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HomeMy WebLinkAboutCity of Lansing police and fire Retirement System Acturial valuation as of dec 31 2013 r �,A��1�r� c►�� f CITY OF LANSING POLICE AND FIRE RETIREMENT SYSTEM ACTUARIAL VALUATION AS OF DECEMBER 31, 2013 i Boomershine Consulting Group Executive Center I 3300 North Ridge Road, Suite 300 Ellicott City,MD 21043 II Il Ll i December, 2014 r i I I BQOMERSFUNE CONSULTING GROUP,LLe. ACNARIAL@I�mrmnttawrp eN SOLUTIONS TABLE OF CONTENTS Page IntroductoryLetter..................................................................................................................................... 1 AssetInformation....................................................................................................................................... 3 Participant Summary and Age,Service and Compensation Distribution................................................................................................................................................. 5 ValuationSummary.................................................................................................................................... 7 Actuarial Assumptions and Methods......................................................................................................... 8 Highlights of Plan Provisions.................................................................................................................... 10 Appendix I:Projection of Funding and Contributions.............................................................................. 13 Appendix II:History of Employer Contributions and Funding Progress................................................. 14 , I jbeg BOONIER5R1NE CON5ULENC GROUP. —} ACRIARIAI &Rr NaI MENrYI AN SOU-r10NS December 15,2014 City of Lansing Police and Fire Retirement System 124 W.Michigan Avenue 8th Floor Lansing,MI 48933 Executive Summary Members of the Board: The following report sets forth the Actuarial Valuation of the City_oLLansine Police and Fire Retirement System as of December 31,2013. The report is based on participant data acid asset summary as of December 31,2013 as submitted by the Plan Administrator and City finance department. We relied on this information without auditing it. INVESTMENT PERFORMANCE: The total Market Value of Plan Assets for the plan year ending December 31,2013 was$319,630,879. Plan assets exclude from this a reserve for healthcare benefits. The total yield of the fund for the plan year ending December 31,2013 was 17.2% on the market value of assets and 12.6%on an actuarial basis,taking into account asset smoothing. The Plan uses a smoothing method to determine the City's contributions.Under this method,asset gains or losses are spread over a 5-year period.The gains and losses are determined every year by comparing actual investment returns with expected asset performance.The Board elected to recognize all investment experience prior to 12/31/2012,and maintain 5-year smoothing beginning at I/l/2013. This strategy maintains a prudent level of unrecognized gains. Details of the development of the Actuarial Asset Value are shown on page 4. FUNDING RECOMMENDATIONS: The total recommended City contribution for fiscal year 2015 is$11,050,091. Last year the total recommended contribution was$11,248,857. The decrease in the contribution is primarily due to investment gains during 2013. FUNDING PROGRESS: The Actuarial Accrued Liability as of December 31,2013 is$383,879,280 compared to the Actuarial Value of Assets of $277,267,947,resulting in a plan funded ratio of 72.2%. Using the market value of assets,this ratio is 77.2%. The 12/31/2013 actuarial liabilities and fiscal year 2015 contributions reflect changes to assumed return and inflation,adopted by the Board. The return and inflation assumptions were decreased from 7.8%and 3.3%to 7.6%and 3.1%,respectively. , i �bcg BOONERSIONE CONSULTING GROUP,LE ACT1, In, h R Ik: Y' 1 PL AN SOLL-11ONS City of Lansing Actuarial Valuation Police and Fire Retirement System as of December 31,2013 This report has been prepared in accordance with generally accepted actuarial principles and practices.In the opinion of the City and its actuaries,the actuarial assumptions used are reasonably related to Plan experience and expectations. The undersigned are members of the American Academy of Actuaries,and are qualified to render the actuarial opinions '.. presented in this Report. The information presented in this report pertains only to the funding of the System. All of the figures related to accounting and disclosure under GASB 67 and 68 are now presented in a separate report. Respectfully submitted, BOOMERSHINE CONSULTING GROUP,L.L.C. J�ja'X' "MY-B ' EA,ASA,AC;A,MAArt 4CChActuffy Swm�, �, � AA hani , i 2 (JbegI BOO'I1 ItSIIINE e CONSULTING CROUP. €E. �� "j1tA� L-&jtI rIR[M}3VI PLTN S�VnONS TRUST FUND STATEMENT AND DETERMINATION OF VALUATION ASSETS i i Jk`fi� ROOMERSHAF CONSULTING GROUP, ,.c. 1 :C[U_ARIALhRLLKji IPI1NSOLILIJojJS City of Lansing Actuarial Valuation Police and Fire Retirement System as of December 31,2013 TRUST FUND STATEMENT FOR THE PLAN YEAR ENDING DECEMBER 31,2013 Market Value of Total Fund as of December 31,2012 $284,183,964 Receipts: Employer Contributions 11,157,599 Employer Contributions-Healthcare Reserve 700,000 Member Contributions 2,704,064 Adjustments Investment Income Interest 4,628,276 Dividends 1,166,761 Market Appreciation 42,301,836 Adjustments(2012 accrual) 135,278 Total Additions $62,793,815 Disbursements: Member Refimd 47,300 Distributions to Participants/Beneficiaries 26,223,424 Administrative Expenses and Other 78,011 j Investment Expenses 998,165 1 Total Disbursements $27,346,900 Adjustments 0 Net Increase/(Decrease)in Assets $35,446,915 Market Value of Total Fund as of December 31,2013 $319,630,879 ALLOCATION OF NET PLAN ASSETS AS OF DECEMBER 31,2013 Market Value % Cash and Short Term Investments 27,470,813 8.6% Equity 184,876,340 57.7% Fixed Income 95,118,153 29.8% Real Estate 16,157,233 5.1% Accounts payable 3991660 -1.2% TOTAL ASSETS $319,630,879 100.0% Estimated Rate of Return on Market Value for 2013: 17.2% ]=,bZcg/— _ C�i�SL1LT�i\TG Cr�(�CP[;a,tnc, Al I(W%jJ%1 IRL I IRfh RN I PL 1N SO LU91()KS' City of Lansing Actuarial Valuation Police and Fire Retirement System as of December 31,2013 DETERMINATION OF ACTUARIAL VALUE OF ASSETS AS OF JANUARY 1,2014 Market Value of Total Fund as of December 31,2012 $284,183,964 Plus: Contributions 14,561,663 Less:Benefit Payments and Refunds 26,270,724 Less:Expenses 78,011 Plus: Expected Return during 2013 (@ 7.8%,prior to assumption change) 21,297,439 Expected Asset Value $293,694,331 Market Value of Total Fund as of December 31,2013 $319,630,879 Asset Gain/(Loss)for 2013 Plan Year 25,936,548 Market Value of Total Fund as of December 31,2013 $319,630,879 Less: 80%of2013 Gain/(Loss) 80% * 25,936,548 20,749,238 Less: 60%of 2012 Gain/(Loss) 60% * 0 ' 0 Less: 40%of2011 Gain/(Loss) 40% * 0 ' 0 Less: 20%of 2010 Gain/(Loss) 20% * 0 ' 0 Total Gain/(Loss)Unrecognized 20,749,238 Actuarial Value of Assets,Total Fund-December 31,2013 $298,881,641 as%of Market Value of Assets 93.5% Healthcare Reserve Fund as of December 31,2013 $23,197,213 Adjusted Healthcare Reserve 21,691,704 Actuarial Value of Assets,Pension Plan-December 31,2013 $277,189,937 Estimated Rate of Return on the Actuarial Value is 12.6% 2010-2012 Investment Experience fully recognized as of 12/31/2013 Takes into account asset smoothing 4 IJ"`g�BOOMERSHINE f CONSULTING GROUP,, -- ACMANN M2 t'neLMMrl'LAN SSIt UI'1ON5 I PARTICIPANT SUMMARY AGE, SERVICE AND COMPENSATION DISTRIBUTION I I,fbcgr 900 IEICSFIINE CONSUETING GIOIIP, t, AACIIJ AAA-TRIM R.RI IIRiimE I'LAN SOLIJ'I'im City of Lansing Actuarial Valuation Police and Fire Retirement System as of December 31,2013 PARTICIPANT SUMMARY AND RECONCILIATION Non-vested Deferred Active Terminations Vested Participants Due Refunds Terminations Retired Disabled Beneficiary Total Participants as of December 31,2012 370 15 20 484 61 132 1,082 Retired (20) 0 (1) 21 0 0 0 Terminated Vested (4) 0 4 0 0 0 0 Terminated Non-Vested(Member Contributions refunded) (3) 0 0 0 0 0 (3) Disabled (5) 0 0 0 5 0 0 Deceased (1) 0 0 (10) (2) (4) (17) New Beneficiary/EDRO 0 0 0 0 0 12 12 Rehired 2 0 0 0 0 0 2 Due Refunds 0 0 0 0 0 0 0 Transfers In from ERS 0 0 0 0 0 0 0 New Hires 13 0 0 0 0 0 13 Data Adjustments 0 0 0 0 0 0 0 Participants as of December 31,2013 352 15 23 495 64 140 1,089 , I 12/31/2012 12/3112013 Inactive Participants Fire Police Total Fire Police Total Number of Retired Participants 209 275 484 212 283 495 Average Age 65.1 65.3 65.2 65.3 65.4 65.4 Average Annual Benefit $46,894 $41,966 $44,094 $47,634 $43,121 $45,054 Number of Disabled Participants 37 24 61 39 25 64 Average Age 54.9 51.7 53.6 54.0 52.5 53.4 Average Annual Benefit $40,772 $36,255 $38,995 $41,463 $37,342 $39,853 Number of Beneficimies/FDROs 58 74 132 57 83 140 Average Age 75.5 73.0 74.1 76.8 72.1 74.0 Average Annual Benefit $14,818 $15,774 $15,354 $15,016 $16,606 $15,959 Number of Deferred Vested Participants 3 17 20 4 19 23 Average Age 41.6 48.2 47.3 42.7 47.4 46.6 Average Amoral Benefit $33,479 $25,505 $26,701 $34,032 $26,246 $27,600 i Number of Terminated Participants Due Refunds 1 14 15 1 14 15 5 beg 1DVlItY@�F� 1'YNP� CONSUMING GROUP,,uc, AC I UARI 1 &Rt 1'f�Ni.N AN SOLL HONS City of Lansing Actuarial Valuation Police and Fire Retirement System as of December 31,2013 DISTRIBUTION OF ACTIVE PARTICIPANTS AND AVERAGE COMPENSATION BY AGE AND SERVICE AS OF DECEMBER 31,2013 Nearest -----Completed Years of Service from Date of I-lire----- Age <1 1 2 - 4 5 - 9 10 - 14 15 - 19 20 - 24 25 - 29 >29 Total I <20 20-24 7 7 5,303 5,303 25-29 4 3 2 8 17 8,238 58,368 61,502 68,714 51,810 ICI 30-34 I 4 4 25 16 50 39,217 56,663 62,396 69,301 66,627 65,780 35-39 4 13 36 16 69 53,461 69,460 67,775 67,574 67,216 40-44 2 5 14 62 9 92 60,349 70,720 67,822 72,005 78,330 71,664 45-49 4 6 22 38 70 70,692 63,719 68,942 77,782 73,393 I 50-54 1 3 11 24 1 40 69,194 69,262 75,321 79,437 69,519 77,038 55-59 3 2 1 6 85,386 73,575 21,208 70,753 60-64 1 1 72,021 72,021 >64 Total 12 7 12 56 75 114 74 2 352 9,108 57,393 58,927 69,032 67,274 71,464 78,194 45,363 Males Females Total Total Compensation 20,366,046 3,787,426 24,153,472 Average Compensation 69,037 66,446 68,618 Aritlnnctic Averages: Nearest Age 41.1 40.7 41.1 Completed Years of Service 13.9 14.1 13.9 Salary-Weighted Averages: Nearest Age 42.0 41.1 41.9 Completed Years of Service 14.8 14.5 14.7 Number of Participants 295 57 352 Percent male/female 83.8% 16.2% 100.0% '.. 6 'beg 1MERSUINE �r CONSULTING GROUP.,.,us, ' -I`AACI OAR M&RI FIR IMrN I I L\N$Ql 111]ONE VALUATION SUMMARY , i , I , i Ib�g BOOMERSTLLNE CONSULTING GROUP,�,,Lc %S UAWW &IU IIRfMIN(PLAN COIU'(IONS City of Lansing Actuarial Valuation Police and Fire Retirement System as of December 31,2013 DEVELOPMENT OF RECOMMENDED CONTRIBUTION 12/31/2012 12/31/2013 Total Entry Age Normal Cost $ 6,438,815 $ 6,577,961 Estimated Employee Contributions 2,325,203 2,240,606 Net City Normal Cost $ 4,113,612 $ 4,337,355 Valuation Payroll $ 26,121,411 $ 25,636,626 City Normal Cost Rate(%of pay) 15.7% 16.9% Actuarial Accrued Liability Active Employees $ 103,595,214 $ 104,601,312 Terminated Vested 3,661,363 4,228,451 Retirees and Beneficiaries 265,827,334 275,049,517 - Total Actuarial Accrued Liability $ 373,083,911 $ 383,879,280 Actuarial Value of Assets 257,898,061 277,267,947 . Net Unfunded Actuarial Accrued Liability 115,185,850 106,611,332 Amortization of Unfunded Actuarial Accrued Liability $ 6,775,892 $ 6,390,889 Amortization Rate(%of Pay) 25.9% 24.9% Total Contribution Rate 41.7% 41.8% Projected Fiscal Payroll $ 26,983,418 $ 26,405,725 Total City Contribution $ 11,248,857 $ 11,050,091 Estimated Cash Flow for Next Five Years: Fiscal Year City Contributions Member Contributions Benefit Payments 2016 11,000,000 2,400,000 27,000,000 2017 11,000,000 2,500,000 27,900,000 2018 11,000,000 2,600,000 28,800,000 2019 11,100,000 2,700,000 29,500,000 2020 11,500,000 2,800,000 29,900,000 7 Jbc4 _ BOOM TISHINE CONSULTING GROUP,I.x, Ar1UNUA &&RCI umEhrFLAAtiOLUIIeNS ASSUMPTIONS AND METHODS I i �fb g f ROOMERSH 1�� ,/ CONSULTING GROU"R,Lu, ACC I L AW M #RL I IRPMFN-CPI 1N$Qja.I IONS City of Lansing Actuarial Valuation Police and Fire Retirement System as of December 31,2013 ASSUMPTIONS AND METHODS Funding Method: Entry Age Nonnal Actuarial Cost Method. The contribution equals the sum of the normal cost and the amount necessary to amortize the unfunded actuarial liability as a level percent of payroll over a closed period of thirty years, decreasing by 1 year to an ultimate period of 15 ', years(28 years retraining as of December 31,2013), Asset Smoothing Method: Investment gains and losses are determined annually and each is spread '.. over a 5-year period. This is done on a total fund basis. The adjusted '.. value of the healthcare reserve is then excluded from the valuation assets. Investment Return: 7.60% compounded annually, beginning January 1, 2014. The prior assumption was 7.80%. The cost of living as measured by the Consumer Price Index (CPI) is Cost of Living(inflation): assumed to increase at the rate of 3.10%per year. The prior assumption was 3.30% i Salary Increases: Increases in salary are assumed to be equal t inflation,plus 7.00%for those with less than 5 years of service or 0.75%for all others. Mortality: RP2000 with Blue Collar adjustments for mates and females. For Disabled members,the disabled version of these tables are assumed with a 5 year age setback for males. Each of these tables is projected to 2008 using Scale BB. Future improvements in mortality for non disabled members are anticipated by projecting these tables an additional 15 years using 50%of Scale BB. Percent Married: 90%of participants are assumed to be married.Male spouses are assumed to be three years older their female spouses. Disability: Rates of disability vary based on the age of the member.95%of disabilities are assumed to be duty related. j Samples rates are shown below. Age Rate 20 0.0800% 30 0.4000% 40 0.6250% 50 0.7500% 60 0.0000% 8 IJbegr B0OMERSHINP / CONSULTING GROUP, --��ACfLiU&WAL 2Er1srM1 Nl PLA4 S01MOM City of Lansing Actuarial Valuation Police and Fire Retirement System as of December 31,2013 ASSUMPTIONS AND METHODS (continued) Termination: Rates of termination vary based on the service of the member. Samples rates are shown below. Years of Service Fire Police 0 4.0% 5.0% 1 3.2% 4.3% 5 1.3% 2.2% 10 0.4% 1.0% 15 0.1% 0.4% 20 0.0% 0.0% Retirement: Rates of retirement vary based on the service of the member as shown below. Years of Service Fire Police 10-24 5.0% 5.0% 25 80.0% 90.0% 26-29 60.0% 25.0% 30+ 100.0% 100.0% The demographic assumptions above are based on the most recent experience study,covering 2005 through 2011. The next Study is scheduled for 2016. Changes in assumptions and methods since the prior valuation: The investment return and inflation assumptions were changed from 7.80%and 3.30%to 7.60%and 3.10%,respectively. All inveshnent gains and losses prior to 12/31/2012 have been fully recognized in the computation of the Actuarial Value of Assets. An adjusted amount of the Healthcare Reserve,based on the ratio of the Actuarial Value of Assets to the Market Value of Assets,is now used as part of the asset smoothing determination. 9 urg BE�O�EMINE f CONSULTING GROUR Gar L CM ARIAi.&Rfl RdiMENT P,A\SOLLJ'IIUNb it HIGHLIGHTS OF PLAN PROVISIONS I i Lfbq BO€MRSHM / CONSULTING GROUP, AC Tp�R1Al &1tJ IBf Mt�l 11 Ah$pl U91UN1 Cityof Lansing g Actuarial Valuation Police and Fire Retirement System as of December 31,2013 PLAN PROVISIONS There have been no changes in Plan provisions since the prior valuation. Employee Group Covered: Police Officers and Fire Fighters Normal Retirement: Age 55 or 25 years of service Mandatory Retirement: Age 60 for Police and age 70 for Firefighters Normal Form of Benefit: Monthly life annuity with 50%of the benefit payable to the spouse upon the member's death. Contribution Rate Group %of Pa Member Contribution Rates: Fire 9.08% (10,00%as of July 1,2014) Police,Supervisor 9.52% Police,Non Supervisor 8.50% Included Compensation: For a police officer member,Included Compensation is defined as annual base salary, overtime pay (including holiday pay), longevity, gun allowance, clothing allowances, sick leave reimbursement (buy-back), shift premium and retroactive pay (prorated by effective date). For a Police Supervisory Division Unit member, the definition also includes compensatory time buy-back(up to a maximum of 160 hours),provided that the compensatory time was earned in the same 24 months on which final average compensation is based. For a fircfighter member,Included Compensation is defined as annual base salary,overtime pay,acting pay, ambulance wage differential pay, longevity, holiday pay, field training instructor pay and retroactive pay(prorated by effective date). i Final Average Compensation: ` Final average compensation moans the monthly average of the member's final compensation that is included in Included Compensation, paid during the period of the member's 24 highest consecutive months of credited service as a police officer, or firefighter. If the member has less than 24 months of credited service, the member's final average compensation shall be the monthly average of the Included Compensation paid for his or her total period of credited service. 3.2%of Final Average Compensation times years of credited service,not '.. Normal Retirement Benefit Formula: to exceed 25 years.Maximum benefit is 80%of Final Average Compensation. Termination Prior to Retirement i Eligibility Vesting is after 10 years of credited service. Benefit is payable beginning at age 55 and computed in the same manner Benefit Amount as the Normal Retirement Benefit,but based on credited service and Final Average Compensation at date of termination. 10 jbcgr 9001 M RSHENR / CONSULTING GROUP I..Le. ---���nrrt---UALffarrfft[MT NTPANSojc:moss City of Lansing Actuarial Valuation Police and Fire Retirement System as of December 31,2013 PLAN PROVISIONS (continued) Duty Disability Eligibility Members are eligible for Duty Disability Retirement benefits immediately Benefit Amount(Before The Duty Disability Retirement Benefit payable to members is equal to ',. Retirement Eligibility) 2/3 of Final Average Compensation. Benefit is paid at the effective date of disability retirement as a Life Annuity and is equal to the accrued Retirement Benefit.In computing the Benefit Amount(After benefit amount,credited service is increased to include the period of Retirement Eligibility) disability,and Final Average Compensation is calculated using current rates of compensation for those with similar rank. The Disability Benefit will be offset by any workers'compensation payable on account of the disability. Non Duty Disability Eligibility Members are eligible for Non Duty Disability Retirement benefits after completing 10 years of service. Benefit is paid at the effective date of disability retirement as a Life Annuity and is equal to the accrued Retirement benefit,with a maximum Benefit Amount benefit equal to 2/3 of the annual rate of compensation of either a full- paid patrolman or a full-paid firefighter as of the date of retirement, whichever is higher. Death incurred in the Line of Duty The Death in Line of Duty Benefit is payable to the survivors of a Eligibility member who died as a result of an injury or disease arising out of and in the course of duty. I A Life Annuity benefit equal to 86%of the Normal Retirement Benefit is payable to the widow or widower,with a minimum benefit equal to 1/3 of Benefit Amount the deceased member's Final Compensation.In addition,unmarried children under the age of 21 will receive a benefit equal to 1/4 of the deceased member's Final Compensation,divided equally among children. Non Duty Pre-Retirement Death The non duty pre retirement death benefit is payable upon the death of a Eligibility member after earning 10 years of credited service. Benefit Amount 50%of the accrued retirement benefit,computed in the same manner as the Retirement Benefit payable as a Life Annuity. Optional Benefit Forms Prior to retirement,a member may elect a reduced benefit of either 93%or 86%of the original amount,thereby increasing the spouse benefit to either 75%or 86%,respectively. ,I II "beg/ �QiY[GAJl1Cfi ''. CONSUE)ING GROUP, AC I UAR1AL k Rr FIRF._N%N1ELA1j Selr'r S City of Lansing Actuarial Valuation Police and Fire Retirement System as of December 31,2013 PLAN PROVISIONS (continued) Ad Hoe Cost-of-Living Adjustments One-time cost of living increases were granted in 1973, 1984 and 1987. Post Retirement Benefit Adjustments Effective January 1, 1995 and each January 1 thereafter,the annual benefit amount will be increased by$525 for each retiree who meets each of the following conditions: 1)25 or more years of credited service at the time of retirement 2)Age 60 as of the January 1 increase date 3)Has been retired at least 6 months as of the January 1 increase date The$525 amount is reduced for retirees who elected the 75%or 86%optional forms of benefit($488.25 and$451.50, respectively). Spouses of deceased members are also eligible for benefit increases each January 1 if. 1)The deceased member had at least 25 years of credited service at the time of retirement 2)The deceased member would have attained at least age 60 as of the January 1 increase date 3)The deceased member had been deceased at least 6 months as of the January 1 increase date. The spouse's annual benefit increase amount is adjusted based on the form of payment elected by the deceased member, according to the following schedule: Annual Benefit Spouse Benefit% Increase 50% $262.50 75% $393.75 86% $451.50 The benefit increases accumulate from year to year,but cumulative benefit increases shall not exceed cumulative increases in the Consumer Price Index. i 12 lbcg 800M SUINE CONSULTINCC>It�1CTR,I�a.e'.. ACIOARIAI&RFIIRPML9rP16RS01I'TION5 City of Lansing Actuarial Valuation Police and Fire Retirement System as of December 31,2013 APPENDIX I: FUTURE FUNDING AND CONTRIBUTIONS The graphs below show a projection of expected funding progress and City contributions to the Fund. The actual funding progress and contributions over this time period will differ from what is shown here,due to the actual experience of the Plan. However,we can see that the Plan is on a path to decreasing the unfunded liability(top graph,red line)and improving the funding ratio to above 80%within the next decade. The City contirbution rate(percentage of payroll)is expected to decline during this time,from its current level of about 40%of pay to closer to 30%of pay. Projection of Funding Progress 140,000,000 [Funding Ratio —Unfunded AAL(AVA) . 120,000,000 - — — 100,000,000 - 79'%t10% 0%-90 81%-a1%82%82%-23°!a AMA 4N 9455 asYVP '.. 72%74% i 80,000,000 - of :� _.'� PRa 40,000,000 ,z5 x R `� IM rq �.. 4 20,000,000 s V � 2013 2016 2019 2022 2025 2028 2031 Projection of City Contributions 20,000,000 — ---- ------ 459S WMW Amortization t- Normal Cost City Contrb(%Pay) 16,000,000 35% 14,000,000 30% 12,000,000 25% 10,000,000 20% 6,000,000 _ _ __ - n,00Q,Ooo ._ r »' logs 2,000,OD0 �` _. r. 5% m 2014 2017 2020 2023 2026 2029 2032 13 IJbcg ROOMERSHINE / CONSULTAG(nRM.LE,c.. �� AC eATUA[&IMIRWENrPLN SOU IONS City of Lansing Actuarial Valuation Police and Fire Retirement System as of December 31,2013 Appendix II:History of Employer Contributions and Funding Progress Annual Required Actual Fiscal Year Endine Contribution(ARC) Contribution 6/30/2003 2,636,688 2,636,688 6/30/2004 3,286,596 3,273,450 6/30/2005 3,333,869 3,333,869 6/30/2006 4,658,703 4,658,703 6/30/2007 5,385,960 5,385,960 6/30/2008 6,520,974 6,520,974 6/30/2009 6,094,397 6,483,000 (1) 6/30/2010 7,179,360 6,790,757 (1) 6/30/2011 8,240,688 8,240,688 6/30/2012 9,242,173 9,057,080 (2) 6/30/2013 10,133,599 10,133,599 (3) 6/30/2014 11,248,857 11,248,857 6/30/2015 11,050,091 To Be Determined (4) (1)The City contributed in excess of its FY 2009 ARC. The City's FY 2010 contribution was reduced by the dollar amount of the FY 2009 overpayment. (2)The FY 2012 City contribution was reduced by$185,093 in recognition of additional contributions by International Association of Firefighters(IAFF)employees,which were negotiated and contributed after the estabishment of the June 30,2012 ARC from the December 31,2010 valuation. (3)Fiscal year 2013 ARC reflects changes made to actuarial assumptions based on an Experience Study. Changes included a decrease in the assumed rate of return from 8.0%to 7.8%. A closed amortization period was also adopted as of 12/31/2011,beginning at 30 years and decreasing each year until 15 years is reached. (4)Fiscal year 2015 ARC reflects changes made to assumed return and inflation from 7.8%and 3.3%to 7.6%and 3.1%,resepectively. ARC also reflects change in asset smoothing to immediately recognize all investment gains and losses prior to 12/31/2012. Actuarial Value Actuarial Accrued Percentage Unfunded Actuarial Valuation Date of Assets(AVA) Liability(AAL) Funded Accrued Liability 12/31/2002 280,686,000 259,282,000 108.3% (21,404,000) j 12/31/2003 277,947,000 267,786,000 103.8% (10,161,000) 12/31/2004 275,807,000 279,873,000 98.6% 4,066,000 12/31/2005 275,216,000 290,299,000 94.8% 15,083,000 12/31/2006 278,839,000 308,193,000 90.5% 29,354,000 12/31/2007 293,571,000 315,635,000 93.0% 22,064,000 12/31/2008 287,394,000 326,673,000 88.0% 39,279,000 12/31/2009 280,342,000 337,315,000 83.1% 56,973,000 12/31/2010 276,377,041 359,293,016 76.9% 82,915,975 (5) 12/31/2011 264,492,738 372,547,509 71.0% 108,054,771 12/31/2012 257,898,061 373,083,911 69.1% 115,185,850 (6) 12/31/2013 277,267,947 383,879,280 72.2% 106,611,332 (5)Reflects changes made to actuarial assumptions,based on Experience Study,including a reduction in tlhe assumed return 8.0%to 7.8%. (6)Reflects changes made to assumed return and inflation from 7.8%and 3.3%to 7.6%and 3.1%,resepectively. AVA also reflects change in asset smoothing to immediately recognize all investment gains and losses prior to 12/31/2012. 14 Jneg CONSUMING GROUP,u-c ' ACt'MAW aP I I to MEN 1 PL14ggl Ur10NS