CITY OF DADE CITY POLICE OFFICERS' PENSION FUND ACTUARIAL VALUATION AS OF OCTOBER 1, 2016

Transcription

1 CITY OF DADE CITY POLICE OFFICERS' PENSION FUND ACTUARIAL VALUATION AS OF OCTOBER 1, 2016 CONTRIBUTIONS APPLICABLE TO THE PLAN/FISCAL YEAR ENDING SEPTEMBER 30, 2018

2 May 20, 2017 Board of Trustees City of Dade City Police Officers Pension Board P.O. Box 1355 Dade City, FL Re: City of Dade City Police Officers Pension Fund Dear Board: We are pleased to present to the Board this report of the annual actuarial valuation of the City of Dade City Police Officers Pension Fund. The valuation was performed to determine whether the assets and contributions are sufficient to provide the prescribed benefits and to develop the appropriate funding requirements for the applicable plan year(s). Please note that this valuation may not be applicable for any other purposes. The valuation has been conducted in accordance with generally accepted actuarial principles and practices, including the applicable Actuarial Standards of Practice as issued by the Actuarial Standards Board, and reflects laws and regulations issued to date pursuant to the provisions of Chapters 112 and 185, Florida Statutes, as well as applicable federal laws and regulations. In our opinion, the assumptions used in this valuation, as adopted by the Board of Trustees, represent reasonable expectations of anticipated plan experience. Future actuarial measurements may differ significantly from the current measurements presented in this report for a variety of reasons including: changes in applicable laws, changes in plan provisions, changes in assumptions, or plan experience differing from expectations. In conducting the valuation, we have relied on personnel, plan design, and asset information supplied by the Board of Trustees and the City of Dade City, and the actuarial assumptions and methods described in the Actuarial Assumptions section of this report. While we cannot verify the accuracy of all this information, the supplied information was reviewed for consistency and reasonableness. As a result of this review, we have no reason to doubt the substantial accuracy of the information and believe that it has produced appropriate results. This information, along with any adjustments or modifications, is summarized in various sections of this report Parker Commons Blvd., Suite 104 Fort Myers, FL (239) Fax (239)

3 The undersigned is familiar with the immediate and long-term aspects of pension valuations, and meets the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions contained herein. All of the sections of this report are considered an integral part of the actuarial opinions. To our knowledge, no associate of Foster & Foster, Inc. working on valuations of the program has any direct financial interest or indirect material interest in the City of Dade City, nor does anyone at Foster & Foster, Inc. act as a member of the Board of Trustees of the City of Dade City Police Officers Pension Fund. Thus, there is no relationship existing that might affect our capacity to prepare and certify this actuarial report. If there are any questions, concerns, or comments about any of the items contained in this report, please contact me at Respectfully submitted, Foster & Foster, Inc. By: Patrick T. Donlan, ASA, MAAA Enrolled Actuary # PTD/lke Enclosures

4 TABLE OF CONTENTS Section Title Page I Introduction a. Summary of Report 5 b. Changes Since Prior Valuation 7 c. Comparative Summary of Principal Valuation Results 8 II Valuation Information a. Actuarial Assumptions and Methods 14 b. Glossary 16 c. Partial History of Premium Tax Refunds 17 III Trust Fund 18 IV Member Statistics a. Statistical Data 24 b. Age and Service Distribution 25 c. Valuation Participant Reconciliation 26 V Summary of Plan Provisions 27 VI Governmental Accounting Standards 30 Board Statements Disclosure Information City of Dade City Police Officers' Pension Fund Foster & Foster 4

5 SUMMARY OF REPORT The regular annual actuarial valuation of the City of Dade City Police Officers' Pension Fund, performed as of October 1, 2016, has been completed and the results are presented in this Report. The contribution amounts set forth herein are applicable to the plan/fiscal year ended September 30, The contribution requirements, compared with those determined as of the October 1, 2015 actuarial valuation, are as follows: Valuation Date Applicable Plan/Fiscal Year End 10/1/2016 9/30/ /1/2015 9/30/2017 Total Required Contribution % of Total Annual Payroll 35.3% 28.7% Member Contributions (Est.) % of Total Annual Payroll 1.0% 1.0% City and State Required Contribution % of Total Annual Payroll 34.3% 27.7% State Contribution * 76,053 76,053 % of Total Annual Payroll 6.9% 6.9% Balance from City % of Total Annual Payroll 27.4% 20.8% * Represents the amount of State Monies received by the Fund in Fiscal The City may consider amounts up to $171,062, if received under the traditional interpretation of Chapter 99-1 Florida Statutes, in determining their required contributions. ** For budgeting purposes, the required Sponsor Contribution (City and State) is 34.3% of actual Pensionable Earnings for the fiscal year ending September 30, The precise City requirement for the year is this amount, less actual State Contributions (up to the maximum $171,062). The City has a prepaid contribution of $27, available to offset the required amounts shown for the current fiscal year. City of Dade City Police Officers' Pension Fund Foster & Foster 5

6 Overall there was favorable actuarial experience during the past year. The primary components of favorable experience included average increases in pensionable compensation that were less than the assumed rate, higher than expected non-retirement terminations of employment and higher than expected inactive mortality. Partially offsetting these gains was the effect of a 5.71% investment return (Actuarial Asset Basis) that was less than the 7.50% assumption. However, despite this net favorable actuarial experience, funding requirements have increased due to the adoption of a state-wide mandated mortality assumption and the reduction of the investment return assumption by 10 basis points. The table below describes how the different components contributed to the overall decrease in funding requirements. % of Total Annual Payroll Prior Year Sponsor Requirement 27.7% Administrative Expense Change -0.6% Active Decrement Gain -0.7% Investment Loss +2.0% Salary Gain -1.3% Inactive Mortality -0.4% Assumption Changes +7.6% Other +0.0% Current Year Sponsor Requirement 34.3% The balance of this Report presents additional details of the actuarial valuation and the general operation of the Fund. The undersigned would be pleased to meet with the Board of Trustees in order to discuss the Report and any pending questions concerning its contents. Respectfully submitted, FOSTER & FOSTER, INC. By: Patrick T. Donlan, ASA, EA, MAAA By: Sara E. Baumer City of Dade City Police Officers' Pension Fund Foster & Foster 6

7 CHANGES SINCE PRIOR VALUATION Plan Changes There have been no changes in benefits since the prior valuation. Actuarial Assumption/Method Changes As mandated by Chapter , Laws of Florida, the assumed rates of mortality were changed from the RP-2000 Combined Healthy Table to the mortality table used by the Florida Retirement System actuary in the July 1, 2015 actuarial valuation for special-risk employees. Additonally, the investment return assumption was reduced from 7.50% to 7.40%. The impact of these changes on the City s funding requirements are shown in the Comparative Summary of Principal Valuation Results section of this report. City of Dade City Police Officers' Pension Fund Foster & Foster 7

8 COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS A. Participant Data New Assump Old Assump 10/1/ /1/ /1/2015 Actives Service Retirees DROP Retirees Beneficiaries Disability Retirees Terminated Vested Total Total Annual Payroll $1,107,104 $1,107,104 $1,004,717 Payroll Under Assumed Ret. Age 1,107,104 1,107,104 1,004,717 Annual Rate of Payments to: Service Retirees 153, , ,359 DROP Retirees 69,434 69,434 68,072 Beneficiaries ,871 Disability Retirees 52,439 52,439 61,315 Terminated Vested 36,189 36,189 11,616 B. Assets Actuarial Value (AVA) ¹ 8,787,144 8,787,144 8,299,998 Market Value (MVA) ¹ 8,405,806 8,405,806 7,728,062 C. Liabilities Present Value of Benefits Actives Retirement Benefits 6,361,910 6,081,675 5,605,913 Disability Benefits 62,652 65,843 64,378 Death Benefits 67,415 29,281 29,122 Vested Benefits 527, , ,764 Refund of Contributions 4,696 4,705 3,589 Service Retirees 2,077,361 1,935,663 1,939,304 DROP Retirees ¹ 1,172,359 1,119,324 1,038,534 Beneficiaries ,292 Disability Retirees 545, , ,563 Terminated Vested 247, , ,398 Excess State Monies Reserve Total 11,066,306 10,532,544 9,983,857 City of Dade City Police Officers' Pension Fund Foster & Foster 8

9 New Assump Old Assump C. Liabilities - (Continued) 10/1/ /1/ /1/2015 Present Value of Future Salaries 7,331,893 7,366,087 6,981,316 Present Value of Future Member Contributions 73,319 73,661 69,813 Total Normal Cost 344, , ,333 Present Value of Future Normal Costs (EAN) 1,619,665 1,550,406 1,434,705 Total Actuarial Accrued Liability (AL) (EAN) 9,446,641 8,982,138 8,549,152 Total Actuarial Accrued Liability (Aggregate) 8,787,144 8,787,144 8,299,998 Unfunded Actuarial Accrued Liability (UAAL) Funded Ratio (AVA / AL) 93.0% 97.8% 97.1% City of Dade City Police Officers' Pension Fund Foster & Foster 9

10 D. Actuarial Present Value of New Assump Old Assump Accrued Benefits 10/1/ /1/ /1/2015 Vested Accrued Benefits Inactives ¹ 4,042,373 3,834,091 3,725,091 Actives 2,579,142 2,485,856 2,149,192 Member Contributions 104, ,426 99,995 Total 6,725,941 6,424,373 5,974,278 Non-vested Accrued Benefits 943, , ,428 Total Present Value Accrued Benefits (PVAB) 7,669,709 7,294,463 6,782,706 Funded Ratio (MVA / PVAB) 109.6% 115.2% 113.9% Increase (Decrease) in Present Value of Accrued Benefits Attributable to: Plan Amendments 0 0 Assumption Changes 375,246 0 New Accrued Benefits 0 235,337 Benefits Paid 0 (223,887) Interest 0 500,307 Other 0 0 Total 375, ,757 City of Dade City Police Officers' Pension Fund Foster & Foster 10

11 New Assump Old Assump Valuation Date 10/1/ /1/ /1/2015 Applicable to Fiscal Year Ending 9/30/2018 9/30/2018 9/30/2017 E. Pension Cost Normal Cost (with interest) $356,884 $272,166 $251,420 % of Total Annual Payroll ² Administrative Expenses (with interest) 34,172 34,189 36,814 % of Total Annual Payroll ² Payment Required to Amortize Unfunded Actuarial Accrued Liability (as of 10/1/2016, with interest) % of Total Annual Payroll ² Total Required Contribution 391, , ,234 % of Total Annual Payroll ² Expected Member Contributions 11,071 11,071 10,047 % of Total Annual Payroll ² Expected City and State Contribution 379, , ,187 % of Total Annual Payroll ² F. Past Contributions Plan Years Ending: 9/30/2016 Total Required Contribution 269,929 City and State Requirement 259,626 Actual Contributions Made: Members (excluding buyback) 10,303 City 183,573 State 76,053 ³ Total 269,929 G. Net Actuarial (Gain)/Loss N/A ¹ The asset values and liabilities for DROP Members include accumulated DROP Balances as of 9/30/2016 and 9/30/2015. ² Contributions developed as of 10/1/2016 are expressed as a percentage of total annual payroll at 10/1/2016 of $1,107,104. City of Dade City Police Officers' Pension Fund Foster & Foster 11

12 H. Schedule Illustrating the Amortization of the Total Unfunded Actuarial Accrued Liability as of: Year Projected Unfunded Actuarial Accrued Liability N/A Aggregate Actuarial Cost Method I. (i) 3 Year Comparison of Actual and Assumed Salary Increases Actual Assumed Year Ended 9/30/ % 5.50% Year Ended 9/30/ % 5.50% Year Ended 9/30/ % 5.50% (ii) 3 Year Comparison of Investment Return on Actuarial Value Actual Assumed Year Ended 9/30/ % 7.50% Year Ended 9/30/ % 7.50% Year Ended 9/30/ % 7.60% (iii) Average Annual Payroll Growth (a) Payroll as of: 10/1/2016 $1,107,104 10/1/ ,102 (b) Total Increase 15.19% (c) Number of Years (d) Average Annual Rate 1.42% City of Dade City Police Officers' Pension Fund Foster & Foster 12

13 STATEMENT BY ENROLLED ACTUARY This actuarial valuation was prepared and completed by me or under my direct supervision, and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate, and in my opinion, the techniques and assumptions used are reasonable and meet the requirements and intent of Part VII, Chapter 112, Florida Statutes. There is no benefit or expense to be provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation. Patrick T. Donlan, EA, ASA, MAAA Enrolled Actuary # Please let us know when the report is approved by the Board and unless otherwise directed we will provide copies of the report to the following offices to comply with Chapter 112, Florida Statutes: Mr. Keith Brinkman Bureau of Local Retirement Systems Post Office Box 9000 Tallahassee, FL Ms. Sarah Carr Municipal Police and Fire Pension Trust Funds Division of Retirement Post Office Box 3010 Tallahassee, FL City of Dade City Police Officers' Pension Fund Foster & Foster 13

14 GLOSSARY Total Annual Payroll is the projected annual rate of pay for the fiscal year beginning on the valuation date of all covered Members. Present Value of Benefits is the single sum value on the valuation date of all future benefits to be paid to current Members, Retirees, Beneficiaries, Disability Retirees and Vested Terminations. Normal (Current Year's) Cost Rate is determined in the aggregate as the ratio of (a) and (b) as follows: (a) The present value of benefits for all Plan participants, less the actuarial value of assets. (b) The present value of future compensation over the anticipated number of years of participation, determined as of the valuation date. The Normal Cost dollar requirement is the ratio of (a) and (b), multiplied by the Total Annual Payroll as of the valuation date. Aggregate Actuarial Cost Method (Level Percent of Compensation) is the method used to determine required contributions under the Plan. The use of this method involves the systematic funding of the Normal Cost (described above). Total Required Contribution is equal to the Normal Cost plus an adjustment for interest according to the timing of sponsor contributions during the year. City of Dade City Police Officers' Pension Fund Foster & Foster 14

15 ACTUARIAL ASSUMPTIONS AND METHODS Mortality Rate Healthy Lives: Female: RP2000 Generational, 100% Annuitant White Collar, Scale BB Male: RP2000 Generational, 10% Annuitant White Collar / 90% Annuitant Blue Collar, Scale BB Disabled Lives: Female: 60% RP2000 Disabled Female set forward two years / 40% Annuitant White Collar with no setback, no projection scale Male: 60% RP2000 Disabled Male setback four years / 40% Annuitant White Collar with no setback, no projection scale The above assumption rates were mandated by Chapter , Laws of Florida. This law mandates the use of the assumptions used in either of the two most recent valuations of the Florida Retirement System (FRS). The above rates are those outlined in Milliman s July 1, 2015 FRS valuation report for special risk employees. We feel this assumption sufficiently accommodates future mortality improvements. Previously, the RP 2000 Combined Healthy Sex Distinct with disabled lives set forward 5 years was utilized. Interest Rate 7.40% (previously 7.50%) per year compounded annually, net of investment related expenses. This assumption is supported by the Plan s investment policy and long-term expected returns by asset class. Retirement Age Attainment of age 55 and 10 years of service or age 52 and 25 year of service. Also, any member who has reached Normal Retirement Age is assumed to continue employment for one additional year. Early Retirement Commencing with the earliest Early Retirement Age (50), members are assumed to retire with an immediate subsidized benefit at the rate of 5% per year. Disability Rate See table on next page (1201). Termination Rate See table on next page (1302). City of Dade City Police Officers' Pension Fund Foster & Foster 15

16 Salary Increases 5.5% per year until the assumed retirement age. Projected Salary at retirement is increased to account for non-regular compensation as follows: 20% if hired before 1/1/ % if hired between 1/1/09 12/31/10 5% if hired between 1/1/11 6/30/11 0% if hired on or after 7/1/11 Administrative Expenses Payroll Increase Funding Method Asset Valuation Method $32,953 annually based on the prior year s actual expense. N/A Aggregate Actuarial Cost Method Each year, the prior Actuarial Value of Assets is brought forward utilizing the historical geometric 4-year average Market Value return. It is possible that over time this technique will produce an insignificant bias above or below Market Value. Current Salary % Becoming Disabled % Terminating as % of Salary Age During the Year During the Year at Age % 12.0% 15.4% % 10.0% 26.2% % 5.2% 44.8% % 1.6% 76.5% City of Dade City Police Officers' Pension Fund Foster & Foster 16

17 PARTIAL HISTORY OF PREMIUM TAX REFUNDS Received During Increase from Fiscal Year Amount Previous Year , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % City of Dade City Police Officers' Pension Fund Foster & Foster 17

18 STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2016 ASSETS COST VALUE MARKET VALUE Cash and Cash Equivalents: Money Market 261, , Cash 210, , Total Cash and Equivalents 472, , Total Receivable Investments: U. S. Bonds and Bills 451, , Federal Agency Guaranteed Securities 127, , Corporate Bonds 936, , Stocks 3,672, ,993, Mutual Funds: Fixed Income 1,223, ,253, Equity 1,124, ,192, Total Investments 7,536, ,963, Total Assets 8,008, ,435, LIABILITIES Payables: Administrative Expenses 2, , Prepaid City Contribution 27, , Total Liabilities 29, , NET POSITION RESTRICTED FOR PENSIONS 7,978, ,405, City of Dade City Police Officers' Pension Fund Foster & Foster 18

19 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Market Value Basis ADDITIONS Contributions: Member 10, City 183, State 76, Total Contributions 269, Investment Income: Net Realized Gain (Loss) 7, Unrealized Gain (Loss) 500, Net Increase in Fair Value of Investments 508, Interest & Dividends 208, Less Investment Expense¹ (53,040.92) Net Investment Income 664, Total Additions 934, DEDUCTIONS Distributions to Members: Benefit Payments 223, Lump Sum DROP Distributions 0.00 Refunds of Member Contributions 0.00 Total Distributions 223, Administrative Expense 32, Total Deductions 256, Net Increase in Net Position 677, NET POSITION RESTRICTED FOR PENSIONS Beginning of the Year 7,728, End of the Year 8,405, ¹Investment related expenses include investment advisory, custodial and performance monitoring fees. City of Dade City Police Officers' Pension Fund Foster & Foster 19

20 CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS SEPTEMBER 30, 2016 Actuarial Asset Basis REVENUES Contributions: Member 10, City 183, State 76, Total Contributions 269, Earnings from Investments: Interest & Dividends 208, Net Realized Gain (Loss) 7, Change in Actuarial Value 310, Total Earnings and Investment Gains 527, EXPENDITURES Distributions to Members: Benefit Payments 223, Lump Sum DROP Distributions 0.00 Refunds of Member Contributions 0.00 Total Distributions 223, Expenses: Investment related¹ 53, Administrative 32, Total Expenses 85, Change in Net Assets for the Year 487, Net Assets Beginning of the Year 8,299, Net Assets End of the Year² 8,787, ¹Investment related expenses include investment advisory, custodial and performance monitoring fees. ²Net Assets may be limited for actuarial consideration. City of Dade City Police Officers' Pension Fund Foster & Foster 20

21 ACTUARIAL ASSET VALUATION SEPTEMBER 30, 2016 Actuarial Assets for funding purposes are developed by increasing the Actuarial Assets used in the most recent actuarial valuation of the Fund by the average annual market value rate of return (net of investment related expenses) for the past four years. Actuarial Assets shall not be less than 80% nor greater than 120% of Market Value of Assets. Details of the derivation are set forth as follows: Plan Year End Rate of Return¹ 09/30/ % 09/30/ % 09/30/ % 09/30/ % Annualized Rate of Return for prior four (4) years: 5.71% (A) 10/01/2015 Actuarial Assets: $8,299, (I) Net Investment Income: 1. Interest and Dividends 208, Realized Gains (Losses) 7, Change in Actuarial Value 310, Investment Related Expenses (53,040.92) Total 474, (B) 10/01/2016 Actuarial Assets: $8,787, Actuarial Asset Rate of Return = 2I/(A+B-I): 5.71% 10/01/2016 Limited Actuarial Assets: $8,787, /01/2016 Market Value of Assets: $8,405, Actuarial Gain/(Loss) due to Investment Return (Actuarial Asset Basis) ($148,609.60) ¹Market Value Basis, net of investment related expenses. City of Dade City Police Officers' Pension Fund Foster & Foster 21

22 DEFERRED RETIREMENT OPTION PLAN ACTIVITY October 1, 2015 to September 30, 2016 Beginning of the Year Balance 191, Plus Additions 68, Investment Return Earned 14, Less Distributions 0.00 End of the Year Balance 274, City of Dade City Police Officers' Pension Fund Foster & Foster 22

23 RECONCILIATION OF CITY'S SHORTFALL/(PREPAID) CONTRIBUTION FOR THE FISCAL YEAR ENDED (FYE) SEPTEMBER 30, 2016 (1) Total Required Contribution Rate 26.2% (2) Pensionable Payroll Derived from Member Contributions 1,030, (3) Total Required Contribution (1) x (2) 269, (4) Less Actual Member Contributions (10,302.63) (5) Less Allowable State Contribution (76,052.93) (6) Equals Required City Contribution for Fiscal , (7) Less 2015 Prepaid Contribution (10,234.92) (8) Less Actual City Contributions (200,903.03) (9) Equals City's Shortfall/(Prepaid) Contribution as of (27,564.60) September 30, 2016 City of Dade City Police Officers' Pension Fund Foster & Foster 23

24 STATISTICAL DATA ¹ 10/1/ /1/ /1/ /1/2016 Actives Number Average Current Age Average Age at Employment Average Past Service Average Annual Salary $49,117 $47,465 $50,236 $50,323 Service Retirees Number Average Current Age Average Annual Benefit $30,660 $37,269 $37,840 $38,421 DROP Retirees Number Average Current Age Average Annual Benefit $65,429 $66,738 $68,072 $69,434 Beneficiaries Number Average Current Age N/A Average Annual Benefit $17,177 $17,521 $17,871 N/A Disability Retirees Number Average Current Age Average Annual Benefit $12,263 $12,263 $12,263 $13,110 Terminated Vested Number Average Current Age Average Annual Benefit ² $3,872 $11,616 $5,808 $18,095 ¹ Prior to 10/1/2015, averages were salary weighted. ² The Average Annual Benefit excludes participants awaiting a refund of contributions. City of Dade City Police Officers' Pension Fund Foster & Foster 24

25 AGE AND SERVICE DISTRIBUTION PAST SERVICE AGE Total Total City of Dade City Police Officers' Pension Fund Foster & Foster 25

26 VALUATION PARTICIPANT RECONCILIATION 1. Active lives a. Number in prior valuation 10/1/ b. Terminations i. Vested (partial or full) with deferred benefits (1) ii. Non-vested or full lump sum distribution received 0 c. Deaths i. Beneficiary receiving benefits 0 ii. No future benefits payable 0 d. Disabled 0 e. Retired 0 f. DROP 0 g. Continuing participants 19 h. New entrants 3 i. Total active life participants in valuation Non-Active lives (including beneficiaries receiving benefits) Service Retirees, Vested Receiving Receiving Receiving DROP Death Disability Vested Benefits Benefits Benefits Benefits Deferred Total a. Number prior valuation Retired DROP Vested Deferred Death, With Survivor Death, No Survivor (1) 0 (1) Disabled Refund of Contributions Rehires Expired Annuities 0 0 (1) 0 0 (1) Data Corrections b. Number current valuation City of Dade City Police Officers' Pension Fund Foster & Foster 26

27 SUMMARY OF PLAN PROVISIONS (Through Ordinance No ) Eligibility Credited Service Salary Average Final Compensation Member Contributions City and State Contributions Full-time employees who are classified as fulltime sworn police officers shall participate in the System as a condition of employment. Total years and fractional parts of years of service with the City as a Police Officer. Total W-2 Earnings plus all tax deferred, tax sheltered or tax exempt items of income. For Service after October 1, 2011 Salary shall only include up to 300 hours of overtime per year and include lump sum sick and vacation time attributable to service prior to this date. Average Salary paid for the highest 5 years during the 10 years immediately preceding retirement or termination. 1% of Salary. Remaining amount necessary to pay current costs and amortize past service cost if any, as provided in Part VII of Chapter 112, Florida Statutes. Normal Retirement Date Benefit Form of Benefit Earlier of Age 55 and 10 years of Credited Service or Age 52 and 25 years of Credited Service. 3.5% of Average Final Compensation per year of Credited Service. Ten Year Certain and Life Annuity (options available). Early Retirement Eligibility Benefit Age 50 and 10 Years of Credited Service. Accrued benefit, reduced 3% per year. Cost of Living Adjustment Normal Retirees after June 24, 2003, receive 2% annual benefit increases each October 1, beginning on the October 1 st following 1 full year of retirement. City of Dade City Police Officers' Pension Fund Foster & Foster 27

28 Vesting Schedule Benefit Amount 100% after 10 years of Credited Service. Member will receive the portion of his (her) accrued benefit payable at the otherwise Normal Retirement Date. Disability Eligibility Service Incurred Non-Service Incurred Exclusions Benefit Duration Covered from Date of Employment. 10 years of Credited Service. Disability resulting from use of drugs, illegal participation in riots, service in military, etc. Benefit accrued to date of disability but not less than 42% of Average Final Compensation (Service Incurred.) Payable for life (with a 10 year guarantee) or until recovery (as determined by the Board). Optional forms available. Death Benefits Pre-Retirement Vested Non-Vested Post-Retirement Monthly accrued benefit payable to designated beneficiary for 10 years. Refund of accumulated contributions without interest. Benefits payable to beneficiary in accordance with option selected at retirement. Board of Trustees a. Two Commission appointees, b. Two Members of the Department elected by the membership, and c. Fifth Member elected by other 4 and appointed by Commission. City of Dade City Police Officers' Pension Fund Foster & Foster 28

29 Deferred Retirement Option Plan Eligibility Participation Satisfaction of Normal Retirement requirements. Not to exceed 60 months. Rate of Return At member s election (may change once), 6.5% or net investment return. Distribution Cash lump sum (options available) at termination of employment. City of Dade City Police Officers' Pension Fund Foster & Foster 29

30 GASB 67 STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2016 ASSETS Cash and Cash Equivalents: Money Market Cash Total Cash and Equivalents Total Receivable Investments: U. S. Bonds and Bills Federal Agency Guaranteed Securities Corporate Bonds Stocks Mutual Funds: Fixed Income Equity Total Investments Total Assets LIABILITIES Payables: Administrative Expenses Total Liabilities NET POSITION RESTRICTED FOR PENSIONS MARKET VALUE 261, , , , , ,194 3,993,356 1,253,987 1,192,675 7,963,100 8,435,430 2,060 2,060 8,433,370 City of Dade City Police Officers' Pension Fund Foster & Foster 30

31 GASB 67 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Market Value Basis ADDITIONS Contributions: Member 10,303 City 200,903 State 76,053 Total Contributions 287,259 Investment Income: Net Increase in Fair Value of Investments 508,849 Interest & Dividends 208,846 Less Investment Expense¹ (53,041) Net Investment Income 664,654 Total Additions 951,913 DEDUCTIONS Distributions to Members: Benefit Payments 223,887 Lump Sum DROP Distributions 0 Refunds of Member Contributions 0 Total Distributions 223,887 Administrative Expense 32,953 Total Deductions 256,840 Net Increase in Net Position 695,073 NET POSITION RESTRICTED FOR PENSIONS Beginning of the Year 7,738,297 End of the Year 8,433,370 ¹Investment related expenses include investment advisory, custodial and performance monitoring fees. City of Dade City Police Officers' Pension Fund Foster & Foster 31

32 GASB 67 NOTES TO THE FINANCIAL STATEMENTS (For the Year Ended September 30, 2016) Plan Description Plan Administration The Plan is a single-employer defined benefit pension plan administered by the Plan's Board of Trustees comprised of: a. Two Commission appointees, b. Two Members of the Department elected by the membership, and c. Fifth Member elected by other 4 and appointed by Commission. Plan Membership as of October 1, 2015: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 11 Inactive Plan Members Entitled to But Not Yet Receiving Benefits 5 Active Plan Members Benefits Provided The Plan provides retirement, termination, disability and death benefits. Normal Retirement: Date: Earlier of age 55 and 10 years of Credited Service, or age 52 and 25 years of Credited Service. Benefit: 3.50% of Average Final Compensation times Credited Service. Early Retirement: Date: Age 50 and 10 Years of Credited Service. Benefit: Accrued benefit, reduced 3.0% per year. Cost-of-Living Adjustment: Normal Retirees after June 24, 2003, receive 2% annual benefit increases each October 1, beginning on the October 1st following 1 full year of retirement. Vesting (Termination): Schedule: 100% after 10 years of Credited Service. Benefit Amount: Member will receive the vested portion of his (her) accrued benefit payable at the otherwise Normal Retirement Date. Disability: Eligibility: Service Incurred: Covered from Date of Employment. Non-Service Incurred: 10 years of Credited Service. Benefit accrued to date of disability but not less than 42% of Average Final Compensation (Service Incurred). Pre-Retirement Death Benefits: Vested: Monthly accrued benefit payable to designated beneficiary for 10 years. Non-Vested: Refund of accumulated contributions without interest. Contributions Member Contributions: 1.0% of Salary. City and State Contributions: Remaining amount necessary to pay current costs and amortize past service cost, if any, as provided in Part VII in Chapter 112, Florida Statutes. City of Dade City Police Officers' Pension Fund Foster & Foster 32

33 GASB 67 Investments Investment Policy: The following was the Board's adopted asset allocation policy as of September 30, 2016: Asset Class Target Allocation Cash Alternative 3% Short Term Taxable Fixed Income 2% Intermediate Taxable Fixed Income 11% Long Term Taxable Fixed Income 4% Dev Market Ex-US Fixed Income 3% High Yield Taxable Fixed Income 7% Emerging Market Fixed Income 6% US Large Cap Equities 25% US Mid Cap Equities 11% US Small Cap Equities 8% Dev Market Ex-US Equities 7% Emerging Market Equities 6% Public Real Estate 5% Commodities 2% Total 100% Concentrations: The Plan did not hold investments in any one organization that represent 5 percent or more of the Pension Plan's Fiduciary Net Position. Rate of Return: For the year ended September 30, 2016, the annual money-weighted rate of return on Pension Plan investments, net of Pension Plan investment expense, was 8.61 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Deferred Retirement Option Program Eligibility: Satisfaction of Normal Retirement requirements. Participation: Not to exceed 60 months. Rate of Return: At member's election (may change once), 6.5% or net investment return. The DROP balance as September 30, 2016 is $274,464. City of Dade City Police Officers' Pension Fund Foster & Foster 33

34 GASB 67 NET PENSION LIABILITY OF THE SPONSOR The components of the Net Pension Liability of the Sponsor on September 30, 2016 were as follows: Total Pension Liability $ 9,623,251 Plan Fiduciary Net Position $ (8,433,370) Sponsor's Net Pension Liability $ 1,189,881 Plan Fiduciary Net Position as a percentage of Total Pension Liability 87.64% Actuarial Assumptions: The Total Pension Liability was determined by an actuarial valuation as of October 1, 2015 updated to September 30, 2016 using the following actuarial assumptions: Inflation 2.50% Salary Increases 5.50% Discount Rate 7.40% Investment Rate of Return 7.40% Mortality Rate Healthy Lives: Female: RP2000 Generational, 100% Annuitant White Collar, Scale BB. Male: RP2000 Generational, 10% Annuitant White Collar /90% Annuitant Blue Collar, Scale BB. Mortality Rate Disabled Lives: Female: 60% RP2000 Disabled Female set forward two years / 40% Annuitant White Collar with no setback, no projection scale. Male: 60% RP2000 Disabled Male setback four years / 40% Annuitant White Collar with no setback, no projection scale. The most recent actuarial experience study used to review the other significant assumptions was dated April 22, The Long-Term Expected Rate of Return on Pension Plan investments was determined using a building-block method in which bestestimate ranges of expected future real rates of return (expected returns, net of Pension Plan investment expenses and inflation) are developed for each major asset class. For 2016 the inflation rate assumption of the investment advisor was 2.50%. These ranges are combined to produce the Long-Term Expected Rate of Return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the Pension Plan's target asset allocation as of September 30, 2016 are summarized in the following table: Asset Class Cash Alternative Short Term Taxable Fixed Income Intermediate Taxable Fixed Income Long Term Taxable Fixed Income Dev Market Ex-US Fixed Income High Yield Taxable Fixed Income Emerging Market Fixed Income US Large Cap Equities US Mid Cap Equities US Small Cap Equities Dev Market Ex-US Equities Emerging Market Equities Public Real Estate Commodities Long Term Expected Real Rate of Return 0.00% 0.10% 0.59% 0.68% 0.29% 3.51% 3.61% 5.07% 5.66% 5.85% 4.88% 6.34% 4.59% 1.85% City of Dade City Police Officers' Pension Fund Foster & Foster 34

35 GASB 67 Discount Rate: The Discount Rate used to measure the Total Pension Liability was 7.40 percent. The projection of cash flows used to determine the Discount Rate assumed that Plan Member contributions will be made at the current contribution rate and that Sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the Member rate. Based on those assumptions, the Pension Plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the Long-Term Expected Rate of Return on Pension Plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. 1% Decrease Current Discount Rate 1% Increase 6.40% 7.40% 8.40% Sponsor's Net Pension Liability $ 2,565,386 $ 1,189,881 $ 68,776 City of Dade City Police Officers' Pension Fund Foster & Foster 35

36 GASB 67 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS Last 10 Fiscal Years 09/30/ /30/ /30/2014 Total Pension Liability Service Cost 232, , ,220 Interest 642, , ,466 Changes of benefit terms Differences between Expected and Actual Experience 61,548 (238,374) - Changes of assumptions 461,939-99,655 Benefit Payments, including Refunds of Employee Contributions (223,887) (229,801) (211,201) Net Change in Total Pension Liability 1,174, , ,140 Total Pension Liability - Beginning 8,448,280 8,070,651 7,389,511 Total Pension Liability - Ending (a) $ 9,623,251 $ 8,448,280 $ 8,070,651 Plan Fiduciary Net Position Contributions - Employer 200, , ,861 Contributions - State 76,053 71,372 72,789 Contributions - Employee 10,303 9,893 9,394 Net Investment Income 664,654 (262,685) 736,583 Benefit Payments, including Refunds of Employee Contributions (223,887) (229,801) (211,201) Administrative Expense (32,953) (35,483) (17,925) Net Change in Plan Fiduciary Net Position 695,073 (244,690) 770,501 Plan Fiduciary Net Position - Beginning 7,738,297 7,982,987 7,212,486 Plan Fiduciary Net Position - Ending (b) $ 8,433,370 $ 7,738,297 $ 7,982,987 Net Pension Liability - Ending (a) - (b) $ 1,189,881 $ 709,983 $ 87,664 Plan Fiduciary Net Position as a percentage of the Total Pension Liability 87.64% 91.60% 98.91% Covered Employee Payroll¹ $ 1,030,263 $ 1,051,778 $ 939,443 Net Pension Liability as a percentage of Covered Employee Payroll % 67.50% 9.33% Notes to Schedule: ¹ The Covered Employee Payroll numbers shown are in compliance with GASB 82, except for the 09/30/2015 measurement period which includes DROP payroll. Changes of Assumptions For measurement date 09/30/2016, as a result of Chapter , Laws of Florida, the assumed rates of mortality were changed to the assumptions used by the Florida Retirement System for special risk employees. Additonally, the investment return assumption was reduced from 7.50% to 7.40%. Finally, the inflation assumption rate was lowered from 3.00% to 2.50%, matching the long-term inflation assumption utilized by the Plan's investment consultant. City of Dade City Police Officers' Pension Fund Foster & Foster 36

37 GASB 67 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS Last 10 Fiscal Years 09/30/ /30/2013 Total Pension Liability Service Cost 222, ,524 Interest 570, ,188 Changes of benefit terms - - Differences between Expected and Actual Experience - - Changes of assumptions 99,655 - Benefit Payments, including Refunds of Employee Contributions (211,201) (233,668) Net Change in Total Pension Liability 681, ,044 - Total Pension Liability - Beginning 7,389,511 6,886,467 Total Pension Liability - Ending (a) $ 8,070,651 $ 7,389,511 $ - Plan Fiduciary Net Position Contributions - Employer 180, ,889 Contributions - State 72,789 75,568 Contributions - Employee 9,394 9,906 Net Investment Income 736, ,467 Benefit Payments, including Refunds of Employee Contributions (211,201) (233,668) Administrative Expense (17,925) (12,968) Net Change in Plan Fiduciary Net Position 770, ,194 Plan Fiduciary Net Position - Beginning 7,212,486 6,657,292 Plan Fiduciary Net Position - Ending (b) $ 7,982,987 $ 7,212,486 Net Pension Liability - Ending (a) - (b) $ 87,664 $ 177,025 Plan Fiduciary Net Position as a percentage of the Total Pension Liability 98.91% 97.60% Covered Employee Payroll¹ $ 939,443 $ 990,617 Net Pension Liability as a percentage of Covered Employee Payroll 9.33% 17.87% Notes to Schedule: ¹ The Covered Employee Payroll numbers shown are in compliance with GASB 82, except for the 09/30/2015 measurement period which includes DROP payroll. Changes of Assumptions For measurement date 09/30/2014, amounts reported as changes of assumptions were related to lowering the investment rate of return from 7.6% to 7.5% per year, net of investment related expenses. City of Dade City Police Officers' Pension Fund Foster & Foster 37

38 GASB 67 SCHEDULE OF CONTRIBUTIONS Last 10 Fiscal Years 09/30/ /30/ /30/ /30/2013 Actuarially Determined Contribution 259, , , ,457 Contributions in relation to the Actuarially Determined Contributions 276, , , ,457 Contribution Deficiency (Excess) $ (17,330) $ (10,235) $ - $ - Covered Employee Payroll¹ $ 1,030,263 $ 1,051,778 $ 939,443 $ 990,617 Contributions as a percentage of Covered Employee Payroll 26.88% 25.99% 27.00% 27.10% ¹ The Covered Employee Payroll numbers shown are in compliance with GASB 82, except for the 09/30/2015 measurement period which includes DROP payroll. Notes to Schedule Valuation Date: 10/01/2014 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Funding Method: Mortality: Interest Rate: Retirement Age: Early Retirement: Disability Rates: Termination Rates: Salary Increases: Payroll Growth: Actuarial Asset Method: Aggregate Actuarial Cost Method. RP-2000 Table with no projection Based on a study of over 650 public safety funds, this table reflects a 10% margin for future mortality improvements. Disabled lives set forward 5 years. 7.5% per year compounded annually, net of investment related expenses. Attainment of age 55 and 10 years of service or age 52 and 25 year of service. Also, any member who has reached N onnal Retirement Age is assumed to continue employment for one additional year. Commencing with the earliest Early Retirement Age (age 50 with 10 years of Credited Service), members are assumed to retire with an immediate subsidized benefit at the rate of 5% per year. See table below (1201). See table below (1302). 5.5% per year until the assumed retirement age. Projected Salary at retirement is increased to account for non-regular compensation as follows: 20% if hired before 1/1/ % ifhired between /31/10 5% if hired between 1/1/11-6/30/11 0% if hired on or after 7/1/11 N/A. Each year, the prior Actuarial Value of Assets is brought forward utilizing the historical geometric four-year average Market Value return (net of fees). It is possible that over time this technique will produce an insignificant bias above or below Market Value of Assets. City of Dade City Police Officers' Pension Fund Foster & Foster 38

39 GASB 67 Termination and Disability Rate Table: % Terminating During the Age Year % % % % % Becoming Disabled During the Year 0.03% 0.04% 0.07% 0.18% City of Dade City Police Officers' Pension Fund Foster & Foster 39

40 GASB 67 SCHEDULE OF INVESTMENT RETURNS Last 10 Fiscal Years 09/30/ /30/ /30/ /30/2013 Annual Money-Weighted Rate of Return Net of Investment Expense 8.61% -3.30% 10.24% 7.84% City of Dade City Police Officers' Pension Fund Foster & Foster 40

41 GASB 68 NOTES TO THE FINANCIAL STATEMENTS (For the Year Ended September 30, 2017) General Information about the Pension Plan Plan Description The Plan is a single-employer defined benefit pension plan administered by the Plan's Board of Trustees comprised of: a. Two Commission appointees, b. Two Members of the Department elected by the membership, and c. Fifth Member elected by other 4 and appointed by Commission. Full-time employees who are classified as full-time sworn police officers shall participate in the System as a condition of employment. Plan Membership as of October 1, 2015: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 11 Inactive Plan Members Entitled to But Not Yet Receiving Benefits 5 Active Plan Members Benefits Provided The Plan provides retirement, termination, disability and death benefits. Normal Retirement: Date: Earlier of age 55 and 10 years of Credited Service, or age 52 and 25 years of Credited Service. Benefit: 3.50% of Average Final Compensation times Credited Service. Early Retirement: Date: Age 50 and 10 Years of Credited Service. Benefit: Accrued benefit, reduced 3.0% per year. Cost-of-Living Adjustment: Normal Retirees after June 24, 2003, receive 2% annual benefit increases each October 1, beginning on the October 1st following 1 full year of retirement. Vesting (Termination): Schedule: 100% after 10 years of Credited Service. Benefit Amount: Member will receive the vested portion of his (her) accrued benefit payable at the otherwise Normal Retirement Disability: Eligibility: Service Incurred: Covered from Date of Employment.Non-Service Incurred: 10 years of Credited Service. Benefit accrued to date of disability but not less than 42% of Average Final Compensation (Service Incurred). Pre-Retirement Death Benefits: Vested: Monthly accrued benefit payable to designated beneficiary for 10 years. Non-Vested: Refund of accumulated contributions without interest. Contributions Member Contributions: 1.0% of Salary. City and State Contributions: Remaining amount necessary to pay current costs and amortize past service cost, if any, as provided in Part VII in Chapter 112, Florida Statutes. City of Dade City Police Officers' Pension Fund Foster & Foster 41

42 GASB 68 Net Pension Liability The measurement date is September 30, The measurement period for the pension expense was October 1, 2015 to September 30, The reporting period is October 1, 2016 through September 30, The Sponsor's Net Pension Liability was measured as of September 30, The Total Pension Liability used to calculate the Net Pension Liability was determined as of that date. Actuarial Assumptions: The Total Pension Liability was determined by an actuarial valuation as of October 1, 2015 updated to September 30, 2016 using the following actuarial assumptions: Inflation 2.50% Salary Increases 5.50% Discount Rate 7.40% Investment Rate of Return 7.40% Mortality Rate Healthy Lives: Female: RP2000 Generational, 100% Annuitant White Collar, Scale BB. Male: RP2000 Generational, 10% Annuitant White Collar /90% Annuitant Blue Collar, Scale BB. Mortality Rate Disabled Lives: Female: 60% RP2000 Disabled Female set forward two years / 40% Annuitant White Collar with no setback, no projection scale. Male: 60% RP2000 Disabled Male setback four years / 40% Annuitant White Collar with no setback, no projection scale. The most recent actuarial experience study used to review the other significant assumptions was dated April 22, The Long-Term Expected Rate of Return on Pension Plan investments was determined using a building-block method in which bestestimate ranges of expected future real rates of return (expected returns, Net of Pension Plan investment expenses and inflation) are developed for each major asset class. For 2016 the inflation rate assumption of the investment advisor was 2.50%. These ranges are combined to produce the Long-Term Expected Rate of Return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the Pension Plan's target asset allocation as of September 30, 2016 are summarized in the following table: Asset Class Target Allocation Long Term Expected Real Rate of Return Cash Alternative 3% 0.00% Short Term Taxable Fixed Income 2% 0.10% Intermediate Taxable Fixed Income 11% 0.59% Long Term Taxable Fixed Income 4% 0.68% Dev Market Ex-US Fixed Income 3% 0.29% High Yield Taxable Fixed Income 7% 3.51% Emerging Market Fixed Income 6% 3.61% US Large Cap Equities 25% 5.07% US Mid Cap Equities 11% 5.66% US Small Cap Equities 8% 5.85% Dev Market Ex-US Equities 7% 4.88% Emerging Market Equities 6% 6.34% Public Real Estate 5% 4.59% Commodities 2% 1.85% Total 100% City of Dade City Police Officers' Pension Fund Foster & Foster 42

43 GASB 68 Discount Rate: The Discount Rate used to measure the Total Pension Liability was 7.40 percent. The projection of cash flows used to determine the Discount Rate assumed that Plan Member contributions will be made at the current contribution rate and that Sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the Member rate. Based on those assumptions, the Pension Plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the Long-Term Expected Rate of Return on Pension Plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. City of Dade City Police Officers' Pension Fund Foster & Foster 43