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

expected value of assets as of any valuation date is determined by applying actual Plan contributions and disbursements and the assumed investment yield to the previous year' s expected value of assets adjusted for any fully recognized cumulative differences. The adjustment is further modified, if necessary, by an amount sufficient to ensure that the actuarial value of assets is L: t.... I La = I :.. :..: Conc~~ ts  APPENDIX B- 3 not less than 80% nor more than 120% of market value. 10. Plan Expenses: Actual expenses incurred for the previous plan year. 11. Cost-of-Living Adjustment: 3. 0% per annum ( does not apply to disability benefits). 12. Payroll Growth Rate: 4. 0% per year; used to project normal cost requirements to applicable fiscal year. Actuarial Cost Method Contribution Requirements To determine the Plan' s contribution requirements, the Individual Entry Age Actuarial Cost Method was used. Vnder this method, the cost of each member' s projected retirement benefit is funded through a series of annual payments, determined as a level level percentage of each year' s earnings from age at hire to assumed exit age. This percentage, known as normal cost, is thus computed as though the Plan had always been in effect. A yearly normal cost for each member is individually determined by multiplying each member' s level percentage by the applicable yearly earnings, then adding together to obtain the normal cost amount for the Plan for that year. The accrued value of normal cost payments due prior to the valuation date is termed the actuarial accrued liability (AAL). This amount minus the actuarial value of assets is known as the unfunded actuarial accrued liability (VAAL). The annual cost of a plan consists of two components: normal cost and an amortization payment, which may vary between prescribed limits, toward the VAAL. An actuarial gain ( or loss), a measurement of the difference between actual experience and that expected based upon the actuarial assumptions during the period between two actuarial valuation dates, reduces ( or increases) the UAAL. The initial VAALs are being amortized over a four-year period from October 1, 2004, for the unamortized portion of the UAAL established prior to October 1, 1994; VAAL bases established on or after October I, 1994, will be amortized over 15 years from inception. Each year' s VAAL base can be either positive or negative, with amortization credits occurring if negative. Conc~ Rts  APPENDIX B-4 Miscellaneous Valuation Procedures limits 1. Projected retirement benefits were limited to IRC Section 415 benefit a life annuity, applicable to the current plan year ( for 2006, $ 175,000), payable as benefit beginning at or after age 62, reduced as applicable for earlier commencement with assumed increases equal to the assumed long- term rate of inflation. limits 2. Projected earnings were limited to IRC Section 401( a)( 17) compensation applicable to the current plan year ( for 2006, $ 220,000) with assumed increases equal to the assumed long- term rate of inflation. 3. Annual covered payroll is the amount of total pensionable earnings paid during the prior fiscal year for employees who are currently active members in the Plan. Valuation payroll is payroll expected to be paid during the current fiscal year, determined using prior-year covered payroll and the salary increase assumption fiscal year are by individual member. Contribution requirements for the next based on valuation payroll for the current fiscal year projected for one year using the payroll growth assumption. 4. Member information is current as of October I, 2006. 5. It was assumed that 100% of future disablements would be service connected. 6. No liability was recognized in the valuation for nonvested employees who have terminated, whether or not a break in service has occurred as of the valuation date, since any potential liability for this group is not significant. Note that upon rehire, any applicable prior employment service credits will be fully recognized in the valuation. 7. The effect of member contributions on the funding of normal cost requirements has been the member contribution rate from the recognized through subtracting total Plan normal cost rate to determine the net City portion. l IL.: Conc~~ ts  APPENDIX 8- 5 8. The contribution requirement includes an amount to recognize the Plan' s anticipated administrative expenses based on actual prior experience ( see assumptions). This amount is reflected in the required normal cost. c. tw :..:..:~= : u: Conc~~ ts  APPENDIX C- 1 CITY OF FORT WALTON BEACH GENERAL EMPLOYEES' RETIREMENT FUND TRUST FUND BALANCE AS OF 9/ 30/ 06 Cost Value Market Value Cash Short Term Investments 1, 665,530 1, 665, 530 Fixed Income 8, 182,617 8, 216, 128 Mutual Funds 2, 542,995 3, 342, 779 14, 910, 162 16,545, 276 Equity Accrued Income 113, 749 113, 749 Accrued Expenses Accrued from Brokers Accrued from Employees Receivable from Fire Plan Total Assets* 27,415, 053 29, 883, 462 Actuarial Value of Assets 29,449, 082 Includes accumulated member contributions with interest of $2, 659,917. vCo;C; ~tt~ts  APPENDIX C- 2 CITY OF FORT WALTON BEACH GENERAL EMPLOYEES' RETIREMENT FUND ANALYSIS OF CHANGES IN ACTUARIAL VALUE OF ASSETS Actuarial Value of Assets as of 9/ 30/ 05 27,938, 158 Add: 1, 071, 742 City Contributions Member Contributions 502,803 Investment Gains (Losses) 1, 526,821 Interest and Dividends 590, 193 Net Appreciation/ ( Depreciation) 439, 734) Total Additions 3, 251, 825 Deduct: Refunds and Benefit Payments 1, 593, 795 Administrative Expenses 13, 228 Investment Expenses 133, 878 Total Deductions 1, 740,901 Actuarial Value of Assets as of 9/ 30/ 06 29,449, 082 DEVELOPMENT OF ACTUARIAL VALUE OF ASSETS AS OF 10/01/ 06 1. Assets at Market Value 29, 883,462 33,273, 887 2. Expected Assets at Market Value 3. Total Difference [( 1)-( 2)] 3,390,425) 4. Cumulative Differences from Previous Years 3, 152, 503) 5. Current Year Differences [( 3)-( 4)] 237,922) 6. Cumulative Adj. Amounts from Previous Years 3, 777,221) 7. Current Year Adj. Amount [(5) xO. 2] 47, 584) 29,449, 082 8. Preliminary Actuarial Value of Assets [( 2)+( 6)+( 7)] 9. 80% of Market Value of Assets [( I)xO. 8] 23, 906, 770 10. 120% of Market Value of Assets [( I)x1.2] 35,860, 154 11. Actuarial Value of Assets [ greater of 8) and ( 9), but not greater than ( 10)] 29, 449, 082 r":'": :~~:=--=: CO~C:~~ts  APPENDIX 0-1 CITY OF FORT WALTON BEACH GENERAL EMPLOYEES' RETIREMENT FUND RECONCILIATION OF PLAN MEMBERS 10/01/ 05 - 10/ 01/ 06 Retirees, Disabled Vested Pending Actives Beneficiaries Retirees Terminateds Refunds* 10/ 01 / 05 Members 224 90 7 5 38 Increase (Decrease) Due to: Retirements ( 5) 6 ( 1) Vested Terminations ( 5) 4 1 Nonvested Terminations ( 30) 30 Rehires