ENGLEWOOD AREA FIRE CONTROL DISTRICT FIREFIGHTERS' PENSION TRUST FUND ACTUARIAL VALUATION AS OF OCTOBER 1, 2016

Transcription

1 ENGLEWOOD AREA FIRE CONTROL DISTRICT FIREFIGHTERS' PENSION TRUST FUND ACTUARIAL VALUATION AS OF OCTOBER 1, 2016 CONTRIBUTIONS APPLICABLE TO THE PLAN/FISCAL YEAR ENDING SEPTEMBER 30, 2018

2 December 8, 2016 Board of Trustees Firefighters Pension Board Englewood Area Fire Control District 516 Paul Morris Dr. Englewood, FL Re: Englewood Area Fire Control District Firefighters Pension Trust Fund Dear Board: We are pleased to present to the Board this report of the annual actuarial valuation of the Englewood Area Fire Control District Firefighters Pension Trust 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 175, 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 Englewood Area Fire Control District, financial reports prepared by the custodian bank, 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 Englewood Area Fire Control District, nor does anyone at Foster & Foster, Inc. act as a member of the Board of Trustees of the Englewood Area Fire Control District Firefighters Pension Trust 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: Douglas H. Lozen, EA, MAAA Enrolled Actuary # DHL/lke Enclosures

4 TABLE OF CONTENTS Section Title Page I Introduction a. Summary of Report 5 b. Changes Since Prior Valuation 7 c. Requirements of Chapter 112, Part VII, Florida Statutes 8 II Valuation Information a. Reconciliation of Unfunded Actuarial Accrued Liabilities 13 b. Detailed Actuarial (Gain)/Loss Analysis 15 c. Actuarial Assumptions and Methods 16 d. Valuation Notes 18 e. Partial History of Premium Tax Refunds 19 f. Excess State Monies Reserve 20 III Trust Fund 21 IV Member Statistics a. Statistical Data 27 b. Age and Service Distribution 28 c. Valuation Participant Reconciliation 29 V Summary of Plan Provisions 30 VI Governmental Accounting Standards Board Statement 33 Disclosure Information Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 4

5 SUMMARY OF REPORT The regular annual actuarial valuation of the Englewood Area Fire Control District Firefighters' Retirement Pension Trust 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 developed in the October 1, 2015, actuarial valuation (based on results of our September 12, 2016 Dollar Funding Analysis), are as follows: Valuation Date Applicable Plan/Fiscal Yr. End 10/1/2016 9/30/ /1/2015 9/30/2017 Total Required Contribution 2,218,528 2,056,973 Member Contributions (Est.) 256, ,739 District and State Required Contribution 1,962,213 1,823,234 State Contribution ¹ 396, ,874 Balance from District ¹ 1,565,339 1,426,360 ¹ The District may use up to $396,874 in State Contributions for determining its minimum funding requirements, based on the traditional interpretation of Chapter 99-1, Florida Statutes. For budgeting purposes, the required Sponsor Contribution (District and State) is $1,962,213 for the fiscal year ending September 30, The precise District requirement for the year is this amount, less actual State Contributions (up to the maximum $396,874). Please note that the District has access to a $41, prepaid contribution; this is available for the fiscal year ending September 30, Experience in the last twelve months has been more favorable than expected, relative to the Plan s actuarial assumptions. The primary sources of favorable experience included an 8.07% investment return (Actuarial Asset Basis), exceeding the 7.50% assumption, and average increase in pensionable compensation that was less than the assumption by more than 4%. These gains were partially offset by no inactive mortality. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 5

6 In spite of the net actuarial gain for the year, dollar funding requirements have increased primarily due to the adoption of a state-mandated mortality assumption. On a percentage of payroll basis, funding requirements decreased slightly as a result of an increase in the valuation payroll. 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 answer any pending questions concerning its contents. Respectfully submitted, FOSTER & FOSTER, INC. By: Douglas H. Lozen, EA, MAAA By: Drew D. Ballard, EA, MAAA Englewood Area Fire Control District Firefighters' Pension Trust 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 For compliance with Part VII of Chapter 112, Florida Statutes, the payroll growth assumption was lowered from 3.58% per year to 3.41% per year, equal to the actual average increase in payroll over the past 10 years. 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. The impact of this change is shown on the comparative summary section of this report. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 7

8 COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS A. Participant Data New Assump Old Assump 10/1/ /1/ /1/2015 Number Included Actives Service Retirees DROP Retirees Beneficiaries Disability Retirees Terminated Vested Total Total Annual Payroll $3,329,528 $3,329,528 $3,036,261 Payroll Under Assumed Ret. Age 3,329,528 3,329,528 3,036,261 Annual Rate of Payments to: Service Retirees 679, , ,808 DROP Retirees 515, , ,802 Beneficiaries Disability Retirees 46,272 46,272 46,272 Terminated Vested B. Assets Actuarial Value ¹ 25,508,959 25,508,959 22,526,604 Market Value ¹ 25,217,804 25,217,804 22,054,769 C. Liabilities Present Value of Benefits Actives Retirement Benefits 19,204,442 18,939,310 17,082,284 Disability Benefits 125, , ,868 Death Benefits 400, , ,543 Vested Benefits 1,161,628 1,173,701 1,113,702 Refund of Contributions 38,217 38,329 35,306 Service Retirees 9,189,995 8,834,700 8,396,619 DROP Retirees¹ 9,199,430 8,958,516 8,885,153 Beneficiaries Disability Retirees 482, , ,274 Terminated Vested Excess State Monies Reserve 333, , ,282 Total 40,135,641 39,084,909 36,593,031 Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 8

9 New Assump Old Assump C. Liabilities - (Continued) 10/1/ /1/ /1/2015 Present Value of Future Salaries 23,964,882 24,177,291 22,794,524 Present Value of Future Member Contributions 1,677,542 1,692,410 1,595,617 Normal Cost (Retirement) 771, , ,544 Normal Cost (Disability) 12,570 13,726 12,291 Normal Cost (Death) 24,537 9,675 8,867 Normal Cost (Vesting) 77,994 79,107 70,931 Normal Cost (Refunds) 8,639 8,653 12,111 Total Normal Cost 895, , ,744 Present Value of Future Normal Costs 6,133,626 6,061,639 5,589,024 Accrued Liability (Retirement) 13,826,944 13,557,702 12,113,281 Accrued Liability (Disability) 49,676 52,285 50,107 Accrued Liability (Death) 244,545 99,137 94,012 Accrued Liability (Vesting) 668, , ,239 Accrued Liability (Refunds) 6,760 6,760 11,040 Accrued Liability (Inactives) ¹ 18,872,392 18,303,081 17,800,046 Excess State Monies Reserve 333, , ,282 Total Actuarial Accrued Liability 34,002,015 33,023,270 31,004,007 Unfunded Actuarial Accrued Liability (UAAL) 8,493,056 7,514,311 8,477,403 Funded Ratio (AVA / AL) 75.0% 77.2% 72.7% D. Actuarial Present Value of Accrued Benefits Vested Accrued Benefits Inactives ¹ 18,872,392 18,303,081 17,800,046 Actives 7,315,964 7,096,539 5,478,416 Member Contributions 2,163,552 2,163,552 1,948,771 Total 28,351,908 27,563,172 25,227,233 Non-vested Accrued Benefits 1,978,775 1,884,460 2,372,143 Total Present Value Accrued Benefits 30,330,683 29,447,632 27,599,376 Funded Ratio (MVA / PVAB) 83.1% 85.6% 79.9% Increase (Decrease) in Present Value of Accrued Benefits Attributable to: Plan Amendments 0 0 Assumption Changes 883,051 0 New Accrued Benefits 0 587,340 Benefits Paid 0 (779,795) Interest 0 2,040,711 Other 0 0 Total 883,051 1,848,256 Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 9

10 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 ² 984, , ,820 Administrative Expenses ² 44,937 44,937 56,727 Payment Required to Amortize Unfunded Actuarial Accrued Liability over 24 years (as of 10/1/2016) ² 1,188,599 1,105,864 1,128,426 Total Required Contribution 2,218,528 2,116,522 2,056,973 Expected Member Contributions ² 256, , ,739 Expected District and State Contribution 1,962,213 1,860,207 1,823,234 F. Past Contributions Plan Years Ending: 9/30/2016 District and State Requirement 1,671,305 Actual Contributions Made: Members (excluding buyback) 214,781 District 1,274,430 State 396,874 ³ Total 1,886,085 G. Net Actuarial (Gain)/Loss (563,695) 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 displayed above have been adjusted to account for assumed salary increase and interest components. ³ Reflects traditional interpretation of Chapter 99-1, Florida Statutes. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 10

11 H. Schedule Illustrating the Amortization of the Total Unfunded Actuarial Accrued Liability as of: Year Projected Unfunded Accrued Liability ,493, ,968, ,364, ,870, ,365, I. (i) 3 Year Comparison of Actual and Assumed Salary Increases Actual Assumed Year Ended 9/30/ % 6.00% Year Ended 9/30/ % 6.00% Year Ended 9/30/ % 6.00% (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/ % 7.50% (iii) Average Annual Payroll Growth (a) Payroll as of: 10/1/2016 $3,329,528 10/1/2006 2,382,113 (b) Total Increase 39.77% (c) Number of Years (d) Average Annual Rate 3.41% Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 11

12 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. Douglas H. Lozen, EA, 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 Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 12

13 RECONCILIATION OF UNFUNDED ACTUARIAL ACCRUED LIABILITIES (1) Unfunded Actuarial Accrued Liability as of October 1, 2015 $8,477,403 (2) Sponsor Normal Cost developed as of October 1, ,206 (3) Expected administrative expenses for the year ended September 30, ,582 (4) Expected interest on (1), (2) and (3) 681,255 (5) Sponsor contributions to the System during the year ended September 30, ,671,304 (6) Expected interest on (5) 41,136 (7) Expected Unfunded Actuarial Accrued Liability as of September 30, 2016 (1)+(2)+(3)+(4)-(5)-(6) 8,078,006 (8) Change to UAAL due to Assumption Change 978,745 (9) Change to UAAL due to Actuarial (Gain)/Loss (563,695) (10) Unfunded Accrued Liability as of October 1, ,493,056 Type of Date Years 10/1/2016 Amortization Base Established Remaining Amount Amount 12/1/ $293,861 $21,441 10/1/ ,896 6,532 10/1/ ,964 9,411 10/1/ (46,586) (4,230) method change 10/1/ ,211,952 91,758 prior losses 10/1/ ,054, ,763 benefit change 10/1/ ,985, ,329 actuarial loss 10/1/ ,952 57,245 actuarial loss 10/1/ ,685 60,693 actuarial loss 10/1/ ,332 44,096 actuarial loss 10/1/ , ,357 method change 10/1/ (166,262) (16,997) benefit change 10/1/ ,879, ,831 actuarial loss 10/1/ , ,343 actuarial loss 10/1/ , ,187 assumption change 10/1/ ,169, ,999 benefit change 10/1/ (3,336,129) (209,515) actuarial loss 10/1/ , ,104 actuarial gain 10/1/ (137,196) (25,139) Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 13

14 RECONCILIATION OF UNFUNDED ACTUARIAL ACCRUED LIABILITIES (1) Unfunded Actuarial Accrued Liability as of October 1, 2015 $8,477,403 (2) Sponsor Normal Cost developed as of October 1, ,206 (3) Expected administrative expenses for the year ended September 30, ,582 (4) Expected interest on (1), (2) and (3) 681,255 (5) Sponsor contributions to the System during the year ended September 30, ,671,304 (6) Expected interest on (5) 41,136 (7) Expected Unfunded Actuarial Accrued Liability as of September 30, 2016 (1)+(2)+(3)+(4)-(5)-(6) 8,078,006 (8) Change to UAAL due to Assumption Change 978,745 (9) Change to UAAL due to Actuarial (Gain)/Loss (563,695) (10) Unfunded Accrued Liability as of October 1, ,493,056 Type of Date Years 10/1/2016 Amortization Base Established Remaining Amount Amount actuarial gain 10/1/ (304,005) (48,642) software change 10/1/ ,621 26,918 actuarial gain 10/1/ (529,446) (75,505) actuarial gain 10/1/ (1,049,376) (135,487) assumption change 10/1/ ,745 69,003 actuarial gain 10/1/ (563,695) (66,705) 8,493,056 1,080,790 Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 14

15 DETAILED ACTUARIAL (GAIN)/LOSS ANALYSIS (1) Unfunded Actuarial Accrued Liability (UAAL) as of October 1, 2015 $8,477,403 (2) Expected UAAL as of October 1, ,078,006 (3) Summary of Actuarial (Gain)/Loss, by component: Investment Return (Actuarial Asset Basis) (131,578) Salary Increases (361,104) Active Decrements (10,562) Inactive Mortality 47,722 Other (108,173) Increase in UAAL due to (Gain)/Loss (563,695) Assumption Changes 978,745 (4) Actual UAAL as of October 1, 2016 $8,493,056 Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 15

16 ACTUARIAL ASSUMPTIONS AND METHODS Mortality Rates 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 assumed rates of mortality were mandated by Chapter , Laws of Florida. This law mandates the use of the assumption used in either of the two most recent valuations of the Florida Retirement System (FRS). The above rates are those outlined in the July 1, 2015 FRS actuarial valuation report. We feel this assumption sufficiently accommodates future mortality improvements. Valuations prior to October 1, 2016: RP-2000 Table projected to the Valuation Date with Schedule AA Disabled lives set forward 5 years. Interest Rate 7.5% per year compounded annually, net of investment-related expenses. This assumption is supported by the target asset allocation of the trust and the expected long-term return by asset class. Retirement Age Earlier age 55 and 10 years of service or 23 years of service, regardless of age. Also, any member who has reached Normal Retirement is assumed to continue employment for one additional year. Early Retirement Commencing with eligibility for Early Retirement Age (Age 50 with 10 years of service), members are assumed to retire with an immediate subsidized benefit at the rate of 5% per year. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 16

17 Non-Investment Expenses Cost-of-Living Adjustment $40,861 per year, based on actual Administrative Expenses incurred during the prior fiscal year. 1.7% beginning one year after retirement for Normal and Early Retirees. Payroll Growth 3.41% per year (3.58% utilized for the 10/1/15 valuation). This assumption is limited by State Statute to not exceed the ten-year average payroll growth determined as of the valuation date. Funding Method Asset Smoothing Methodology Disability Rate Termination Rate Salary Increases Entry Age Normal Actuarial Cost Method. The Actuarial Value of Assets is brought forward using the historical four-year geometric average of Market Value Returns (net-of-fees). Over time, this may result in an insignificant bias that is above or below the Market Value of Assets. See table below (1201). 75% of Disability Retirements are assumed to be Line-of-Duty related. This assumption is consistent with rates utilized by other Florida Municipal Defined Benefit Plans for Firefighters. See table below (1302). This assumption is consistent with rates utilized by other Florida Municipal Defined Benefit Plans for Firefighters. 6.0% per year until the assumed retirement age; see table below. This assumption is consistent with the Plan s long-term experience. % Terminating % Becoming Disabled Current Salary as % Age During the Year During the Year of Salary at age % 0.03% 14.6% Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 17

18 VALUATION NOTES Total Annual Payroll is the projected annual rate of pay as of 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 is determined for each participant as the present value of future benefits, determined as of the Member s entry age, amortized as a level percentage of compensation over the anticipated number of years of participation, determined as of the entry age. Individual Entry Age Normal 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) and the Unfunded Accrued (Past Service) Liability. The actuarial accrued liability for active participants is the difference between the present value of future benefits and the present value of future Normal Costs. The actuarial accrued liability for inactive participants is the present value of future benefits. Unfunded Actuarial Accrued Liability (UAAL) is the difference between the actuarial accrued liability (described above) and the actuarial value of assets. Under the Entry Age Normal Actuarial Cost Method, an actuarial gain or loss, based on actual versus expected UAAL, is determined in conjunction with each valuation of the plan. Total Required Contribution is equal to the Normal Cost plus an amount sufficient to amortize the Unfunded Accrued Liability over no more than 30 years. The required amount is adjusted for interest according to the timing of contributions during the year. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 18

19 PARTIAL HISTORY OF PREMIUM TAX REFUNDS Received During Increase from Fiscal Year Amount Previous Year , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % , % Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 19

20 Regular Distribution EXCESS STATE MONIES RESERVE Firefighters' Distribution Actual Applicable Excess State Actual Applicable Excess State State Contribution "Frozen" Amount Monies Reserve State Contribution "Frozen" Amount Monies Reserve 1998 $51, $51, $0.00 N/A N/A N/A , , N/A N/A N/A , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Accumulated Regular Excess 689, Accumulated Special Excess 87, Less Excess Used in Funding Ordinance No. 05/ (110,828.44) Less Excess Used in Funding Ordinance No. 09/ A (332,739.50) Equals Current State Monies Reserve $333, Special Distribution 689, , Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 20

21 STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2016 ASSETS COST VALUE MARKET VALUE Cash and Cash Equivalents: Short Term Investments 769, , Total Cash and Equivalents 769, , Receivables: Member Contributions in Transit 4, , Member Contributions District Contributions in Transit 364, , State Contributions 360, , Investment Income 36, , Total Receivable 765, , Investments: U. S. Bonds and Bills 2,886, ,877, Federal Agency Guaranteed Securities 1,284, ,283, Corporate Bonds 1,746, ,735, Stocks 5,160, ,902, Mutual Funds: Fixed Income 993, , Equity 6,899, ,046, Pooled/Common/Commingled Funds: Real Estate 2,699, ,051, Total Investments 21,672, ,745, Total Assets 23,207, ,280, LIABILITIES Payables: Investment Expenses 19, , Administrative Expenses 2, , Prepaid Member Contribution Prepaid District Contribution 41, , Total Liabilities 63, , NET POSITION RESTRICTED FOR PENSIONS 23,144, ,217, Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 21

22 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Market Value Basis ADDITIONS Contributions: Member 214, District 1,274, State 450, Total Contributions 1,940, Investment Income: Net Realized Gain (Loss) 440, Unrealized Gain (Loss) 1,078, Net Increase in Fair Value of Investments 1,518, Interest & Dividends 633, Less Investment Expense¹ (108,422.45) Net Investment Income 2,043, Total Additions 3,983, DEDUCTIONS Distributions to Members: Benefit Payments 710, Lump Sum DROP Distributions 69, Refunds of Member Contributions 0.00 Total Distributions 779, Administrative Expense 40, Total Deductions 820, Net Increase in Net Position 3,163, NET POSITION RESTRICTED FOR PENSIONS Beginning of the Year 22,054, End of the Year 25,217, ¹Investment related expenses include investment advisory, custodial and performance monitoring fees. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 22

23 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: 8.07% (A) 10/01/2015 Actuarial Assets: $22,526, (I) Net Investment Income: 1. Interest and Dividends 633, Realized Gains (Losses) 440, Change in Actuarial Value 897, Investment Related Expenses (108,422.45) Total 1,862, (B) 10/01/2016 Actuarial Assets: $25,508, Actuarial Asset Rate of Return = 2I/(A+B-I): 8.07% 10/01/2016 Limited Actuarial Assets: $25,508, /01/2016 Market Value of Assets: $25,217, Actuarial Gain/(Loss) due to Investment Return (Actuarial Asset Basis) $131, ¹Market Value Basis, net of investment related expenses. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 23

24 CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS SEPTEMBER 30, 2016 Actuarial Asset Basis REVENUES Contributions: Member 214, District 1,274, State 450, Total Contributions 1,940, Earnings from Investments: Interest & Dividends 633, Net Realized Gain (Loss) 440, Change in Actuarial Value 897, Total Earnings and Investment Gains 1,971, EXPENDITURES Distributions to Members: Benefit Payments 710, Lump Sum DROP Distributions 69, Refunds of Member Contributions 0.00 Total Distributions 779, Expenses: Investment related¹ 108, Administrative 40, Total Expenses 149, Change in Net Assets for the Year 2,982, Net Assets Beginning of the Year 22,526, Net Assets End of the Year² 25,508, ¹Investment related expenses include investment advisory, custodial and performance monitoring fees. ²Net Assets may be limited for actuarial consideration. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 24

25 DEFERRED RETIREMENT OPTION PLAN ACTIVITY October 1, 2015 to September 30, 2016 Beginning of the Year Balance 1,460, Plus Additions 525, Investment Return Earned 45, Less Distributions (69,775.42) End of the Year Balance 1,961, Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 25

26 RECONCILIATION OF DISTRICT'S SHORTFALL/(PREPAID) CONTRIBUTION FOR THE FISCAL YEAR ENDED (FYE) SEPTEMBER 30, 2016 (1) Total Required Contribution Rate 61.47% (2) Pensionable Payroll Derived from Member Contributions $3,068, (3) Required City and State Contributions 1,671, (4) Less Actual Member Contributions - (5) Less Allowable State Contribution (396,874.44) (6) Required District Contribution for Fiscal ,274, (7) Less 2015 Prepaid Contribution 0.00 (8) Less Actual District Contributions (1,315,488.09) (9) Equals District's Shortfall/(Prepaid) Contribution as of ($41,057.65) September 30, 2016 Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 26

27 STATISTICAL DATA ¹ 10/1/ /1/ /1/ /1/2016 Actives Number Average Current Age Average Age at Employment Average Past Service Average Annual Salary $72,396 $72,945 $74,055 $70,841 Service Retirees Number Average Current Age Average Annual Benefit $50,091 $50,961 $53,067 $52,282 DROP Retirees Number Average Current Age Average Annual Benefit $61,420 $59,447 $59,867 $64,434 Beneficiaries ² Number Average Current Age N/A N/A N/A N/A Average Annual Benefit $22,968 $22,968 N/A N/A Disability Retirees Number Average Current Age Average Annual Benefit $17,212 $17,649 $46,272 $46,272 Terminated Vested ³ Number Average Current Age N/A N/A N/A N/A Average Annual Benefit N/A N/A N/A N/A ¹ Prior to 10/1/2015, averages were salary weighted. ² Beneficary payment based on remainder of 120 payment guarantee. ³ Excludes non-vested terminated participants due only a refund of Member Contributions. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 27

28 AGE AND SERVICE DISTRIBUTION PAST SERVICE AGE Total Total Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 28

29 VALUATION PARTICIPANT RECONCILIATION 1. Active lives a. Number in prior valuation 10/1/ b. Terminations i. Vested (partial or full) with deferred benefits 0 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 41 h. New entrants 6 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 1 (1) DROP Vested Deferred Death, With Survivor Death, No Survivor Disabled Refund of Contributions Rehires Expired Annuities Data Corrections b. Number current valuation Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 29

30 SUMMARY OF PLAN PROVISIONS (Through Ordinance No ) Latest Amendment Date July 17, Eligibility Credited Service Salary Average Final Compensation (AFC) Accrued Benefit Full-time employees who are classified as fulltime Firefighters shall participate in the System as a condition of employment. Total years and fractional parts of years of employment with the District as a Firefighter. Base pay plus longevity pay and tax exempt/deferred items. Average Salary for the highest 5 years during the 10 years immediately preceding retirement or termination. The sum of the following: a) 3.50% of Average Final Compensation (using the highest two-year average of pensionable earnings prior to January 6, 2012) for each year of Credited Service prior to January 6, 2012, plus b) 3.25% of Average Final Compensation (using the highest five-year average of pensionable earnings earned after January 5, 2012) for each year of Credited Service earned after January 5, Normal Retirement Date Form of Benefit Earlier of age 55 and 10 years of Credited Service, or 20 years of Credited Service, regardless of age. Ten Year Certain and Life Annuity (options available). Early Retirement Eligibility Benefit Age 50 with 10 years of Credited Service. Accrued Benefit, reduced 3% per year. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 30

31 Cost of Living Adjustment Each October 1, after one full year of retirement, Normal and Early Retirees receive a 1.7% increase in their monthly benefit. Vesting Schedule Benefit Amount 100% after 10 years of Credited Service. Member will receive the vested 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 120 payments guaranteed or until recovery (as determined by the Board). Options available. Death Benefits Pre-Retirement Vested Non-Vested Post-Retirement District Contributions Member Contributions 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. Remaining amount necessary to pay current costs and amortize past service cost, if any, over a period up to 30 years. Minimum Contribution by District is 16.6% of total Salary of the Members. 7.0% of Salary. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 31

32 Board of Trustees a. Two District Board appointees, b. Two Members of the Department elected by the membership, and c. Fifth Member elected by other 4 Trustees. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 32

33 GASB 67 ASSETS Cash and Cash Equivalents: Short Term Investments STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2016 MARKET VALUE 769,912 Total Cash and Equivalents Receivables: Member Contributions in Transit Member Contributions District Contributions in Transit State Contributions Investment Income Total Receivable Investments: U. S. Bonds and Bills Federal Agency Guaranteed Securities Corporate Bonds Stocks Mutual Funds: Fixed Income Equity Pooled/Common/Commingled Funds: Real Estate Total Investments Total Assets LIABILITIES Payables: Investment Expenses Administrative Expenses Total Liabilities NET POSITION RESTRICTED FOR PENSIONS 769,912 4, , ,785 36, ,699 2,877,936 1,283,596 1,735,967 5,902, ,294 8,046,523 3,051,858 23,745,230 25,280,841 19,700 2,203 21,903 25,258,938 Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 33

34 GASB 67 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED SEPTEMBER 30, 2016 Market Value Basis ADDITIONS Contributions: Member 214,858 District 1,315,488 State 450,934 Total Contributions 1,981,280 Investment Income: Net Increase in Fair Value of Investments 1,518,850 Interest & Dividends 633,118 Less Investment Expense¹ (108,423) Net Investment Income 2,043,545 Total Additions 4,024,825 DEDUCTIONS Distributions to Members: Benefit Payments 710,020 Lump Sum DROP Distributions 69,775 Refunds of Member Contributions 0 Total Distributions 779,795 Administrative Expense 40,861 Total Deductions 820,656 Net Increase in Net Position 3,204,169 NET POSITION RESTRICTED FOR PENSIONS Beginning of the Year 22,054,769 End of the Year 25,258,938 ¹Investment related expenses include investment advisory, custodial and performance monitoring fees. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 34

35 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 District Board appointees, b. Two Members of the Department elected by the membership, and c. Fifth Member elected by other 4 Trustees. Plan Membership as of October 1, 2015: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 22 Inactive Plan Members Entitled to But Not Yet Receiving Benefits - Active Plan Members Benefits Provided The Plan provides retirement, termination, disability and death benefits. Accrued Benefit: The sum of the following: a) 3.50% of Average Final Compensation (using the highest two-year average of pensionable earnings prior to January 6, 2012) for each year of Credited Service prior to January 6, 2012, plus b) 3.25% of Average Final Compensation (using the highest five-year average of pensionable earnings earned after January 5, 2012) for each year of Credited Service earned after January 5, Normal Retirement: Date: Earlier of age 55 and 10 years of Credited Service, or 20 years of Credited Service, regardless of age. Early Retirement: Eligibility: Age 50 with 10 years of Credited Service. Benefit: Accrued Benefit, reduced 3% per year. Cost of Living Adjustment: Each October 1, after one full year of retirement, Normal and Early Retirees receive a 1.7% increase in their monthly benefit. Vesting: Schedule: 100% after 10 years of Credited Service. Benefit: Member will receive the vested portion of his (her) accrued benefit payable at the otherwise Normal Retirement Date. Disability: 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: 7.0% of Salary. District Contributions: Remaining amount necessary to pay current costs and amortize past service cost, if any, over a period up to 30 years. Minimum Contribution by District is 16.6% of total Salary of the Members. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 35

36 GASB 67 Investments Investment Policy: The following was the Board's adopted asset allocation policy as of September 30, 2016: Asset Class Target Allocation Domestic Equity 50% International Equity 10% Broad Market Fixed Income 20% Global Bond 5% Real Estate 15% 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 9.25 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: You may elect to either have your account credited with interest at the rate of 2.65% per annum or credited or debited with an investment return or loss equal to the net investment return realized by the System for that quarter. One change in election is permitted. The DROP balance as September 30, 2016 is $1,961,794. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 36

37 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 $ 34,084,829 Plan Fiduciary Net Position $ (25,258,938) Sponsor's Net Pension Liability $ 8,825,891 Plan Fiduciary Net Position as a percentage of Total Pension Liability 74.11% 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 6.00% Discount Rate 7.50% Investment Rate of Return 7.50% 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 other significant assumptions are based upon the most recent actuarial experience study dated November 14th, 2008 for the period 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: Long Term Expected Real Asset Class Rate of Return Domestic Equity 7.5% International Equity 8.5% Broad Market Fixed Income 2.5% Global Bond 3.5% Real Estate 4.5% Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 37

38 GASB 67 Discount Rate: The Discount Rate used to measure the Total Pension Liability was 7.50 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 6.50% 7.50% 8.50% Sponsor's Net Pension Liability $ 13,201,108 $ 8,825,891 $ 5,251,408 Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 38

39 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 812, , ,603 Interest 2,360,906 2,206,787 2,048,033 Change in Excess State Money 54,059 91,911 37,771 Changes of benefit terms Differences between Expected and Actual Experience (631,754) (117,198) - Changes of assumptions 933, Benefit Payments, including Refunds of Employee Contributions (779,795) (914,610) (608,388) Net Change in Total Pension Liability 2,749,437 2,097,080 2,385,019 Total Pension Liability - Beginning 31,335,392 29,238,312 26,853,293 Total Pension Liability - Ending (a) $ 34,084,829 $ 31,335,392 $ 29,238,312 Plan Fiduciary Net Position Contributions - Employer 1,315,488 1,098,040 1,022,327 Contributions - State 450, , ,646 Contributions - Employee 214, , ,077 Net Investment Income 2,043,545 (27,879) 2,051,288 Benefit Payments, including Refunds of Employee Contributions (779,795) (914,610) (608,388) Administrative Expense (40,861) (51,582) (30,621) Net Change in Plan Fiduciary Net Position 3,204, ,577 3,084,328 Plan Fiduciary Net Position - Beginning 22,054,769 21,257,192 18,172,863 Plan Fiduciary Net Position - Ending (b) $ 25,258,938 $ 22,054,769 $ 21,257,192 Net Pension Liability - Ending (a) - (b) $ 8,825,891 $ 9,280,623 $ 7,981,120 Plan Fiduciary Net Position as a percentage of the Total Pension Liability 74.11% 70.38% 72.70% Covered Employee Payroll¹ $ 3,068,303 $ 3,689,554 $ 3,072,530 Net Pension Liability as a percentage of Covered Employee Payroll % % % 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. 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. Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 39

40 GASB 67 SCHEDULE OF CONTRIBUTIONS Last 10 Fiscal Years 09/30/ /30/ /30/2014 Actuarially Determined Contribution 1,671,305 1,494,914 1,419,201 Contributions in relation to the Actuarially Determined Contributions 1,712,362 1,494,914 1,419,201 Contribution Deficiency (Excess) $ (41,057) $ - $ - Covered Employee Payroll¹ $ 3,068,303 $ 3,689,554 $ 3,072,530 Contributions as a percentage of Covered Employee Payroll 55.81% 40.52% 46.19% 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: Amortization Method: Remaining Amortization Period: Mortality: Interest Rate: Retirement Age: Early Retirement: Cost-of-Living Adjustment: Payroll Growth: Asset Smoothing Methodology: Disability Rates: Termination Rates: Salary Increases: Termination and Disability Rate Table: Entry Age Normal Actuarial Cost Method. Level Percentage of Pay, Closed. 26 Years (as of 10/01/2014). RP 2000 Combined Healthy Mortality Table, Sex Distinct. Disabled lives are set forward 5 years. Based on a study of over 650 public safety funds, this table reflects a 10% margin for future mortality improvements. 7.5% per year compounded annually, net of investment related expenses. Earlier age 55 and 10 years of service or 23 years of service, regardless of age. Also, any member who has reached Normal Retirement is assumed to continue employment for one additional year. Commencing with eligibility for Early Retirement Age (Age 50 with 10 years of service), members are assumed to retire with an immediate subsidized benefit at the rate of 5% per year. 1.7% beginning one year after retirement, for Normal and Early Retirees. 5% per year. The Actuarial Value of Assets is brought forward using the historical four-year geometric average of Market Value Returns (net-of-fees). Over time, this may result in a deminis bias that is above or below the Market Value of Assets. See table below (1201). 75% of Disability Retirements are assumed to be Line-of- Duty related. See table below (1302). 6.0% per year until the assumed retirement age. % Terminating During the Age Year % % % % % Becoming Disabled During the Year 0.03% 0.04% 0.07% 0.18% Englewood Area Fire Control District Firefighters' Pension Trust Fund FOSTER & FOSTER 40