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

Actuarial Present Value (APV)of Future Valuation Payroll 54,998,423 58,845,576 58, 845,576 1,475, 136 1,590, 660 1,590, 660 f) Total Annual Benefit Payments 5; Assets a) Market Value 27,932,804 29, 883,462 29, 883, 462 27,938, 158 29, 449,082 29,449,082 b) Actuarial Value t3. Liabilities a) APV of Future Benefits 1) Active Members Retirement 17,577,920 18, 701, 963 18, 701, 963 Withdrawal 951, 680 970, 830 970,830 2, 807,244 3, 013,460 3,013,460 Disability Death 555,317 600, 607 600,607 Refund of Contributions 246,923 268,096 268,096 Total $ 22, 139,084 $ 23,554, 956 $ 23,554, 956 2) Retirees and Beneficiaries 16, 465,592 17,972, 636 17,972, 636 3) Disabled Members 1, 017, 142 890,820 890,820 4) Vested Terminated and Pending Lump Sums 306, 914 602, 676 602, 676 5) Total $ 39, 928, 732 $ 43,021, 088 $ 43, 021, 088 25, 222, 057 27,817, 156 27,817, 156 b) APV of Vested Accrued Benefits APV of All Accrued Benefits 28, 044, 847 30, 451,885 30,451, 885 c) d) Actuarial Accrued Liability (AAL) 31, 397,476 33,885, 353 33, 885,353 3, 459, 318 4,436, 271 4,436,271 e) Unfunded AAL (UAAL) UY/ 3U/ 06 09/ 30107 UY/ 30/ 08 4: Contribution RequirementsoO for Year Ended oO $ 1, 226, 362 $ 1, 307,311 $ 1, 359,603 a) Plan Normal Cost"" 203,650 309, 474 309,474 b) Amortization Payment 1, 430,012 $ 1,616, 785 $ 1, 669, 077 c) Total Plan RequirementsoO $ d) Estimated Member Contributions 359, 510 385, 782 401, 213 1, 070,502 $ 1, 231, 003 $ 1, 267,864 e) Total City RequirementsoO $ f) Estimated Chapter 175/ 185 Contributions - - - 1, 070,502 $ 1, 231, 003 $ 1, 267,864 g) Net City Requirements" $ 1, 102, 102 1, 267,341 1, 305, 290 h) Total City Requirement Adjusted to End of Year 15. Past Contributions for Year Ended 9/ 30/ 2006 a) ( 1)Contribution Required by City $ 1, 102, 102 2) Contribution Required by Members 370, 122 3) Total Contribution Requirements $ 1,472, 225 1, 071, 742 b) (1) Actual City Contributions Paid 2) Actual Member Contributions Paid 502,803 3) Total Contributions Paid $ 1,574, 545 c) ( 1) Actual City Contribution w lInt.Adj. to End of Year 1, 101, 495 2) Actual Member Contribution w lInt.Adj. to End of Year 522,528 3) Total Contributions w lInt.Adj. to End of Year $ 1, 624,023 as determined from p rior actuarial valuation. a able Assumed py quarterly at the end of each quarter oOoO Includes administrative expenses of $17,047 in 2005 and $13, 355 in 2006. Conc~ Rts  3- 2 Discussion of Valuation Results If the participating group remained unchanged and all the actuarial assumptions were realized, the Plan' s experience would be as anticipated, and there would be no actuarial gains or losses. If the experience were less favorable than anticipated, actuarial losses would result; if more favorable, actuarial gains would result. Plan the last 12 months in aggregate was less favorable than experience over anticipated, resulting in an actuarial loss of approximately $ 933, 000. This loss was attributable to an investment 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. Future valuations will monitor the Plan' s' experience to determine whether actuarial these gains or losses have occurred since the previous valuation. Recognition of actuarial gains or losses will be made through adjustments to the VAAL and amortized over the same period as used for the pre-adjusted VAAL. It should be noted that the true costs of a retirement plan cannot be determined until its future unfolds. No one can precisely predict the interest earnings on retirement fund assets, mortality rates to be experienced, member termination rates, future salary levels, etc. Estimates based on experience with similar groups, along with the judgment of the actuary and the plan sponsor, can provide a reasonable approximation of this true cost. As actual experience emerges under the Plan, it will be necessary to study the continued appropriateness of the techniques and assumptions employed and to adjust the contribution rates as necessary. y;~; ;~i Conc~~ ts  3-3 Effect of Amortization Policy on Contribution Requirements It is intended that the Plan' s UAAL remaining in 1993 from the original 1978 VAAL base amount continue to be amortized in accordance with prior procedures. This portion of the VAAL is amortized over a four-year period from October I, 2004, as a level dollar amount, and will be fully amortized by September 30, 2008. Any change in each Plan' s VAAL due to actuarial gains or losses, changes in actuarial assumptions and/ or changes in Plan provisions will be amortized over a period of 15 years from its inception. The outstanding balances of the combined VAAL bases for each plan for selected years are: Annual Outstanding Date of First Years Amortization Balance at Remaining Payment"" 10/ 01/06 UAAL Bases: Charge 1978 Base 10/ 01/ 93 2$( 120,324) $ ( 220, 904) 1994 Base 10/ 01/ 94 3 ( 42,026 ) ( 111, 501) 1995 Base 10/ 01/ 95 4 ( 58, 325) ( 198, 882) 1996 Base 10/ 01/ 96 5 ( 20, 485) ( 84,204) 1997 Base 10/ 01/ 97 6 ( 114, 680) ( 545, 800) 1998 Base 10/ 01/ 98 7 71, 842 385, 076 1999 Base 10/ 01/ 99 8 ( 89, 030) ( 526, 724) 2000 Base 10/ 01/ 00 9 ( 116, 135) ( 746,900) 2001 Base 10/ 01/ 01 10 ( 48,346) ( 333, 980) 2002 Base 10/ 01/ 02 11 249,956 1, 837, 104 2003 Base 10/ 01/ 03 12 ( 8, 385) ( 65,056) 2004 Base 10/ 01/ 04 13 154, 212 1, 254,838 2005 Base 10/ 01/ 05 14 345, 375 2,931, 405 2006 Base 10/ 01/ 06 15 105, 824 932,535 Total** $ 309, 474 $ 4,507, 008 Assumed p a y aDTe quarterly at the end of each quarter. May be disparity due to rounding. Fiscal Year VAAL Ending 9/ 30 Balance 2007 4, 548, 959 2008 4,594, 266 2009 4, 519, 322