CITY OF CLEARWATER EMPLOYEES PENSION PLAN Chapter , F.S. Compliance Report In Connection with the January 1, 2018 Funding Actuarial Valuation

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1 CITY OF CLEARWATER EMPLOYEES PENSION PLAN Chapter , F.S. Compliance Report In Connection with the January 1, 2018 Funding Actuarial Valuation Report And the Plan s Financial Reporting for the Year Ending September 30, 2017

2 June 1, 2018 Board of Trustees City of Clearwater Employees Pension Plan Clearwater, Florida Dear Board Members: Gabriel, Roeder, Smith & Company (GRS) has been engaged by the City of Clearwater Employees Pension Plan (Plan) to prepare a disclosure report to satisfy the requirements set forth in Ch , F.S. and as further required pursuant to Ch. 60T1.0035, F.A.C. This report was prepared at the request of the Board and is intended for use by the Retirement Board and those designated or approved by the Board. This report may be provided to parties other than the System only in its entirety and only with the permission of the Board. The purpose of the report is to provide the required information specified in Ch , F.S. as well as supplement this information with additional exhibits. This report should not be relied on for any purpose other than the purpose described above. The findings in this report are based on data or other information through December 31, Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan s funded status); and changes in plan provisions or applicable law. The scope of this engagement does not include an analysis of the potential range of such measurements. This report was based upon information furnished by the City concerning Plan benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We checked for internal and yeartoyear consistency, but did not audit the data. We are not responsible for the accuracy or completeness of the information provided by the City. Except as otherwise indicated as required for the disclosures contained herein, this report was prepared using certain assumptions selected by the Board as described in our January 1, 2018 actuarial valuation report. This report is also based on the Plan Provisions, census data, and financial information as summarized in our January 1, 2018 actuarial valuation report and GASB No. 67 report for the fiscal year ending September 30, Please refer to the January 1, 2018

3 Board of Trustees June 1, 2018 Page ii actuarial valuation report, dated March 28, 2018, and the GASB No. 67 report, dated December 22, 2017, for summaries and descriptions of this information. The use of an investment return assumption that is 2% higher than the investment return assumption used to determine the funding requirements does not represent an estimate of future Plan experience nor does it reflect an observation of future return estimates inherent in financial market data. The use of this investment return assumption is provided as a counterpart to the Chapter , Florida Statutes requirement to utilize an investment return assumption that is 2% lower than the assumption used to determine the funding requirements. The inclusion of the additional exhibits showing the effect of using a 2% higher investment return assumption shows a more complete assessment of the range of possible results as opposed to showing a onesided range as required by Florida Statutes. Peter N. Strong and Trisha Amrose are members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. The signing actuaries are independent of the plan sponsor. This report has been prepared by actuaries who have substantial experience valuing public employee retirement systems. To the best of our knowledge the information contained in this report is accurate and fairly presents the actuarial position of the Pension Plan as of the valuation date. All calculations have been made in conformity with generally accepted actuarial principles and practices, with the Actuarial Standards of Practice issued by the Actuarial Standards Board and with applicable statutes. With respect to the reporting standards for defined benefit retirement plans or systems contained in Section (1) F.S., the actuarial disclosures required under this section were prepared and completed by us or under our direct supervision, and we acknowledge responsibility for the results. To the best of our knowledge, the results are complete and accurate, and in our opinion, meet the requirements of Section (1), F.S. and Section 60T1.0035, F.A.C. Respectfully submitted, GABRIEL, ROEDER, SMITH AND COMPANY By By Peter N. Strong, FSA, MAAA Trisha Amrose, MAAA Enrolled Actuary No Enrolled Actuary No Senior Consultant & Actuary Consultant & Actuary

4 TABLE OF CONTENTS Title Page Ch , F.S. Results Schedule of Changes in Net Pension Liability 1. Using financial reporting assumptions per GASB Statement No Using assumptions prescribed in Section (1)(a), F.S Using assumptions prescribed in Section (1)(b), F.S Using the mandated mortality and funding interest rate +2% 4 Assets Versus Benefit Payments Projections 1. Using assumptions from the Plan s latest actuarial valuation 5 2. Using assumptions prescribed in Section (1)(a), F.S Using assumptions prescribed in Section (1)(b), F.S Using the mandated mortality and funding interest rate +2% 8 Actuarially Determined Contribution 9 City of Clearwater Employees Pension Plan

5 CHAPTER FLORIDA STATUTES RESULTS

6 Schedule of Changes in the Employers' Net Pension Liability Using Financial Reporting Assumptions per GASB Statement No. 67 Fiscal year ending September 30, Total Pension Liability a. Service Cost $ 14,770,113 b. Interest 61,053,620 c. Benefit Changes d. Difference between actual & expected experience & Other (8,071,653) e. Assumption Changes 381,755 f. Benefit Payments (44,490,793) g. Contribution Refunds (1,366,008) h. Net Change in Total Pension Liability 22,277,034 i. Total Pension Liability Beginning 880,352,852 j. Total Pension Liability Ending $ 902,629, Plan Fiduciary Net Position a. Contributions Employer (from City) $ 11,898,912 b. Contributions Employer (from State) 12,000 c. Contributions Member 7,004,943 d. Net Investment Income 102,287,929 e. Benefit Payments (44,490,793) f. Contribution Refunds (1,366,008) g. Administrative Expense (295,301) h. Other i. Net Change in Plan Fiduciary Net Position 75,051,682 j. Plan Fiduciary Net Position Beginning 905,236,677 k. Plan Fiduciary Net Position Ending $ 980,288, Net Pension Liability / (Asset) (77,658,473) Valuation Date 01/01/2017 Measurement Date 09/30/2017 Investment Return Assumption 7.00% Mortality Table FRS Mortality Rates from 7/1/16 FRS Valuation City of Clearwater Employees Pension Plan 1

7 Schedule of Changes in the Employers' Net Pension Liability Using Assumptions required under (1)(a), F.S. Fiscal year ending September 30, Total Pension Liability a. Service Cost $ 14,770,113 b. Interest 61,053,620 c. Benefit Changes d. Difference between actual & expected experience & Other (8,071,653) e. Assumption Changes 381,755 f. Benefit Payments (44,490,793) g. Contribution Refunds (1,366,008) h. Net Change in Total Pension Liability 22,277,034 i. Total Pension Liability Beginning 880,352,852 j. Total Pension Liability Ending $ 902,629, Plan Fiduciary Net Position a. Contributions Employer (from City) $ 11,898,912 b. Contributions Employer (from State) 12,000 c. Contributions Member 7,004,943 d. Net Investment Income 102,287,929 e. Benefit Payments (44,490,793) f. Contribution Refunds (1,366,008) g. Administrative Expense (295,301) h. Other i. Net Change in Plan Fiduciary Net Position 75,051,682 j. Plan Fiduciary Net Position Beginning 905,236,677 k. Plan Fiduciary Net Position Ending $ 980,288, Net Pension Liability / (Asset) (77,658,473) Valuation Date 01/01/2017 Measurement Date 09/30/2017 Investment Return Assumption 7.00% Mortality Table FRS Mortality Rates from 7/1/16 FRS Valuation City of Clearwater Employees Pension Plan 2

8 Schedule of Changes in the Employers' Net Pension Liability Using Assumptions required under (1)(b), F.S. Fiscal year ending September 30, Total Pension Liability a. Service Cost $ 23,801,983 b. Interest 56,729,110 c. Benefit Changes d. Difference between actual & expected experience & Other (10,171,953) e. Assumption Changes 600,935 f. Benefit Payments (44,490,793) g. Contribution Refunds (1,366,008) h. Net Change in Total Pension Liability 25,103,274 i. Total Pension Liability Beginning 1,133,708,620 j. Total Pension Liability Ending $ 1,158,811, Plan Fiduciary Net Position a. Contributions Employer (from City) $ 11,898,912 b. Contributions Employer (from State) 12,000 c. Contributions Member 7,004,943 d. Net Investment Income 102,287,929 e. Benefit Payments (44,490,793) f. Contribution Refunds (1,366,008) g. Administrative Expense (295,301) h. Other i. Net Change in Plan Fiduciary Net Position 75,051,682 j. Plan Fiduciary Net Position Beginning 905,236,677 k. Plan Fiduciary Net Position Ending $ 980,288, Net Pension Liability / (Asset) 178,523,535 Valuation Date 01/01/2017 Measurement Date 09/30/2017 Investment Return Assumption 5.00% Mortality Table FRS Mortality Rates from 7/1/16 FRS Valuation City of Clearwater Employees Pension Plan 3

9 Schedule of Changes in the Employers' Net Pension Liability Using Assumptions under (1)(b), F.S. except 2% higher investment return assumption Fiscal year ending September 30, Total Pension Liability a. Service Cost $ 9,691,828 b. Interest 62,595,738 c. Benefit Changes d. Difference between actual & expected experience & Other (6,679,047) e. Assumption Changes 194,567 f. Benefit Payments (44,490,793) g. Contribution Refunds (1,366,008) h. Net Change in Total Pension Liability 19,946,285 i. Total Pension Liability Beginning 708,744,770 j. Total Pension Liability Ending $ 728,691, Plan Fiduciary Net Position a. Contributions Employer (from City) $ 11,898,912 b. Contributions Employer (from State) 12,000 c. Contributions Member 7,004,943 d. Net Investment Income 102,287,929 e. Benefit Payments (44,490,793) f. Contribution Refunds (1,366,008) g. Administrative Expense (295,301) h. Other i. Net Change in Plan Fiduciary Net Position 75,051,682 j. Plan Fiduciary Net Position Beginning 905,236,677 k. Plan Fiduciary Net Position Ending $ 980,288, Net Pension Liability / (Asset) (251,597,304) Valuation Date 01/01/2017 Measurement Date 09/30/2017 Investment Return Assumption 9.00% Mortality Table FRS Mortality Rates from 7/1/16 FRS Valuation City of Clearwater Employees Pension Plan 4

10 Asset and Benefit Payment Projection Not Reflecting Any Contributions from the Employer, State or Employee Using Assumptions from the Latest Actuarial Valuation Plan Year Ending Assets (BOY) Expected Investment Return Projected Benefit Payments Assets (EOY) ,019,110,192 69,595,780 49,769,517 1,038,936, ,038,936,455 70,884,269 52,608,094 1,057,212, ,057,212,630 72,068,368 55,329,029 1,073,951, ,073,951,969 73,155,261 57,753,637 1,089,353, ,089,353,593 74,158,061 59,905,431 1,103,606, ,103,606,223 75,082,583 61,995,788 1,116,693, ,116,693,018 75,936,892 63,760,564 1,128,869, ,128,869,346 76,736,332 65,272,070 1,140,333, ,140,333,608 77,488,300 66,715,778 1,151,106, ,151,106,130 78,200,983 67,898,469 1,161,408, ,161,408,644 78,889,174 68,840,889 1,171,456, ,171,456,929 79,567,400 69,559,583 1,181,464, ,181,464,746 80,246,033 70,185,697 1,191,525, ,191,525,082 80,937,947 70,537,397 1,201,925, ,201,925,632 81,661,182 70,674,639 1,212,912, ,212,912,175 82,429,159 70,705,512 1,224,635, ,224,635,822 83,254,401 70,574,479 1,237,315, ,237,315,744 84,152,114 70,285,385 1,251,182, ,251,182,473 85,135,963 69,908,851 1,266,409, ,266,409,585 86,222,195 69,327,889 1,283,303, ,283,303,891 87,431,940 68,552,359 1,302,183, ,302,183,472 88,786,097 67,621,303 1,323,348, ,323,348,266 90,306,405 66,513,520 1,347,141, ,347,141,151 92,015,446 65,269,547 1,373,887, ,373,887,050 93,935,542 63,901,476 1,403,921, ,403,921,116 96,090,431 62,401,350 1,437,610,197 Number of years for which current market value of assets is adequate to sustain the payment of expected retirement benefits, reflecting no contributions from the Employer, Employee or State, contrary to Florida Statutes and Plan provisions: All Future Years Valuation Investment return assumption 7.00% Valuation Mortality Table FRS Mortality Rates from 7/1/16 FRS Valuation Note: As required in Section (1)(c) of the Florida Statutes, the projection of the Fund assets do not include contributions from the Employer, Employee or State, which is contrary to Florida Statutes and Plan provisions. For this reason, these projections should not be viewed as a representation of the amount of time the Fund can sustain benefit payments. Under the GASB standards which DO include contributions from the employer, employee and State, the Fund is expected to be able to sustain the benefit payment demands in the nearterm and longterm future. City of Clearwater Employees Pension Plan 5

11 Asset and Benefit Payment Projection Not Reflecting Any Contributions from the Employer, State or Employee Using Assumptions required under (1)(a), F.S. Plan Year Ending Assets (BOY) Expected Investment Return Projected Benefit Payments Assets (EOY) ,019,110,192 69,595,780 49,769,517 1,038,936, ,038,936,455 70,884,269 52,608,094 1,057,212, ,057,212,630 72,068,368 55,329,029 1,073,951, ,073,951,969 73,155,261 57,753,637 1,089,353, ,089,353,593 74,158,061 59,905,431 1,103,606, ,103,606,223 75,082,583 61,995,788 1,116,693, ,116,693,018 75,936,892 63,760,564 1,128,869, ,128,869,346 76,736,332 65,272,070 1,140,333, ,140,333,608 77,488,300 66,715,778 1,151,106, ,151,106,130 78,200,983 67,898,469 1,161,408, ,161,408,644 78,889,174 68,840,889 1,171,456, ,171,456,929 79,567,400 69,559,583 1,181,464, ,181,464,746 80,246,033 70,185,697 1,191,525, ,191,525,082 80,937,947 70,537,397 1,201,925, ,201,925,632 81,661,182 70,674,639 1,212,912, ,212,912,175 82,429,159 70,705,512 1,224,635, ,224,635,822 83,254,401 70,574,479 1,237,315, ,237,315,744 84,152,114 70,285,385 1,251,182, ,251,182,473 85,135,963 69,908,851 1,266,409, ,266,409,585 86,222,195 69,327,889 1,283,303, ,283,303,891 87,431,940 68,552,359 1,302,183, ,302,183,472 88,786,097 67,621,303 1,323,348, ,323,348,266 90,306,405 66,513,520 1,347,141, ,347,141,151 92,015,446 65,269,547 1,373,887, ,373,887,050 93,935,542 63,901,476 1,403,921, ,403,921,116 96,090,431 62,401,350 1,437,610,197 Number of years for which current market value of assets is adequate to sustain the payment of expected retirement benefits, reflecting no contributions from the Employer, Employee or State, contrary to Florida Statutes and Plan provisions: All Future Years Valuation Investment return assumption 7.00% Valuation Mortality Table FRS Mortality Rates from 7/1/16 FRS Valuation Note: As required in Section (1)(c) of the Florida Statutes, the projection of the Fund assets do not include contributions from the Employer, Employee or State, which is contrary to Florida Statutes and Plan provisions. For this reason, these projections should not be viewed as a representation of the amount of time the Fund can sustain benefit payments. Under the GASB standards which DO include contributions from the employer, employee and State, the Fund is expected to be able to sustain the benefit payment demands in the nearterm and longterm future. City of Clearwater Employees Pension Plan 6

12 Asset and Benefit Payment Projection Not Reflecting Any Contributions from the Employer, State or Employee Using Assumptions required under (1)(b), F.S. Plan Year Ending Assets (BOY) Expected Investment Return Projected Benefit Payments Assets (EOY) ,019,110,192 49,711,272 49,769,517 1,019,051, ,019,051,947 49,637,395 52,608,094 1,016,081, ,016,081,248 49,420,837 55,329,029 1,010,173, ,010,173,056 49,064,812 57,753,637 1,001,484, ,001,484,231 48,576,576 59,905, ,155, ,155,376 47,957,874 61,995, ,117, ,117,462 47,211,859 63,760, ,568, ,568,757 46,346,636 65,272, ,643, ,643,323 45,364,272 66,715, ,291, ,291,817 44,267,129 67,898, ,660, ,660,477 43,062,002 68,840, ,881, ,881,590 41,755,090 69,559, ,077, ,077,097 40,349,212 70,185, ,240, ,240,612 38,848,596 70,537, ,551, ,551,811 37,260,725 70,674, ,137, ,137,897 35,589,257 70,705, ,021, ,021,642 33,836,720 70,574, ,283, ,283,883 32,007,060 70,285, ,005, ,005,558 30,102,557 69,908, ,199, ,199,264 28,126,766 69,327, ,998, ,998,141 26,086,098 68,552, ,531, ,531,880 23,986,061 67,621, ,896, ,896,638 21,831,994 66,513, ,215, ,215,112 19,629,017 65,269, ,574, ,574,582 17,381,192 63,901, ,054, ,054,298 15,092,681 62,401, ,745, ,745,629 12,767,004 60,811, ,701, ,701,552 10,407,577 59,100, ,009, ,009,102 8,017,613 57,313, ,713, ,713,027 5,600,344 55,412,304 89,901, ,901,067 3,159,950 53,404,123 39,656, ,656, ,197 51,345,918 Number of years for which current market value of assets is adequate to sustain the payment of expected retirement benefits, reflecting no contributions from the Employer, Employee or State, contrary to Florida Statutes and Plan provisions: Valuation Investment return assumption 5.00% Valuation Mortality Table FRS Mortality Rates from 7/1/16 FRS Valuation Note: As required in Section (1)(c) of the Florida Statutes, the projection of the Fund assets do not include contributions from the Employer, Employee or State, which is contrary to Florida Statutes and Plan provisions. For this reason, these projections should not be viewed as a representation of the amount of time the Fund can sustain benefit payments. Under the GASB standards which DO include contributions from the employer, employee and State, the Fund is expected to be able to sustain the benefit payment demands in the nearterm and longterm future. City of Clearwater Employees Pension Plan 7

13 Asset and Benefit Payment Projection Not Reflecting Any Contributions from the Employer, State or Employee Using Assumptions under (1)(b), F.S. except 2% higher investment return assumption Plan Year Ending Assets (BOY) Expected Investment Return Projected Benefit Payments Assets (EOY) ,019,110,192 89,480,289 49,769,517 1,058,820, ,058,820,964 92,926,523 52,608,094 1,099,139, ,099,139,393 96,432,739 55,329,029 1,140,243, ,140,243, ,022,966 57,753,637 1,182,512, ,182,512, ,730,374 59,905,431 1,226,337, ,226,337, ,580,553 61,995,788 1,271,922, ,271,922, ,603,767 63,760,564 1,319,765, ,319,765, ,841,638 65,272,070 1,370,334, ,370,334, ,327,932 66,715,778 1,423,947, ,423,947, ,099,805 67,898,469 1,481,148, ,481,148, ,205,516 68,840,889 1,542,513, ,542,513, ,695,991 69,559,583 1,608,649, ,608,649, ,620,093 70,185,697 1,680,083, ,680,083, ,033,362 70,537,397 1,757,579, ,757,579, ,001,823 70,674,639 1,841,906, ,841,906, ,589,880 70,705,512 1,933,791, ,933,791, ,865,370 70,574,479 2,034,082, ,034,082, ,904,559 70,285,385 2,143,701, ,143,701, ,787,229 69,908,851 2,263,579, ,263,579, ,602,426 69,327,889 2,394,854, ,394,854, ,452,033 68,552,359 2,538,754, ,538,754, ,444,902 67,621,303 2,696,577, ,696,577, ,698,876 66,513,520 2,869,762, ,869,762, ,341,537 65,269,547 3,059,834, ,059,834, ,509,579 63,901,476 3,268,443, ,268,443, ,351,814 62,401,350 3,497,393,515 Number of years for which current market value of assets is adequate to sustain the payment of expected retirement benefits, reflecting no contributions from the Employer, Employee or State, contrary to Florida Statutes and Plan provisions: All Future Years Valuation Investment return assumption 9.00% Valuation Mortality Table FRS Mortality Rates from 7/1/16 FRS Valuation Note: As required in Section (1)(c) of the Florida Statutes, the projection of the Fund assets do not include contributions from the Employer, Employee or State, which is contrary to Florida Statutes and Plan provisions. For this reason, these projections should not be viewed as a representation of the amount of time the Fund can sustain benefit payments. Under the GASB standards which DO include contributions from the employer, employee and State, the Fund is expected to be able to sustain the benefit payment demands in the nearterm and longterm future. City of Clearwater Employees Pension Plan 8

14 ACTUARIALLY DETERMINED CONTRIBUTION Plan's Latest Actuarial Valuation (1)(a) F.S. Assumptions (1)(b) F.S. Assumptions (1)(b) F.S. Except 2% Higher Investment Return Assumption A. Valuation Date January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 B. Actuarially Determined Contribution (ADC) to Be Paid During Fiscal Year Ending 9/30/2019 9/30/2019 9/30/2019 9/30/2019 C. Assumed Dates of Employer Contributions Evenly during first two quarters of fiscal year Evenly during first two quarters of fiscal year Evenly during first two quarters of fiscal year Evenly during first two quarters of fiscal year D. Annual Payment to Amortize Unfunded Actuarial Liability $ 0 $ 0 $ 13,958,861 $ 0 E. Employer Normal Cost 8,236,726 8,236,726 17,531,370 3,010,004 F. ADC if Paid on Valuation Date: D + E 8,236,726 8,236,726 31,490,231 3,010,004 G. ADC Adjusted for Frequency of Payments 8,813,297 8,813,297 33,064,743 3,280,904 H. Adjusted for Frequency of Payments as % of Covered Payroll % % % 3.99 % I. Assumed Rate of Increase in Covered Payroll to Contribution Year 0.00 % 0.00 % 0.00 % 0.00 % J. Covered Payroll for Contribution Year 82,317,307 82,317,307 82,317,307 82,317,307 K. Employer ADC for Contribution Year: H x J 8,813,297 8,813,297 33,064,743 3,280,904 L. Allowable Credit for State Revenue in Contribution Year 12,000 12,000 12,000 12,000 M. Employer ADC in Contribution Year 8,801,297 8,801,297 33,052,743 3,268,904 N. Employer ADC as % of Covered Payroll in in Contribution Year: M J % % % 3.97 % O. Expected Member Contribution 7,237,233 7,237,233 7,237,233 7,237,233 P. Total Contribution (Including Members) in Contribution Year 16,050,530 16,050,530 40,301,976 10,518,137 Q. Total Contribution as % of Covered Payroll in Contribution Year: P J % % % % R. Investment Return Assumption 7.00% 7.00% 5.00% 9.00% Mortality Table FRS Mortality Rates from 7/1/16 FRS Valuation FRS Mortality Rates from 7/1/16 FRS Valuation FRS Mortality Rates from 7/1/16 FRS Valuation FRS Mortality Rates from 7/1/16 FRS Valuation City of Clearwater Employees Pension Plan 9