HomeMy WebLinkAboutAgenda Police Pension 042817Agenda
City of Palm Beach Gardens Police Officers'
Pension Fund
SPECIAL MEETING OF APRIL 28, 2017
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, Secretary
• Marc Glass, Trustee
• Greg Mull, Trustee
3. Presentation of the 9/30/2016 Audited Financial Statements - Cherry Bekaert
4. Presentation of the 9/30/2016 Actuarial Valuation Report - GRS (Pete Strong)
5. Discussion Regarding the use of State Money and Share Accounts
6. Benefit Approvals
7. Other Business
8. Public Comments
9. Adjourn
Next Meetinq Date:
Scheduled for Thursday June 1, 2017 @ 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.
GARDENS
OFFICERS' PENSION FUND
A PENSION TRUST FUND OF THE
CITY OF PALM BEACH GARDENS, FLORIDA
FINANCIAL STATEMENTS AND
ACCOMPANYING INFORMATION
For the Years Ended September 30, 2016 and 2015
And Report of Independent Auditor
%. Cherry Bekaert""
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
TABLE OF CONTENTS
Page
REPORT OF INDEPENDENT AUDITOR.............::...................................................... 1-2
MANAGEMENT'S DISCUSSION AND ANALYSIS......................................................... 3-8
BASIC FINANCIAL STATEMENTS
Statements of Fiduciary Net Position...................................................................................... 9
Statements of Changes in Fiduciary Net Position.................................................................... 10
Notes to Financial Statements................................................................................................. 11 - 18
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
Schedules of Changes in Net Pension Liability
andRelated Ratios............................................................................................................... 19
Scheduleof Contributions.............................................................................................................. 20
Schedule of Money -Weighted Rate of Return............................................................................... 21
Notes to Required Supplementary Information.............................................................................22 - 23
OTHER SUPPLEMENTARY INFORMATION
Schedule of Administrative and Investment Expenses............................................................ 24
OTHER REPORT
Report of Independent Auditor on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards ......................................... 25 - 26
Cherry Bekaert"°
CPAs & Advisors
Qop
Report of Independent Auditor
Board of Trustees
City of Palm Beach Gardens Police Officers' Pension Fund
Palm Beach Gardens, Florida
Report on the Financial Statements
We have audited the accompanying financial statements of the City of Palm Beach Gardens Police Officers'
Pension Fund (the "Fund") which comprise the statements of fiduciary position as of September 30, 2016 and
2015, and the related statements of changes in fiduciary net position for the years then ended, and the related
notes to the financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our
audits in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the Plan's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Plan's internal control. Accordingly, we express
no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the fiduciary net
position of the City of Palm Beach Gardens Police Officers' Pension Fund as of September 30, 2016 and 2015
and the changes in fiduciary net position for the years then ended in accordance with accounting principles
generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and required supplementary information listed on the accompanying table of contents
be presented to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial statements, and
other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Other Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the basic financial statements as a whole.
The other supplementary information listed on the accompanying table of contents is presented for purposes of
additional analysis and is not a required part of the basic financial statements.
The other supplementary information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit of the basic financial statements
and certain additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the basic financial statements or to the basic financial
statements themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. In our opinion, the other supplementary information is fairly stated in
all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 28, 2017 on our
consideration of the Fund's internal control over financial reporting and our tests of its compliance with certain
provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the results of
that testing and not to provide an opinion on internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards in
considering the Fund's internal control over financial reporting and compliance.
Orlando, Florida
April 28, 2017
2
MANAGEMENT'S DISCUSSION AND ANALYSIS
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2016 and 2015
As management of the City of Palm Beach Gardens Police Officers' Pension Fund (the "Fund"), we offer readers
of the Fund's financial statements this narrative overview of the financial activities of the Fund for the years
ended September 30, 2016 and 2015. This narrative is intended to supplement the Fund's financial statements,
and we encourage readers to consider the information presented here in conjunction with these statements,
which begin on page 9.
Overview of the financial statements
The following discussion and analysis are intended to serve as an introduction to the Fund's financial
statements. The financial statements are:
• Statements of Fiduciary Net Position
• Statements of Changes in Fiduciary Net Position
• Notes to the Financial Statements
This report also contains the following "Required Supplementary Information" to the financial statements:
• Schedules of Changes in Net Pension Liability and Related Ratios
• Schedule of Contributions
• Schedule of Money -Weighted Rate of Return
• Notes to Required Supplementary Information
The financial statements contained in the report are described below:
• The Statements of Fiduciary Net Position are a point -in -time snapshot of account balances at
fiscal year-end. They report the assets available for future payments to retirees and any current
liabilities that are owed as of the statement date. The resulting Net Position value (Assets —
Liabilities = Net Position) represents the value of assets held in trust for pension benefits.
The Statements of Changes in Fiduciary Net Position display the effect of pension fund
transactions that occurred during the fiscal years, where Additions — Deductions = Net Increase
(Decrease) in Net Position. This Net Increase (Decrease) in Net Position reflects the change in
the net asset value of the Statement of Fiduciary Net Position from the prior year to the current
year. Both statements are in compliance with Governmental Accounting Standards Board
(GASB) Pronouncements.
The Notes to the Financial Statements are an integral part of the financial statements and
provide additional information that is essential to the comprehensive understanding of the data
provided in the financial statements. These notes describe the accounting and administrative
policies under which the Fund operates and provide additional levels of detail for select financial
statement items (See Notes to Financial Statements on pages 11 to 18 of this report.)
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2016 and 2015 4�
Because of the long-term nature of a defined benefit pension plan, financial statements alone cannot provide
sufficient information to properly reflect the ongoing plan perspective. Therefore, in addition to the financial
statements explained above, this financial report includes two additional "Required Supplementary Information"
schedules with historical trend information.
• The Schedules of Changes in Net Pension Liability and Related Ratios (page 19) includes
information about the sources of changes to the net pension liability and to the changes in Fund
fiduciary net position. They also provides information regarding the fiduciary net position as a
percentage of covered employee payroll and the net pension liability as a percentage of
covered payroll.
• The Schedule of Contributions (page 20) present information regarding the value of total annual
contributions required to be paid by the City and the actual performance of the City in meeting
this requirement.
• The Schedule of Money -Weighted Rate of Return (page 21) provides information regarding the
Fund rate of return.
• The Notes to the Required Supplementary Information (pages 22 - 23) provide background
information and explanatory detail to aid in understanding the required supplementary
schedules.
Financial highlights
• The net position of the Fund exceeded its liabilities at the close of the fiscal years ended
September 30, 2016 and 2015 with $82,113,694 and $74,092,896 in net position restricted for
pension benefits, respectively.
• Net position increased by $8,020,798 or 10.8% during 2016, primarily due to the current year's
contributions and investment income.
• Net position increased by $1,466,565 or 2.0% during 2015, primarily due to that year's
contributions and investment income.
• For the year ended September 30, 2016 Plan net position was 80.60% of the total pension
liability of $101,877,717. Net pension liability was $19,764,023 which was 375.69% of covered
payroll.
• For the year ended September 30, 2015 Plan net position was 77.02% of the total pension
liability of $96,205,515. Net pension liability was $22,112,619 which was 450.48% of covered
payroll.
• Additions to fiduciary net position for the year ended September 30, 2016 were $12,100,672
which includes member, employer and state contributions of $3,993,434 and net income from
investment activities totaling $8,107,238.
• Additions to fiduciary net position for the year ended September 30, 2015 were $4,880,158
which includes member, employer and state contributions of $3,954,404 and net income from
investment activities totaling $925,754.
4
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2016 and 2015
Q0'0-*Z4rjr
• Deductions from fiduciary net position increased to $4,079,874 in 2016. Most of the increase
relates to increased benefit payments made in 2016.
• Deductions from fiduciary net position increased to $3,413,593 in 2015. Most of the increase
relates to increased benefit payments made in 2015.
Analysis of financial activities
The Fund's funding objective is to meet long-term benefit obligations through investment income and
contributions. Accordingly, the collection of employer and member contributions, and the income from
investments provide the reserves needed to finance future retirement benefits.
Contributions from the City of Palm Beach Gardens are made at levels determined by the Fund's actuary.
Because expected investment returns increased and expected payroll growth has remained stable compared to
previous years, the City's contribution requirement has decreased slightly. Net position restricted for pension
benefits increased by $8,020,798 in 2016, compared to an increase of $1,466,565 in 2015.
Fiduciary Net Position (Table 1)
4s of September 30, 2016, 2015 and 2014
2016
2015
2014
Increase (Decrease)
Increase (Decrease)
2015 to 2016
2014 to 2015
$
%
$
%
Current and Other Assets
Investments, at fair value
Total Assets
Total Liabilities
Net Position
$ 1,509,517
80,654,674
$ 1,766,589
72,556,777
$ 1,692,923
70,977,595
$ (257,072)
8,097,897
(14.6%)
11.2%
$ 73,666
1,579,182
4.4%
2.2%
82,164,191
50,497
74,323,366
230,470
72,670,518
44,187
7,840,825
(179,973)
10.5%
(78.1%)
1,652,848
186,283
2.30%
421.6%
7--
82,113,694
$ 74,092,896
$ 72,626,331
$ 8,020,798
10.8%
$ 1,466,565
2.0%
As the years roll forward and total assets and liabilities grow, investment income will continue to play an
important roll in funding future retirement benefits. Therefore, investment return over the long term is critical to
the funding status of the retirement Fund.
During 2016, the Fund's investment portfolio returned gains of approximately 10.96%. It is important to
remember that a retirement plan's funding is based on a long time horizon, where temporary ups and downs in
the market are expected. The more critical factor is that the Fund be able to meet an expected earnings yield of
6.9% annual return on investments.
Based on our latest actuarial analysis for the year ended September 30, 2016, the Plan's total pension liability
exceeds its Plan net position by $19.8 million, producing a plan net position as a percent of total pension liability
of 80.60%.
5
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2016 and 2015
Financial analysis — summary
rc kk
As previously noted, net position viewed over time may serve as a useful indication of the Fund's financial
position (See Table 1 above.) At the close of fiscal year 2016, the assets of the Fund exceeded its current
liabilities by $82,113,694, shown as net position held in trust for pension benefits. The net position is available
to meet the Fund's ongoing obligation to plan participants and their beneficiaries.
Net position
The Fund's net position is established from employer and member contributions, and the accumulation of
investment income, net of investment and administrative expenses and benefit payments.
Additions to plan net position
As noted above, net position needed to finance retirement benefits are accumulated through collecting employer
and member contributions and through investment earnings (net of investment expenses.) The additions totaled
$12,100,672 for the year ended September 30, 2016. This was $7,220,514 more than the prior year, primarily
due to increased investment returns.
Additions to Net Position (Table 2)
As of September 30, 2016, 2015 and 2014
Increase (Decrease)
Increase (Decrease)
2015 to 2016
2014 to 2015
$
%
$
%
2016
2015
2014
Employer contributions
$ 2,897,754
$ 3,007,780
$ 2,712,635
$ (110,026)
(3.7%)
$ 295,145
10.9%
Member contributions
452,421
422,145
391,188
30,276
7.2%
30,957
7.9%
State of Florida contributions
643,259
524,479
546,749
118,780
22.6%
(22,270)
(4.1%)
Net Investment income
8,107,238
925,754
6,798,928
7,181,484
775.7%
(5,873,174)
(86.4%
Total additions
$ 12,100,672'
$ 4,880,158
$ 10,449,500
$ 7,220,514
148.0%
$ (5,569,342)
(53.3%
[:]
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2016 and 2015
Deductions from plan net position
QDI?,a
FT
The Fund was created to provide retirement, survivor and disability benefits to qualified members and their
beneficiaries. The cost of such programs includes recurring benefit payments, refunds of contributions to
employees who terminate employment, and the cost of administering the Fund.
Deductions from Net Position (Table 3)
As of September 30, 2016, 2015 and 2014
2016
2015
2014
Increase (Decrease)
Increase (Decrease)
2015 to 2016
2014 to 2015
$
%
$
%
Benefit payments
Refunds of contributions
Administrative expenses
'Total deductions
$ 3,938,855
8,046
132,973
$ 3,297,505
116,088
$ 2,277,672
6,852
114,098
$ 641,350
8,046
16,885
19.4%
100.0%
14.5%
$ 1,019,833
(6,852)
1,990
44.8%
(100.0%
1.7%
$ 4,079,874
$ 3,413,593
$ 2,398,622
$ 666,281
19.5%
$ 1,014,971
42.3%
Expenses for the year ended September 30, 2016 totaled $4,079,874, an increase of 19.5% from 2015. The
increase was primarily due to increased benefit payments in 2016. Expenses for the year ended September 30,
2015 totaled $3,413,593. Further analysis of benefit payments is provided in Table 4 below.
Benefit Payments (Table 4)
As of September 30. 2016, 2015 and 2014
2016
2015
2014
Increase (Decrease)
Increase (Decrease)
2015 to 2016
2014 to 2015
$
%
$
%
Normal retirement payments
(Disability pension payments
IDROP account withdrawals
Total benefit payments
$ 2,879,396
$ 272,822
$ 786,637
$ 2,053,763
$ 272,822
$ 970,920
$ 1,718,813
$ 272,822
$ 286,037
$ 825,633
$ -
$ (184,283)
40.2%
0.0%
(19.0%)
$ 334,950
$ -
$ 684,883
19.5%
0.0%
239.4%
$ 3,938,855
$ 3,297,505
$ 2,277,672
$ 641,350
19.4%•
$ 1,019,833
44.89%
The deductions of plan net position of $4,079,874 and additions to plan net position of $12,100,672 resulted in
an overall increase of $8,020,798 in net position held in trust for pension benefits for the year ended September
30, 2016. The deductions of plan net position of $3,413,593 and additions to plan net position of $4,880,158
resulted in an overall increase of $1,466,565 in net position held in trust for pension benefits for the year ended
September 30, 2015.
7
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEARS ENDED SEPTEMBER 30, 2016 and 2015
Fiduciary responsibilities
The Board of Trustees is the fiduciary of the pension trust fund. Fiduciaries are charged with the responsibility of
assuring that the assets of the Fund are used exclusively for the benefit of plan participants and their
beneficiaries and defraying reasonable expenses of administering the Fund.
Requests for information
This financial report is designed to provide the Board of Trustees, our membership, taxpayers and investment
managers with an overview of the Fund's finances and accountability for the money received. Questions
concerning any of the information provided in this report or requests for additional financial information should
be addressed to:
City of Palm Beach Gardens Police Officers' Pension Fund
c/o Resource Centers LLC
4360 Northlake Boulevard, Suite 206
Palm Beach Gardens, FL 33410
BASIC FINANCIAL STATEMENTS
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
STATEMENTS OF FIDUCIARY NET POSITION
SEPTEMBER 30, 2016 AND 2015
2016 2015
ASSETS
Cash and cash equivalents
Receivables
State of Florida
Interest and dividends
Pending trades
Other receivables
Police officers
Total receivables
Prepaid expenses
Investments, at fair value
Money market funds
Fixed Income
Corporate obligations
U.S. Government obligations
Mortgage/Asset backed securities
Municipal obligations
Collateralized mortgage obligations
Equity securities
Domestic equities
Foreign equities
ETFs
Pooled equity trust funds
International equity mutual funds
International bond mutual funds
Commingled real estate funds
Total investments
Total assets
LIABILITIES
Accounts payable and accrued expenses
Pending trades payable
Total liabilities
Net position restricted for pensions
S 869,382 $ 739,463
126,338
118,543
79,851
2,753
327,485
312,650
838,694
12,384,934
2,432,691
970,789
588,915
7,493,473
41,049
32,294
45,913,612
3,389,879
6,568,344
80,654,674
82,164,191
47,564
2,933
50,497
$ 82,113,694
524,479
133,053
90,125
56,499
9,904
814,060
368,245
13,652,081
2,499,071
798,088
583,331
73,751
7,680,461
146,663
34,977,640
4,950,842
2,094,879
4,731,725
72, 556, 777
49,336
181,134
230,470
See accompanying notes to financial statements 9
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION
YEARS ENDED SEPTEMBER 30, 2016 AND 2015
Additions
Contributions
City of Palm Beach Gardens
State of Florida
Police officers
Total contributions
Investment income
Net appreciation in fair value
of investments (realized and unrealized)
Interest and dividends
Other
Less investment expenses
Net investment income
Total additions
Deductions
Participant benefit payments
Refunds of participant contributions
Administration expenses
Total deductions
Net increase
Net position restricted for pensions
Beginning of year
End of year
2016
r
2015
$ 2,897,754
$ 3,007,780
643,259
524,479
452,421
422,145
3,993,434
3,954,404
7,265,935
225,663
1,079,187
917,145
83
1,764
8,345,205
1,144,572
237,967
218,818
8,107,238
925,754
12,100,672
4,880,158
3,938,855
3,297,505
8,046
-
132, 973
116,088
4,079,874
3,413,593
8,020,798
1,466,565
74,092,896
72,626,331
$ 82,113,694
$ 74,092,896
See accompanying notes to financial statements 10
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2016 and 2015
Note 1- Summary of significant accounting policies
Reporting entity - The City of Palm Beach Gardens Police Officers' Pension Fund (the "Fund") was established
to account for the financial activity of the City of Palm Beach Gardens Police Pension Fund. The Fund is
managed by a five member Board of Trustees comprised of two members appointed by the Council of the City
of Palm Beach Gardens, Florida (the "City"), two members elected by/from the plan membership and one
member elected by the other four members. The Fund is reported in the fiduciary funds (pension trust) in the
City's basic financial statements.
Basis of accounting - The Fund's financial statements are prepared using the accrual basis of accounting.
Contributions from the Fund's members are recognized as revenue in the period in which the contributions are
due. Contributions from the City of Palm Beach Gardens, as calculated by the Fund's actuary, are recognized
as revenue when due and when the City is legally required to provide the contributions. Expenses are
recognized in the accounting period incurred, if measurable. Benefits and refunds are recognized when due
and payable in accordance with the terms of the Fund.
Method used to value investments - Investments are reported at fair value. Money market mutual funds are
reported at cost, which approximates fair value. Securities traded on national or international exchanges are
valued at the last reported sales price or exchange rates. Net asset values of the commingled real estate funds
are determined by the fund managers using fair market values of the underlying investments of the fund, and
the fund invests in private real estate. There are no restrictions or terms and conditions on the Fund in
redeeming the commingled real estate investment, and the Fund has no unfunded commitments related to the
investment. Real estate values are based upon independent appraisals performed for assets held by the open-
end fund annually, with restricted -scope appraisals conducted on a quarterly basis for those assets not receiving
a full appraisal. The fair value of real estate is determined as the price that the Fund would expect to receive if
the asset was sold to a market participant assuming the highest and best use of each asset at the date of the
Statement of Fiduciary Net Position. Net appreciation (depreciation) in fair value of investments includes the
difference between cost and fair value of investments held as well as the net realized gains and losses for
securities which are sold. Interest and dividend income are recognized on the accrual basis when earned.
Purchases and sales of investments are recorded on a trade date basis.
Use of estimates - The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires the plan administrator to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those
estimates.
New Accounting Pronouncements — Effective October 1, 2015, the Fund adopted the provisions of GASB
Statement No. 72, Fair Value Measurement and Application. The Fund continues to value certain investments
using the market approach and has enhanced disclosures regarding these investments to include the level of
fair value hierarchy.
Note 2 - Plan description and contribution information
Plan description
The following brief description of the Fund is provided for general information purposes only. Participants
should refer to City ordinances for more complete information.
The City of Palm Beach Gardens, Florida adopted this single employer defined benefit pension plan (the "Plan".)
The Fund is governed by Florida Statutes Chapter 185, as revised by ordinances passed by the Palm Beach
Gardens City Council. All full time police officers are covered under the Plan.
11
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2016 and 2015
Note 2 - Plan description and contribution information (continued)
Plan description (continued)
The Plan provides retirement, death and disability benefits for its members. Benefit provisions are established
and may be amended by the City of Palm Beach Gardens, in conjunction with the Palm Beach County Police
Benevolent Association. A member hired before September 13, 2012 may retire with normal benefits after the
earlier of age 52 with 10 years of credited service, or 20 years of credited service regardless of age. A member
hired on or after September 13, 2012 may retire with normal benefits upon the attainment of age 59 and 10
years of credited service. Reduced early retirement benefits are available once a member reaches age 50 and
accumulates 10 years of credited service. For members retiring prior to September 13, 2012, normal retirement
benefits are 3.5% of the member's average monthly earnings times his or her credited service years, up to a
maximum of 100% of average monthly earnings, plus a monthly supplemental benefit of $12.50 per year of
service. For members hired prior to September 13, 2012 and retiring on or after September 13, 2012, but not
having attained the normal retirement date prior to September 13, 2012, normal retirement benefits are 3.5% of
the member's average monthly earnings times his or her credited service years earned prior to September 13,
2012 plus 2.75% of the member's average monthly earnings times his or her credited service years earned on
or after September 13, 2012, up to a maximum of 75% of average monthly earnings, plus a monthly
supplemental benefit of $12.50 per year of service. For members hired on or after September 13, 2012, normal
retirement benefits are 2.75% of the member's average monthly earnings times his or her credited service
years, up to a maximum of 75% of average monthly earnings, plus a monthly supplemental benefit of $12.50 per
year of service. Early retirement benefits are the same as normal retirement benefits, reduced by 3.0% for each
year by which early retirement precedes the normal retirement date. Average monthly earnings for purposes of
calculating benefits is the average of salary during the last five years of employment producing the highest
average.
Salary means the average monthly earnings reported to the Internal Revenue Service for income tax purposes,
plus deferred compensation. Beginning with salary after December 31, 2008, the definition of salary includes
amounts paid by the City as differential wages to members who are absent from employment while in qualified
military service. Notwithstanding the preceding two sentences, effective September 13, 2012, salary will
henceforth mean base pay, excluding all other compensation, provided that the salary of any member employed
on September 13, 2012 shall include payment for unused accrued sick and annual leave up to the dollar amount
of unused sick and annual leave that the member has accrued as of September 13, 2012. However, in no event
will the salary of any member who is employed on September 13, 2012 be less than the member's salary on
September 12, 2012 as determined in accordance with the definition of salary in effect on September 12, 2012.
Any member who attains 20 years of service or age 52 with 10 years of service may elect to participate in a
deferred retirement option plan (DROP) while continuing his or her active employment as a police officer. The
election to enter the DROP must be made prior to completing 25 years of credited service. Upon participation in
the DROP, the member becomes a retiree for all Plan purposes so that he or she ceases to accrue any further
benefits under the Plan. Normal retirement payments that would have been payable to the member as a result
are accumulated and invested in the DROP plan to be distributed to the member upon his or her termination of
employment. Participation in the DROP plan ceases for a member at the first to occur of: termination of
employment, 30 years of credited service or 5 years of participation.
Eligibility for disability benefits begins from the member's date of hire, if the disability is service connected, or
after 10 years of service if non -service connected. Service -incurred disability benefits are 60% of the member's
current compensation, and not less than the accrued pension benefit. Non -service incurred disability benefits
are calculated the same as a normal retirement pension based on average monthly earnings and credited
service at the time of disability, but not less than 25% of average monthly earnings or the accrued pension
benefit, whichever is greater.
12
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
OPP
YEARS ENDED SEPTEMBER 302016 and 2015.`''
Note 2 - Plan description and contribution information (continued)
Plan description (continued)
Pre -retirement death benefits for service related deaths are paid to the member's beneficiary for life. Benefits
are calculated at 50% of the member's average monthly earnings, with a minimum equal to the accrued pension
benefit (with no early retirement reduction).
Pre -retirement death benefits for non -service related deaths are paid to the member's beneficiary for life. For
members with less than 5 years of contributing service at the date of death, the benefit is the return of the
member's contributions without interest. For members with 5 years or more of contributing service at the date of
death, the benefit is equal to that payable at early or normal retirement age. If the member is eligible for normal
retirement, the benefit is equal to his or her accrued pension benefit, and is payable for life.
Termination benefits for unvested members are the return of the member's contributions. For members who are
vested when they terminate, their vested accrued pension benefit is payable at the early or normal retirement
date. Full vesting occurs at the completion of 10 years of credited service.
Membership in the Fund consisted of the following at October 1, 2015, the date of the latest actuarial valuation:
Retirees, beneficiaries, and DROP participants receiving benefits 75
Terminated employees entitled to benefits but not yet receiving them 4
Active members 78
Total -157
Contributions
Contribution requirements are established and may be amended by the City of Palm Beach Gardens in
conjunction with the Palm Beach County Police Benevolent Association. Contribution requirements are based
on the benefit structure established by the City. Members are required to contribute 8.6% of their covered
salary. Pursuant to Chapter 185 of Florida Statutes, a premium tax on certain casualty insurance contracts
written on Palm Beach Gardens properties is collected by the state and remitted to the Fund for the state's
annual contribution amount. The City is required to contribute the remaining amounts necessary to finance the
benefits through periodic contributions at actuarially determined rates. Administrative costs are financed
through investment earnings.
A rehired member may buy back one or more years of continuous past service by paying into the Fund the
amount of contributions the employee would otherwise have paid for such service, plus the investment earnings
that would have been earned had such funds been invested by the Fund during that time.
In accordance with Florida Statutes, additional premium tax revenues received by the Fund are reserved to
provide future minimum or extra benefits. The State contribution for the fiscal year was $643,259. Of the State
contribution, the Base Amount ($292,446), the Gap Amount ($182,769), and 50% of the Growth Amount
($84,022) were used to fund the pension plan, and 50% of the Growth Amount ($84,022) was allocated to Share
Plan Accounts. Per the default treatment of accumulated additional premium tax revenues, of which $308,511
was the accumulated balance as of September 30, 2015, 50% of this amount ($154,255) was used to reduce
the Plan's unfunded actuarial accrued liability and the remaining 50% ($154,255) was allocated to Share Plan
accounts. As of September 30, 2016, the cumulative balance of additional premium tax revenues reserved to
provide future benefit improvements totals $0 and the amounts reserved for allocation to Share Plan accounts
totaled $238,277.
13
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2016 and 2015
Note 3 - Deposits and investments
Deposits
Custodial credit risk — Florida Statutes require the Fund to maintain its deposits with financial institutions in a
qualified public depository, as determined by the Treasurer of the State of Florida.
The Fund's accounts maintained in qualified public depositories are covered by federal depository insurance for
an amount equal to the aggregate of each participant's ascertainable, non -contingent interest in the Fund (up to
$250,000 per participant). Amounts in excess of federal depository insurance are secured by the Public
Depository Trust Fund (the "Trust Fund") maintained by the Treasurer. The Trust Fund is a multiple financial
institution pool with the ability to assess its member financial institutions for collateral shortfalls if a member fails.
Investments
Authorized investments — Florida Statutes and the Fund's investment policy limit investments to certificates of
deposit up to $100,000 maximum value; money market deposit accounts; obligations issued by the United
States Government or by an agency of the United States Government; bonds issued by the State of Israel;
corporate stocks and bonds; mutual funds; commingled stock, bond, and money market funds; real estate
investments and securities; and to be announced (TBA) securities that are issued by a Federal Agency or are of
investment grade. The following investments are permissible with approval from the Board of Trustees:
securities paying interest only (ID's), securities representing principal only (PO's), accrual bonds (z-tranches),
inverse or reverse floaters with a multiple greater than 1.00 or less than -1.00, asset pools not domiciled in the
Unites States, Collateralized Bond Obligations (CBO's), Collateralized Debt Obligations (CDO's), Collateralized
Loan Obligations (CLO's), and companion bonds. Investments in companies identified as scrutinized
companies by the Florida State Board of Administration (SBA) are prohibited, with the exception of investments
in scrutinized companies that are held within commingled funds (if the commingled fund sponsor does not offer
a similar fund that does not hold investments in scrutinized companies). Investments in unhedged and/or
leveraged derivatives are prohibited.
Investment Policy — The Fund's policy in regard to the allocation of invested assets is established and may be
amended by the Fund's Board of Trustees. It is reviewed quarterly with the assistance of the Fund consultant.
The Board recognizes that the obligations of the Fund are long-term, and that the investment policy should be
made with a view toward performance and return over a number of years. The general investment objective,
then, is to obtain a reasonable total rate of return — defined as interest and dividend income plus realized and
unrealized capital gains and/or losses — that exceeds the actuarial interest rate assumption on an annual basis
year after year.
14
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2016 and 2015
Note 3 - Deposits and investments (continued)
The following was the Board's adopted asset allocation policy as of September 30, 2016.
Asset Class
Domestic equity
International Equity
Domestic Bonds
International Bonds
Real Estate
Target Allocation
55.0%
10.0%
23.5%
4.0%
7.5%
100.0%
tong -term
Expected Real
Rate of Return
7.5%
8.5%
2.5%
3.5%
4.5%
The long-term real annualized returns shown above are best estimates of arithmetic real rates of return for each
major asset class as provided by the investment monitor.
At September 30, 2016, the Fund had the following investments:
Investment maturit
in ears
Credit rating
Less than
More than
(Moody's)
Fair value
1
1-5
5 - 10
10
Money market funds
Aaa-mf
$ 838,694
$ 838,694
$ -
$
-
$ -
Corporate obligations
Aaa .. Baa3
12,384,934
2,517,950
1,814,654
4,166,506
3,885,824
U.S. Government obligations
Aaa
2,432,691
170,325
831,525
817,425
613,416
Mortgage/Asset backed
:securities
Aaa
970,789
-
30,357
168,957
771,475
Municipal obligations
Aa2 .. Al
588.915
-
214.909
162,728 1211.278
$ 17,216,023
$ 3.526.969
$ 2.891.445
1 $
5,315.616 1
$ 5.481.993
Fixed income subtotal
(Equity securities
(Domestic equities
N/R
7,493,473
(Foreign equities
N/R
41,049
IETFs
N/R
32,294
(Pooled equity trust funds
N/R
45,913,612
International bond mutual funds
N/R
3,389,879
Commingled real estate funds (at
net asset value)
N/R
6,568.344
$ 80,654,674
Total investments
15
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2016 and 2015 1)1944
Note 3 - Deposits and investments (continued)
Interest rate risk — This is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to
changes in market interest rates. Although the Fund's investment policy does not provide limitations as to
maturities, the Fund minimizes risk of fair value losses in its fixed income portfolio due to rising interest rates by
structuring its investment portfolio so that securities mature to meet ongoing cash requirements, thereby
avoiding the need to sell securities on the open market prior to maturity; and by investing operating funds
primarily in shorter -term securities or by cash flow projections.
Credit risk — This is the risk that a security or a portfolio will lose some or all of its value due to a real or
perceived change in the ability of the issuer to repay its debt. This risk is generally measured by the assignment
of a rating by a nationally recognized statistical rating organization (NSRO), such as Moody's or Standard &
Poor's. The Fund's investment policy limits investments in fixed income securities, with the exception of
international bond mutual funds, to securities with a Moody's rating of Aaa, Aa, or A or a Standard & Poor's
rating of AAA, AA, or A. Equity investments must be traded on one or more of the recognized national
exchanges and have a Value Line Investment Survey Rank for Safety rating of 1, 2, or 3 or a Standard & Poor's
rating of A+, A, or A-. Money market deposits must have a Moody's rating of P1 or a Standard & Poor's rating of
Al.
Custodial credit risk — This is the risk that in the event of the failure of the counterparty, the Fund will not be able
to recover the value of its investments or collateral securities that are held by the counterparty. The Fund's
policy is to maintain its investments in custodial accounts that identify securities held as assets of the Fund by
registering securities in the name of the Fund, or in street name or nominee name as the Fund's agent.
Concentration of credit risk — The Fund's investment policy limits investments in the stock of any one issuing
company to 5% of the Fund's assets, and to 5% of the outstanding capital stock of any issuing company.
Furthermore, investments in corporate common stock, international equities, convertible bonds, and convertible
preferred issues shall not exceed 65% of the Fund's assets at cost.
Fair Value Hierarchy — The fair value hierarchy, which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value, provides three levels of inputs to
measure fair value. Because of the inherent uncertainty of valuations, estimated fair values may differ
significantly from the values that would have been used had a ready market for these investments existed, and
differences could be material.
The Fund classifies its investments into a hierarchical disclosure framework as follows:
Level I — Securities traded in an active market with available quoted prices for identical assets as of the
reporting date.
Level II — Securities not traded on an active market but for which observable market inputs are readily
available or Level I securities where there is a contractual restriction as of the reporting date.
Level III — Securities not traded in an active market and for which no significant observable market inputs are
available as of the reporting date.
16
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2016 and 2015
Note 3 - Deposits and investments (continued)
Fair Value Measurements Using
Quoted aces
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
9/30/2016
(Level 1)
(Level 2)
(Level 3)
Investments by fair value level
Money market funds
$ 838,694
$ 838,694
$ -
$ -
Corporate obligations
12,384,934
-
12,384,934
-
U.S. Government obligations
2,432,691
-
2,432,691
Mortgage/Asset backed securities
970,789
-
970,789
Municipal obligations
588,915
-
588,915
Domestic securities
7,493,473
7,493,473
-
-
Foreign securities
41,049
41,049
-
-
ETFs
32,294
32,294
-
-
Pooled equity trust funds
45,913,612
45,913,612
-
-
International bond mutual funds
3,389,879
3,389,879
-
-
74,086,330
57,709,001 1
16,377,329
Total investments by fair value level
Investments measured at the net asset value (NAV)
Commingled real estate funds
6,568,344
Total investments measured at the NAV
6,568,344
Total investments measured at fair value
$ 80,654,674
Note 4 - Designations
Portions of the plan net position are designated for benefits that accrue in relation to the DROP plan described
in Note 2. Plan net position at September 30, 2016 and 2015 consists of the following:
2016
Designated for DROP benefits (fully funded) $ 15,862,830
Undesignated Plan Net Position 66,012,587
Reserve for allocation to Share Plan accounts 238,277
Total plan net position $ 82,113,694
2015
$ 13,700,980
60,237,661
154,255
$ 74,092,896
17
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2016 and 2015
Note 5 - Net pension liability of the City
The components of the net pension liability of the City at September 30, 2016 and 2015, were as follows:
Total Pension Liability
Plan Fiduciary Net Position
City's Net Pension Liability
2016 _ 2015
$101,877,717
82,113,694
$ 19,764,023
5 96,205,515
74,092,896
$22,112,619
Plan Fiduciary Net Position as a percentage of the Total Pension Liability 80.60% 77.02%
Mortality rates were based on the RP-2000 Combined Healthy Participant Mortality Table for males and females
with mortality improvement projected to all future years after 2000 using Scale BB. For females, the base
mortality rates include a 100% white collar adjustment. For males, the base mortality rate include a 90% blue
collar adjustment and a 10% white collar adjustment. These are the same rates used for Special Risk Class
members of the Florida Retirement System (FRS) in the July 1, 2015 FRS Actuarial Valuation Report.
A single discount rate of 6.90% 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 6.90%. 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 (6.90%) was applied to
all periods of projected benefit payments to determine the total pension liability.
Sensitivity of net pension liability to changes in the discount rate - The following presents the net pension liability
of the City, calculated using the discount rate of 6.90%, as well as what the City's net pension liability would be if
it were calculated using a discount rate that is 1-percentage point lower (5.90%) or 1-percentage higher (7.90%)
than the current rate:
Sensitivity of the Net Pension Liability to the Single Discount Rate Assumption
Current Single Discount
1% Decrease Rate Assumption 1% Increase
5.90% 6.90% 7.90%
$ 29,925,890 $ 19,764,023 $ 11,362,674
Note 6 - Income taxes
The Fund's tax counsel believes that the Fund is designed and is currently being operated in compliance with
applicable requirements of the Internal Revenue Code and that, therefore, the Fund continues to qualify under
Section 401 (a) as a tax-exempt as of September 30, 2016. Therefore, no provision for income taxes is included
in the Fund's financial statements.
18
i
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULES OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
YEAR ENDING SEPTEMBER 30, 2016
RAP -,-
Year Ending September 30,
2016
2015
2014
Total pension liability
Service cost
$
1,355,530
$ 1,206,826
$ 1,229,681
Interest
6,784,226
6,504,741
6,083,570
Benefit changes
-
885,269
Difference between actual & expected experience
976,528
344,110
(56,911)
Assumption changes
573,052
875,147
Benefit payments
(3,938,855)
(3,297,505)
(2,277,672)
Refunds
(8,046)
(6,852)
Other (Net Decrease in State Contribution Reserve)
(70,233)
(426,717)
134,105
Net change in total pension liability
5,672,202
5,206,602
5,991,190
Total pension liability - beginning
96,205,515
90,998,913
85,007,723
Total pension liability
$
101,877,717
$ 96,205,515
$ 90,998,913
Plan fiduciary net position
Contributions - Employer
$
2,897,754
$ 3,007,780
$ 2,712,635
Contributions - State of Florida
643,259
524,479
546,749
Contributions - Member
452,421
422,145
391,188
Net investment income
8,107,238
925,753
6,798,928
Benefit payments
(3,938,855)
(3,297,504)
(2,277,672)
Refunds
(8,046)
(6,852)
Administrative expense
(132,973)
(116,088)
(114,098)
Net changes in Plan fiduciary net position
8,020,798
1,466,565
8,050,878
Total Plan fiduciary net position - beginning
74,092,896
72,626,331
64,575,453
Total Plan fiduciary net position - ending
82,113,694
74,092,896
72,626,331
Net pension liability ending
$
19,764,023
$ 22,112,619
$ 18,372,582
Plan fiduciary net position as a percentage of the total pension liability
80.60%
77.02%
79.81%
Covered employee payroll
$
5,260,709
$ 4,908,663
$ 4,548,698
Net pension liability as a percentage of covered employee payroll
375.69%
450.48%
403.91%
Note to Schedule:
GASB 67 requires 10 year trend information. As fiscal year 2014 is the first year of implementation, additional
years will be displayed as the information becomes available.
19
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS
SCHEDULE OF CONTRIBUTIONS
Actuarially
Contribution
FY Ending
Determined
*Actual
Deficiency
Contribution as a % of
September 30,
Contribution
Contribution
(Excess)
Covered Payroll
Covered Payroll
2016
$ 3,316,250
$ 3,456,991 *
$ (140,741)
$ 5,260,709
65.71%
2015
$ 3,357,659
$ 3,420,424 **
$ (62,765)
$ 4,908,663
69.68%
2014
$ 3,125,279
$ 3,125,279
$
$ 4,548,698
68.71%
GASB 67 requires 10 year trend information. As fiscal year 2014 is the first year of implementation, additional
years will be displayed as the information becomes available.
Notes: * FY2016 contributions from the City of Palm Beach Gardens and the State of Florida, as shown on the
Statements of Changes in Fiduciary Net Position, were $2,897,754 and $643,259, respectively, for a total of
$3,541,013. However, of the $643,259 State Contribution, $559,237 was available to be credited towards the
Actuarially Determined Contribution as presented above. This amount, in addition to the City contribution of
$2,897,754, results in a total Actual Contribution of $3,456,991.
** FY2015 contributions from the City of Palm Beach Gardens and the State of Florida, as shown on the -
Statements of Changes in Fiduciary Net Position, were $3,007,780 and $524,479, respectively, for a total of
$3,532,259. However, of the $524,479 State Contribution, $412,644 was available to be credited towards the
Actuarially Determined Contribution as presented above. This amount, in addition to the City contribution of
$3,007,780, results in a total Actual Contribution of $3,420,424.
20
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF MONEY -WEIGHTED RATE OF RETURN
T
Year Ending Annual money -weighted rate of
September 30, return, net of investment expense
2016
10.96%
2015
1.29%
2014
10.73%
2013
14.53%
2012
18.63%
2011
0.22%
2010
10.09%
Note: GASB 67 requires 10-year trend information. As fiscal year 2014 is the first year of implementation,
additional years will be displayed as the information becomes available.
21
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
REQUIRED SUPPLEMENTARY INFORMATION
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
u
Valuation Date October 1, 2015
Measurement Date September 30, 2016
Note: Actuarially determined contribution rates are calculated as of October 1, which is two
years 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
20 years (single equivalent amortization period)
Asset Valuation Method
Recognizes 20% of difference between market value of assets and
expected actuarial asset value
Inflation
2.5%
Salary Increases
5.5% to 7.0% depending on service, including inflation
Investment Rate of Return
6.90%
Retirement Age
Experience -based table of rates that are specific to the type of eligibility
condition
Mortality
RP-2000 Mortality Table for Annuitants with mortality improvement
projected to all future years using Scale BB. For females, the base mortality
rates include a 100%ti white collar adjustment. For males, the base mortality
rate include a 90% blue collar adjustment and a 10% white collar
adjustment. These are the same rates used for Special Risk Class
members of the Florida Retirement System (FRS) in the July 1, 2015 FRS
Actuarial Valuation Report.
Benefit changes:
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.
22
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
REQUIRED SUPPLEMENTARY INFORMATION
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
9-8A #..—
Changes in assumptions:
For the year ended September 30, 2016, the investment return assumption was lowered from 7.1 % to 6.9%.
This rate will continue to be lowered by 0.1% each year until 6.5% is reached. The inflation rate was reduced
from 3.0% to 2.5%. The rate of salary increase was reduced from 7.5% per year to 7.0% for the first 3 years,
and 5.5% per year thereafter.
For the year ended September 30, 2015, 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.
23
OTHER SUPPLEMENTARY INFORMATION
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
SCHEDULE OF ADMINISTRATIVE AND INVESTMENT EXPENSES
YEARS ENDED SEPTEMBER 30, 2016 AND 2015
Administrative Expenses
Accounting services
Actuarial services
Legal services
Administrative services
Fiduciary liability insurance
General liability insurance
Annual membership fees
Trustee expenses
Postage
Miscellaneous expenses
Bank charges
Total administrative expenses
Investment Expenses
Investment management fees
Custodial fees
Performance monitoring fees
Total investment expenses
2016
2015
$ 15,150
$ 16,950
44,256
33,325
16,332
9,764
31,089
31,040
5,675
6,495
1,013
1,185
690
600
16,288
14,444
175
99
200
2,305
1,986
$ 132,973
$ 116,088
196,240
178,875
19,367
18,197
22,360
21,746
$ 237,967
$ 218,818
24
OTHER REPORT
Cherry Bekaert"°
Ws & Advisors
i
Report of Independent Auditor on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of the Financial Statements
Performed in Accordance with Government Auditing Standards
Board of Trustees
City of Palm Beach Gardens Police Officers' Pension Fund
Palm Beach Gardens, Florida
We have audited, in accordance with the auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards issued by the
Comptroller General of the United States, the financial statements of City of Palm Beach Gardens Police
Officers' Pension Fund (the "Fund") as of and for the year ended September 30, 2016, and the related notes to
the financial statements, and have issued our report thereon, dated April 28, 2017.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Fund's internal control over
financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances
for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the Fund's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control such that there is a reasonable possibility that a material misstatement of the entity's financial
statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section
and was not designed to identify all deficiencies in internal control over financial reporting that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit, we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may
exist that have not been identified.
25
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Fund's financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and
grant agreements, noncompliance with which could have a direct and material effect on the determination of
financial statement amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and
the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the entity's internal control and compliance. Accordingly, this communication is not
suitable for any other purpose.
Orlando, Florida
April 28, 2017
26
GRSGabriel Roeder Smith & Company
Consultants & Actuaries
CITY OF PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND
ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, 2016
ANNUAL EMPLOYER CONTRIBUTION FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2018
Retirement
R Consulting
P:954.527.1616 1 F:954.525.0083 1 www.grsconsulting.com
April 21, 2017
Board of Trustees
Dania Beach Police and Firefighters Retirement System
Dania Beach, Florida
Dear Board Members:
Gabriel, Roeder, Smith & Company (GRS) has been engaged by the Dania Beach Police and Firefighters
Retirement System (Plan) to prepare a disclosure report to satisfy the requirements set forth in Ch. 112.664,
F.S. and as further required pursuant to Ch. 60T-1.0035, F.A.C.
This report was prepared at the request of the Board and is intended for use by the Retirement Board and
those designated or approved by the Board. This report may be provided to parties other than the System
only in its entirety and only with the permission of the Board.
The purpose of the report is to provide the required information specified in Ch. 112.664, F.S. as well as
supplement this information with additional exhibits. This report should not be relied on for any purpose
other than the purpose described above.
The findings in this report are based on data or other information through September 30, 2016. Future
actuarial measurements may differ significantly from the current measurements presented in this report due
to such factors as the following: plan experience differing from that anticipated by the economic or
demographic assumptions; changes in economic or demographic assumptions; increases or decreases
expected as part of the natural operation of the methodology used for these measurements (such as the end of
an amortization period or additional cost or contribution requirements based on the plan's funded status); and
changes in plan provisions or applicable law. The scope of this engagement does not include an analysis of
the potential range of such measurements.
This report was based upon information furnished by the Plan Administrator concerning Plan benefits,
financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries.
We checked for internal and year-to-year consistency, but did not otherwise audit the data. We are not
responsible for the accuracy or completeness of the information provided by the Plan Administrator.
Except as otherwise indicated as required for the disclosures contained herein, this report was prepared using
certain assumptions selected by the Board as described in our October 1, 2016 actuarial valuation report.
This report is also based on the Plan Provisions, census data, and financial information as summarized in our
October 1, 2016 actuarial valuation report. Please refer to the October 1, 2016 actuarial valuation report,
dated February 20, 2017, and the GASB No. 67 actuarial disclosure report, dated January 19, 2017, for
summaries and descriptions of this information.
The use of an investment return assumption that is 2% higher than the investment return assumption used to
determine the funding requirements does not represent an estimate of future Plan experience nor does it
reflect an observation of future return estimates inherent in financial market data. The use of this investment
return assumption is provided as a counterpart to the Chapter 112.664, Florida Statutes requirement to utilize
an investment return assumption that is 2% lower than the assumption used to determine the funding
requirements. The inclusion of the additional exhibits showing the effect of using a 2% higher investment
return assumption shows a more complete assessment of the range of possible results as opposed to showing
a one-sided range as required by Florida Statutes.
The undersigned are members of the American Academy of Actuaries and meet the Qualification Standards
of the American Academy of Actuaries to render the actuarial opinions contained herein. The signing
actuaries are independent of the plan sponsor.
This report has been prepared by actuaries who have substantial experience valuing public employee
retirement systems. To the best of our knowledge the information contained in this report is accurate and
fairly presents the actuarial position of the Retirement Plan as of the valuation date. All calculations have
been made in conformity with generally accepted actuarial principles and practices, with the Actuarial
Standards of Practice issued by the Actuarial Standards Board and with applicable statutes.
With respect to the reporting standards for defined benefit retirement plans or systems contained in Section
112.664(1) F.S., the actuarial disclosures required under this section were prepared and completed by me or
under my direct supervision, and 1 acknowledge responsibility for the results. To the best of my knowledge, the
results are complete and accurate, and in my opinion, meet the requirements of Section 112.664(1), F.S. and
Section 60T-1.0035, F.A.C.
Respectfully submitted,
GABRIEL, ROEDER, SMITH AND COMPANY
By -r►IR,4�Ata&
Melissa R. Moskovitz, MAAA, FCA
Enrolled Actuary No. 17-06467
Consultant & Actuary
GRS
Retirement
Consulting
By fA—
Peter N. Strong, FSA, M A, FCA
Enrolled Actuary No. 17-156975
Senior Consultant & Actuary
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.
Actuarially Determined Employer Contribution (ADEC)
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
17
8.
Recent History of UAAL and Funded Ratio
18
9.
Actuarial Assumptions and Cost Method
19
10.
Glossary of Terms
24
C Pension Fund Information
1. Statement of Plan Assets at Market Value 27
2. Reconciliation of Plan Assets 28
3. Reconciliation of DROP Accounts 29
4. Calculation of Actuarial Value of Assets 30
5. Investment Rate of Return 31
D Financial Accounting Information
1. FASB No. 35 32
2. GASB No. 67 33
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
GRS
SECTION A
DISCUSSION OF VALUATION RESULTS
GRS
I
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.
For FYE 9/30/2018
Based on
10/1/2016
Valuation
For FYE 9/30/2017
Based on
10/1/2015
Valuation
Increase
(Decrease)
Required City/State Contribution
$ 3,394,168
$ 3,256,067
$ 138,101
As % of Covered Payroll
56.55
%
61.11
%
(4.56) %
Estimated Credit for State Contribution
$ 559,237
$ 559,237
$ 0
As % of Covered Payroll
9.32
%
10.50
%
(1.18) %
Required City Contrbution
$ 2,834,931
$ 2,696,830
$ 138,101
As % of Covered Payroll
47.23
%
50.61
%
(3.38) %
As % of Total Payroll including
DROP participants
29.58
%
30.14
%
(0.56) %
The required employer contribution for the fiscal year ending September 30, 2018 has been
discounted for interest on the basis that the contribution is made in full at the beginning of the year.
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 2017 and 2018 will be
$559,237 respectively. 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, 2018, including pay for members
participating in the DROP, is expected to be approximately $9.58 million (compared to $6.00 million for
expected non -DROP covered payroll). City contribution requirements have also been shown above as a
percentage of total payroll (including DROP members.)
Actual employer and State contributions during the year ending September 30, 2016 were
$2,897,754 and $559,237, respectively, for a total of $3,456,991. The annual required contribution was
GRS
2
$3,316,250. The $559,237 in contributions from the State include a Base Amount of $292,446, a Gap
amount of $182,769, and half the Growth amount ($168,044) of $84,022. In addition, 50% of the
Accumulated Excess State Reserve has been used to reduce the Plan's Unfunded Actuarial Accrued
Liability (UAAL) as of October 1, 2016. This was amount was $154,255.
Revisions in Benefits
There were no changes in plan benefits since the previous valuation.
Revisions in Actuarial Assumptions or Methods
The following revisions in actuarial assumptions have been approved by the Board and incorporated
into this report:
The investment return assumption was lowered from 6.9% to 6.8%. This rate will continue to be
lowered by 0.1 % each year until 6.5% is reached.
Additionally, the Florida Retirement System (FRS) revised their mortality assumption for
preretirement mortality (for active members) in their July 1, 2016 actuarial valuation. All Florida
municipal pension plans are now required to use the same mortality assumptions as FRS, so we
have made the same adjustment to pre -retirement mortality rates in this actuarial valuation. The
Board approved use of the mortality assumption used by the FRS effective with the October 1, 2015
valuation. Since that valuation, FRS has made adjustments to their pre -retirement mortality
assumption for active members in their most recent valuation as of July 1, 2016.
In the aggregate, the assumption changes described above resulted in an increase in the required
employer contribution of 1.72% of covered payroll (or $103,236). There have been no other changes in
assumptions or methods since the prior valuation.
Actuarial Experience
There was a net actuarial experience gain of $420,988 for the year, which means that actual
experience was more favorable than expected. The gain is primarily due a recognized investment return
above the assumed rate of 6.9%. The investment return was 10.9% based on market value of assets and
7.7% based on actuarial value of assets. Part of the gain was also due to lower than expected salary
GRS
3
increases (4.5% actual versus 5.8% expected). Mortality experience was a minor offsetting source of
actuarial experience loss (as there were no deaths during the year). The net actuarial gain decreased the
required employer contribution by 0.75% of covered payroll (or about $45,000).
Funded Ratio
This year's funded ratio is 73.4% compared to 71.8% last year. The funded ratio was 74.3% before
the changes in assumptions. 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
Change in assumptions
Payment on unfunded liability
Experience (gain)/loss
Change in Normal Cost Rate
Change in administrative expense
Change in State revenue
Contribution rate this year
Variability of Future Contribution Rates
50.61 %
1.72
(5.48)
(0.75)
0.03
(0.08)
1.18
47.23
The Actuarial Cost Method used to determine the contribution rate is intended to produce
contribution rates which are generally level as a percent of payroll. Even so, when experience differs
from the assumptions, as it often does, the employer's contribution rate can vary significantly from year-
to-year.
Over time, if the year-to-year gains and losses offset each other, the contribution rate would be
expected to return to the current level, but this does not always happen.
The Market Value of Assets exceeds the Actuarial Value of Assets by $2,269,502 as of the
valuation date (see Section Q. This difference will be gradually recognized in the absence of offsetting
losses. In turn, the computed employer contribution rate will decrease by approximately 4.03% of
covered payroll.
GRS
4
Relationship to Market Value
If Market Value had been the basis for the valuation, the required net City contribution rate would
have been 43.20% (a dollar amount of approximately $2.6 million) and the funded ratio would have been
76.0%. The market value -based funded ratio was 71.6% 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 toward 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, 2016 the market value of assets is $66.0 million and the liability for current
inactive members is $67.3 million. Many steps have been taken to address this issue, such as lowering the
investment return assumption, conducting an experience study and implementing the recommended
assumption changes, shortening the amortization period for bases established on or after October 1, 2007,
and making extra payments towards the UAAL.
The remainder of this Report includes detailed actuarial valuation results, financial information,
miscellaneous information and statistics, and a summary of plan provisions.
GRS
E
CHAPTER REVENUE
The Base Amount is the amount of Premium Tax Revenue received for calendar year 2002.
This amount must be used to fund Chapter minimum benefits. The Gap Amount is the difference
between the amounts of Premium Tax Revenue received for calendar year 2002 and calendar year 2012.
This amount must be used to fund the cost of benefits that are in excess of Chapter minimum benefits.
The Growth Amount is revenue in excess of the amount received for calendar year 2012. This amount
must be shared 50% - 50% between Share Plan accounts and the cost to fund the Plan.
Actuarial Confirmation of the Use of State Chapter Money
1.
Base Amount (2002 Premium Tax Revenue (PTR))
$ 292,446
2.
PTR Received for Calendar year 2012
475,215
3.
Gap Amount: (2) - (1)
182,769
4.
PTR Received for Previous Plan Year
643,259
5.
Growth Amount for Previous Plan Year: (4) - (2)
168,044
6.
Accumulated Excess at Beginning of Previous Year
308,511
7.
Prior Excess Used to Reduce UAAL: 50% of (6)
154,255
8.
Amount Used to Fund Share plan Accounts: 50% of [(5) + (6)]
238,278
9.
Amount Used to Fund Plan: (1) + (3) + 50% of (5)
559,237
10. Accumulated Excess as of Valuation Date
0
GRS
SECTION B
11.1911.11Ma9m0NV
GRS
PARTICIPANT DATA
October 1, 2016
October 1, 2016
October 1, 2015
After Changes
Before Changes
ACTIVE MEMBERS
Number
86
86
78
Covered Annual Payroll
$ 5,716,252
$
5,716,252
$
5,074,483
Average Annual Payroll
$ 66,468
$
66,468
$
65,057
Average Age
38.5
38.5
38.8
Average Past Service
8.9
8.9
9.5
Average Age at Hire
29.6
29.6
29.3
RETIREES, BENEFICIARIES & DROP*
Number
68
68
65
Annual Benefits
$ 4,998,260
$
4,998,260
$
4,749,442
Average Annual Benefit
$ 73,504
$
73,504
$
73,068
Average Age
56.7
56.7
56.0
DISABILITY RETIREES
Number
10
10
10
Annual Benefits
$ 272,822
$
272,822
$
272,822
Average Annual Benefit
$ 27,282
$
27,282
$
27,282
Average Age
60.2
60.2
59.2
TERMINATED VESTED MEMBERS
Number
3
3
4
Annual Benefits
$ 147,116
$
147,116
$
175,148
Average Annual Benefit
$ 49,039
$
49,039
$
43,787
Average Age
44.1
44.1
45.7
* Does not include deferred supplemental benefits for DROP members
GRS
ACTUARiALLYDErE'RNUNED EMPLOYER CONTRIBUTION (ADEC)
A. Valuation Date
October 1, 2016
October 1, 2016
October 1, 2015
After Changes
Before Changes
B. ADEC to Be Paid During
Fiscal Year Ending
9/30/2018
9/30/2018
9/30/2017
C. Assumed Dates of Employer
Contributions
10/1/2017
10/1/2017
10/1/2016
D. Annual Payment to Amortize
Unfunded Actuarial Liability
$ 2,103,662
$ 2,011,299
$ 2,101,220
E. Employer Normal Cost
1,129,056
1,123,140
999,840
F. ADEC if Paid on the Valuation
Date: D+E
3,232,718
3,134,439
3,101,060
G. ADEC Adjusted for Frequency of
Payments
3,232,718
3,134,439
3,101,060
H. ADEC as % of Covered Payroll
56.55 %
54.83 %
61.11 IYO
L Assumed Rate of Increase in Covered
Payroll to Contribution Year
5.00 %
5.00 %
5.00 %
J. Covered Payroll for Contribution Year
61002,065
6,002,065
5,328,207
K. ADEC for Contribution Year: H xJ
3,394,168
3,290,932
3,256,067
L. Estimated Credit for State Revenue in
Contribution Year
559,237
559,237
559,237
M. Required Employer Contribution (REC)
in Contribution Year
2,834,931
2,731,695
2,696,830
N. REC as % of Covered Payroll in
Contribution Year: M _ J
47.23 %
45.51 %
50.61
GRS
ACTUARIAL VALUE OF BENEFITS AND AS SETS
A. Valuation Date
October 1, 2016
October 1, 2016
October 1, 2015
After Changes
Before Changes
B. Actuarial Present Value of All Projected
Benefits for
1. Active Members
a. Service Retirement Benefits
$ 30,815,909
$ 29,564,257
$ 28,001,839
b. Vesting Benefits
686,163
662,695
612,231
c. Disability Benefits
2,036,022
1,973,740
1,763,179
d. Preretirement Death Benefits
666,278
1,268,371
1,086,446
e. Return of Member Contributions
47,840
47,987
34,840
31,498,535
f. Total
34,252,212
33,517,050
2. Inactive Members
a. Service Retirees & Beneficiaries
63,549,751
62,912,316
60,604,901
b. Disability Retirees
2,577,157
2,558,130
2,599,686
c. Terminated Vested Members
1,155,360
1,136,344
1,367,591
d. Total
67,282,268
66,606,790
64,572,178
3. Total for All Members
101,534,480
100,123,840
96,070,713
C. Actuarial Accrued (Past Service)
Liability per GASB No. 25
86,868,365
85,829,801
83,858,731
D. Actuarial Value of Accumulated Plan
Benefits per FASB No. 35
84,190,143
83,460,260
81,763,642
E. Plan Assets
1. Market Value
66,012,586
66,012,586
60,083,405
2. Actuarial Value
63,743,084
63,743,084
60,233,951
F. Unfunded Actuarial Accrued Liability: C - E2
23,125,281
22,086,717
23,624,780
G. Actuarial Present Value of Projected
Covered Payroll
58,747,670
57,732,651
49,400,189
H. Actuarial Present Value of Projected
Member Contributions
5,052,300
4,965,008
4,248,416
L Accumulated Value of Contributions
for Active Members
4,022,973
4,022,973
3,916,394
I Funded Ratio: E2 - C
73.4%
74.3%
71.8%
GRS
CALCULATION OF EMPLOYER NORMAL COST
A. Valuation Date
October 1, 2016
October 1, 2016
October 1, 2015
After Changes
Before Changes
B. Normal Cost for
1. Service Retirement Benefits
$ 1,232,554
$ 1,176,679
$ 1,063,770
2. Vesting Benefits
52,260
50,867
44,193
3. Disability Benefits
141,940
139,232
121,604
4. Preretirement Death Benefits
55,918
109,698
79,438
5. Return of Member Contributions
13,451
13,731
12,148
6. Total for Future Benefits
1,496,123
1,490,207
1,321,153
7. Assumed Amount for Administrative
Expenses
124,531
124,531
115,093
8. Total Normal Cost
1,620,654
1,614,738
1,436,246
9. Total as a % of Covered Payroll
28.35%
28.25%
28.30%
C. Expected Member Contribution
491,598
491,598
436,406
D. Employer Normal Cost: B&C
1,129,056
1,123,140
999,840
E. Employer Normal Cost as a % of
Covered Payroll
19.75%
19.65%
19.70%
GRS
10
LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY
A. UAAL Amoritzation Period and Payments
Original UAAL
Current UAAL
Amortization
Date
Period
Years
Payment
After Change
Before Change
Established
(Years)
Amount
Remaining
Amount
10/l/1993
30
(194,444)
7
(86,051)
(14,846)
(14,884)
10/l/1995
30
796,975
9
524,824
74,784
75,034
10/l/1996
30
(189,977)
10
(140,778)
(18,594)
(18,663)
10/l/2000
30
3,639,273
14
3,544,303
374,931
376,844
10/l/2005
30
975,210
19
993,198
88,632
89,219
10/l/2005
30
5,273,728
19
5,371,002
479,300
482,479
10/l/2006
30
12,571,515
20
12,569,773
1,093,743
1,101,302
10/l/2008
15
3,319,494
7
1,491,026
257,246
257,905
10/1/2009
15
(137,951)
8
(89,840)
(13,978)
(14,020)
10/l/2010
15
348,981
9
243,078
34,637
34,753
10/l/2011
15
(718,288)
10
(527,070)
(69,617)
(69,875)
10/l/2011
15
847,054
10
621,555
82,097
82,401
10/l/2011
15
(6,706,717)
10
(4,921,288)
(650,016)
(652,428)
10/l/2012
15
(751,599)
11
(608,506)
(75,227)
(75,533)
10/l/2012
15
792,519
11
641,636
79,322
79,645
10/1/2013
15
(151,072)
12
(127,337)
(14,852)
(14,917)
10/l/2013
15
836,318
12
704,922
82,217
82,581
10/l/2013
15
755,890
12
637,130
74,310
74,639
10/l/2014
15
(732,488)
13
(647,542)
(71,726)
(72,068)
10/l/2014
15
876,591
13
774,933
85,836
86,246
10/l/2015
15
893,801
14
836,208
88,457
88,909
10/l/2015
15
750,916
14
702,529
74,316
74,696
10/l/2016
15
(420,988)
15
(420,988)
(42,734)
(42,966)
10/1/2016
15
1,038,564
15
1,038,564
105,424
N/A
$ 23,713,305
$ 23,125,281
$ 2,103,662
$ 2,011,299
GRS
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:
Amortization Schedule
Year
Expected UAAL
2016
$ 23,125,281
2017
22,451,086
2018
21,731,049
2019
20962,050
2020
20:140,758
2021
19,263,618
2026
14,814,518
2031
6,879,098
2036
0
GRS
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 1 $ 23,624,780
2. Last Year's Employer Normal Cost 1 999,840
3. Last Year's Employer Contributions* 3,611,246
4. Interest at the Assumed Rate on:
a. 1 and 2 for one year 1,699,099
b. 3 from dates paid 204,768
c. a - b 1,494,331
5. This Year's Expected UAAL Prior to Revision:
1 + 2 - 3 + 4c 22,507,705
6. Change in UAAL Due to Plan Amendments
and/or Changes in Actuarial Assumptions
1,038,564
7.
This Year's Expected UAAL: 5 + 6
23,546,269
8.
This Year's Actual UAAL
23,125,281
9.
Net Actuarial Gain (Loss): 7 - 8
420,988
10.
Gain (Loss) Due to Investments
567,375
11.
Gain (Loss) from Other Sources
(146,387)
*Includes the new Base amount of $292,446, the Gap amount of $182,769, half the Growth amount of
$168, 044 ($84, 022), $154,255 from the excess State reserve, and the City contribution of $2, 897, 754.
GRS
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
732,488
2015
(893,801)
2016
420,988
GRS
14
Cumulative Actuarial Gains (Losses)
Balance at
Year Ending
Beginning
Gain (Loss)
Balance at
9/30
of Year
for Year
COLA
End ofYear
2001
$ 0
$ (435,534)
$ 0
$ (435,534)
2002
(435,534)
(2,162,823)
0
(2,598,357)
2003
(2,598,357)
(949,324)
0
(3,547,681)
2004
(3,547,681)
(246,347)
0
(3,794,028)
2005
(3,794,028)
(1,006,694)
0
(4,800,722)
2006
(4,800,722)
(1,517,294)
0
(6,318,016)
2007
(6,318,016)
251,668
0
(6,066,348)
2008
(6,066,348)
(3,319,494)
0
(9,385,842)
2009
(9,385,842)
137,951
0
(9,247,891)
2010
(9,247,891)
(348,981)
0
(9,596,872)
2011
(9,596,872)
718,288
0
(8,878,584)
2012
(8,878,584)
751,599
0
(8,126,985)
2013
(8,126,985)
151,072
0
(7,975,913)
2014
(7,975,913)
732,488
0
(7,243,425)
2015
(7,243,425)
(893,801)
0
(8,137,226)
2016
(8,137,226)
420,988
0
(7,716,238)
An actuarial experience gain occurred during fiscal year 2016, but since the cumulative actuarial experience
since fiscal year 2001 is negative, a COLA cannot be paid.
GRS
15
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
Investment Return
Salary Increases
Actual
Assumed
Actual
Assumed
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
9/30/2015
7.0
7.1
7.6
7.5
9/30/2016
7.7
6.9
4.5
5.8
Average for
Years Shown
6.9
N/A
7.1
N/A
* 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.
GRS
16
Actual (A) Compared to Expected (E) Decrements
Among Active Employees
Number
Added
Service &
Active
During
DROP
Disability
Terminations
Members
Vested Other Totals
Year
Year
Retirement
Retirement
Death
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
1
9
0
1
0
0
0
4
4
3
107
9/30/2007
5
3
6
0
1
0
0
1
1
2
3
107
9/30/2008
2
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
9
5
3
0
0
0
0
0
1
1
2
2
78
9/30/2016
13
5
3
4
0
0
0
0
0
2
2
3
86
9/30/2017
3
0
0
3
15 Yr Totals *
107
106
67
64
2
6
1
0
9
27
36
39
* Totals are through current Plan Year only.
GRS
RECENT HISTORY OF REQUIRED AND ACTUAL CONTRIBUTIONS
Required Contributions
End of
Year To
Employer & State
Estimated State
Net Employer
Actual Contributions
Which
% of
% of
% of
Valuation
Valuation
Date
Applies
Amount
Payroll
Amount
Payroll
Amount
Payroll
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
3,007,780
951,196
3,958,976
10/1/2014
9/30/2016
3,316,250
68.00
412,644
8.46
2,903,606
59.54
2,897,754
559,237
3,456,991
10/1/2015
9/30/2017
3,256,067
61.11
559,237
10.50
2,696,830
50.61
---
---
--
10/1/2016
9/30/2018
3,394,168
56.55
559,237
9.32
2,834,931
47.23
---
---
--
v
RECENT HISTORY OF UAAL AND FUNDED RATIO
Actuarial
Valuation Date
Actuarial Value of
Assets
(a)
Actuarial Accrued
Liability (AAL) - Entry
Age
(b)
Unfunded AAL (UAAL)
(b) - (a)
Funded Ratio
(a) / (b)
CowredPayroll
(c)
UAAL As % of
CoveredPayroll
(b - a) / c
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
10/1/2015
60,233,951
83,858,731
23,624,780
71.8
5,074,483
465.6
10/1/2016
63,743,084
86,868,365
23,125,281
73.4
5,716,252
404.E
a
19
�y lil\ 7 L\ I . ,11Y1 0u i Wno] ►�Y�i IZ4Col." iM_KWO
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 6.8% per year, compounded annually (net after
investment expenses). This assumption is being lowered by 0.1% each year until 6.5% is reached.
The Inflation Rate assumed in this valuation was 2.5% per year. The Inflation Rate is defined to be the
portion of total pay increases for an individual that are due to general price inflation.
The assumed real rate of return over inflation is defined to be the portion of total investment return that
is more than the assumed inflation rate. Considering other economic assumptions, the 6.8% investment
return rate translates to an assumed real rate of return over inflation of 4.3%.
GRS
20
The rate of salary increase used for individual members varies by years of service. Total salaries are
assumed to increase 7.0% per year in years zero through three, and 5.5% per year thereafter. Part of the
assumption is for merit and/or seniority increase, productivity increases, and changes in labor market
conditions, and 2.5% recognizes inflation. 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 (3.69%). Therefore, unfunded liabilities are being amortized
this year as a level dollar amount, with no assumed payroll growth.
Demographic Assumptions (Current Assumptions)
The mortality table is the RP-2000 Combined Healthy Participant Mortality Table (for pre -retirement
mortality) and the RP-2000 Mortality Table for Annuitants (for post -retirement mortality), with mortality
improvements projected to all future years after 2000 using Scale BB. For males, the base mortality rates
include a 90% blue collar adjustment and a 10% white collar adjustment. For females, the base mortality
rates include a 100% white collar adjustment. These are the same rates currently in use for Special Risk
Class members of the Florida Retirement System (FRS), as mandated by Florida House Bill 1309.
FRS Healthy Post -Retirement Mortality for Special Risk Class Members
Sample
Attained
es (in 2016)
Probability of
Dying Next Year
Men Women
Future Life
Expectancy (years)
Men Women
50
0.54 %
0.23 %
33.78
38.21
55
0.67
0.32
29.14
33.19
60
0.91
0.48
24.56
28.29
65
1.32
0.75
20.17
23.56
70
2.04
1.25
16.05
19.10
75
3.31
2.12
12.34
15.04
80
5.45
3.55
9.15
11.43
This assumption is used to measure the probabilities of each benefit payment being made after retirement.
GRS
21
FRS Healthy Pre -Retirement Mortality for Special Risk Class Members
Sample
Probability of
Future Life
Attained
Dying Next Year
Expectancy (years)
Ages (in 2016)
Men Women
Men
Women
50
0.23 % 0.15 %
34.77
38.56
55
0.39 0.24
29.65
33.42
60
0.72 0.40
24.77
28.40
65
1.24 0.71
20.21
23.58
70
2.04 1.25
16.05
19.10
75
3.31 2.12
12.34
15.04
80
5.45 3.55
9.15
11.43
This assumption is used to measure the probabilities of active members dying prior to retirement.
For disabled retirees, the mortality table used was 60% of the RP-2000 for Disabled Annuitants with ages
set back 4 years for males and set forward 2 years for females, and 40% of the RP2000 Annuitant Mortality
Table with a White Collar adjustment with no age setback, both with no provision being made for future
mortality improvements. These are the same rates currently in use for Special Risk Class members of the
Florida Retirement System (FRS), as mandated by Florida House Bill 1309.
FRS Disabled Mortality for Special Risk Class Members
Sample
Attained
es (in 2016)
Probability of
Dying Next Year
Men Women
Future Life
Expectancy (years)
Men Women
50
1.67 %
0.91 %
23.74
27.06
55
2.03
1.26
20.77
23.37
60
2.47
1.67
17.91
19.90
65
3.07
2.24
15.15
16.62
70
3.90
3.18
12.52
13.58
75
5.30
4.60
10.02
10.86
80
7.59
6.66
7.80
8.48
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:
S
under 45
45
4649
50-51
52-54
55-56
57-59
60
e
10 -19 N/A
N/A
N/A
2.5%
22.5%
22.5%
50.0%
50.0%
r
20 35.0%
65.0%
65.0%
65.0%
65.0%
65.0%
65.0%
100.00/0
v
i
21 - 22 15.0%
15.0%
15.0%
65.0%
65.0%
65.0%
65.0%
100.00/0
123 - 24 15.0% 15.0% 50.0% 50.0% 50.0% 65.0% 65.0% 100.00/0
e 25+ 100.00/0 100.0% 100.00/0 100.0% 100.0% 100.0% 100.0% 100.00/0
GRS
22
The probability of normal retirement for members who had less than 10 years of service as of September 13,
2012 is as follows:
S
42 - 49
50 - 54
55 - 57
58 - 59
60
e
10 -19
N/A
2.5%
22.5%
22.5%
50.0%
r
20 - 22
N/A
2.5%
65.0%
65.0%
100.0%
v
23 - 24
N/A
2.5%
50.0%
65.0%
100.00/0
i
25
50.0%
50.0%
50.0%
65.0%
100.0%
c
26
15.0%
15.0%
50.0%
65.0%
100.0%
e
27
100.0%
100.00/0
100.0%
100.0%
100.0%
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 are 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 separating from employment for reasons other than retirement, death or
disability.
Years of
% of Active Members
Service
Age
Separating Within Next Year
0-2
All
10.5 %
3
All
3.0
4 +
Under 35
2.0
4+
35-44
1.0
4 +
45 +
0.5
Rates of disability among active members (75% of disabilities are assumed to be service -connected) are
as follows:
Sample % Becoming Disabled
Ages
within Next Year
20
0.126 %
25
0.135
30
0.162
35
0.207
40
0.270
45
0.459
50
0.900
55
1.395
GRS
23
Miscellaneous and Technical Assumptions
Administrative & Investment The investment return assumption is intended to be the return net of
Expenses 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
Normal Form of Benefit
Pay Increase Timing
Service Credit Accruals
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.
A 10-year certain and life annuity is the normal form of benefit.
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.
It is assumed that members accrue one year of service credit per year.
GRS
24
GLOSSARY
Actuarial Accrued Liability The difference between the Actuarial Present Value of Future Benefits,
(AAL) 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 The amount of funds required to provide a payment or series of payments
(APi9 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 The Actuarial Present Value of amounts which are expected to be paid at
Future Benefits (APVFB) 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 Actuarially
Determined Employer Contribution (ADEC).
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
Determined Employer Contribution (ADEC).
GRS
25
Actuarially Determined The employer's periodic required contributions, expressed as a dollar
Employer Contribution amount or a percentage of covered plan compensation, determined under
(ADEC) GASB. The ADEC consists of the Employer Normal Cost and
Amortization Payment.
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 ADEC 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.
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 For plans that do not establish separate amortization bases (separate
Amortization Period 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.
GRS
26
Funded Ratio The ratio of the Actuarial Value of Assets to the Actuarial Accrued
Liability.
GASB Governmental Accounting Standards Board.
GASB No. 67 and These are the governmental accounting standards that set the accounting
GASB No. 68 rules for public retirement systems and the employers that sponsor or
contribute to them. Statement No. 68 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 The difference between the Actuarial Accrued Liability and Actuarial
Liability 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.
GRS
SECTION C
PENSION FUND INFORMATION
GRS
27
Statement of Plan Assets at Market Value
September 30
Item 2016 2015
A. Cash and Cash Equivalents (Operating Cash)
B. Receivables:
1.
Member Contributions
2.
Employer Contributions
3.
State Contributions
4.
Investment Income and Other Receivables
5.
Total Receivables
C. Investments
1. Short Term Investments
2. Domestic Equities
3. International Equities
4. Domestic Fixed Income
5. International Fixed Income
6. Real Estate
7. Private Equity
8. Total Investments
D. Liabilities
1. Benefits Payable
2. Accrued Expenses and Other Payables
3. Total Liabilities
E. Total Market Value of Assets Available for Benefits
F. Reserves
1. State Contribution Reserve
2. Share Plan Accounts
3. DROP Accounts
4. Total Reserves
G. Market Value Net of Reserves
H. Allocation of Investments
1. Short Term Investments
2. Domestic Equities
3. International Equities
4. Domestic Fixed Income
5. International Fixed Income
6. Real Estate
7. Private Equity
8. Total Investments
$ 869,382
$ 2,753
637,382
$ 640,135
$ 838,694
53,439,379
41,049
16,377,329
3,389,879
6,568,344
$ 80,654,674
(50,497)
$ (50,497)
$ 82,113,694
(238,278)
(15,862,830)
$ (16,101,108)
$ 66,012,586
1.0%
66.3%
0.1%
20.3%
4.2%
8.1%
0.0%
$ 739,463
$ 9,904
524,479
492,743
$ 1,027,126
$ 368,245
42,658,101
5,097,505
17,606,322
2,094,879
4,731,725
.p I G,JJV, l l l
(230,470)
$ (230,470)
$ 74,092,896
$ (308,511)
(13,700,980)
$ (14,009,491)
$ 60,083,405
0.5%
58.8%
7.0%
24.3%
2.9%
6.5%
n not
100.0% 100.0%
GRS
28
Reconciliation of Plan Assets
September 30
Item
2016
2015
A. Market Value of Assets at Beginning of Year
$
74,092,896
$
72,626,331
B. Revenues and Expenditures
1. Contributions
a. Member Contributions
$
452,421
$
422,145
b. Employer Contributions
2,897,754
3,007,780
c. State Contributions
643,259
524,479
d. Total
$
3,993,434
$
3,954,404
2. Investment Income
a. Interest, Dividends, and Other Income
$
1,079,270
$
918,909
b. Unrealized Gains/(Losses)
4,377,698
(940,005)
c. Realized Gains/(Losses)
2,888,237
1,165,668
d. Investment Expenses
(237,967)
(218,818)
e. Net Investment Income
$
8,107,238
$
925,754
3. Benefits and Refunds
a. Regular Monthly Benefits
$
(3,152,218)
$
(2,326,585)
b. Refunds
(8,046)
-
c. Lump Sum Benefits
-
-
d. DROP Distributions
(786,637)
(970,920)
e. Total
$
(3,946,901)
$
(3,297,505)
4. Administrative and Miscellaneous Expenses
$
(132,973)
$
(116,088)
5. Transfers
$
-
$
-
C. Market Value of Assets at End of Year
$
82,113,694
$
74,092,896
D. Reserves
1. State Contribution Reserve $ - $ (308,511)
2. Share Plan Accounts (238,278) -
3. DROP Accounts (15,862,830) (13,700,980)
4. Total Reserves $ (16,101,108) $ (14,009,491)
E. Market Value Net of Reserves $ 66,012,586 $ 60,083,405
GRS
29
Ye ar
Balance at
Ended
Beginning
9/30
of Year
Reconciliation of DROP Accounts
Credits
Balance at
End of
Interest Distributions Adjustments 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)
- 25054,547
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
2015
11,341,300
2,530,933
799,667
(970,920)
- 13,700,980
2016
13,700,980
2,007,023
941,464
(786,637)
- 15,862,830
GRS
30
Calculation of Actuarial Value
of Assets
Year Ending September 30
Item
2016
2015
A.
Beginning of Year Assets*
1. Market Value $
74,092,896 *
$ 72,626,331
2. Actuarial Value
74,243,442
68,833,865
B.
End of Year Market Value
of Assets*
82,113,694
74,092,896
C.
Net of Contributions
Less Disbursements
(86,440) *
540,811
D.
Actual Net Investment
Earnings
8,107,238
925,754
E.
Expected Investment
Earnings
5,119,815
4,906,403
F.
End of Year Expected
Actuarial Value
79,276,817
74,281,079
G.
End of Year Market Value Less
Expected Actuarial Value: B - F
2,836,877
(188,183)
H.
20% of Difference
567,375
(37,637)
I.
End of Year Assets
1. Actuarial Value:
F + H
79,844,192
74,243,442
2. Final Actuarial Value
Within 80% to 120%
of Market Value
79,844,192
74,243,442
J.
State Contribution Reserve
0
308,511
K.
Share Plan Accounts
238,278
0
L.
DROP Accounts
15,862,830
13,700,980
M.
Final Actuarial Value of Assets:
I2 - J - K - L
63,743,084
60,233,951
N.
Recognized Investment Earnings
5,687,190
4,868,766
O.
Recognized Rate of Return
7.7%
7.0%
* Before offset of DROP Account Balances and Reserves.
31
Year Ending
September 30
Investment Rate of Return
Market Value * Actuarial Value
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
2015
1.3
7.0
2016
10.9
7.7
Average Returns:
Last 5 Years
10.8
%
7.8 %
Last 10 Years
6.5
%
6.5 %
All Years
7.1
%
6.9 %
* Net of investment expenses after 2005.
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.
GRS
SECTION D
14 1►[ei lei 0341,40 04 Y [Mi
GRS
32
FASB NO.35 INFORMATION
A. Valuation Date
October 1, 2016
October 1, 2015
B. Actuarial Present Value of Accumulated
Plan Benefits
1. Vested Benefits
a. Members Currently Receiving Payments
$ 66,126,908
$ 63,204,587
b. Terminated Vested Members
1,155,360
1,367,591
c. Other Members
15,717,454
16,062,158
d. Total
82,999,722
80,634,336
2. Non -Vested Benefits
1,190,421
1,129,306
3. Total Actuarial Present Value of Accumulated
Plan Benefits: ld + 2
84,190,143
81,763,642
4. Accumulated Contributions of Active Members
4,022,973
3,916,394
C. Changes in the Actuarial Present Value of
Accumulated Plan Benefits
1. Total Value at Beginning of Year
81,763,642
77,156,150
2. Increase (Decrease) During the Period
Attributable to:
a. Plan Amendment and Change in
Actuarial Assumptions
729,883
2,027,810
c. Latest Member Data, Benefits Accumulated
and Decrease in the Discount Period
6,863,905
7,437,200
d. Benefits Paid (net basis)
(5,167,287)
(4,857,518)
e. Net Increase
2,426,501
4,607,492
3. Total Value at End of Period
84,190,143
81,763,642
D. Market Value of Assets
66,012,586
60,083,405
E. Actuarial Assumptions - See page entitled
Actuarial Assumptions and Methods
GRS
33
SCHEDULE OF CHANGES IN THE EMPLOYER'S
NET PENSION LIABILITY AND RELATED RATIOS
GASB Statement No. 67
Fiscal year ending September 30,
Total pension liability
Service Cost
Interest
Benefit Changes
Difference between actual & expected experience
Assumption Changes
Benefit Payments
Refunds
Other (Net Change in State Contribution Reserve)
Net Change in Total Pension Liability
Total Pension Liability - Beginning
Total Pension Liability - Ending (a)
Plan Fiduciary Net Position
Contributions - Employer (from City)
Contributions - Employer (from State)
Contributions - Non -Employer Contributing Entity
Contributions - Member
Net Investment Income
Benefit Payments
Refunds
Administrative Expense
Other
Net Change in Plan Fiduciary Net Position
Plan Fiduciary Net Position - Beginning
Plan Fiduciary Net Position - Ending (b)
Net Pension Liability - Ending (a) - (b)
Plan Fiduciary Net Position as a Percentage
of Total Pension Liability
Covered Payroll
Net Pension Liability as a Percentage
of Covered Payroll
2017* 2016 2015
$ 1,490,207 $ 1,355,530 $ 1,206,826
6,945,546 6,784,226 6,504,741
56,862
976,528
344,110
1,014,791
573,052
875,147
(5,398,608)
(3,938,855)
(3,297,505)
(17,079)
(8,046)
-
84,022
(70,233)
(426,717)
4,175,741
5,672,202
5,206,602
101,877,717
96,205,515
90,998,913
$106,053,458 $101,877,717 $ 96,205,515
$ 2,843,423 $ 2,897,754 $ 3,007,780
643,259 643,259 524,479
491,598 452,421 422,145
5,627,302 8,107,238 925,754
(5,398,608) (3,938,855) (3,297,505)
(17,079) (8,046) -
(124,531) (132,973) (116,088)
4,065,364 8,020,798 1,466,565
82,113,694 74,092,896 72,626,331
$ 86,179,058 $ 82,113,694 $ 74,092,896
19,874,400 19,764,023 22,112,619
81.26 % 80.60 % 77.02 %
$ 5,700,000 $ 5,260,709 $ 4,908,663
348.67 % 375.69 % 450.48 %
* These figures are estimates only. Actual figures will be provided after the end of the
fiscal year. Note that only three years are shown here for summary purposes. The actual
disclosure reports will include all years (up to 10) beginning with the first year GASB 67
was implemented (Fiscal Year 2014).
GRS
34
SCHEDULE OF THE EMPLOYER'S NET PENSION LIABILITY
GASB Statement No. 67
Total
FYFnding
Pension
Plan Net
September30,
Liability
Position
2014
$ 90,998,913
$ 72,626,331
2015
96,205,515
74,092,896
2016
101,877,717
82,113,694
2017*
106,053,458
86,179,058
Plan Net Position
Net Pension Liability
Net Pension
as a % of Total
Covered
as a % of
Liability
Pension Liability
Payroll
Covered Payroll
$ 18,372,582
79.81%
$ 4,548,698
403.91%
22,112,619
77.02%
4,908,663
450.48%
19,764,023
80.60%
5,260,709
375.69%
19,874,400
81.26%
5,700,000
348.67%
These figures are estimates only. Actual figures will be provided after the end of the fiscal
year.
GRS
35
NOTES TO SCHEDULE OF THE EMPLOYER'S NET PENSION LIABILITY
GASB Statement No. 67
Valuation Date: October 1, 2016
Measurement Date: September 30, 2017
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method Entry Age Normal
Inflation 2.5%
Salary Increases 5.5% to 7.0% depending on service, including inflation
Investment Rate of Return 6.8%
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 pre -
retirement mortality) and the RP-2000 Mortality Table for Annuitants
(for post -retirement mortality), with mortality improvements projected
to all future years after 2000 using Scale BB. For males, the base
mortality rates include a 90% blue collar adjustment and a 10% white
collar adjustment. For females, the base mortality rates include a 100%
white collar adjustment. These are the same rates currently in use for
Special Risk Class members of the Florida Retirement System (FRS),
as mandated by Florida House Bill 1309.
Other Information:
Notes
See Discussion of Valuation Results on page 1.
GRS
0
FY Ending
September 30,
2014
2015
2016
2017*
SCHEDULE OF CONTRIBUTIONS
GASB Statement No. 67
Actuarially
Determined
Contribution
$ 3,125,279
3,357,659
3,316,250
3,256,067
Actual
Contribution
$ 3,125,279
3,420,424
3,456,991
3,402,660
Contribution
Actual Contribution
Deficiency
Covered
as a % of
(Excess)
Payroll
Covered Payroll
$ -
$ 4,548,698
68.71%
(62,765)
4,908,663
69.68%
(140,741)
5,260,709
65.71%
(146,593)
5,700,000
59.70%
* These figures are estimates only. Actual figures will be provided after the end of the fiscal
year.
GRS
37
NOTES TO SCHEDULE OF CONTRIBUTIONS
GASB Statement No. 67
Valuation Date: October 1, 2015
Notes Actuarially determined contributions 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 20 years (single equivalent period)
Asset Valuation Method Recognizes 20% of difference between market value of assets
and expected actuarial asset value
Inflation 2.5%
Salary Increases 5.5% to 7.0% depending on service, including inflation
Investment Rate of Return 6.90%
Retirement Age Experience -based table of rates that are specific to the type of eligibility
condition
Mortality RP-2000 Mortality Table for Annuitants with mortality improvement
projected to all future years using Scale BB. For females, the base
mortality rates include a 100% white collar adjustment. For males, the
base mortality rates include a 90% blue collar adjustment and a 10% white
collar adjustment. These are the same rates used for Special Risk Class
members of the Florida Retirement System (FRS) in the July 1, 2015 FRS
Actuarial Valuation Report.
Other Information:
Notes
See Discussion of Valuation Results on Page 1 of the October 1, 2015
Actuarial Valuation Report.
GRS
M
SINGLE DISCOUNT RATE
GASB Statement No. 67
A single discount rate of 6.80% 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 6.80%. 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 (6.80%) 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 6.80%,
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
5.80% 6.80% 7.80%
$30,398,458
$19,874,400
$11,165,364
* These figures are estimates only. Actual figures will be provided after the end of the fiscal
year.
GRS
SECTION E
MISCELLANEOUS INFORMATION
GRS
39
RECONCILIATION OF MEMBERSHIP DATA
From 10/1/15
From 10/1/14
To 10/1/16
To 10/1/15
A. Active Members
1. Number Included in Last Valuation
78
74
2. New Members
12
9
3. Non -Vested Employment Terminations
(2)
(1)
4. Vested Employment Terminations
0
(1)
5. Service Retirements
0
0
6. DROP Retirement
(3)
(3)
7. Disability Retirements
0
0
8. Deaths
0
0
9. Other -- Rehires
1
0
10. Number Included in This Valuation
86
78
B. Terminated Vested Members
1. Number Included in Last Valuation
4
3
2. Additions fromActive Members
0
1
3. Lump Sum Payments/Refund of Contributions
0
0
4. Payments Commenced
0
0
5. Deaths
0
0
6. Other -- Rehires
(1)
0
7. Number Included in This Valuation
3
4
C. DROP Plan Members
1. Number Included in Last Valuation
30
34
2. Additions fromActive Members
3
3
3. Retirements
(12)
(7)
4. Deaths Resulting in No Further Payments
0
0
5. Other
0
0
6. Number Included in This Valuation
21
30
D. Service Retirees, Disability Retirees and Beneficiaries
1. Number Included in Last Valuation
45
38
2. Additions fromActive Members
0
0
3. Additions from Terminated Vested Members
0
0
4. Additions from DROP
12
7
5. Deaths Resulting in No Further Payments
0
0
6. Deaths Resulting in New Survivor Benefits
0
0
7. End of Certain Period -No Further Payments
0
0
8. Other
0
0
9. Number Included in This Valuation
57
45
GRS
40
ACTIVE PARTICIPANT DISTRIBUTION
Years of Service to Valuation Date
e Group
0-1
1-2
2-3
3-4
4-5
5-9
10-14
15-19
20-24
25 &Up
Totals
15-24 NO.
4
1
0
0
0
0
0
0
0
0
5
TOT PAY
215,856
50,621
0
0
0
0
0
0
0
0
266,477
AVG PAY
53,964
50,621
0
0
0
0
0
0
0
0
53,295
25-29 NO.
4
2
4
2
2
1
0
0
0
0
15
TOT PAY
215,856
100,677
203,780
98,789
103,498
51,900
0
0
0
0
774,500
AVG PAY
53,964
50,338
50,945
49,394
51,749
51,900
0
0
0
0
51,633
30-34 NO.
1
3
1
0
0
6
2
0
0
0
13
TOT PAY
53,964
151,889
51,900
0
0
362,748
121,943
0
0
0
742,444
AVGPAY
53,964
50,630
51,900
0
0
60,458
60,972
0
0
0
57,111
35-39 NO.
2
0
0
4
0
1
3
2
0
0
12
TOT PAY
107,928
0
0
207,550
0
65,912
194,767
144,938
0
0
721,095
AVG PAY
53,964
0
0
51,888
0
65,912
64,922
72,469
0
0
60,091
40-44 NO.
0
0
0
0
0
0
12
4
0
0
16
TOTPAY
0
0
0
0
0
0
810,627
291,822
0
0
1,102,449
AVG PAY
0
0
0
0
0
0
67,552
72,956
0
0
68,903
45-49 NO.
0
0
0
0
0
1
6
7
1
0
15
TOT PAY
0
0
0
0
0
62,918
403,413
514,211
92,352
0
1,072,894
AVG PAY
0
0
0
0
0
62,918
67,236
73,459
92,352
0
71,526
50-54 NO.
0
0
0
0
0
0
3
1
0
0
4
TOT PAY
0
0
0
0
0
0
205,925
73,808
0
0
279,733
AVG PAY
0
0
0
0
0
0
68,642
73,808
0
0
69,933
55-59 NO.
0
2
0
0
0
1
1
1
0
0
5
TOT PAY
0
240,359
0
0
0
134,324
57,631
91,472
0
0
523,786
AVG PAY
0
120,180
0
0
0
134,324
57,631
91,472
0
0
104,757
60-64 NO.
0
0
0
0
0
0
1
0
0
0
1
TOT PAY
0
0
0
0
0
0
67,860
0
0
0
67,860
AVG PAY
0
0
0
0
0
0
67,860
0
0
0
67,860
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.
11
8
5
6
2
10
28
15
1
0
86
TOT AMT
593,604
543,546
255,680
306,339
103,498
677,802
1,862,166
1,116,251
92,352
0
5,551,238
AVG AMT
53,964
67,943
51,136
51,057
51,749
67,780
66,506
74,417
92,352
0
64,549
GRS
41
INACTIVE PARTICIPANT DISTRIBUTION
Terminated Vested
Disabled
Retired*
Deceased with
Beneficiary
Total
Total
Total
Total
Age Group
Number Benefits
Number Benefits
Number Benefits
Number Benefits
Under 20
- -
- -
- -
- -
20-24
- -
- -
- -
- -
25-29
-
-
-
-
30-34
-
-
-
35-39
- -
- -
-
40-44
2 72,404
-
4 252,966
-
45-49
1 74,712
- -
4 289,785
-
50-54
- -
1 23,392
30 2,544,254
-
55-59
3 87,331
11 922,360
- -
60-64
5 144,248
6 399,268
1 33,777
65-69
1 17,851
5 282,755
1 32,070
70-74
- -
4 146,965
1 21,589
75-79
- -
1 72,471
- -
80-84
-
- -
85-89
-
- -
-
90-94
-
- -
-
95-99
-
- -
-
100 & Over
- -
- -
- -
- -
Total
3 147,116
10 272,822
65 4,910,824
3 87,436
,Average Age
44
60
56
69
* Does not include deferred supplemental benefits for DROP members
GRS
SECTION F
SUMMARY OF PLAN PROVISIONS
GRS
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 V1I, 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).
GRS
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 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
I 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.
GRS
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
GRS
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.
GRS
M
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
0%
5
25
6
40
7
55
8
70
9
85
10 or more
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.
GRS
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 the
earlier of-
(1) age 55 and 10 years of Credited Service, or
(2) 25 years of Credited Service regardless of age.
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.
Maximum
DROP Period: 60 months
GRS
48
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
There have been no changes from the previous valuation.
GRS