Fort Walton Beach Council agenda — 08-22-2007 special agenda — reading text

DEVELOPMENT ................................................................. 2- 1 2- 1 Date and Basis of V aluation ...................................................................................... 2- 2 Member Reconciliation .............................................................................................. 2- 3 Valuation Financial Values ........................................................................................ 2- 4 Explanation of Financial Values ............................................................................... 2- 6 Derivation of CUIrent UAAL .... .............. ....... .... ..... .......... ....... ....... ........ ....... ........... SECTION 3 ANALYSIS OF VALUATION RESULTS............................................................................. 3- 1 3- 1 Valuation Comparison Values .................................................................................. 3- 2 Discussion of Valuation Results ............................................................................... Effect of Amortization Policy on Contribution Requirements............................. 3- 3 Comparison of Actual and Assumed Salary Increases ......................................... 3-4 3- 4 Comparison of Actual and Assumed Investment Returns................................... 3- 5 Calculation of Actual Rate of Investment Returns................................................. Documentation of Past Excess 3- 5 Contributions......................................................... 3- Additional DisclosUIes.. .... ....... .... .... ... ....... ..... .... ....... .... ....... ........ .... .... .... 5.............. ... APPENDIX A A- l ....... PLAN PROVISIONS SUMMARY... .... ....... ........ ......................... ...................... APPENDIX B ACTUARIAL ASSUMPTIONS AND B- l ACTUARIAL COST METHOD SUMMARY ......................................................... APPENDIX C DEVELOPMENT OF ACTUARIAL VALUE OF ASSETS ...................................C- l APPENDIX D CENSUS D- l DATA......... ......... ..... ........ ......................... ...................... ....... .... ......... a. .. t= ~~ C~OM~ Rts  1- 1 SECTION 1 KEY VALUATION RESULTS SUMMARY The 2006 valuation of the City of Fort Walton Beach General Employees' Retirement Fund presents a statement of the estimated financial position of the Plan as of October 1, 2006. Information in the report provides bases for determining contribution requirements and current funded status. Key Results SynoDsis The major conclusions of the report are: Plan experience has been less favorable than expected mostly due to unfavorable investment performance measured on an average- asset basis. The net City contribution for the 2006-2007 plan year is $ 1, 231, 003. The net City contribution for the 2007- 2008 plan year is $1, 283,295. The City should still be aware that contribution requirements will increase by almost 200, 000 over time as prior gain amortizations are completed and the payment toward amortizing $ 4.4 million in unfunded liabilities takes full effect ( see page 3- 3 for details). The Plan continues to be reasonably well funded both on a current as well as a projected basis. Chanqes Since Last Valuation A plan provision has been added to provide for buyback of prior city service at full actuarial cost. There have been no changes made to the actuarial assumptions or cost method since the last valuation. However, a one-year delay of payment of contribution the State of requirements has been added in accordance with rules established by Florida regarding funding of local retirement systems. Hereafter, each actuarial valuation as of the beginning of any fiscal year will establish contribution requirements this for the fiscal year starting one year after the valuation date. The purpose of fiscal year procedure is to finalize the requirements for any fiscal year well before any budget is finalized. and Appendix A contains a summary of current Plan provisions. Actuarial assumptions cost method are summarized in Appendix B. J:.. .::~=::.=.==-=-: U= :~= L.:':": Conc-~2ts  1- 2 Plan Experience Plan experience the last 12 months in aggregate was less favorable than over anticipated, resulting in an actuarial loss of approximately $ 933,000. This loss was attributable to an invesbnent return ( on actuarial assets) of 5.53% versus the assumed rate of 8% as well as adverse demographic experience. In addition, there was a small gain due to salary increases less than assumed. ffu~~~~~ 10. 00% L-+- Actual ~~ AssumedJ 8.00% 6. 00% 4.00% 2. 00% 0.00% 10/ 04 10/ 05 10/ 06 cr~ J r-==~---- ~ Actual - l 10.00% Assume~ L:!=_ 8.00% 6.00% 4. 00% 2. 00% 0. 00% 10/ 04 10/ 05 10/ 06 a. __ L .:...::...=: UI: COnc~ 2ts  1- 3 Contribution Requirements u___._~_] Annual City Contribution Requirements 000 D2OO-~ 1, 267,864 1,400, 1, 231, 003 $ 2006 1, 200, 000 1, 070, 502 958,390 921, 529 $ 02007 15. 80% 1, 000, 000 866,852 $ of Pay 800, 000 600, 000 309,474 $ 309, 474 400, 000 203, 650 200, 000 0 200,000 Amortization Payment Total City Normal Cost Contribution Amounts 2005 2006 2007 Annual 1, 070, 502 1, 231, 003 1, 267,864 267, 626 307,751 316, 966 Quarterly It should be noted that the annual contribution amount is the total required City contribution for the applicable plan year assumed payable at the end of each fiscal quarter beginning December 31. y~; !\:!! Conctt~ ts  1-4 Current Funded Status - Current Liabilities Fe~Funded t status] 40,000,000 30,451, 885 29, 449, 082 30,000,000 20,000,000 10,000, 000