PFPB Actuarial Report 10-01-2004RECEIVED
®~Y ~ ~ 2005
~~.~
OCTOBER 1, 2004
ACTUARIAL VALUATION REPORT
FOR THE
VILLAGE OF NORTH PALM BEACH
FIRE AND POLICE RETIREMENT FUND
ANNUAL EMPLOYER CONTRIBUTION
IS DETERMINED BY THIS VALUATION
FOR THE PLAN YEAR ENDING
SEPTEMBER 30, 2005
TO BE PAID IN EMPLOYER FISCAL YEAR ENDING
SEPTEMBER 30, 2006
GABRIEL, ROEDER, SMITH 8 COMPANY
March 14, 2005
Board of Trustees of the
Village of North Palm Beach
Fire and Police Retirement Fund
North Palm Beach, Florida
Board Members:
We are pleased to present our October 1, 2004 Actuarial Valuation Report for the Plan. The
purpose of the Report is to set forth required contribution levels, to disclose plan assets and
actuarial liabilities, to comment on funding progress and to provide supporting information
regarding the operation of the Plan. This Report is also designed to comply with requirements of
the State.
The valuation was performed on the basis of employee, retiree and financial information supplied
by the City. Although we did not audit this information, it was reviewed for reasonableness and
comparability to prior years.
The benefits valued are outlined at the end of the Report. Actuarial assumptions and the actuarial
cost method are also described herein. Any changes in benefits, assumptions or methods are
described in the first section.
We will be pleased to answer any questions pertaining to the valuation and to meet with you to
review this Report.
Respectfully submitted,
GABRIEL, ROEDER, SMITH AND COMPANY
BY.
J. Stephen Palmquist, ASA, MAAA, FCA
Enrolled Actuary No. 02-1560
TABLE OF CONTENTS
Section Title Paae
A 1. Discussion of Valuation Results 1
2. Chapter Revenue 3
B Valua tion Results
1. Annual Required Contribution 4
2. Participant Data 5
3. Actuarial Value of Benefits and Assets 6
4. Calculation of Employer Normal Costs 7
5. Actuarial Gains and Losses 8
6. Recent History of Valuation Results 13
7. Recent History of Contributions 16
8. Actuarial Assumptions and Cost Method 18
9. Glossary of Terms 20
C Pension Fund Information
1. Summary of Assets 21
2. Summary of Fund's Income and Disbursements 22
3. Actuarial Value of Assets 23
4. Investment Rate of Return 24
D Financial Accounting Information
1. FASB No. 35 25
2. GASB No. 25 26
3. GASB No. 27 28
E Miscellaneous Information
1. Reconciliation of Membership Data 30
2. Age/Service/Salary Distributions 31
F Summary of Plan Provisions 33
GABRIEL, ROEDER, SMITH S~ COMPANY
SECTION A
DISCUSSION OF VALUATION RESULTS
~~~~ GABRIEL, ROEDER, SMITH & COMPANY
1
DISCUSSION OF VALUATION RESULTS
Comparison of Required Employer Contributions
A comparison of the required employer contribution developed in this year's and last year's
actuarial valuations is as follows:
-For FYE 9/30/06 For FYE 9/30!05
Based on Based on -'
10/1/2004+' 10/1/2003 Ihcrease
Valuation Valuation ' (Decrease)'
Required Employer/State Contribution $ 690,186 $ 509,800 $ 180,386
As % of Covered Payroll 25.26 % 21.20 % 4.06
Estimated State Contribution $ 138,200 $ 134,303 $ 3,897
Ps % of Covered Payroll 5.06 % 5.58 % (0.52)
Required Employer Contribution $ 551,986 $ 375,497 $ 176,489
Ps % of Covered Payroll 2020 % 15.62 % 4.58
The employer contribution has been adjusted for interest on the basis that employer
contributions are made in equal payments at the end of each quarter.
The required employer contribution has been computed under the assumption that the
amount to be received from the State on behalf of members this year will be equal to the last
payment. If this year's payment from the State exceeds this amount, then the employer may
reduce its contribution accordingly, but only up to $138,200, which is the amount received in 1998
plus the cost of enacting minimum benefits. If this year's payment from the State falls below the
estimated amount, then the employer must raise its contribution by the difference.
The actual employer and State contributions during the year ending September 30, 2004
were $250,000 and $203,317, respectively. Only $138,200 of the State revenue in 2004 may be
used as a credit against the City contribution.
Revisions in Benefits
There have been no revisions in benefits since the last valuation.
GABRIEL, ROEDER, SMITH & COMPANY
Revisions in Actuarial Assumptions or Methods
2
There have been no changes in actuarial assumptions or methods since the last valuation.
Actuarial Experience
There was a net actuarial loss of $785,221 for the year which means that actual
experience was less favorable than expected. The loss is due to investment return below the
assumed rate of 8% and salary increases above the assumed rate of 6%.
The net actuarial loss for the year translates into an increase in annual employer
contributions of 3.88% of covered payroll.
Analysis of Change in Employer Contributions
The components of change in required contribution are as follows:
Contribution rate last year 15.62
Experience gain/loss 3.88
Change in adminstrative expense 0.18
Change in State revenue 0.52
Contribution rate this year 20.20
The remainder of this Report includes detailed actuarial valuation results, pension fund
information, miscellaneous information and statistics, and a summary of plan provisions.
..,..,~ GABRIEL, ROEDER, SMITH 8 COMPANY
CHAPTER REVENUE
3
Increments in Chapter revenue over that received in 1998 must first be used to fund the
cost of compliance with minimum benefits. Once minimums are met, any subsequent additional
Chapter revenue must be used to provide extra benefits.
As of the valuation date, a Normal Retirement Date of age 52 with 25 years of service
should be added to meet the minimum required benefits.
Actuarial Confirmation of the Use of State Chapter Money'
1. Base Amount Previous Plan Year $ 134,303
2. Amount Received for Previous Plan Year 203,317
3. Benefit Improvements Made in Previous Plan Year 3,897 '
4. Excess Funds for Previous Plan Year: (2) - (1) - (3) 65,117
5. Accumulated Excess at Beginning of Previous Year 25,641
6. Prior Excess Used in Previous Plan Year 0
7. Accumulated Excess as of Valuation Date
(Available for Benefit Improvements): (4) + (5) - (6) 90,758
8. Base Amount This Plan Year: (1) + (3) 138,200
' Figure represents aggregate increase in allowable state money for the year
and is not necessarily due to benefit improvements.
The Accumulated Excess shown in line 7 is being held in reserve to pay for additional
benefits. The reserve is subtracted from Plan assets (see Section C of this Report). The Base
Amount in line 8 is the amount the employer may take as accredit against its required contribution.
GABRIEL, ROEDER, SMITH & COMPANY
SECTION B
VALUATION RESULTS
GABRIEL, ROEDER, SMITH 8. COMPANY
4
PARTICIPANT DATA
October 1, 2004 October 1, 2003
ACTIVE MEMBERS
Number 38 37
Covered Annual Payroll $ 2,627,239 $ 2,312,228
Average Annual Payroll $ 69,138 $ 62,493
Average Age 42.7 41.1
Average Past Service 10.7 10.0
Average Age at Hire 32.0 31.1
RETIREES R BENEFICIARIES & DROP
Number 3 4
Annual Benefits $ 17,896 $ 17,740
Average Annual Benefit $ 5,965 $ 4,435
Average Age 69.9 73.3
DISABILITY RETIREES
Number 0 0
Annual Benefits $ 0 $ p
Average Annual Benefit $ 0 $ 0
Average Age 0.0 0.0
TERMINATED VESTED MEMBERS
Number 12 14
Annual Benefits $ 222,995 $ 253,256
Average Annual Benefit $ 18,583 $ 18,090
Average Age 48.5 47.8
~~~~ GABRIEL, ROEDER, SMITH H~ COMPANY
ANNUAL REQUIRED CONTRIBUTION (ARC)
A. Valuation Date October 1, 2004 October 1, 2003
B. ARC to Be Paid During
Fiscal Year Ending 9/30/2006 9/30/2005
C. Assumed Date of Employer Contrib. Quarterly Quarterly
D. Annual Payment to Amortize
Unfunded Actuarial Liability $ 0 $ 0
E. Employer Normal Cost 632,978 467,436
F. ARC if Paid on the Valuation
Date: D+E 632,978 467,436
G. ARC Adjusted for Frequency of
Payments 663,703 490,125
H. ARC as % of Co~.ered Payroll 25.26 % 21.20
1. Assumed Rate of Increase in Cored
Payroll to Contribution Year 4.00 % 4.00
J. Covered Payroll for Contribution Year 2,732,328 2,404,717
K. ARC for Contribution Year: H x J 690,186 509,800
L. Estimate of State Resenue in
Contribution Year 138,200 134,303
M. Required Employer Contribution (REC)
in Contribution Year 551,986 375,497
N. REC as % of Covered Payroll in
Contribution Year: M = J 20.20 % 15.62
GABRIEL, ROEDER, SMITH 8 COMPANY
ACTUARIAL VALUE OF BENEFITS AND ASSETS
A. Valuation Date October 1, 2004 October 1, 2003
B. Actuarial Present Value of All Projected
Benefits for
1. Acti~.e Members
a. Ser~ce Retirement Benefits $ 8,637,767 $ 7,388,134
b. Vesting Benefits 406,591 389,337
c. Disability Benefits 873,489 793,360
d. Preretirement Death Benefits 166,433 150,880
e. Retum of Member Contributions 17,172 17,844
f. Total 10,101,452 8,739,555
2. Inacti~.e Members
a. Service Retirees & Beneficiaries 195,001 197,835
b. Disability Retirees - -
c. Terminated Vested Members 1,664,771 1,791,753
d. Total 1,859,772 1,989,588
3. Total for All Members 11,961,224 10,729,143
C. Actuarial Accrued (Past Service)
Liability per GASB No. 25 8,546,754 7,616,168
D. Actuarial Value of Accumulated Plan
Benefits per FASB No. 35 6,572,410 5,950,518
E. Plan Assets
1. Market Value 7,178,318 6,705,408
2. Actuarial Value 6,771,959 6,635,342
F. Actuarial Present Value of Projected
Covered Payroll 21,222,195 19,725,766
G. Actuarial Present Value of Projected
Member Contributions 424,444 394,515
GABRIEL, ROEDER, SMITH S~ COMPANY
ThE
salary incre~
can vary frc
significant Ic
expected to
been comps
Net
CALCULATION OF EMPLOYER NORMAL COST
A. Valuation Date October 1, 2004 October 1, 2003
B. Actuarial Present Value of Projected
Benefits $ 11,961,224 $ 10,729,143
C. Actuarial Value of Assets 6,771,959 6,635,342
D. Unfunded Actuarial Accrued Liability 0 0
E. Actuarial Present Value of Projected
Member Contributions 424,444 394,515
F. Actuadal.Present Value of Projected
Employer Normal Costs: B-C-D-E 4,764,821 3,699,286
G. Actuarial Present Value of Projected
Covered Payroll 21,222,195 19,725,766
H. Employer Normal Cost Rate: F/G 22.45 % 18.75
I. Covered Annual Payroll 2,627,239 2,312,228
J. Employer Normal Cost: H x I 589,815 433,543
K. Assumed Amount of Administrative
Expenses 43,163 33,893
L. Total Employer Normal Cost: J+K 632,978 467,436
M. Employer Normal Cost as % of
Covered Payroll 24.09 % 20.22
® GAB ~~ ~ GABRIEL, ROEDER, SMITH S~ COMPANY
9
GABRIEL, ROEDER, SMITH ~ COMPANY
10
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 few
years:
Investment Return .Salary Increases
Year Ending Actual; -. Assumed Actual- Assumed
9/30/1985 17.8 % 7.0 % 1.4 % 6.0
9/30/1986 24.9 7.0 13.9 6.0
9/30/1987 13.3 7.0 10.9 6.0
9/30/1988 2.3 7.0 4.3 6.0
9/30/1989 20.1 7.0 8.7 6.0
9/30/1990 (0.5) 7.0 5.3 6.0
9/30/1991 23.6 7.0 8.9 6.0
9/30/1992 12.2 7.0 9.0 6.0
9/30/1993 9.4 7.0 0.7 6.0
9/30/1994 7.2 7.0 1.2 6.0
9/30/1995 10.6 7.0 6.4 6.0
9/30/1996 8.3 8.0 10.2 6.0
9/30/1997 16.1 8.0 (5.4) 6.0
9/30/1998 10.7 8.0 18.6 6.0
9/30/1999 12.6 8.0 (5.5) 6.0
9/30/2000 11.6 8.0 9.2 6.0
9/30/2001 7.4 8.0 8.7 6.0
9/30/2002 1.8 8.0 15.5 6.0
9/30/2003 3.9 8.0 7.1 6.0
9/30/2004 2.8 8.0 14.0 6.0
Averages 10.6 % --- 7.0 % ---
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.
~~~ GABRIEL, ROEDER, SMITH B~ COMPANY
11
History of Investment Return
Based on Actuarial Value of Assets
30%
25°l0
20°/m` ,
15%
14°%;
30%
25°~
20% ',
~ 15%
' /
~,. 10%
History of Salary Increases
zo~° 20%
1$% 18%.
1fi% 18%
14°!0 -
12%. ~
10%
~ 14°k -
12%
10%:
8% ~ 8°/d:
6% 6%
1
2°h ~ 2%
0°f 0%
o
_2% ~ -2% ,
$% $%:
9\By ~' 901 000 Or~b9 990 9~9, 0\9`L 9~0 9~9p 9`eh ~,~f° X01 9\90 ,,,pi. X00 O\O~. O~O`Y 0\O`D 0\O°` .
Plan Year End Compared t0 Previous Year
-as--Actual -~--Assumed
~`~~ GABRIEL, ROEDER, SMITH & COMPANY
12
Actual (A) Compared to Expected (E) Decrements
Among Active Employees
Number
Added Service & Active
During DROP Disability Terminations Members
Year Year Retirement Retirement Death Vested Other Totals End of
Ended A E A E A E A E A A A E Year
9/30/2002 6 2 0 1 0 0 0 0 1 1 2 1 31
9/30/2003 8 2 0 1 0 0 0 0 1 1 2 1 37
9/30/2004 4 3 0 1 0 0 0 0 0 3 3 1 38
9/30!2005 3 0 0 1
3 Yr Totals ` 18 7 0 3 0 0 0 0 2 5 7 3
Totals are through current Plan Year only
~`~~ GABRIEL, ROEDER, SMITH 8 COMPANY
i~
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RECENT HISTORY OF VALUATION RESULTS
Number of Employer Normal Cost
Active Inactive
Valuation
Date Members Members Covered Annual
Pa roll Actuarial Value of
Assets
UFAAL
Amount
°I° of Payroll
1011188 31 6 $ 906,217 $ 1,094,961 $ 0 $ 112,306 12.4
10/1/89 31 6 969,198 1,413,195 0 105,967 10.9
1011190 31 9 1,005,750 1,503,065 0 112,554 11.2
10/1/91 31 9 1,074,925 1,818,821 0 114,587 10.7
10/1/92 35 9 1,272,588 1,932,821 0 134,305 10.6
10/1/93 34 8 ` 1,244,783 2,250,243 0 125,213 10.1
10!1!94 29 8 1,122,868 2,532,566 0 121,796 10.9
10/1/95 28 8 1,180,433 2,932,454 0 125,518 10.6
1011196 31 9 ' 1,417,072 3,316,017 0 159,996 11.3
10/1/97 33 9 1,385,328 4,039,956 0 113,150 8.2
10/1/98 31 10 ` 1,552,984 4,650,015 0 173,847 11.2
10/1/99 29 11 1,355,684 4,839,840 0 92,638 6.8
10(1/00 30 13 1,493,357 5,285,938 0 81,891 5.5
10/1/01 27 16 1,517,524 5,718,291 0 124,273 8.2
1011102 31 17 1,921,532 6,047,007 0 352,003 18.3
1011/03 37 18 2,312,228 6,635,342 0 467,436 20.2
10/1/04 38 15 2,627,239 6,771,959 0 632,978 24.1
This number includes cost-of-living benefits being paid by the pension fund for retirees for whom annuities
were purchased during the 1970's.
w
14
Recent History of Number of Members
so
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O
^~° sb~~ ~b~° ^b~A ^b~'M ~b~y'! ~.o~°ja Ao~°j~ ~b~b ^o~b1 w~~ ^b~ ~W.. . boa°^ ^b~°" ra°~ i~°~
Actuarial Va-uation Date
GABRIEL, ROEDER, SMITH 8 COMPANY
Recent History,of Covered Annual Payroll
15
Recent History of Employer Nomtal Cost
$700 za~io
~ ~ 28%
$600 ' {
~ 2496 `
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Actuarial Valuation Date
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GABRIEL, ROEDER, SMITH S~ COMPANY
16
GASRIEI, ROEDER, SM{TH & COMPANY
RF?VENT}IISTORYOFREQUIRE!]ANDACTUAICON[RIBIiTtONS
Required Contributions
End of
Ye a r To
Valuation Which Employer & State Estimated State Net Employer Actual Contributions
Valuation
Applies
°I°of
%of
%of
Amount Payroll Amount Payroll Amount Payroll Employer State Total
10/1/88 9/30/89 $ 117,090 12.92 °/ $ 44,728 4.94 % $ 72,362 7.99 % $ 64,223 $ 52,866 $ 117,089
10/1/89 9/30/9D 110,481 11.40 52,866 5.45 57,615 5.94 62,349 49,647 111,996
10/1!90 9!30/91 117,352 11.67 49,647 4.94 67,705 6.73 68,000 54,960 122,960
10/1/91 9/30!92 119,472 11.11 54,960 5.11 64,512 6.00 70,000 51,832 121,832
1011/92 9!30193 140,031 11.00 51,832 4.07 88,199 6.93 91,109 49,897 141,006
10/1193 9130194 130,551 10.49 49,897 4.01 80,654 6.48 77,009 54,214 131,214
10/1/94 9/30/95 126,988 11.31 54,214 4.83 72,774 6.48 73,000 58,926 131,925
10/1/95 9/30/96 131,611 11.15 58,926 4.99 72,685 6.16 78,000 55,501 133,501
10!1!96 9/30197 167,763 11.84 55,501 3.92 112,262 7.92 93,000 76,514 169,514
10/1/97 9/30/98 118,643 8.56 74,935 5.40 43,708 3.16 56,672 92,463 149,135
10/1/98 9/30/99 182,286 11.74 84,883 5.47 97,403 6.27 110,966 79,215 190,181
10/1/99 9/30/00 97,135 7.16 73,907 5.45 23,228 1.71 53,067 73,123 126,190
10/1/00 9/30/01 85,866 5.75 78,246 5.24 7,620 0.51 25,607 77,227 102,834
1011/01 9/30/02 130,305 8.59 77,227 5.09 53,078 3.50 57,825 88,452 146,277
10!1(02 9(30!03 369,089 19.21 134,189 6.98 234,900 12.23 235,339 134,303 369,642
10!1/02 9130104 383,891 19.21 134,189 6.71 249,702 12.50 250,000 138,200 388,200
10/1/03 9/30/05 509,800 21.2D 134,303 5.58 375,497 15.62 -- - -
10/1/04 9130/06 690,186 25.26 138,200 5.06 551,986 20.20 -- - -
Recent History of Required and Actual Contributions
$700
$Soo
$500
'O
R $400
7
= $300—H
$200
$100 J
$0
$ 4 p�ph.pop, 40 40 1-,40, 4b, ®p r Vpp• 1p� 01 xp's' V0�`'; �Oy �pfp.
9� - .9 0. N. 9 p :...p p
`fiscal Year,E.nd ,
Required Cantribution ■Actua[,Contribution
18
ACTUARIAL ASSUMPTIONS AND COST METHOD
A. Cost Method
1. Funding Aggregate Actuarial Cost Method.
2. Accumulated Benefit Obligation Accrued Benefit Method
B. Investment Earnings
(Including inflation)
C. Salary Increases
(Including inflation)
D. Inflation
E. Retirement Age
S% per year, compounded annually; net rate
after investment related expenses.
6% per year up to the assumed retirement age.
4% per year.
See Table below for retirement rates.
F. Turnover Rates
G. Mortality Rates
H. Disability
1. Rates
2. Percent Service Connected
I. Asset Value
J. Administrative Expenses
K. Increase in Covered Payroll
L. Post Retirement Benefit Increase
M. Changes Since Last Valuation
See Table below.
1983 Group Annuity Mortality Table for males and females.
See Table below.
NA
Market Value less unrecognized capital appreciation, where
capital appreciation is recognized at the rate of 20% per
year.
Expenses paid out of the fund other than investment related
expenses are assumed to be equal to the average of actual
expenses over the previous two years.
NA
3% per year.
None.
~ ~~ GABRIEL, ROEDER, SMITH 8~ COMPANY
19
Annual Rate of
A e Turnover Disability
25 8.6% 0.15%
30 7.5 0.18
35 5.7 0.23
40 3.9 0.30
45 2.4 0.51
50 1.2 1.00
55 --- ---
Annual Rate of Retirement
For each year eligible for
early retirement 5%
For year when normal
retirement date is
attained 60
For each of four years
after normal retirement
date 40
For fifth year after normal
retirement 100
GABRIEL, ROEDER, SMITH & COMPANY
20
GLOSSARY OF TERMS
Actuarial Present Value is the value of an amount or series of amounts payable at various times,
determined as of the valuation date by the application of the set of actuarial assumptions.
Actuarial Assumptions are assumptions as to the occurrence of future events affecting pension
costs. The previous page outlines the Actuarial Assumptions utilized in this valuation.
Actuarial Cost Method is a procedure for determining the Actuarial Present Value of pension plan
benefits and for developing an actuarially equivalent allocation of such value to time periods, usually in
the form of a Normal Cost and Actuarial Accrued Liability.
Aggrepate Actuarial Cost Method is a method under which the excess of the Actuarial Present
Value of Projected Benefits of the group included in the valuation, over the sum of the Actuarial Value
of Assets and the Actuarial Present Value of Future Member Contributions (if any) is allocated as a
level percentage of earnings of the group between the valuation date and the assumed retirement age.
This allocation is performed for the group as a whole, not as a sum of individual allocations. The
portion of this Actuarial Present Value allocated to a specific year is called the Employer Normal
Cost. Under this method, actuarial gains (losses) reduce (increase) future Normal Costs.
GABRIEL, ROEDER, SMITH 8 COMPANY
SECTION C
PENSION FUND INFORMATION
GABRIEL, ROEDER, SMITH 8a COMPANY
21
SUMMARY OF ASSETS .
9/30/2004 9/30/2003
Cash and Securities -Market Value
Cash $ - $ 227,569
Money Market Funds 304,662 445,326
Treasury and Agency Bonds & Notes 2,365,305 2,162,256
Corporate Bonds 611,557 551,917
Common Stocks 3,929,442 3,320,573
Pooled Equity Funds - -
Pooled Bond Funds - -
Other Securities - -
Total 7,210,966 6,707,641
Receivables and Accruals
State Contribution 43,409 -
Member Contribution - -
Employer Contribution - -
Interest and Dividends 18,748 28,232
Other - -
Total 62,157 28,232
Payables
Reserve for Excess State Funds 90,758 25,641
Monthly Supplemental Benefit Reserve - -
Benefits - -
Refunds - -
Expenses 4,047 4,824
Other - -
Total 94,805 30,465
Net Assets -Market Value 7,178,318 6,705,408
~~ ~ GABRIEL, ROEDER, SMITH ~ COMPANY
22
PENSION FUND"INCOME AND DISBURSEMENTS'-
Year Ending Year Ending
9/30/2004 9/30/2003
Market Value at Beginning of Period $ 6,731,049 $ 5,478,071
Income
Member Contributions 52,490 43,611
State Contributions 203,317 159,943
Employer Contributions 250,000 235,339
Other Contributions 3,151 0
Investment Earnings 562,676 908,618
Total Income 1,071,634 1,347,511
Disbursements
Monthly Benefit Payments 17,998 17,680
Lump Sum Distributions 427,295 0
Refund of Contributions 5,866 3,840
Investment Related Expenses 40,784 28,352
Other Administrative Expenses 38,858 42,021
Insurance Premiums 2,806 2,640
Other Expenses 0 0
Total Disbursements 533,607 94,533
Net increase During Period 538,027 1,252,978
Market Value at End of Period 7,269,076 6,731,049
Less: State Contribution Reserve 90,758 25,641
Final Market Value 7,178,318 6,705,408
..,..,~ GABRIEL, ROEDER, SMITH 8 COMPANY
23
ACTUARIAL VALUE OF ASSETS
The Actuarial Value of Assets is equal to the market value less capital appreciation which
has not yet been recognized. Capital appreciation, the total of realized and unrealized gains, is
being recognized at the rate of 20% per year. Recognized and unrecognized capital
appreciation for this year's valuation is developed as follows:
(1) Amount of (1) Amount of (1) Amount of (1)
Year. Capital Recognized Recognized by `. Unrecognized by
Ending Appreciation. Each Year ;Valuation Date = Valuation Date
9/30/2000 $ 241,305 $ 48,261 $ 241,305 $ 0
9/30/2001 (548,250) (109,650) (438,600) (109,650)
9/30/2002 (519,755) (103,951) (311,853) (207,902)
9/30/2003 691,198 138,240 276,480 414,718
9/30/2004 386,491 77,298 77,298 309,193
250,989 50,198 (155,370) 406,359
Actuarial Value of Assets = (Market Value) - (Unrecognized Capital Appreciation)
_ $ 7,178,318 - $ 406,359
_ $ 6,771,959
Range from 80% to 1 20% of Market Value = $ 5,742,654 to $ 8,613,982
Final Actuarial Value of Assets = $ 6,771,959
Investment earnings recognized in the Actuarial Value of Assets are computed as follows:
$ 6,771,959
- 6,570,225
- 508,958
+ 533,607
226,383
- 40,784
185,599
Actuarial Value this year
Actuarial Value last year'
Contributions during year
Expenses during year
Gross Earnings recognized
Investment related expenses
Net Earnings recognized
' Actuarial Value last year adjusted to take out increases in the State Contribution Reserve
~`~~ GABRIEL, ROEDER, SMITH 8 COMPANY
24
INVESTMENT RATE OF RETURN
The investment rate of return has been calculated as follows:
Basis 1 - Interest, dividends, realized gains (losses) and unrealized appreciation
(depreciation) divided by the weighted average of the market value of the
fund during the year. This figure is normally called the Total Rate of
Return.
Basis 2 - Investment earnings recognized in the Actuarial Value of Assets divided
by the weighted average of the Actuarial Value of Assets during the year.
Investment Rate of Return
Year Ended -Basta 1 Basis 7
9/30/85 17.8 % 17.8
9/30/86 24.9 24.9
9/30/87 13.3 13.3
9/30/88 2.3 2.3
9/30/89 20.1 20.1
9/30/90 (0.5) (0.5)
9/30/91 23.6 23.6
9/30/92 12.2 12.2
9/30/93 9.7 9.4
9/30/94 2.1 7.2
9/30/95 17.9 10.6
9/30/96 8.6 8.3
9/30/97 26.4 16.1
9/30/98 6.0 10.7
9/30/99 12.1 12.6
9/30/00 8.7 11.6
9/30/01 (5.6) 7.4
9/30/02 (5.7) 1.8
9/30/03 16.1 3.9
9/30/04 8.4 2.8
Average Compounded
Rate of Return for
Number of Years Shown 10.5 % 10.6
Average Compounded
Rate of Return for Last 5
Years 4.0 % 5.4
Note: Figures prior to 1988 were taken from the previous
actuary's report for 1987.
~'~~ GABRIEL, ROEDER, SMITH & COMPANY
SECTION D
FINANCIAL ACCOUNTING INFORMATION
~`~~ GABRIEL, ROEDER, SMITH & COMPANY
25
FASB NO. 35 INFORMATION
A Valuation Date
B. Actuarial Present Value of Accumulated
Plan Benefits
1. Vested Benefits
a. Members Currently Receiving Payments
b. Terminated Vested Members
c. Other Members
d. Total
2. Non-Vested Benefits
3. Total Actuarial Present Value of Accumulated
Plan Benefits: 1d + 2
4. Accumulated Contributions of Active Members
C. Changes in the Actuarial Present Value of
Accumulated Plan Benefits
1. Total Value at Beginning of Year
2. Increase (Decrease) During the Period
Attributable to:
a. Plan Amendment
b. Change in Actuarial Assumptions
c. Latest Member Data, Benefits Accumulated
and Decrease in the Discount Period
d. Benefits Paid
e. Net Increase
3. Total Value at End of Period
D. Market Value of Assets
E. Actuarial Assumptions -See page entitled
Actuarial Assumptions and Methods
October 1, 2004
$ 195,001
1,664,771
4,120,857
5,980,629
591.781
6,572,410
246,016
5,950,518
0
0
1,073,051
(451,159)
621,892
6,572,410
7,178,318
October 1.2003
$ 197,835
1,791,753
3,448,329
5,437,917
512,601
5,950,518
199,475
4,769,153
301,655
0
901,230
(21,520)
1,181,365
5,950,518
6,705,408
~'~~ GABRIEL, ROEDER, SMITH & COMPANY
SCHEDULE OF FUNDING PROGRESS
(GASB Statement No. 25)
Actuarial
Valuation
Date
Actuarial Value of
~~ Aetna rIa l Accrued
Liebllity (AAL} - `
~~ Age
r Unfunded AAL
(UAAL) ~;
Funded Ratio
Covered Payroll UAAL As % of
Covered
-Payroll
10/1/1991 S 1,818,821 $ 1,510,461 $ (308,360) 120.4 % $ 1,074,925 (28.7)
10/1/1992 1,932,821 1,816,156 (116,665) 106.4 1,272,588 (9.2)
10/1/1993 2,250,243 2,015,285 (234,958) 111.7 1,244,783 (18.9)
10/1/1994 2,532,566 2,313,914 (218,652) 109.4 1,122,866
(19.5)
10/1/1995 2,932,454 2,974,020 41,566 98.6 1,180,433 3.5
10/1/1996 3,316,017 3,408,675 92,658 97.3 1,417,072 6.5
10/1/1997 4,039,956 3,646,297 (393,659) 110.8 1,385,328 (28.4)
10/1/1998 4,650,015 4,640,502 (9,513) 100.2 1,552,984
(0.6)
10/1/1999 4,839,840 4,249,937 (589,903) 113.9 1,355,684 (43.5)
10/1/2000 5,285,938 4,496,853 (789,085) 117.5 1,493,357 (52.8)
10/1/2001 5,718,291 5,304,774 (413,517) 107.8 1,517,524 (27.2)
10/1/2002 5,963,256 6,565,654 602,398 90.8 1,921,532 31.3
10/1/2003 6,635,342 7,616,168 980,826 87.1 2,312,228 42.4
10/1/2004 6,771,959 8,546,754 1,774,795 79.2 2,627,239 67.6
Note: Because this Plan uses the Aggregate Actuarial Cost Method for funding, the Schedule of Funding Progress is not
required per GASB No. 25. The Schedule above is included in this Report in case the Plan and/or Employer
believe the information would be useful to users of their financial statements.
27
SCHEDULE OF CONTRIBUTIONS FROM EMPLOYER
AND THE STATE OF FLORIDA
(GASB Statement No. 25)
Year Ended
September 30 .Annual Required
Contribution Actuat
Contribution Percentage
Contributed
1991 117 , 352 122 , 960 104.8
1992 119,472 121,832 102.0
1993 140,031 141,006 100.7
1994 130,551 131,214 100.5
1995 126,988 131,926 103.9
1996 131, 611 133, 501 101.4
1997 167,763 169,514 101.0
1998 118,643 149,135 125.7
1999 182,286 190,181 104.3
2000 97,135 126,190 129.9
2001 85,866 102,834 119.8
2002 130, 305 146, 277 112.3
2003 369,089 369,642 100.1
2004 383,891 388,200 101.1
GABRIEL, ROEDER, SMITH S~ COMPANY
z8
ANNUAL PENSION COST AND NET PENSION OBLIGATION
(GASB STATEMENT NO. 27)
Employer FYE September 30 2005 2004 2003
Annual Required Contribution (ARC)* $ 509,800 $ 383,891 $ 369,089
Interest on Net Pension Obligation (NPO) (8,578) (8,533) (8,799)
Adjustment to ARC (12,570) (12,289) (12,677)
Annual Pension Cost (APC) 513,792 387,647 372,967
Contributions made ** 388,200 369,642
Increase (decrease) in NPO ** (553) 3,325
NPO at beginning of year (107,221) (106,668) (109,993)
NPO at end of year ** (107,221) (106,668)
* Includes expected State contribution
** To be determined
THREE YEAR TREND INFORMATION
Fiscat Annual Pension Actual Percentage of Net Pension
Year Endin Cost APC Contribution APC Contributed Obli atiori'
9/30/2002 $ •133,722 $ 146,277 109.4 % $ (109,993)
9/30/2003 372,967 369,642 99.1 (106,668)
9/30/2004 387,647 388,200 100.1 107,221
~~~ GABRIEL, ROEDER, SMITH & COMPANY
29
REQUIRED SUPPLEMENTARY INFORMATION
GASB Statement No. 25 and No. 27
The information presented in the required supplementary schedules was determined as part of
the actuarial valuations at the dates indicated. Additional information as of the latest actuarial
valuation:
Valuation date
Contribution Rates:
Employer
Plan Members
Actuarial Cost Method
Amortization Method
Remaining amortization period
Asset valuation method
Actuarial assumptions:
Investment rate of return
Projected salary increases
Includes inflation and other general increases at
Cost of Living adjustments
October 1, 2004
25.26%
2.00%
Aggregate
NA
NA
5-year smoothed market
8.0%
6.0%
4.0%
3.0% per year
GABRIEL, ROEDER, SMITH & COMPANY
SECTION E
MISCELLANEOUS INFORMATION
GABRIEL, ROEOER, SMITH ~ COMPANY
30
RECONCILIATION OF MEMBERSHIP DATA
From 10/1/03 From 10/1/02
To 10/1/04 To 10/1/03
A. Active Members
1. Number Included in Last Valuation 37 31
2. New Members Included in Current Valuation 4 8
3. Non-Vested Employment Terminations (3) (1)
4. Vested Employment Terminations 0 (1)
5. Service Retirements 0 0
6. Disability Retirements 0 0
7. Deaths 0 0
8. Transfer from General Employees 0 0
9. Number Included in This Valuation 38 37
B. Terminated Vested Members
1. Number Included in Last Valuation 14 13
2. Additions from Active Members 0 1
3. Lump Sum Payments/Refund of Contributions (2) 0
4. Payments Commenced 0 0
5. Deaths 0 0
6. Other-Return to Actives 0 0
7. Number Included in This Valuation 12 14
C. Service Reflrees, Disablllty Retirees and Beneflciarles
1. Number Included in Last Valuation' 4 4
2. Additions from Active Members 0 0
3. Additions from Terminated Vested Members 0 0
4. Deaths Resulting in No Further Payments (1) 0
5. Deaths Resulting in New Surviwr Benefits 0 0
6. End of Certain Period - No Further Payments 0 0
7. Other -- Lump Sum Distributions 0 0
8. Number Included in This Valuation 3 4
This number includes cost-of-living benefits being paid by the pension fund
for retirees for whom annuities were purchased during the 1970's.
~'~~ GABRIEL, ROEDER, SMITH 8 COMPANY
31
GABRIEL, ROEDER,SMITH Si COMPANY
32
~`~` GABRIEL, ROEDER, SMITH & COMPANY
SECTION F
SUMMARY OF PLAN PROVISIONS
~~~ GABRIEL, ROEDER, SMITH & COMPANY
33
SUMMARY OF PLAN PROVISIONS
Effective Date
March 1, 1967
Eligibilitv
Full-time fire and police employees are eligible for membership on the October 1st
following completion of 12 months of employment.
Earninqs
Gross salary including overtime but excluding bonuses or any other nonregular
payments such as unused sick leave and vacation pay.
Average Monthly Earninqs (AME)
Average of earnings during the five years within the last ten years of employment which
produces the highest average.
Credited Service
Total number of years and fractional parts of years of actual service.
Normal Retirement
Eligibility Age 55.
Benefit 2.50% of AME multiplied by Credited Service, with a maximum benefit of
60% of AME.
Form of Benefit 10 years certain and life thereafter with other options available.
Early Retirement
Eligibility Age 50.
Benefit Calculated in same manner as Normal Retirement Benefit and payable at
Normal Retirement Date; or payable immediately after reduction by 3%
for each year by which the benefit commencement date precedes the
Normal Retirement Date.
Delayed Retirement
Eligibility Any time after the Normal Retirement Date.
Benefit Calculated in the same manner as the Normal Retirement Benefit using
the AME and Credited Service as of the Normal Retirement Date and
increased actuarially to the actual retirement date.
~` ~ GABRIEL, ROEDER, SMITH 8a COMPANY
34
Preretirement Death Benefits
For a member who is age 55 and has at least five years of service but who dies before
commencement of retirement benefits, a monthly benefit is payable to the designated
beneficiary; the benefit is calculated as though the member had retired on his date of
death and had chosen the 50% Joint and Survivor Annuity Option. Upon the death of a
member with ten years of service, a death benefit is payable for ten years in an amount
equal to the vested accrued benefit.
Disability Retirement
Eligibility For non-service connected disability, ten years of Credited Service and a
total and permanent disability. For service connected disability, a total
and permanent disability with no service requirement.
Benefit A ten year certain and life annuity that can be provided by the single-sum
value of the member's accrued pension benefit, but is at least 42% of
AME for service connected disability and at least 25% of AME for non-
service connected disability.
Termination Benefits
For a member with less than ten years of Credited Service when he terminates, no
benefit is payable. For a member with ten or more years of Credited Service when he
terminates, his accrued benefit is payable at his Normal Retirement Date, or at any time
after age 50 is attained, with the benefit being subject to the same reduction as for Early
Retirement Benefits.
Contributions
From Members 2% of earnings.
From the City The amount necessary to fund the Plan properly according to the Plan's
actuary.
Cost of Living Increases
Up to 3% change effective each October 1st in accordance with the Consumer Price
Index.
Changes Since Last Valuation
None.
~~~ GABRIEI, ROEDER, SMITH & COMPANY