,291) 10/1/2012 15 (751,599)13 (724,281)(81,375)(81,759) 10/1/2012 15 792,519 13 763,713 85,805 86,210 10/1/2013 15 (151,072)14 (149,234)(16,029)(16,110) 10/1/2013 15 836,318 14 826,143 88,733 89,180 10/1/2013 15 755,890 14 746,694 80,199 80,604 10/1/2014 15 (1,184,221)15 (1,184,221)(122,170)(122,825) 10/1/2014 15 876,591 15 876,591 90,433 N/A 21,159,088$ 23,362,637$ 2,073,095$ 1,996,502$ Original UAAL Current UAAL Payment 11 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 the 10-year historical average payroll growth rate. The expected amortization schedule is as follows: 2014 $23,362,637 2015 22,801,096 2016 22,199,689 2017 21,555,981 2018 20,866,569 2019 20,128,210 2024 16,003,182 2029 10,242,238 2034 2,874,953 2036 0 Year Expected UAAL Amortization Schedule 12 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 (from Actuarial Impact Statement)$23,647,262 2.Last Year's Employer Normal Cost 1,414,890 3.Last Year's Employer Contributions 3,125,279 4. Interest at the Assumed Rate on: a.1 and 2 for one year 1,804,475 b.3 from dates paid 71,081 c. a - b 1,733,394 5.This Year's Expected UAAL Prior to Revision: 1 + 2 - 3 + 4c 23,670,267 6.Change in UAAL Due to Plan Amendments and/or Changes in Actuarial Assumptions 876,591 7.This Year's Expected UAAL: 5 + 6 24,546,858 8.This Year's Actual UAAL 23,362,637 9.Net Actuarial Gain (Loss): 7 - 8 1,184,221 10.Gain (Loss) Due to Investments 948,117 11.Gain (Loss) from Other Sources 236,104 13 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 2014 1,184,221 14 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 several 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 9/30/2014 8.7 7.2 1.0 7.5 Average for Years Shown 6.8 N/A 7.2 N/A SalaryIncreasesInvestmentReturn 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. 15 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 5 6 5 1 0 0 0 0 1 0 1 2 74 9/30/2015 0 0 0 2 13 Yr Totals *85 96 61 60 2 6 1 0 8 24 32 34 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 2,712,635 412,644 3,125,279 10/1/2013 9/30/2015 3,357,569 65.26 951,196 18.49 2,406,373 46.77 --------- 10/1/2014 9/30/2016 3,310,398 67.88 412,644 8.46 2,897,754 59.42 --------- 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 16 RECENT HISTORY OF UAAL AND FUNDED RATIO 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 53,201,682 76,848,944 23,647,262 69.2 4,899,915 482.6 10/1/2014 56,757,337 80,119,974 23,362,637 70.8 4,644,608 503.0 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) 17 18 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 7.1% 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 7.1% investment return rate translates to an assumed real rate of return over wage inflation of 4.1%. 19 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 (3.68%). 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 2014)Men Women Men Women 50 0.17 %0.13 %34.26 35.63 55 0.28 0.24 29.14 30.66 60 0.54 0.47 24.21 25.89 65 1.05 0.90 19.60 21.40 70 1.80 1.56 15.41 17.28 75 3.11 2.51 11.63 13.56 80 5.59 4.16 8.41 10.25 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. 20 The rates of retirement used to measure the probability of eligible members who had at least 10 years of service as of September 13, 2012 retiring during the next year are as follows: 42 - 45 46-47 48-49 50 51 52 53 54 55 56 57-59 60 10 0.0%0.0%0.0%2.5%2.5%20.0%20.0%20.0%55.0%65.0%65.0%100.0% 11 0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%100.0% 12 0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%100.0% 13 0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%100.0% 14 0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%100.0% 15 0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%100.0% 16 0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%100.0% 17 0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%100.0% 18 0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%100.0% 19 0.0%0.0%0.0%2.5%2.5%10.0%10.0%10.0%47.5%57.5%60.0%100.0% 20 20.0%22.5%22.5%25.0%27.5%30.0%40.0%45.0%70.0%80.0%80.0%100.0% 21 5.0%5.0%10.0%12.5%12.5%12.5%15.0%15.0%47.5%65.0%65.0%100.0% 22 5.0%5.0%10.0%12.5%12.5%12.5%15.0%15.0%47.5%65.0%65.0%100.0% 23 5.0%5.0%10.0%15.0%15.0%15.0%15.0%15.0%47.5%65.0%65.0%100.0% 24 5.0%5.0%10.0%15.0%15.0%15.0%15.0%15.0%47.5%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% S e r v i c e Age The probability of normal retirement for members who had less than 10 years of service as of September 13, 2012 is as follows: 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% 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%. 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 21 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 22 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. 23 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, 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). 24 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. 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. 25 Funded Ratio The ratio of the Actuarial Value of Assets to the Actuarial Accrued Liability. GASB Governmental Accounting Standards Board. GASB No. 27 and GASB No. 67 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. 67 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 26 Statement of Plan Assets at Market Value Item 2014 2013 A.Cash and Cash Equivalents (Operating Cash)876,826$ 849,326$ B.Receivables: 1.Member Contributions 20,279$ 30,655$ 2.Employer Contributions - - 3.State Contributions 546,749 - 4.Investment Income and Other Receivables 249,069 261,309 5.Total Receivables 816,097$ 291,964$ C.Investments 1.Short Term Investments 1,159,131$ 1,896,360$ 2.Domestic Equities 43,647,103 37,998,999 3.International Equities 5,592,075 5,016,371 4.Domestic Fixed Income 15,441,231 15,373,981 5.International Fixed Income 2,200,483 1,502,285 6.Real Estate 2,937,572 1,696,507 7.Private Equity - - 8.Total Investments 70,977,595$ 63,484,503$ D.Liabilities 1.Benefits Payable -$ -$ 2.Accrued Expenses and Other Payables (44,187) (50,340) 3.Total Liabilities (44,187)$ (50,340)$ E.Total Market Value of Assets Available for Benefits 72,626,331$ 64,575,453$ F.Reserves 1.State Contribution Reserve (735,228)$ (601,123)$ 2.DROP Accounts (11,341,300) (8,313,546) 3.Total Reserves (12,076,528)$ (8,914,669)$ G.Market Value Net of Reserves 60,549,803$ 55,660,784$ H.Allocation of Investments 1.Short Term Investments 1.6%3.0% 2.Domestic Equities 61.5%59.8% 3.International Equities 7.9%7.9% 4.Domestic Fixed Income 21.8%24.2% 5.International Fixed Income 3.1%2.4% 6.Real Estate 4.1%2.7% 7.Private Equity 0.0%0.0% 8.Total Investments 100.0%100.0% September 30 27 Reconciliation of Plan Assets Item 2014 2013 A.Market Value of Assets at Beginning of Year 64,575,453$ 55,261,152$ B.Revenues and Expenditures 1.Contributions a.Member Contributions 391,188$ 432,301$ b.Employer Contributions 2,712,635 2,700,762 c.State Contributions 546,749 475,215 d.Total 3,650,572$ 3,608,278$ 2.Investment Income a.Interest, Dividends, and Other Income 788,529$ 752,092$ b.Net Realized/Unrealized Gains/(Losses)*6,205,769 7,347,888 c.Investment Expenses (195,370) (174,307) d.Net Investment Income 6,798,928$ 7,925,673$ 3.Benefits and Refunds a.Regular Monthly Benefits (1,991,635)$ (1,974,719)$ b.Refunds (6,852) (32,872) c.Lump Sum Benefits - - d.DROP Distributions (286,037) (93,400) e.Total (2,284,524)$ (2,100,991)$ 4.Administrative and Miscellaneous Expenses (114,098)$ (118,659)$ 5.Transfers -$ -$ C.Market Value of Assets at End of Year 72,626,331$ 64,575,453$ D.Reserves 1.State Contribution Reserve (735,228)$ (601,123)$ 2.DROP Accounts (11,341,300) (8,313,546) 3.Total Reserves (12,076,528)$ (8,914,669)$ E.Market Value Net of Reserves 60,549,803$ 55,660,784$ September 30 Breakdown between realized and unrealized gains/(losses) was not provided. 28 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 2014 8,313,546 2,649,761 628,054 (286,037) 35,976 11,341,300 Reconciliation of DROP Accounts 29 Calculation of Actuarial Value of Assets Item A. Beginning of Year Assets* 1. Market Value $64,575,453 *$55,261,152 * 2. Actuarial Value 62,116,351 55,976,014 B. End of Year Market Value of Assets*72,626,331 64,575,453 C. Net of Contributions Less Disbursements 1,251,950 *1,388,628 * D. Actual Net Investment Earnings 6,798,928 7,925,673 E. Expected Investment Earnings 4,517,447 4,136,934 F. End of Year Expected Actuarial Value 67,885,748 61,501,576 G. End of Year Market Value Less Expected Actuarial Value: B - F 4,740,583 3,073,877 H. 20% of Difference 948,117 614,775 I. End of Year Assets 1. Actuarial Value: F + H 68,833,865 62,116,351 2. Final Actuarial Value Within 80% to 120% of Market Value 68,833,865 62,116,351 J. State Contribution Reserve 735,228 601,123 K. DROP Accounts 11,341,300 8,313,546 L. Final Actuarial Value of Assets: I2 - J - K 56,757,337 53,201,682 M. Recognized Investment Earnings 5,465,564 4,751,709 N. Recognized Rate of Return 8.7%8.4% 2014 2013 Year Ending September 30 Before offset of DROP Account Balances and State Contribution Reserve. 30 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 2014 10.4 8.7 Average Returns: Last 5 Years 10.2 % 6.8 % Last 10 Years 6.9 % 6.2 % All Years 7.2 % 6.8 % Investment Rate of Return ActuarialValueMarketValue * 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 31 A.Valuation Date B.Actuarial Present Value of Accumulated Plan Benefits 1.Vested Benefits a.Members Currently Receiving Payments $60,273,052 $55,535,998 b.Terminated Vested Members 967,399 820,252 c.Other Members 14,841,588 15,964,054 d.Total 76,082,039 72,320,304 2.Non-Vested Benefits 1,074,111 993,105 3.Total Actuarial Present Value of Accumulated Plan Benefits: 1d + 2 77,156,150 73,313,409 4.Accumulated Contributions of Active Members 3,889,790 4,089,690 C.Changes in the Actuarial Present Value of Accumulated Plan Benefits 1.Total Value at Beginning of Year 73,313,409 70,152,684 2.Increase (Decrease) During the Period Attributable to: a.Plan Amendment and Change in Actuarial Assumptions 1,385,824 820,138 c.Latest Member Data, Benefits Accumulated and Decrease in the Discount Period 7,105,165 6,735,358 d.Benefits Paid (net basis)(4,648,248)(4,394,771) e.Net Increase 3,842,741 3,160,725 3.Total Value at End of Period 77,156,150 73,313,409 D.Market Value of Assets 60,549,803 55,660,784 E.Actuarial Assumptions - See page entitled Actuarial Assumptions and Methods October 1, 2014 October 1, 2013 FASB NO. 35 INFORMATION 32 Employer FYE September 30 2014 2013 Annual Required Contribution (ARC)*3,125,279$ 3,113,406$ Interest on Net Pension Obligation (NPO)(13,513) (14,017) Adjustment to ARC (17,537) (18,347) Annual Pension Cost (APC)3,129,303 3,117,736 Contributions made 3,125,279 3,113,406 Increase (decrease) in NPO 4,024 4,330 NPO at beginning of year (187,686) (192,016) NPO at end of year (183,662) (187,686) Includes expected State contribution. ANNUAL PENSION COST AND NET PENSION OBLIGATION GASB STATEMENT NO. 27) Fiscal Annual Pension Actual Year Ending Cost (APC)Contribution 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) 9/30/2014 3,129,303 3,125,279 99.9 (183,662) APC Contributed Obligation THREE YEAR TREND INFORMATION Percentage of Net Pension 33 REQUIRED SUPPLEMENTARY INFORMATION GASB Statement 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, 2014 Contribution Rates Employer (and State) 67.88% Plan Members 8.60% Actuarial Cost Method Entry Age Normal Amortization Method Level percent, closed Remaining Amortization Period 22 years Asset Valuation Method Recognizes 20% of difference between market value of assets and expected actuarial asset value Actuarial Assumptions Investment rate of return 7.1% Projected salary increases 7.5% Includes inflation and other general increases at 3.0% Cost-of-living adjustments Not Applicable 34 SCHEDULE OF CHANGES IN THE EMPLOYER’S NET PENSION LIABILITY AND RELATED RATIOS GASB Statement No. 67 Fiscal year ending September 30,2015*2014 Total pension liability Service Cost 1,232,020$ 1,229,681$ Interest 6,323,716 6,083,570 Benefit Changes - 885,269 Difference between actual & expected experience 343,789 (56,911) Assumption Changes 938,829 - Benefit Payments (4,852,873) (2,277,672) Refunds (5,702) (6,852) Other (Net Decrease in State Contribution Reserve)(404,447) 134,105 Net Change in Total Pension Liability 3,575,332 5,991,190 Total Pension Liability - Beginning 90,998,913 85,007,723 Total Pension Liability - Ending (a)94,574,245$ 90,998,913$ Plan Fiduciary Net Position Contributions - Employer 2,406,373$ 2,712,635$ Contributions - Non-Employer Contributing Entity 546,749 546,749 Contributions - Member 399,436 391,188 Net Investment Income 5,079,321 6,798,928 Benefit Payments (4,852,873) (2,277,672) Refunds (5,702) (6,852) Administrative Expense (120,440) (114,098) Other - - Net Change in Plan Fiduciary Net Position 3,452,864 8,050,878 Plan Fiduciary Net Position - Beginning 72,626,331 64,575,453 Plan Fiduciary Net Position - Ending (b)76,079,195$ 72,626,331$ Net Pension Liability - Ending (a) - (b)18,495,050 18,372,582 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 80.44 %79.81 % Covered Employee Payroll 4,644,608$ 4,548,698$ Net Pension Liability as a Percentage of Covered Employee Payroll 398.20 %403.91 % These figures are estimates only. Actual figures will be provided after the end of the fiscal year. 35 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 90,998,913$ 72,626,331$ 18,372,582$ 79.81%4,548,698$ 403.91% 2015*94,574,245 76,079,195 18,495,050 80.44%4,644,608 398.20% These figures are estimates only. Actual figures will be provided after the end of the fiscal year. 36 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$ -$ 4,548,698$ 68.71% 2015*3,357,569$ 3,357,569$ -$ 4,644,608$ 72.29% These figures are estimates only. Actual figures will be provided after the end of the fiscal year. 37 NOTES TO SCHEDULE OF CONTRIBUTIONS GASB Statement No. 67 Valuation Date:October 1, 2014 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 21 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 7.10% 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 38 SINGLE DISCOUNT RATE GASB Statement No. 67 A single discount rate of 7.10% 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 7.10%. 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 (7.10%) 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 7.10%, 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 6.10%7.10%8.10% 28,220,192$ 18,495,050$ 10,403,288$ These figures are estimates only. Actual figures will be provided after the end of the fiscal year. SECTION E MISCELLANEOUS INFORMATION 39 A. 1.Number Included in Last Valuation 75 74 2.New Members 5 7 3.Non-Vested Employment Terminations 0 (1) 4.Vested Employment Terminations (1)(1) 5.Service Retirements 0 0 6.DROP Retirement (5)(4) 7.Disability Retirements 0 0 8.Deaths 0 0 9.Other -- Data Corrections 0 0 10.Number Included in This Valuation 74 75 B. 1.Number Included in Last Valuation 2 1 2.Additions from Active Members 1 1 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 3 2 1.Number Included in Last Valuation 31 28 2.Additions from Active Members 5 4 3.Retirements (2)(1) 4.Deaths Resulting in No Further Payments 0 0 5.Other 0 0 6.Number Included in This Valuation 34 31 D. 1.Number Included in Last Valuation 36 36 2.Additions from Active Members 0 0 3.Additions from Terminated Vested Members 0 0 4.Additions from DROP 2 1 5.Deaths Resulting in No Further Payments 0 (1) 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 38 36 RECONCILIATION OF MEMBERSHIP DATA Active Members Service Retirees, Disability Retirees and Beneficiaries Terminated Vested Members From 10/1/12From10/1/13 To 10/1/13To10/1/14 C. DROP Plan Members 40 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.1 1 1 0 0 0 0 0 0 0 3 TOT PAY 46,149 46,149 46,131 0 0 0 0 0 0 0 138,429 AVG PAY 46,149 46,149 46,131 0 0 0 0 0 0 0 46,143 25-29 NO.3 2 1 1 0 2 0 0 0 0 9 TOT PAY 138,447 93,221 46,131 46,131 0 99,516 0 0 0 0 423,446 AVG PAY 46,149 46,610 46,131 46,131 0 49,758 0 0 0 0 47,050 30-34 NO.1 2 0 0 0 6 2 0 0 0 11 TOT PAY 46,149 93,221 0 0 0 305,210 128,381 0 0 0 572,961 AVG PAY 46,149 46,610 0 0 0 50,868 64,190 0 0 0 52,087 35-39 NO.0 2 0 0 0 5 4 0 0 0 11 TOT PAY 0 92,298 0 0 0 274,295 232,667 0 0 0 599,260 AVG PAY 0 46,149 0 0 0 54,859 58,167 0 0 0 54,478 40-44 NO.0 0 0 0 0 4 11 6 0 0 21 TOT PAY 0 0 0 0 0 214,519 662,372 483,174 0 0 1,360,065 AVG PAY 0 0 0 0 0 53,630 60,216 80,529 0 0 64,765 45-49 NO.0 0 0 0 0 1 3 6 0 0 10 TOT PAY 0 0 0 0 0 53,390 182,878 443,192 0 0 679,460 AVG PAY 0 0 0 0 0 53,390 60,959 73,865 0 0 67,946 50-54 NO.0 0 0 0 0 2 2 3 0 0 7 TOT PAY 0 0 0 0 0 118,805 130,774 268,633 0 0 518,212 AVG PAY 0 0 0 0 0 59,402 65,387 89,544 0 0 74,030 55-59 NO.0 0 0 0 1 0 1 0 0 0 2 TOT PAY 0 0 0 0 124,792 0 60,106 0 0 0 184,898 AVG PAY 0 0 0 0 124,792 0 60,106 0 0 0 92,449 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.5 7 2 1 1 20 23 15 0 0 74 TOT AMT 230,745 324,889 92,262 46,131 124,792 1,065,735 1,397,178 1,194,999 0 0 4,476,731 AVG AMT 46,149 46,413 46,131 46,131 124,792 53,287 60,747 79,667 0 0 60,496 Years of Service to Valuation Date 41 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 1 24,228 - - - - - - 40-44 2 124,164 - - 3 193,040 - - 45-49 - - - - 9 694,927 - - 50-54 - - 4 110,723 27 2,307,406 - - 55-59 - - 2 52,775 9 673,217 - - 60-64 - - 3 91,473 3 205,675 1 33,777 65-69 - - 1 17,851 3 153,144 1 32,070 70-74 - - - - 5 217,636 1 21,589 75-79 - - - - - - - - 80-84 - - - - - - - - 85-89 - - - - - - - - 90-94 - - - - - - - - 95-99 - - - - - - - - 100 & Over - - - - - - - - Total 3 148,392 10 272,822 59 4,445,045 3 87,436 Average Age 42 58 55 67 Terminated Vested Deceased with Beneficiary Does not include deferred supplemental benefits for DROP members SECTION F SUMMARY OF PLAN PROVISIONS 42 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. 9, 2014 passed and adopted on July 10, 2014. 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). 43 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 Years of Service. Effective July 1, 2016, 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 the earlier of: 1) age 55 and 10 years of Credited Service, or 2) 25 years of Credited Service regardless of age. 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. 44 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 45 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. 46 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. 47 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. Effective July 1, 2016, a member 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 the earlier of: 1) age 55 and 10 years of Credited Service, or 2) 25 years of Credited Service regardless of age. Also, effect July 1, 2016, members may delay entry into the DROP until the maximum benefit percentage of 75% of Average Monthly Earnings is attained. 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. 48 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. 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 Effective July 1, 2016, for members who had less than ten years of service as of September 13, 2012, eligibility for normal retirement will 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 will 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 was 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 was 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. Minutes 1-29-15.doc Page 1 of 4 City of Palm Beach Gardens Police Officers’ Pension Fund Minutes of the Meeting Held January 29, 2015 The regular meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers’ Pension Fund was called to order at 9:17 AM by Jay Spencer in the Council Chambers at the Palm Beach Gardens City Hall at 10500 North Military Trail, Palm Beach Gardens, Florida. TRUSTEES PRESENT OTHERS PRESENT Jay Spencer, Chairman Audrey Ross (Resource Centers) David Pierson, Secretary Bonni Jensen (Law Offices of Perry & Jensen) Brad Seidensticker, Trustee John McCann (Thistle Asset Consulting) Greg Mull, Trustee Steve Stack (ICC Capital Management) PUBLIC COMMENTS N/A INVESTMENT CONSULTANT REPORT Thistle Asset Consulting – Presented by John McCann Mr. McCann reviewed the Callen chart and the market environment during the quarter ending December 31, 2014. Large cap is doing well and emerging markets remain down. As of December 31, 2014 the Plan’s assets are up to $73.6M and for the quarter the fund was up 3.84% versus the index at 3.45%, but for the one year they are slightly trailing the index at 7.60% versus 7.67%. Mr. McCann briefly reviewed each manager’s performance during the quarter and noted that domestic fixed income was the only negative manager and sector during the quarter. The Plan is now fully invested in American Realty as of December 31, 2014. The Trustees had a very lengthy discussion on ETF’s and Mr. McCann stated that Rhumbline does buy some ETF’s through their portfolio, but if the Board wanted to go outside on their own and buy individual ETF’s then they would need the Custodian purchase them and then they would not be actively managed. Mr. McCann discussed increasing the American Realty holding from 4.2% to 5% ($700K) because they have been doing so well. The Trustees discussed and stated that their target goes up to 5% so they didn’t see a reason why not to increase their holding. Ms. Jensen noted that every quarter American Realty is paying the Board out their dividends and she questioned whether or not it would be more visible to have the dividends reinvested instead of paid out. Mr. McCann explained that originally it was his recommendation to have the dividends paid out so that the Board can use that income for expenses/benefit payments, and also American Realty was added into the portfolio as a bond alternative so that it produces some kind of income. MOTION: Mr. Seidensticker made a motion to authorize and approve the transfer of $700K from the ICC Capital fixed income account to the American Realty account per the recommendation for the Plan’s Investment Consultant. Minutes 1-29-15.doc Page 2 of 4 SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 5-0. The Trustees had a lengthy discussion inflation and deflation due to the current market environment. They inquired with ICC in regards to the bond portfolio to see if it was setup to protect against deflation and Mr. Stack commented that they are prepared and the portfolio is positioned to hedge interest rate inflation, but they are not too worried about deflation at the moment. Overall Mr. McCann noted that the portfolio is doing great and is well positioned. INVESTMENT MANAGER REPORT ICC Capital – Presented by Steve Stack Mr. Stack updated the Board on the firm changes. He explained that ICC entered an agreement to be bought out by another management firm by the name of Argent Financial Group and they will be part of their subsidiary, Highland Capital Management. ICC Capital currently has 4 older shareholders that are looking to retire so they are ready for a transition. The ICC portfolio team/firm that is currently in place now and is located in Orlando will remain in place with no changes. Mr. Stack stated that the only change this Board will see is the name change from ICC to Highland. Highland is a family trust company and they currently do not have any institutional clients, but they do have a great fixed income product and team. ICC’s current fixed income portfolio manager, Bart will remain with the firm but he will now be focusing primarily on equities now. Ms. Jensen stated that the Board will need to approve this transition and she has reviewed and approved the consent (she also noted that there are no changes in fees). MOTION: Mr. Seidensticker made a motion to approve and authorize ICC Capital’s consent to transition to Highland Capital Management. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 5-0. ATTORNEY REPORT KKJ&L - Presented by Bonni Jensen Ms. Jensen reviewed the State law update memo regarding Senate Bill 172 and Senate Bill 242. If Senate Bill 172 passes then it would require this Plan to change its mortality table to coincide with the FRS’s table. We are hoping this Bill does not pass because it would have a financial impact on the Plan. Also the second Bill is the same Bill that has been pending for about the past 4 years regarding changes to the 175/185 accounts. This Bill would require that the Plan create individual Share accounts and would also require a defined contribution component be added in as well. Ms. Jensen noted that she will keep the Board updated as more information becomes available. Ms. Jensen presented the Board with an updated Special Tax Notice due to some IRS changes. This document is provided to all members that take a distribution from the Plan. Ms. Jensen notified the Board that the IRS mileage rate increased to $0.575 effective January 1, 2015. Ms. Jensen reviewed the DROP Plans and IRS review memo. She stated that this Plan’s IRS determination letter has been pending since 2009. In 2013 the IRS started taking on DROP Plans and wanted to consider them defined contribution (DC) Minutes 1-29-15.doc Page 3 of 4 Plans instead of defined benefit (DB) Plans. Now the IRS has recently made a ruling stating that all DROP accounts are not considered DC Plans and do not have to follow the rules and regulations of DC Plans either. This outcome is favorable to DB Plans and members and now hopefully we can get a move on the IRS determination letter. Ms. Jensen reviewed the draft of the State of Pension Report that she is working on finalizing. This report would eventually be provided to the members of the pension plan as well as the City Council. The fee to complete this project is $1,500 and Ms. Jensen stated that she will bring back a final report to the next meeting. Ms. Jensen stated that the summary plan description is final now that the actuarial information is updated. This document needs to be provided to the all the active members. MOTION: Mr. Glass made a motion to approve and accept the updated summary plan description as presented. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 5-0. ADMINISTRATOR REPORT Resource Centers – Presented by Audrey Ross Ms. Ross discussed a vested deferred member’s retirement eligibility. He recently terminated and as the Plan is currently written this member would have to wait until age 59 to start collecting his pension, but in 2016 the Plan will be changing again. Effective July 1, 2016 the retirement age will go back down from 59 to 55 and therefore this member wants to know if he will be included in that change as well. Mr. Jensen’s recommendation is to keep the Plan as is in that the members is entitled to the benefit now, and then come 2016 the member will still fall under the new rules and can collect at age 55. MOTION: Mr. Mull made a motion to approve and authorize that all members are eligible to retire at age 55 effective July 1, 2016, including all vested members as well. SECOND: Mr. Glass seconded the motion. CARRIED: The motion carried unanimously 5-0. Ms. Ross presented the Board with the 2015/2016 fiduciary liability insurance renewal. The fee this year is only $12.39 higher than last year. MOTION: Mr. Mull made a motion to approve and authorize the renewal of the 2015/2016 fiduciary liability insurance renewal. SECOND: Mr. Glass seconded the motion. CARRIED: The motion carried unanimously 5-0. Ms. Ross stated that the Board still needed to schedule the rest of their 2015 meeting dates. The Trustees scheduled the next meeting for Thursday April 30, 2015 at 9AM and the following one on Wednesday August 26, 2015 at 9AM. They noted that they will schedule the last meeting of the year at the next meeting. Minutes 1-29-15.doc Page 4 of 4 MINUTES MOTION: Mr. Pierson made a motion to approve the minutes from the October 27, 2014 regular meeting. SECOND: Mr. Mull seconded the motion. CARRIED: The motion carried unanimously 5-0. DISBURSEMENTS APPROVALS MOTION: Mr. Mull made a motion to approve the disbursements. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 5-0. BENEFIT APPROVALS MOTION: Mr. Glass made a motion to approve the application to exit the DROP for Gwen Fleming, the applications for distribution from DROP account for Gwen Fleming. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 5-0. OTHER BUSINESS N/A AJOURN There being no further business, the Trustees officially adjourned the meeting at 10:26PM. The next meeting is scheduled for Thursday April 30, 2015 at 9AM. Respectfully submitted, _____________________________ April 30, 2015 Cherry Bekaert LLP This representation letter is provided in connection with your audit of the financial statements and supplemental schedule of City of Palm Beach Gardens Police Officers’ Pension Fund (the “Fund”), which comprise the statement of fiduciary net position as of September 30, 2014, and the related statement of changes in fiduciary net position for the year then ended, and the related notes to the financial statements, for the purpose of expressing an opinion as to whether the financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States (U.S. GAAP). Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. An omission or misstatement that is monetarily small in amount could be considered material as a result of qualitative factors. We confirm, to the best of our knowledge and belief, as of April 30, 2015, the following representations made to you during your audit. Financial Statements 1) We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated October 24, 2014, including our responsibility for the preparation and fair presentation of the financial statements. 2) The financial statements referred to above are fairly presented in conformity with U.S. GAAP and include all other financial information required by generally accepted accounting principles to be included in in the financial reporting entity. 3) We acknowledge our responsibility for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. 4) We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud. 5) We understand that as part of your audit, you prepared the adjusting journal entries necessary to reclassify investment activity. We acknowledge that we have reviewed and approved those entries and accepted responsibility for them. We are in agreement with the adjusting journal entries that you have proposed and they have been posted to the Fund's accounts 6) Significant assumptions we used in making accounting estimates, including those measured at fair value, are reasonable. 7) Related-party relationships and transactions have been appropriately accounted for and disclosed in accordance with U.S. GAAP. 8) All events subsequent to the date of the financial statements and for which U.S. GAAP requires adjustment or disclosure have been adjusted or disclosed. 9) The effects of all known actual or possible litigation, claims, and assessments, if any, have been accounted for and disclosed in accordance with U.S. GAAP. 10) Other matters that legal counsel has advised us that must be disclosed have been properly disclosed. 11) Material concentrations have been properly disclosed in accordance with U.S. GAAP. THETHETHETHE PPPP ENSIONENSIONENSIONENSION R R R R ESOURCEESOURCEESOURCEESOURCE C C C CENTERENTERENTERENTER , , , , LLCLLCLLCLLC 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 Phone (561) 624-3277 Fax (561) 624-3278 WWW.R ESOURCECENTERS.COM 12) Financial instruments with concentrations of credit risk have been properly recorded or disclosed in the financial statements. 13) Guarantees, whether written or oral, under which the Fund is contingently liable, have been properly recorded or disclosed in accordance with U.S. GAAP. Information Provided 14) We have provided you with: a) Access to all information, of which we are aware, that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters. b) Additional information that you have requested from us for the purpose of the audit. c) Unrestricted access to persons within the Fund from whom you determined it necessary to obtain audit evidence. d) Plan instruments, trust agreements, insurance contracts, or investment contracts and amendments to such documents entered into during the year, including amendments to comply with applicable laws. e) Actuarial reports prepared for the Fund and the Fund’s sponsor during the year. 15) All material transactions have been recorded in the accounting records and are reflected in the financial statements. 16) We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud. 17) We have no knowledge of any fraud or suspected fraud that affects the Fund and involves: a) Management, b) Employees who have significant roles in internal control, or c) Others where the fraud could have a material effect on the financial statements. 18) We have no knowledge of any allegations of fraud or suspected fraud affecting the Fund’s financial statements communicated by employees, former employees, participants, regulators, beneficiaries, service providers, third-party administrators, or others. 19) We have no knowledge of any instances of noncom pliance or suspected noncompliance with laws and regulations whose effects should be considered when preparing financial statements. 20) We have disclosed to you all known actual or possible litigation, claims, and assessments whose effects should be considered when preparing the financial statements. 21) We have disclosed to you the identity of the Fund’s related parties and parties in interest and all the related- party and party-in-interest relationships and transactions of which we are aware. 22) The Fund has satisfactory title to all owned assets, which are recorded at fair value, and all liens, encumbrances, or security interests requiring disclosure in the financial statements have been properly disclosed. 23) We have no— a) Plans or intentions that may materially affect the carrying value or classification of assets and liabilities. b) Intentions to terminate the Fund. 24) Amendments to the Plan instrument, if any, have been properly recorded or disclosed in the financial statements. 25) We have no knowledge of any omissions from the participants’ data provided to the Fund’s actuary for the purpose of determining the actuarial present value of the Fund’s benefit obligations and other actuarially determined amounts in the financial statements. 26) The Fund administrator agrees with the actuarial methods and assumptions used by the actuary for funding purposes and for determining the Fund’s benefit obligations and has no knowledge or belief that such methods or assumptions are inappropriate in the circumstances. We did not give any instructions, nor cause any to be given, to the Fund’s actuary with respect to values or amounts derived, and we are not aware of any matters that have impacted the independence or objectivity of the Fund’s actuary. 27) We have obtained the service auditor’s report from our service organization. We have reviewed the report, including the complementary user controls. We have implemented the relevant user controls, and they were in operation for the year ended September 30, 2014. Also, the service auditors have not reported to us any: • Fraud • Noncompliance with laws and regulations, or • Uncorrected misstatements affecting the Fund financial statements as a result of the third-party service providers. • We are aware that the service auditor’s report for Salem Trust had an adverse opinion. We are not aware of any discrepancies that may have occurred in the investments held in custody by Salem Trust. 28) The following have been properly recorded or disclosed in the financial statements: • The actuarial methods or assumptions used in calculating amounts recorded or disclosed in the financial statements. • Fund provisions between the actuarial valuation date and the date of this letter. 29) The methods and significant assumptions used to estimate fair values of financial instruments, including non- readily marketable securities, are as follows: current values of investments have been determined using published market prices. If published market prices are unavailable, estimated values are based on similar investments of issuers with similar credit ratings. The methods and significant assumptions used result in a measure of fair value appropriate for financial measurement and disclosure purposes. 30) All required filings of the Fund’s documents with the appropriate agencies have been made. 31) The Fund is qualified under the appropriate section of the Internal Revenue Code and we intend to continue them as a qualified plan. The Fund sponsor has operated the Fund in a manner that did not jeopardize this tax status. 32) We have apprised you of all communications, whether written or oral, with regulatory agencies concerning the operation of the Fund. 33) We acknowledge our responsibility for the required supplementary information (RSI). The RSI is measured and presented within prescribed guidelines and the methods of measurement and presentation have not changed from those used in the prior period. We have disclosed to you any significant assumptions and interpretations underlying the measurement and presentation of the RSI. 34) With respect to the supplementary information on which an in-relation-to opinion is issued. We acknowledge our responsibility for presenting other supplementary information in accordance with accounting principles generally accepted in the United States of America, and we believe the other supplemental information, including its form and content, is fairly presented in accordance with accounting principles generally accepted in the United States of America. The methods of measurement and presentation of the other supplementary information have not changed from those used in the prior period, and we have disclosed to you any significant assumptions or interpretations underlying the measurement and presentation of the supplementary information. No events have occurred subsequent to the date of the Fund’s financial statements and through the date of this letter that would require adjustment to or disclosure in the aforementioned financial statements. _______________________________ ________________________________ Jay Spencer Audrey Ross Chairman, Board of Trustees Plan Administrator PAGE Market Snapshot 1 Index Comparisons 2 Compliance Report 3 Total Portfolio Pie Chart 5 Manager Pie Chart 6 Asset Allocation Table 7 Gain/Loss Table 8 Total Ranks Table 9 Manager Ranks 10 Scatterplot Graphs: Total Fund Graph 13 Rhumbline Equities Graph 14 ICC Fixed income Graph 15 Beta Graph 16 Alpha Graph 17 Beta/Alpha Table 18 Batting Average Graph 19 Batting Average/R-Squared Table 20 Other Managers' Page 21 Palm Beach Gardens Police Pension Fund Executive Summary Report Table of Contents SECTION Page 2 Index Comparison March 31, 2015 -10.00 0.00 10.00 20.00 30.00 3 Months Last 12 Months Last 3 Years (Annualized) Re t u r n ( % ) Barclays Gov/Credit Bond Barclays Gov/Credit-Intermediate S&P 500 Russell 1000 Growth Russell 1000 Value Russell 2000 Growth Russell 2000 Value Russell 3000 MSCI EAFE 6.63% R2000G 1.45% BCIGC 16.09% R1000G 17.74% R2000G 2.31% BCIGC 3.58% BCIGC 1. 2. 3. 1. 2. 3. 4. 5. 6. 1. 2. 3. 4. 5. 6. Page 3 Is the minimum quality rating of the domestic bond investments BBB from Standard & Poor's or BAA from Moody's? Did the fixed income return, over the trailing 5-year period, rank in the top 40% of the Mobius Broad Fixed Income Universe? [68th] Did the total return of the fund over the trailing 3-year period equal or exceed 7.3% (actuarial assumption rate of return)? [11.41 vs. 7.3] TOTAL FIXED INCOME Did the fixed income return, over the trailing 3-year period, exceed the 89% BCAB and 11% Non-US World Gov't Bond? [2.16 vs. 2.39] Is the amount invested in any single security less than or equal to 5% of the market value of the total equity portfolio? Is the amount invested in any single industry less than or equal to 20% of the market value of the total equity portfolio? Did the fixed income return, over the trailing 5-year period, exceed the BCAB? [3.81 vs. 3.99] Did the fixed income return, over the trailing 3-year period, rank in the top 40% of the Mobius Broad Fixed Income Universe? [74th] Is the amount invested in any single security (with exception of U.S. Government and its agencies) less than or equal to 5% of the market value of the total fixed income portfolio? Palm Beach Gardens Police Pension Fund Compliance Report March 31, 2015 YES NO Did the equity return, over the trailing 3-year period, exceed the 38.4% S&P 500, 15.4% S&P 400, 15.4% S&P 600, 15.4% R1000G index and 15.4% EAFE? [16.06 vs. 15.53] Did the equity return, over the trailing 5-year period, exceed the 38.4% S&P 500, 15.4% S&P 400, 15.4% S&P 600, 15.4% R1000G index and 15.4% EAFE? [14.11 vs. 13.97] Did the equity return, over the trailing 3-year period, rank in the top 40% of the Mobius 38.4% Broad Large Cap, 15.4% Mid Cap, 15.4% Small Cap, 15.4% Broad Large Cap Growth and 15.4% International Universe? [7th] Did the equity return, over the trailing 5-year period, rank in the top 40% of the Mobius 38.4% Broad Large Cap, 15.4% Mid Cap, 15.4% Small Cap, 15.4% Broad Large Cap Growth and 15.4% International Universe? [12th] TOTAL FUND Did the total return, over the trailing 3-year period, exceed the policy, which is comprised of 25% S&P500, 10% S&P400, 10% S&P600, 10% R1000G, 10% EAFE, 29% BCAB , 4% Non US $ World Gov. Bond & 2% RE? [11.41 vs. 11.05] TOTAL EQUITY Did the total return, over the trailing 3-year period, rank in the top 40% of the Universe comprised of 25% Mobius Broad Large Core, 10% Mid Cap, 10% Small Cap, 10% Broad Large Cap Growth, 10% International Equity, 29% Broad Fixed, 4% International Fixed Income & 2% NCREIF? [23rd] 1. Yes, ICC closed on the annouced deal with Highland Capital Management, LLC as of 3/31/2015. 2. No 3. Yes, ICC closed on the annouced deal with Highland Capital Management, LLC as of 3/31/2015. With the new entity, there has been additional staff added to the team. David Thompson, CFA, Mark Cronin, CFA and Vineet Agrawal, CFA will be working with ICC's current equity investment teams. Steve Wishnia, Jed Miller and Brian Escobedo will be working on the fixed income team. 4. No 5. No 6. No 7. No 8. No 9. 0% 10. N/A 11. 67.79% 12. Steve Stack, ICC/Highland Capital Management, LLC For managers, with fixed income portfolios that we monitor, are you currently invested in commercial mortgage backed securities (CMBS)? (If yes, please give % of fixed portfolio) Manager Compliance Questionnaire March 31, 2015 Have there been any changes in your organization? Have you undergone any change in ownership or control? Are you invested in any unhedged and/or levereged derivatives? What percentage of equity is international? The manager must immediately notify the Board and the Consultant when the international exposure reaches ten percent (10%). An explanation will be needed as to why the manager is changing their discipline. (This does not apply to managers that are 100% international equity and to those that have been previously given permission by the board and the consultant) Are you invested in any companies on the SBA's website? (Please review list of scrutinized companies on the following website: http://www.sbafla.com/fsb/Home/ProtectingFloridasInvestmentAct/tabid/751/Default.aspx What is your Active Share percentage? Name of person completing this form (please include company name)? Have there been any changes in your investment philosophy? Have there been any changes in your staff of investment professionals? Have you lost a substantial amount of business (amount of percentage of assets under management)? Have you gained a substantial amount of business (amount of percentage of assets under management)? Have there been any new investigations begun by any state or federal government or their agencies, or any charges filed, with regard to any division or unit of your company, and in particular anyone who directly or indirectly performs services for this client? Please provide details (if there is any doubt, please err on the side of providing too much information). Page 5 Palm Beach Gardens Police Pension Fund Total Assets March 31, 2015 Equities 69% Fixed Income 26% Real Estate 4% Cash 1% Equities Fixed Income Real Estate Cash Page 6 Palm Beach Gardens Police Pension Fund Total Assets March 31, 2015 Rhumbline S&P500 27% Rhumbline S&P400 12% Rhumbline S&P600 12% Intl. Equity 7% ICC Lg. Growth 12% Intl. Bonds 3% ICC Fixed 24% American Realty 4% Rhumbline S&P500 Rhumbline S&P400 Rhumbline S&P600 Intl. Equity ICC Lg. Growth Intl. Bonds ICC Fixed American Realty Manager Equities Fixed Income Real Estate Cash Total % of Total Rhumbline S&P500 $20,245,000 $0 $0 $0 $20,245,000 26.7% 25.0% Rhumbline S&P400 $8,790,000 $0 $0 $0 $8,790,000 11.6% 10.0% Rhumbline S&P600 $8,817,000 $0 $0 $0 $8,817,000 11.6% 10.0% Intl. Equity $5,540,000 $0 $0 $0 $5,540,000 7.3% 10.0% ICC Lg. Growth $9,312,000 $0 $0 $0 $9,312,000 12.3% 10.0% Intl. Bonds $0 $2,190,000 $0 $0 $2,190,000 2.9% 4.0% ICC Fixed $0 $17,202,000 $0 $466,000 $17,668,000 23.3% 26.0% $0 $0 $3,169,000 $0 $3,169,000 4.2% 5.0% Total $52,704,000 $19,392,000 $3,169,000 $466,000 $75,731,000 100.0% 100.0% % of Total 69.6%25.6%4.2%0.6%100.0% Target %65.0%30.0%5.0%0.0%100.0% Page 7 Palm Beach Gardens Police Pension Fund Performance Evaluation Summary March 31, 2015 American Realty Portfolio Last Qtr. MV Net Flows Inv G(L)This Qtr. MV Total Fund $73,650,000 -$5,000 $2,086,000 $75,731,000 Total Equities $50,958,000 $36,000 $1,711,000 $52,705,000 ICC Large Growth $8,771,000 $23,000 $518,000 $9,312,000 Rhumbline S&P 500 $20,054,000 $0 $191,000 $20,245,000 Rhumbline S&P 400 $8,346,000 $0 $445,000 $8,790,000 Rhumbline S&P 600 $8,480,000 $0 $337,000 $8,817,000 International Equity $5,307,000 $0 $233,000 $5,540,000 International Bonds $2,182,000 $0 $8,000 $2,190,000 ICC Fixed Income $16,353,000 $611,000 $239,000 $17,202,000 Real Estate $3,071,000 -$30,000 $128,000 $3,169,000 Page 8 Palm Beach Gardens Police Pension Fund Performance Evaluation Summary March 31, 2015 Current Fiscal Year Quarter FYTD One Year Three Years Five Years 2014 2013 2012 2011 2010 Return 2.83%6.78%8.99%11.41%10.51%10.73%14.53%18.63%0.22%10.09% Ranking (*)12 14 28 23 33 47 80 90 40 45 Policy Return (**)2.41%5.93%8.33%11.05%10.71%10.35%14.21%19.60%1.76%10.82% Policy Ranking (*)28 30 33 30 27 58 85 72 8 32 Return 3.36%8.73%11.14%16.06%14.11% 13.97%24.43%28.59%-2.62%12.36% Ranking (***)9 13 8 7 3 20 30 14 58 20 23.27%27.80%-0.50%11.44% Policy Ranking (***)14 22 14 12 4 21 56 27 15 36 Return 1.32%2.08%3.55%2.16%3.81%3.07%-2.93%5.83%4.78%7.63% Ranking (Broad Fixed)41 51 62 74 68 74 75 71 14 45 Policy Return (89% BCAB and 11% Non-US World Gov't Bond)0.94%2.22%3.91%2.39%3.99%3.41%-2.12%4.98%5.21%7.79% Policy Ranking (Broad Fixed)65 46 59 70 64 71 61 76 10 44 Page 9 * 25% Broad Large Cap Core, 10% Mid Cap, 10% Small Cap, 10% Broad Large Growth, 10% International, 4% Intl. Bond, 26% Broad Fixed & 5% RE ** 25% S&P500, 10% S&P400, 10% S&P600, 10% R1000G, 10% EAFE, 4% Intl. Bond, 26% BCAB & 5% NCREIF Policy Return (38.4%S&P500, 15.4%S&P400, 15.4%S&P600, 15.4% R1000G, 15.4% EAFE)13.97% Red indicates bottom 40% of universe 15.53% *** 38.4% Broad Large Cap Core, 15.4% Mid Cap, 15.4% Small Cap, 15.4% Broad Large Cap Growth, 15.4% International TOTAL FIXED INCOME(Net of Fees)[Inception 3-31-1994](International Fixed Inception 9-30-2010) Gold indicates equal to or beat the index, or in upper 40% of universe 3.16% Palm Beach Gardens Police Pension Fund Performance Evaluation Summary March 31, 2015 10.54% TOTAL FUND (Net of Fees)[Inception 3-31-1992] TOTAL EQUITIES(Net of Fees)[Inception 6-30-2000] 7.86%13.86% Current Fiscal Year Quarter FYTD One Year Three Years Five Years 2014 2013 2012 2011 2010 0.95%5.96%12.74%16.08%14.46%19.65%19.31%30.17%1.19%10.21% Ranking (Br.Large Cap Core)61 49 30 39 31 18 66 21 20 29 0.95%5.93%12.73%16.11%14.47%19.74%19.34%30.20%1.15%10.16% Policy Ranking (Br.Large Cap Core)61 49 31 38 31 17 66 20 20 30 5.33%11.98%12.20%16.97%15.79%11.81%27.56%28.90%-1.17%17.77% 18 18 25 36 17 53 46 28 26 12 5.31%12.00%12.20%17.03%15.72%11.82%27.68%28.54%-1.28%17.78% 18 17 25 35 19 53 44 30 27 12 3.98%14.20%8.75%17.26%16.24%5.80%31.40%33.27%0.21%14.14% Ranking (Broad Small Cap)59 31 36 27 29 35 39 18 26 37 3.96%14.20%8.72%17.30%16.25%5.74%31.52%33.35%0.21%14.21% Policy Ranking (Broad Small Cap)59 31 36 27 29 36 37 18 26 36 5.93%11.40%15.55%18.32%14.75%16.29%28.72%27.52%-6.48%14.62% Ranking (Broad Large Cap Growth)6 8 32 5 38 67 1 55 94 8 3.84%8.81%16.09%16.34%15.63%19.15%19.27%29.18%3.78%12.65% 34 39 26 37 19 29 73 40 14 20 4.38%2.35%1.89%10.77%8.19%7.90%23.71%19.38%-11.11%9.09% 68 41 26 15 15 8 28 20 50 32 5.00%1.29%-0.48%9.52%6.64%4.70%24.29%14.33%-8.94%3.71% 54 55 43 25 40 41 24 68 25 65 Page 10 Return Policy (R1000G) Policy (S&P 600) Ranking (Broad Mid Cap) ICC LARGE CAP GROWTH EQUITY PORTFOLIO(Inception 9-30-2007) Return Policy Ranking (Broad Mid Cap) INTERNATIONAL EQUITY(Inception 9-30-2006) Return Ranking (International Equity) Policy (MSCI EAFE) Return Gold indicates equal to or beat the index, or in upper 40% of universe Policy (S&P 400) Red indicates bottom 40% of universe Policy Ranking (Broad Large Cap Growth) Policy Ranking (International Equity) Return Palm Beach Gardens Police Pension Fund Performance Evaluation Summary March 31, 2015 RHUMBLINE S&P 500 EQUITY PORTFOLIO(Inception 6-30-2000) RHUMBLINE S&P 400 EQUITY PORTFOLIO(Inception 12-31-2002) Policy(S&P500) RHUMBLINE S&P 600 EQUITY PORTFOLIO(Inception 10-31-2003) Current Fiscal Year Quarter FYTD One Year Three Years Five Years 2014 2013 2012 2011 2010 1.44%2.42%4.02%2.24%3.88%3.10%-2.93%5.59%5.20%7.44% Ranking (Broad Fixed)36 41 57 73 66 73 75 72 10 46 1.61%3.43%5.72%3.10%4.42%3.96%-1.68%5.16%5.29%8.17% Policy Ranking (Broad Fixed)29 11 34 57 53 66 53 75 9 41 Four Years 0.37%-0.47%0.01%1.66%1.85%2.97%-2.82%7.89%0.33%n/a -4.36%-7.14%-9.82%-3.32%-1.56%-0.99%-5.65%3.46%4.14%n/a Two Years Inception 4.17%5.79%10.42%11.91%11.19%11.34%11.10%n/a n/a n/a 3.40%6.54%12.53%11.85%11.42%11.26%11.00%n/a n/a n/a Page 11 INTERNATIONAL FIXED INCOME PORTFOLIO(Inception 9-30-2010) Return Policy (Non-US World Bond) Gold indicates equal to or beat the index, or in upper 40% of universe Red indicates bottom 40% of universe AMERICAN REALTY PORTFOLIO(Inception 6-30-2012) Return Policy (NCREIF) Palm Beach Gardens Police Pension Fund Performance Evaluation Summary March 31, 2015 ICC FIXED INCOME PORTFOLIO(Inception 3-31-1994) Return Policy(BCAB) March 31, 2015 EXPLANATION OF RISK/REWARD SCATTERPLOT GRAPHS The crossing lines represent the 5-year return (horizontal line) and 5-year standard deviation or volatility or risk (vertical line) of the index against which the Fund is being measured. Each point represents the Fund's 5-year return (vertically) and standard deviation or volatility (horizontally), relative to the index. If a point is in the southwest quadrant, for example, the 5 -year return of the Fund has been less than (below) the index line, and the 5 -year standard deviation (volatility) has also been less than (to the left of) the index line. There are four points, one for each of the last four quarters. The earliest one is the smallest and the quarter just ended being the largest. Each point shows the 5-year relative position of the Fund versus the index for that quarter. The movement of the points shows the trend, or direction, over time. As noted in the graph, the best place to be is the northwest quadrant (less risk and a higher return); the worst place to be is the southeast quadrant (more risk and a lower return). Page 13 Palm Beach Gardens Police Pension Fund Total Fund Trailing 5-Years March 31, 2015 (versus 25% S&P500, 10% S&P400, 10% S&P600, 10% R1000G, 10% EAFE, 4% Non-US World Bond, 26% BCAB, 5% RE) -3 0 3 -3 0 3 Di f f e r e n c e i n R e t u r n s ( M a n a g e r - In d e x ) Risk (Difference in Standard Deviations) 3/31/2015 12/31/2014 9/30/2014 6/30/2014 Good Aggressive Conservative Bad Page 14 Palm Beach Gardens Police Pension Fund Total Equity Trailing 5-Years March 31, 2015 (versus 38.4% S&P 500, 15.4% S&P 400, 15.4% S&P 600, 15.4% R1000G & 15.4% Intl. ) -3 0 3 -3 0 3 Di f f e r e n c e i n R e t u r n s ( M a n a g e r - In d e x ) Risk (Difference in Standard Deviations) 3/31/2015 12/31/2014 9/30/2014 6/30/2014 Good Aggressive Conservative Bad Page 15 Palm Beach Gardens Police Pension Fund Total Fixed Income 5-Year Trailing March 31, 2015 (versus 89% BCAB, 11% Non-US World Gov't Bond) -3 0 3 -3 0 3 Di f f e r e n c e i n R e t u r n s ( M a n a g e r - In d e x ) Risk (Difference in Standard Deviations) 3/31/2015 12/31/2014 9/30/2014 6/30/2014 Good Aggressive Conservative Bad 15451000 15451000 123518000 123518000 264000 264000 139233000 Page 16 Palm Beach Gardens Police Pension Fund Beta: Trailing 5-Year Risk (or Inception if Less) March 31, 2015 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 Mar-15 Dec-14 Sep-14 Jun-14 Total Fund Large Cap Mid Cap Small Cap Total Fixed International Large Growth Page 17 Palm Beach Gardens Police Pension Fund Alpha: Trailing 5-Year Reward (or Inception if Less) March 31, 2015 -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% Mar-15 Dec-14 Sep-14 Jun-14 TOTAL FUND & INDIVIDUAL MANAGERS Total Fund Large Cap Mid Cap Small Cap Total Fixed International Large Growth Mar-15 Dec-14 Sep-14 Jun-14 Total Fund 0.97 0.97 0.97 0.96 Managers, Fixed Income Total Fixed 0.95 0.97 0.96 0.97 Managers, Equities Large Cap 1.00 1.00 1.00 1.00 Mid Cap 1.00 1.00 1.00 1.00 Small Cap 1.00 1.00 1.00 1.00 International 0.34 0.34 0.31 0.34 Large Growth 1.11 1.12 1.13 1.13 Real Estate NCREIF 0.94 n/a n/a n/a Total Fund 0.13%0.00%-0.14%-0.15% Managers, Fixed Income Total Fixed 0.00%-0.04%-0.03%-0.23% Managers, Equities Large Cap 0.04%0.04%0.04%0.04% Mid Cap 0.11%0.09%0.10%0.11% Small Cap 0.04%0.02%0.02%-0.01% International 5.94%5.89%6.91%10.08% Large Growth -2.55%-3.08%-3.18%-1.90% Real Estate NCREIF 0.41%n/a n/a n/a Page 18 S&P400 * 25% S&P 500, 10% S&P400, 10% S&P600, 10% R1000G, 10% EAFE, 4% Non-US World Gov't Bond, 26% BCAB, 5% RE S&P600 EAFE R1000G Policy S&P500 S&P600 EAFE S&P400 BCAB R1000G BCAB S&P500 * ALPHA Palm Beach Gardens Police Pension Fund Alpha & Beta: 5-Years Trailing (or Inception if Less) March 31, 2015 Current BETA * Page 19 Palm Beach Gardens Police Pension Fund Batting Average: 5-Years Trailing (or Inception if Less) March 31, 2015 0 10 20 30 40 50 60 70 80 90 100 Mar-15 Dec-14 Sep-14 Jun-14 TOTAL FUND & INDIVIDUAL MANAGERS Total Fund Large Cap Mid Cap Small Cap Total Fixed International Large Growth Mar-15 Dec-14 Sep-14 Jun-14 Total Fund 35.00 30.00 30.00 25.00 Managers, Fixed Income Total Fixed 55.00 55.00 55.00 50.00 Managers, Equities Large Cap 45.00 40.00 40.00 40.00 Mid Cap 60.00 55.00 60.00 60.00 Small Cap 40.00 35.00 35.00 30.00 International 50.00 55.00 55.00 55.00 Large Growth 40.00 40.00 40.00 45.00 Real Estate NCREIF 45.45 40.00 50.00 50.00 Total Fund 0.99 0.99 0.99 0.99 Managers, Fixed Income Total Fixed 0.88 0.88 0.89 0.90 Managers, Equities Large Cap 1.00 1.00 1.00 1.00 Mid Cap 1.00 1.00 1.00 1.00 Small Cap 1.00 1.00 1.00 1.00 International 0.24 0.25 0.13 0.15 Large Growth 0.93 0.93 0.93 0.93 Real Estate NCREIF 0.13 0.09 0.23 0.05 Page 20 BCAB BCAB * S&P600 R1000G R-SQUARED S&P500 S&P400 * 25% S&P 500, 10% S&P400, 10% S&P600, 10% R1000G, 10% EAFE, 4% Non-US World Gov't Bond, 26% BCAB, 5% RE S&P600 EAFE R1000G March 31, 2015 EAFE Palm Beach Gardens Police Pension Fund Batting Average: 5-Years Trailing (or Inception if Less) BATTING AVERAGE S&P500 S&P400 Current Policy * Qtr YTD 1Yr 3Yr 5Yr 10Yr Great Lakes - Large Cap - Gross Size 2.37 7.60 13.00 17.70 15.26 9.07 Atlanta Capital Management Co., LLC - High Quality Growth Plus - Gross Size 0.65 6.19 11.12 13.70 13.55 8.61 ICC Capital Management, Inc - Core Value - Gross Size 1.76 8.36 12.11 16.58 12.29 7.82 Inverness Counsel, LLC - Pension Equity - Gross Size 2.87 6.76 13.31 17.57 14.29 9.35 Logan Capital Management - Large Core 60/40 - Gross Size 4.20 9.09 14.78 14.55 16.97 10.28 Rhumbline Advisers Corporation - Russell 1000 Index Fund - Gross Size 1.57 6.50 12.69 16.39 14.29 8.24 Valley Forge Asset Management - Large Cap Core - Gross Size -1.43 1.85 6.82 10.54 10.80 6.97 Russell 1000 1.59 6.55 12.73 16.45 14.73 8.34 S&P 500 0.95 5.93 12.73 16.11 14.47 8.01 Dana Investment Management - Large Growth - Gross Size 4.69 12.77 18.46 17.94 16.21 10.28 Garcia Hamilton & Associates - Quality Growth - Gross Size 2.61 8.32 16.17 12.91 13.55 7.96 Logan Capital Management - Large Cap Growth - Gross Size 6.58 10.76 15.97 15.10 15.10 9.13 Montag & Caldwell, Inc. - Large Cap Growth - Gross Size 2.49 7.25 12.46 13.81 12.46 9.06 Polen Capital Management - Large Cap Growth - Gross Size 3.70 14.25 21.17 13.40 15.73 10.87 Rhumbline Advisers Corporation - Russell 1000 Growth Index Fund - Gross Size 3.82 8.81 16.14 16.33 15.63 9.36 Sawgrass Asset Management, LLC - Large Cap Growth Equity - Gross Size 1.65 7.85 13.76 16.71 15.88 9.16 Silvant Capital - Select LCG Stock - Grosss Size 3.74 7.91 11.95 11.96 12.12 8.01 Russell 1000 Growth 3.84 8.81 16.09 16.34 15.63 9.36 S&P 500/Citigroup Growth 2.47 7.66 16.11 16.85 15.77 9.02 Rhumbline Large Cap(FYE)0.95 5.96 12.74 16.08 14.46 8.12 Rhumbline Mid Cap(FYE)5.33 11.98 12.20 16.97 15.79 10.42 Rhumbline Small Cap(FYE)3.98 14.20 8.75 17.26 16.24 9.75 ICC Large Growth(FYE)5.93 11.40 15.55 18.32 14.75 n/a International Equity(FYE)4.38 2.35 1.89 10.77 8.19 n/a Page 21 Performance of Other Managers March 31, 2015 CORE EQUITY GROWTH EQUITY Qtr YTD 1Yr 3Yr 5Yr 10Yr Ceredex Value Ad Large Cap Value -1.68 3.25 8.23 16.23 14.08 9.15 Edgar Lomax Large Value - Gross Size -1.64 2.64 10.22 15.60 14.69 8.06 ICC Capital Management, Inc - Core Value - Gross Size 1.76 8.36 12.11 16.58 12.29 7.82 Rhumbline Advisers Corporation - Russell 1000 Value Index Fund - Gross Size -0.73 4.15 9.25 16.37 13.72 7.28 The Boston Company Asset Mgmt., LLC - US Large Cap Value Equity Management 1.88 6.33 10.63 18.75 14.17 9.30 RBC Global Asset Management, Inc. - Large Cap Value - Gross Size 1.52 6.52 12.05 16.36 13.55 8.23 RNC Genter Capital - Dividend Income Equity - Gross Size -1.11 -1.01 3.66 11.70 12.35 8.15 Westwood Management Corporation - LargeCap Equity - Gross Size 1.65 7.41 11.86 16.12 13.35 8.94 Russell 1000 Value -0.72 4.22 9.33 16.44 13.75 7.21 S&P 500/Citigroup Value -0.69 4.06 9.12 15.34 13.14 6.90 Amalgamated Bank - LongView 400 MidCap Index Fund - Gross Size 5.26 11.93 12.12 17.00 15.69 10.32 Chicago Equity Partners, LLC - Mid Cap Core Equity - Gross Size 6.89 10.45 12.07 17.69 17.51 9.39 Robeco Investment Management, Inc. - BPAM Mid Cap Value Equity - Gross Size 4.69 13.46 15.13 21.19 18.73 13.46 Russell Midcap 3.95 10.13 13.68 18.10 16.16 10.02 S&P Midcap 400 5.31 12.00 12.19 17.03 15.72 10.32 Great Lakes - SMID - Gross Size 3.24 13.49 13.66 21.55 19.52 11.64 Eagle Asset Management - SMID Core - Institutional - Gross Size 6.28 14.57 12.45 17.53 16.16 11.01 Earnest Partners - SMID Core - Gross Size 5.39 11.30 13.95 18.52 16.65 Kayne AndersonRudnick - SMID Core - Gross Size 7.40 16.21 20.12 15.58 15.39 9.55 New Amsterdam Partners - SMID Active Equity - Gross Size 8.15 16.68 10.93 18.27 18.99 11.57 Russell 2500 5.17 12.29 10.07 17.13 15.48 9.62 Rhumbline Large Cap(FYE)0.95 5.96 12.74 16.08 14.46 8.12 Rhumbline Mid Cap(FYE)5.33 11.98 12.20 16.97 15.79 10.42 Rhumbline Small Cap(FYE)3.98 14.20 8.75 17.26 16.24 9.75 ICC Large Growth(FYE)5.93 11.40 15.55 18.32 14.75 n/a International Equity(FYE)4.38 2.35 1.89 10.77 8.19 n/a Page 22 Performance of Other Managers March 31, 2015 VALUE EQUITY MID-CAP EQUITY SMID-CAP EQUITY Qtr YTD 1Yr 3Yr 5Yr 10Yr Great Lakes - AllCap - Gross Size 3.83 9.70 14.01 18.39 16.37 9.09 HGK Asset Management - All Cap - Gross Size -2.19 0.98 5.83 14.76 12.90 8.43 ICC Capital Management, Inc - Multi-Cap Eq. - Gross Size 1.56 6.88 13.56 11.70 9.96 10.59 Oak Ridge Investments, LLC - All-Cap - Gross Size 6.24 12.54 20.49 16.36 15.76 9.81 Russell 3000 1.80 7.13 12.37 16.43 14.71 8.38 Dow Jones Wilshire 5000 (Full Cap)1.61 6.95 12.25 16.21 14.58 8.41 Atlanta Capital Management Co., LLC - High Quality Small Cap - Gross Size 6.83 17.78 11.83 17.59 18.03 12.99 Ceredex - Value Ad Small Cap Value - Gross Size 2.66 13.02 5.25 15.23 14.67 11.36 GW Capital, Inc. - Small Cap Value Equity - Gross Size 1.58 6.29 -1.76 13.97 12.42 9.49 Kayne Anderson Rudnick Invst. - Small Cap - Gross Size 4.13 14.00 14.80 13.79 16.60 10.95 Sawgrass Asset Management, LLC - Small Cap Growth Equity - Gross Size 7.30 17.25 18.66 17.90 18.78 6.76 Silvant Capital - Small Cap Growth - Gross Size 5.80 14.80 5.24 15.69 15.44 8.82 Russell 2000 4.32 14.46 8.21 16.27 14.57 8.82 S&P SmallCap 600 3.96 14.20 8.72 17.30 16.25 9.68 American Realty Advisors - Core Equity Real Estate-Sep. Accts. - Gross Size 1.79 1.79 11.60 11.74 12.29 6.27 JPMorgan Asset Management - Strategic Property Fund - Gross Size 2.74 2.74 11.13 12.90 13.81 8.17 Principal Global - Real Estate Core - Gross Size 4.53 4.53 13.88 13.75 15.03 6.97 Dow Jones Wilshire REIT Index 15.14 15.14 31.79 16.44 17.27 8.28 NCREIF Property Index 3.04 3.04 11.81 11.11 12.13 8.38 Harding Loevner - International Equity - Gross Size 5.08 4.11 5.52 9.39 8.88 8.96 Harding Loevner - Emerging Mkts. Equity - Gross Size 1.07 -2.03 0.66 4.69 5.83 10.94 ICC Capital Management, Inc - International ADR Equity - Gross Size 4.79 1.09 -2.31 7.88 6.61 5.36 INVESCO - International EM Equity - Gross Size 4.33 -1.31 2.84 -1.92 -0.70 8.04 Manning & Napier - International Equity - Gross Size 2.18 -2.48 -8.72 5.08 4.23 6.49 Nuveen Asset Management - International Growth ADR - Gross Size 5.57 6.01 2.3 12.74 9.87 The Boston Company Asset Mgmt., LLC - International Core Equity Management 5.19 0.19 -0.89 12.22 9.07 5.67 Thornburg Investment Mgmt. - International Equity - Gross Size 7.44 6.18 7.05 7.88 6.74 7.99 WHV - WHV International Equity - Gross Size -1.05 -11.49 -10.86 2.94 3.27 8.73 MSCI EAFE 5.00 1.29 -0.48 9.52 6.64 5.43 MSCI EMERGING MARKETS 2.28 -2.26 0.79 0.66 2.08 8.82 Rhumbline Large Cap(FYE)0.95 5.96 12.74 16.08 14.46 8.12 Rhumbline Mid Cap(FYE)5.33 11.98 12.20 16.97 15.79 10.42 Rhumbline Small Cap(FYE)3.98 14.20 8.75 17.26 16.24 9.75 ICC Large Growth(FYE)5.93 11.40 15.55 18.32 14.75 n/a International Equity(FYE)4.38 2.35 1.89 10.77 8.19 n/a Page 23 Performance of Other Managers March 31, 2015 ALL CAP EQUITY SMALL CAP EQUITY REAL ESTATE (12/31/2014) INTERNATIONAL EQUITY Qtr YTD 1Yr 3Yr 5Yr 10Yr Eagle Asset Management - Core Fixed Institutional - Gross Size 2.00 3.88 5.48 2.89 4.40 5.11 Garcia Hamilton & Associates - Fixed Aggregate - Gross Size 1.97 4.57 7.45 5.76 6.30 6.78 ICC Capital Management, Inc - Core Fixed Income - Gross Size 0.77 1.88 3.62 2.31 4.05 4.45 Integrity Fixed Income Mgmt, LLC - Core Fixed Income - Gross Size 1.49 3.09 5.79 3.92 5.16 Inverness Counsel, LLC - Pension Fixed Income - Gross Size 1.75 2.85 4.54 2.84 4.33 5.14 Montage & Caldwell Inc. - Core Fixed Income - Gross Size 1.39 2.75 4.35 2.37 3.54 4.92 Sawgrass Asset Management, LLC - Core Fixed Income - Gross Size 1.52 3.04 5.10 3.24 4.54 5.29 RBC Global Asset Management, Inc. - Broad Market Core - Gross Size 1.86 3.78 6.36 3.57 4.94 4.85 Wedge Capital Management - Core Fixed Income - Gross Size 1.65 3.31 5.86 3.83 5.01 5.68 Barclays Aggregate Bond 1.61 3.43 5.72 3.10 4.41 4.93 Barclays Gov/Credit Bond 1.84 3.69 5.86 3.35 4.75 4.96 Barclays High Yield US Corporate Bond 2.52 1.49 2.00 7.46 8.59 8.18 Eagle Asset Management - Institutional Conservative - Gross Size 1.55 2.60 3.85 2.22 3.68 4.75 Garcia Hamilton & Associates - Intermediate Fixed Income - Gross Size 1.60 3.03 4.87 4.56 5.17 5.95 Integrity Fixed Income Mgmt, LLC - Intermediate Fixed Income - Gross Size 1.31 2.26 4.21 3.08 4.29 RBC Global Asset Management, Inc. - Intermediate Core - Gross Size 1.57 2.46 3.74 2.67 3.96 4.08 Sit Investment Associates, Inc. - Intermediate Govt/Corp - Gross Size 1.91 3.33 5.84 3.68 5.01 5.54 Barclays Intermediate Aggregate 1.32 2.54 4.24 2.41 3.62 4.54 Barclays Gov/Credit-Intermediate 1.45 2.35 3.58 2.31 3.52 4.34 Brandywine Global - International Fixed Invst. Grade - Gross Size -1.67 -2.88 -1.93 2.71 4.89 5.10 PIMCO - Non US Fixed Income Unhedged - Gross Size -2.30 -4.47 -4.45 -0.02 4.18 4.86 Wells Capital Mgmt. - Global Fixed Income Ex-US - Gross Size -3.21 -5.16 -5.36 0.00 2.44 4.53 Citigroup World Government Ex-US -4.36 -7.14 -9.82 -3.32 0.38 2.51 ICC Fixed Income(FYE)1.44 2.42 4.02 2.24 3.88 4.14 International Bonds(FYE)0.37 -0.47 0.01 1.66 n/a n/a American Realty(FYE)4.17 5.79 10.42 n/a n/a n/a Page 24 INTERMEDIATE FIXED INCOME INTERNATIONAL FIXED INCOME Performance of Other Managers March 31, 2015 CORE FIXED INCOME AM E R I C A N R E A L T Y A D V I S O R S 80 1 N o r t h B r a n d B o u l e v a r d , S u i t e 8 0 0 , G l e n d a l e , C A 9 1 2 0 3 | T e l : 8 1 8 - 5 4 5 - 11 5 2 | w w w . a m e r i c a n r e a l . c o m | Am e r i c a n R e a l t y A d v i s o r s All rights reserved. Ci t y o f P a l m B e a c h G a r d e n s P o l i c e O f f i c e r s ’ Pe n s i o n F u n d Am e r i c a n C o r e R e a l t y F u n d Ap r i l 3 0 , 2 0 1 5 Ri c h e l l e H a y e s Di r e c t o r , M a r k e t i n g a n d C l i e n t S e r v i c e 1 Am e r i c a n R e a l t y A d v i s o r s – C o m m i t m e n t t o E x c e l l e n c e St a n l e y L . I e z m a n Ch a i r m a n & C E O “O u r m i s s i o n i s t o c r e a t e a n d i m p l e m e n t c l i e n t - f o c u s e d in s t i t u t i o n a l r e a l e s t a t e i n v e s t m e n t s t r a t e g i e s d e s i g n e d t o p r o v i d e su p e r i o r r e t u r n s , c a p i t a l p r e s e r v a t io n a n d g r o w t h , d e l i v e r e d w i t h a hi g h l e v e l o f i n t e g r i t y , c o m m u n i c a t i o n , a n d s e r v i c e . ” Mi s s i o n S t a t e m e n t Ri c h e l l e H a y e s Di r e c t o r , M a r k e t i n g an d C l i e n t S e r v i c e 2 A L e a d e r i n t h e R e a l E s t a t e I n v e s t m e n t M a n a g e m e n t I n d u s t r y As s e t s u n d e r m a n a g e m e n t r e p r e s e n t a p p r o x i m a t e g r o s s m a r k e t v a l u e o f a l l a s s e t s a n d ac c o u n t s m a n a g e d b y A m e r ic a n e x c l u d i n g p a r t n e rs ’ s h a r e o f e q u i t y a n d p a r t n e r s ’ s h a r e o f d e b t o n p a r t n e r s h i p i n v e s t m e n t s . Al l d a t a a b o v e i s a s o f D e c e m b e r 3 1 , 2 0 1 4 . We s t Mi d w e s t So u t h Ea s t Sa n Fr a n c i s c o Ch i c a g o At l a n t a Or l a n d o Ph i l a d e l p h i a Lo s A n g e l e s Sa n t a F e — On e o f t h e l a r g e s t p r i v a t e l y - h e l d re a l e s t a t e i n v e s t m e n t m a n a g e r s i n th e U . S . — Se a s o n e d p r o f e s s i o n a l s w i t h a n a ve r a g e o f 2 2 y e a r s o f i n v e s t m e n t ma n a g e m e n t e x p e r i e n c e — Ov e r $ 6 . 7 b i l l i o n i n a s s e t s u n d e r m a n a g e m e n t — 15 1 p r o p e r t i e s p r i m a r i l y i n ma j o r M S A s a c r o s s t h e U . S . — 35 0 + i n s t i t u t i o n a l i n v e s t o r s t r u s t Am e r i c a n t o i n v e s t t h e i r c a p i t a l — Ni n e o f f i c e s n a t i o n w i d e p r o v i d i n g a b i l i t y t o m e e t i n v e s t o r n e e d s Am e r i c a n ’ s O f f i c e s LO S A N G E L E S (H E A D Q U A R T E R S ) Co r p o r a t e , I n v e s t m e n t s , A s s e t Ma n a g e m e n t , R e s e a r c h , P o r t f o l i o Ma n a g e m e n t , M a r k e t i n g / C l i e n t S e r v i c e , Ac c o u n t i n g , L e g a l / C o m p l i a n c e , Ad m i n i s t r a t i o n AT L A N T A As s e t M a n a g e m e n t CH I C A G O In v e s t m e n t s , A s s e t M a n a g e m e n t , Di s p o s i t i o n s , M a r k e t i n g / C l i e n t S e r v i c e CO N N E C T I C U T As s e t M a n a g e m e n t , I n v e s t m e n t s OR A N G E C O U N T Y As s e t M a n a g e m e n t OR L A N D O Ma r k e t i n g / C l i e n t S e r v i c e PH I L A D E L P H I A In v e s t m e n t s SA N F R A N C I S C O As s e t M a n a g e m e n t , I n v e s t m e n t s SA N T A F E Ma r k e t i n g / C l i e n t S e r v i c e Co n n e c t i c u t Or a n g e Co u n t y 3 — Ex t e n s i v e e x p e r i e n c e a c t i n g a s a f i d u c i a r y a n d P r u d e n t P e r s o n in v e s t i n g i n a c c o r d a n c e w i t h s t a t e a n d f e d e r a l f i d u c i a r y g u i d e l i n e s — Ri s k c o n t r o l f o r m s t h e b a s i s o f o u r i n v e s t m e n t p r o c e s s • Co m p l i a n c e / R i s k M a n a g e m e n t d e p a r t m e n t ev a l u a t e s a l l as p e c t s o f t r a n s a c t i o n s • Av o i d a n c e of c o n f l i c t s o f i n t e r e s t • No l i t i g a t i o n wi t h c l i e n t s c o n c e r n i n g i n v e s t m e n t ma n a g e m e n t s e r v i c e s p r o v i d e d b y A m e r i c a n — De f i n e d c u l t u r e o f t e a m w o r k a n d i n t e g r i t y — So l e f o c u s o n i n s t i t u t i o n a l r e a l e s t a t e i n v e s t m e n t b u i l d s s t r o n g al i g n m e n t o f i n t e r e s t s w i t h o u r i n v e s t o r s — Re c o g n i t i o n o f o u r r o l e a s a s t ew a r d o f t h e c a p i t a l f o r p l a n pa r t i c i p a n t s a n d t h e i r b e n e f i c i a r i e s Ri s k M a n a g e m e n t a n d C l i e n t F o c u s : T h e F o u n d a t i o n o f O u r F i r m Pl e a s e r e f e r t o d i s c l o s u r e s a t t h e e n d o f t h i s p r e s e n t a t i o n . 4 Fu n d a m e n t a l P r i n c i p l e s — C o r e R e a l E s t a t e S t r a t e g y Fo c u s o n I n c o m e Ca s h f l o w f r o m o p e r a t i o n s r e p r e s e n t s t h e m o s t s t a b l e a n d p r e d ic t a b l e c o m p o n e n t o f r e a l e s t a t e r e t u r n s . A m e r i c a n i d e n t i f i e s as s e t s w i t h h i g h - q u a l i t y i n - p l a c e c a s h f l o w s a n d o p p o r t u n i t i e s t o g r o w t h a t i n c o m e o v e r t i m e i n o r d e r t o m i n i m i z e v o l a t i l i t y . In v e s t i n S i g n i f i c a n t I n n o v a t i o n H u b s / G r o w t h C l u s t e r s It i s e s s e n t i a l t o i d e n t i f y m a r k e t s a n d s e c t o r s t h a t a r e e x p e c t e d t o o u t p e r f o r m t h r o u g h o u t t h e m a r k e t c y c l e . A m e r i c a n g o e s be y o n d t r a d i t i o n a l m a r k e t a n a l y s i s a n d f o c u s e s o n s u b m a r k e t s th a t a r e i n n o v a t i o n h u b s w h e r e w e e x p e c t s u s t a i n e d g r o w t h to o c c u r . Ta r g e t S u p p l y C o n s t r a i n e d M a r k e t s Lo c a l a n d r e g i o n a l c o n s t r a i n t s c a n l i m i t n e w s u p p l y i n k e y l o c a t i o ns a n d p r o v i d e o p p o r t u n i t i e s t o i n c r e a s e v a l u e o f e x i s t i n g as s e t s i n t h e s e m a r k e t s . A m e r i c a n i d e n t i f i e s a n d t a r g e t s t h o s e u n i q u e l y p o s i t i o n e d a s s e t s i n d e m a n d f r o m g r o w i n g i n d u s t r i e s an d l o c a t e d i n c o m p e l l i n g i n - f i l l l o c a t i o n s . Ca p t u r e E c o n o m i c D i v e r s i t y t o R e d u c e R i s k Di v e r s i f i c a t i o n i s m o r e t h a n j u s t d i f f e r e n t p r o p e r t y t y p e s a nd m a r k e t s . A m e r i c a n ’ s a n a l y s i s a l s o i d e n t i f i e s a n d m a n a g e s te n a n t a n d i n d u s t r y e c o n o m i c e x p o s u r e a t t h e m a r k e t a n d su b m a r k e t l e v e l t o e n h a n c e a s s e t v a l u e s a n d l i m i t r i s k . 5 In v e s t i n M a r k e t s w i t h G l o b a l l y C o m p e t i t i v e I n d u s t r i e s By i n v e s t i n g i n h i g h - q u a l i t y a s s e t s i n t h e s e d y n a m i c m a r k e t s , A m e r i c a n s e e k s t o p r o v i d e i t s c l i e n t s wi t h a m o r e s t a b l e r i s k - c o n t r o l l e d i n v e s t m e n t s t r a t e g y t h a t b e n e f i t s f r o m t h e s t r o n g d e m a n d gr o w t h i n t h e U . S . e c o n o m y o v e r t h e l o n g t e r m . Am e r i c a n i d e n t i f i e s a n d i n v e s t s i n m a r k e t s t h a t w e b e l i e v e p o s s e s s s u p e r i o r d r i v e r s o f re a l e s t a t e d e m a n d : — Em p l o y e r s i n g l o b a l l y c o m p e t i t i ve i n d u s t r i e s s e e k o u t a h i g h l y sk i l l e d a n d e d u c a t e d w o r k f o r c e — Hi g h l y s k i l l e d a n d e d u c a t e d e m p l o y e e s g r a v i t a t e t o i n n o v a t i o n h u b s w h e r e t h es e i n d u s t r i e s a r e l o c a t e d — Th i s s y n e r g y c r e a t e s a r e i n f o r c i n g c y c l e th a t s u p p o r t s j o b e x p a n s i o n an d e n e r g i z e s d e m a n d f o r s t r a t e g i c a l l y - l o c a t e d r e a l es t a t e i n t h e s e m a r k e t s Fi n a n c e Go v e r n m e n t Mi d w e s t Au s t i n De n v e r Ho u s t o n Da l l a s At l a n t a So u t h F l o r i d a No r t h N e w J e r s e y Mi n n e a p o l i s Ch i c a g o Ne w Y o r k Wa s h i n g t o n D . C . Ph i l a d e l p h i a Ba l t i m o r e Se a t t l e Bo s t o n Oa k l a n d Sa n D i e g o Lo s A n g e l e s Sa n J o s e Or a n g e C o u n t y Sa n F r a n c i s c o He a l t h C a r e Te c h n o l o g y Ed u c a t i o n En e r g y Se r v i c e s ( p r i m a r i l y H Q ) Tr a n s p o r t a t i o n / T r a d e  $  $ $ $ $ Po r t l a n d 6 In v e s t m e n t P r o c e s s In v o l v e d t h r o u g h o u t in v e s t m e n t c y c l e w i t h In v e s t m e n t a n d Po r t f o l i o M a n a g e m e n t Te a m s – Ex e c u t e s t h e a s s e t le v e l b u s i n e s s p l a n – Su p e r v i s e s o n - s i t e pr o p e r t y m a n a g e r s , le a s i n g a g e n t s a n d ot h e r p r o f e s s i o n a l s – Ov e r s e e s c a p i t a l bu d g e t p r o g r a m s Wo r k s w i t h I n v e s t m e n t an d A s s e t M a n a g e m e n t Te a m s – De v e l o p s p o r t f o l i o mi x – Ac t i v e l y m a n a g e s po r t f o l i o s – Es t a b l i s h e s ac q u i s i t i o n c r i t e r i a an d e x e c u t i o n o f t h e pu r c h a s e a n d s a l e Fo r m s f r a m e w o r k f o r ex e c u t i n g a c q u i s i t i o n an d d i s p o s i t i o n st r a t e g i e s – De t e r m i n e s k e y in d i c a t o r s t o s u p p o r t im p l e m e n t a t i o n o f st r a t e g y – Id e n t i f i e s k e y m a r k e t fa c t o r s t o m a x i m i z e lo n g - t e r m r e t u r n s Co o r d i n a t e s w i t h Po r t f o l i o M a n a g e m e n t an d A s s e t M a n a g e m e n t Te a m s – So u r c e s , i d e n t i f i e s , un d e r w r i t e s , pe r f o r m s d u e di l i g e n c e , a n d c l o s e s in v e s t m e n t s – Pr o v i d e s f e e d b a c k on c a p i t a l m a r k e t co n d i t i o n s P O R T F O L I O In v e s t m e n t P r o c e s s In v e s t m e n t Co m m i t t e e Compliance Re s e a r c h T e a m Po r t f o l i o M a n a g e m e n t T e a m In v e s t m e n t T e a m As s e t M a n a g e m e n t T e a m 7 Am e r i c a n R e a l t y A d v i s o r s – S e r v i n g P u b l i c F u n d s T h r o u g h o u t F l o r i d a  Ba r t o w G e n e r a l E m p l o y e e s R e t i r e m e n t S y s t e m  Ca p e C o r a l M u n i c i p a l F i r e f i g h t e r s ' R e t i r e m e n t P l a n  Ca p e C o r a l M u n i c i p a l P o l i c e O f f i c e r s ' R e t i r e m e n t P l a n  Ca s s e l b e r r y P o l i c e O f f i c e r s ' a n d F i r e f i g h t e r s ' P e n s i o n P l a n  Cl a i r T . S i n g e r m a n E m p l o y e e s ’ R e t i r e m e n t F u n d  Cl e a r w a t e r F i r e f i g h t e r s ’ S u p p l e m e n t a l T r u s t F u n d  Co c o a G e n e r a l E m p l o y e e s ' R e t i r e m e n t P l a n  Co o p e r C i t y G e n e r a l E m p l o y e e s P e n s i o n P l a n  Co o p e r C i t y P o l i c e P e n s i o n F u n d  Co r a l S p r i n g s F i r e f i g h t e r s ' R e t i r e m e n t P l a n  Co r a l S p r i n g s P o l i c e O f f i c e r s ' P e n s i o n P l a n  Da n i a B e a c h F i r e a n d P o l i c e P e n s i o n P l a n  Da v i e F i r e f i g h t e r s ' P e n s i o n T r u s t F u n d  Da v i e P o l i c e P e n s i o n F u n d  De L a n d M u n i c i p a l P o l i c e O f f i c e r s ’ R e t i r e m e n t P l a n  De e r f i e l d B e a c h M u n i c i p a l F i r e f i g h t e r s ' P e n s i o n T r u s t F u n d  De e r f i e l d B e a c h M u n i c i p a l P o l i c e O f f i c e r s ' R e t i r e m e n t T r u s t F u n d  De l r a y B e a c h P o l i c e a n d F i r e f i g h t e r s ' R e t i r e m e n t S y s t e m  Ea s t N a p l e s F i r e C o n t r o l & R e s c u e D i s t r i c t F i r e f i g h t e r s ' P e n s i o n P l a n  En g l e w o o d A r e a F i r e C o n t r o l D i s t r i c t F i r e f i g h t e r s ' P e n s i o n T r u s t F u n d  Fe r n a n d i n a B e a c h G e n e r a l E m p l o y e e s ’ P e n s i o n P l a n  Fe r n a n d i n a B e a c h P o l i c e O f f i c e r s ' & F i r e f i g h t e r s ' P e n s i o n P l a n  Fo r t L a u d e r d a l e G e n e r a l E m p l o y e e s ’ R e t i r e m e n t S y s t e m  Fo r t L a u d e r d a l e P o l i c e a n d F i r e P e n s i o n F u n d  Fo r t W a l t o n B e a c h M u n i c i p a l F i r e f i g h t e r s ’ P e n s i o n T r u s t F u n d  Ho l l y w o o d P o l i c e O f f i c e r s ’ R e t i r e m e n t S y s t e m  Ju p i t e r P o l i c e O f f i c e r s ' R e t i r e m e n t P l a n  Ke y W e s t G e n e r a l E m p l o y e e s ' P e n s i o n P l a n  Ke y W e s t U t i l i t y G e n e r a l E m p l o y e e s R e t i r e m e n t S y s t e m  Ki s s i m m e e G e n e r a l E m p l o y e e s ' R e t i r e m e n t P l a n  La k e M a r y F i r e f i g h t e r s ’ a n d P o l i c e O f f i c e r s ' P e n s i o n T r u s t F u n d s  La k e W o r t h F i r e f i g h t e r s ' P e n s i o n T r u s t F u n d  La k e W o r t h G e n e r a l E m p l o y e e s ' R e t i r e m e n t S y s t e m  La k e W o r t h P o l i c e O f f i c e r s ' D 1 P e n s i o n F u n d  La k e l a n d P o l i c e O f f i c e r s ' R e t i r e m e n t S y s t e m  La u d e r h i l l F i r e f i g h t e r s R e t i r e m e n t S y s t e m  Le e s b u r g M u n i c i p a l F i r e m e n ' s R e t i r e m e n t T r u s t  Mi a m i S p r i n g s G e n e r a l E m p l o y e e s ' R e t i r e m e n t S y s t e m  Mi a m i S p r i n g s P o l i c e a n d F i r e f i g h t e r s ' R e t i r e m e n t S y s t e m  Mi r a m a r M a n a g e m e n t R e t i r e m e n t P l a n  Mi r a m a r P o l i c e O f f i c e r s ' R e t i r e m e n t F u n d  Mi r a m a r R e t i r e m e n t P l a n f o r G e n e r a l E m p l o y e e s  Ne w S m y r n a B e a c h P o l i c e O f f i c e r s ’ R e t i r e m e n t P l a n  No r t h B r e v a r d C o u n t y H o s p i t a l D i s t r i c t O p e r a t i n g F u n d  No r t h B r e v a r d C o u n t y H o s p i t a l D i s t r i c t P e n s i o n P l a n  No r t h M i a m i R e t i r e m e n t S y s t e m - O r d i n a n c e N u m b e r 7 4 8  No r t h P o r t F i r e f i g h t e r s ' P e n s i o n - L o c a l O p t i o n T r u s t F u n d  No r t h P o r t P o l i c e O f f i c e r s ' P e n s i o n - L o c a l O p t i o n T r u s t F u n d  Oc a l a F i r e f i g h t e r s ' R e t i r e m e n t S y s t e m  Oc a l a P o l i c e O f f i c e r s ' R e t i r e m e n t S y s t e m  Oc o e e M u n i c i p a l G e n e r a l E m p l o y e e s ' R e t i r e m e n t T r u s t F u n d  Oc o e e P o l i c e O f f i c e r s ' a n d F i r e f i g h t e r s R e t i r e m e n t T r u s t F u n d  Ov i e d o F i r e f i g h t e r s ' P e n s i o n T r u s t F u n d ( F L )  Pa l m B e a c h G a r d e n s F i r e f i g h t e r s ' P e n s i o n F u n d  Pa l m B e a c h G a r d e n s P o l i c e O f f i c e r s ' P e n s i o n F u n d  Pe m b r o k e P i n e s F i r e a n d P o l i c e P e n s i o n F u n d  Pa n a m a C i t y M u n i c i p a l F i r e f i g h t e r s ’ an d P o l i c e O f f i c e r s ’ P e n s i o n T r u s t F u n d s  Pl a n t C i t y S a f e t y E m p l o y e e s R e t i r e m e n t P l a n  Po m p a n o B e a c h G e n e r a l E m p l o y e e s ' R e t i r e m e n t S y s t e m  Po r t O r a n g e F i r e a n d R e s c u e P e n s i o n F u n d  Po r t S t . L u c i e M u n i c i p a l P o l i c e O f f i c e r s ' R e t i r e m e n t T r u s t F u n d  Ri v i e r a B e a c h P o l i c e P e n s i o n F u n d  Sa n i b e l G e n e r a l E m p l o y e e s P e n s i o n F u n d  St . C l o u d G e n e r a l E m p l o y e e s ' R e t i r e m e n t S y s t e m  St . C l o u d P o l i c e O f f i c e r s ' a n d F i r e f i g h t e r s R e t i r e m e n t S y s t e m  St . L u c i e C o u n t y F i r e D i s t r i c t F i r e f i g h t e r s ' P e n s i o n T r u s t F u n d  St . L u c i e C o u n t y F i r e D i s t r i c t G e n e r a l E m p l o y e e s R e t i r e m e n t S y s t e m  Ta m a r a c P o l i c e O f f i c e r s ' P e n s i o n T r u s t F u n d  Te m p l e T e r r a c e P o l i c e O f f i c e r s R e t i r e m e n t T r u s t F u n d  Ti t u s v i l l e G e n e r a l E m p l o y e e s P e n s i o n F u n d  Ve n i c e M u n i c i p a l F i r e f i g h t e r s ' P e n s i o n T r u s t F u n d  Ve r o B e a c h P o l i c e O f f i c e r s ' P e n s i o n P l a n  Vi l l a g e o f N o r t h P a l m B e a c h F i r e a n d P o l i c e R e t i r e m e n t F u n d  Wi n t e r H a v e n F i r e f i g h t e r s ' R e t i r e m e n t S y s t e m  Wi n t e r H a v e n G e n e r a l E m p l o y e e s ' R e t i r e m e n t S y s t e m  Wi n t e r H a v e n P o l i c e O f f i c e r s ' R e t i r e m e n t S y s t e m  Wi n t e r S p r i n g s G e n e r a l E m p l o y e e R e t i r e m e n t S y s t e m Th e a b o v e l i s t i n c l u d e s p u b l i c p e n s i o n f u n d i n ve s t o r s f r o m F l o r i d a w h o h a v e e x e c u t e d a n a g r e e m e n t t o i n v e s t i n p r o d u c t s s p o n s o r ed b y A m e r i c a n R e a l t y A d v i s o r s a n d w h o s e na m e i s n o t r e s t r i c t e d f r o m b e i n g i n c l u d e d in t h i s l i s t . . I t i s n o t k n o w n w h e t h e r t h e l i s t e d i n v e s t o r s a p p r o v e o r d i s a p p r o v e o f A m e r i c a n o r t h e a d v i s o r y s e r v i c e s p r o v i d e d . T h e a b o v e l i s t i n c l u d e s i n v e s t o r s a s o f A p r i l 2 8 , 2 0 1 5 .