ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, City of Plantation General Employees Retirement System

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1 ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, 2014 City of Plantation General Employees Retirement System ANNUAL EMPLOYER CONTRIBUTION IS DETERMINED BY THIS VALUATION FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2016

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3 January 22, 2015 Board of Trustees Plantation General Employees Retirement System Plantation, Florida Re: Plantation General Employees Retirement System Actuarial Valuation as of October 1, 2014 Dear Board Members: The results of the October 1, 2014 Actuarial Valuation of the Plantation General Employees Retirement System are presented in this report. This report was prepared at the request of the Board and is intended for use by the Retirement System 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 valuation is to measure the System s funding progress, to determine the employer contribution rate for the fiscal year ending September 30, 2016, and to determine the actuarial information for Governmental Accounting Standards Board (GASB) Statement No. 27 for the fiscal year ending This report also includes final GASB Statement No. 67 information for the fiscal year ending 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 September 30, 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 an actuarial valuation does not include an analysis or the potential range of such future measurements. The valuation was based upon information furnished by the Plan Administrator concerning Retirement Plan benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We checked for internal and year-to-year consistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided by the Plan Administrator. This report was prepared using certain assumptions prescribed by the Board as described in Section B. The undersigned actuaries 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 Retirement 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.

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5 TABLE OF CONTENTS Section Title Page A Discussion of Valuation Results 1 B Valuation Results 1. Participant Data 4 2. Annual Required Contribution 5 3. Actuarial Value of Benefits and Assets 6 4. Calculation of Employer Normal Cost 7 5. Liquidation of the Unfunded Actuarial Accrued Liability 8 6. Actuarial Gains and Losses Recent History of Valuation Results Recent History of Required and Actual Contributions Schedule of Funding Progress Actuarial Assumptions and Cost Method Glossary of Terms 26 C Pension Fund Information 1. Summary of Assets Summary of Fund's Income and Disbursements Reconciliation of DROP Accounts Actuarial Value of Assets Investment Rate of Return 32 D Financial Accounting Information 1. FASB No GASB No GASB No E Miscellaneous Information 1. Reconciliation of Membership Data Active Member Age and Service Distributions Inactive Member Age Distributions 45 F Summary of Plan Provisions 46

6 SECTION A DISCUSSION OF VALUATION RESULTS

7 1 DISCUSSION OF VALUATION RESULTS Comparison of Required Employer Contributions year s: The following is a comparison of this year's required employer contribution as compared to last Based on 10/1/2014 Based on 10/1/2013 Valuation, for Valuation, for FYE 9/30/2016 FYE 9/30/2015 Increase (Decrease) Required Employer Contribution $ 6,794,427 $ 6,540,786 $ 253,641 As % of Covered Payroll % % 1.59 % The required contribution has been adjusted for interest such that payments would be made at the end of each quarter during the fiscal year. The actual employer contribution during the fiscal year ending September 30, 2014 was $6,035,177 compared to the required contribution of $6,035,177. Actuarial Experience There was a net actuarial gain of $2,934,233 for the year which means that actual experience was more favorable than expected. This gain is primarily due to recognized investment return above the assumed rate of 7.6%. While the market value return was 9.8%; the return recognized under the asset smoothing method was 9.3%. There was also a gain due to salary increases of 0.4% as compared to the assumed rate of 4.5%. The annual required contribution has decreased by 1.25% of payroll as a result of the net actuarial gain. Revisions in Benefits There have been no revisions in benefits since the last actuarial valuation.

8 2 Revisions in Actuarial Assumptions and Methods The assumed investment rate of return was lowered from 7.6% to 7.5%. In connection with the October 1, 2010 Valuation, the mortality table was updated from the 1983 Group Annuity Mortality Table to the RP-2000 Combined Healthy Mortality Tables for males and females with the provision for future mortality improvements using Scale AA after The change in the mortality table is being phased in over five years. The portion of the updated table recognized was increased from 80% to 100% for the October 1, 2014 valuation. Funded Ratio The assumption changes increased the annual required contribution by 1.76% of payroll this year. The funded ratio this year is 76.0% compared to 74.1% last year. The ratio was 77.5% before the changes in assumptions. The ratio is equal to the actuarial value of assets divided by the actuarial accrued (past service) liability. Analysis of Change in Employer Contribution The components of the change in required contribution as a percent of payroll are as follows: Contribution Rate Last Year % Experience (Gain)/Loss (1.25) Change in Assumptions and Methods 1.76 Amortization Payment on UAL 1.10 * Normal Cost Rate (0.01) Change in Administrative Expense (0.01) Contribution Rate This Year % * The payroll growth assumption was lowered to 0.36% from 0.87% for purposes of amortizing the UAAL due to the 10-year payroll growth cap required by the Florida Statute.

9 3 Variability of Future Contribution Rates The Actuarial Cost Method is intended to produce contribution rates which are generally level as a percent of payroll. Even so, when experience differs from the assumptions, as it often does, the employer s contribution rate can vary significantly from year-to-year. Over time, if the year-to-year gains and losses offset each other, the contribution rate would be expected to return to the current level, but this does not always happen. The Market Value of Assets exceeds the Actuarial Value of Assets by $8,115,506 as of the valuation date (see Section C). This difference will be gradually recognized in the absence of offsetting gains. In turn, the computed employer contribution rate will gradually decrease by approximately 3.4% of covered payroll. Another potential area of variability has to do with the annual payment on the unfunded accrued liability (UAL). This payment is computed as a level percent of covered payroll under the assumption that covered payroll will rise by 4.0% per year. According to the Florida Administrative Code, this payroll growth assumption may not exceed the average growth over the last ten years which was 0.36%. When the ten-year average falls below 4.0%, the amortization payments increase. For example, if the payroll growth assumption is lowered to 0%, the UAL payment will go from $4,164,973 next year to $4,249,282. Relationship to Market Value If Market Value had been the basis for the valuation, the City contribution rate would have been 26.2% and the funded ratio would have been 81.0%. In the absence of other gains and losses, the City contribution rate should decrease to that level over the next several years. Conclusion The remainder of this Report includes detailed actuarial valuation results, financial information, miscellaneous information and statistics, and a summary of plan provisions.

10 SECTION B VALUATION RESULTS

11 4 PARTICIPANT DATA October 1, 2014 October 1, 2013 ACTIVE MEMBERS 1 Number Covered Annual Payroll $ 22,026,645 $ 22,405,476 Average Annual Payroll $ 44,498 $ 45,081 Average Age Average Past Service Average Age at Hire RETIREES & BENEFICIARIES & DROP Number Annual Benefits $ 8,928,746 $ 8,400,547 Average Annual Benefit $ 24,132 $ 24,002 Average Age DISABILITY RETIREES Number 6 6 Annual Benefits $ 182,798 $ 182,798 Average Annual Benefit $ 30,466 $ 30,466 Average Age TERMINATED VESTED MEMBERS Number Annual Benefits $ 498,915 $ 554,752 Average Annual Benefit $ 9,071 $ 9,565 Average Age Does not include employees who transferred to the Police Officers System (44 this year, 37 last year)

12 5 ANNUAL REQUIRED CONTRIBUTION (ARC) A. Valuation Date October 1, 2014 October 1, 2014 October 1, 2013 After Assumption Change Before Assumption Change B. ARC to Be Paid During Fiscal Year End 9/30/2016 9/30/2016 9/30/2015 C. Assumed Dates of Employer Contributions Quarterly Quarterly Quarterly D. Annual Payment to Amortize Unfunded Actuarial Liability $ 4,164,973 $ 3,911,232 $ 4,010,214 E. Employer Normal Cost 2,082,273 1,963,929 2,001,143 F. ARC if Paid on the Valuation Date: D + E 6,247,246 5,875,161 6,011,357 G. ARC Adjusted for Frequency of Payments 6,532,058 6,146,476 6,288,961 H. ARC as % of Covered Payroll % % % I. Assumed Rate of Increase in Covered Payroll to Contribution Year 4.00 % 4.00 % 4.00 % J. Covered Payroll for Contribution Year 22,907,711 22,907,711 23,301,695 K. ARC for Contribution Year: H x J 6,794,427 6,391,251 6,540,786 L. REC as % of Covered Payroll in Contribution Year: K J % % %

13 6 ACTUARIAL VALUE OF BENEFITS AND ASSETS A. Valuation Date October 1, 2014 After October 1, 2014 Before October 1, 2013 Assumption Assumption Change Change B. Actuarial Present Value of All Projected Benefits for 1. Active Members a. Service Retirement Benefits $ 78,859,520 $ 76,457,637 $ 76,623,787 b. Vesting Benefits 6,585,869 6,341,518 6,536,738 c. Disability Benefits 6,399,915 6,216,743 6,350,620 d. Preretirement Death Benefits 1,539,160 1,724,362 1,744,740 e. Return of Member Contributions 802, , ,519 f. Total 94,187,219 91,545,234 92,151, Inactive Members a. Service Retirees & Beneficiaries 89,446,313 88,137,924 83,149,057 b. Disability Retirees 2,095,147 2,065,482 2,070,367 c. Terminated Vested Members 3,215,758 3,125,677 3,496,099 d. Total 94,757,218 93,329,083 88,715, Total for All Members 188,944, ,874, ,866,927 C. Actuarial Accrued (Past Service) Liability per GASB No ,750, ,673, ,451,925 D. Actuarial Value of Accumulated Plan Benefits per FASB No ,492, ,736, ,301,207 E. Plan Assets 1. Market Value 132,632, ,632, ,074, Actuarial Value 124,516, ,516, ,214,428 F. Unfunded Actuarial Accrued Liability: C-E2 39,233,763 36,156,498 40,237,497 G. Actuarial Present Value of Projected Covered Payroll 162,336, ,216, ,751,181 H. Actuarial Present Value of Projected Member Contributions 12,045,863 11,965,353 12,717,430

14 7 CALCULATION OF EMPLOYER NORMAL COST A. Valuation Date B. Normal Cost for October 1, 2014 October 1, 2014 October 1, 2013 After Assumption Changes Before Assumption Changes 1. Service Retirement Benefits $ 2,537,542 $ 2,436,265 $ 2,512, Vesting Benefits 389, , , Disability Benefits 375, , , Preretirement Death Benefits 52,525 60,519 62, Return of Member Contributions 279, , , Total for Future Benefits 3,634,491 3,516,147 3,620, Assumed Amount for Administrative Expenses 112, , , Total Normal Cost 3,746,535 3,628,191 3,736,889 C. Expected Member Contribution 1,664,262 1,664,262 1,735,746 D. Employer Normal Cost: B8-C 2,082,273 1,963,929 2,001,143 E. Employer Normal Cost as a % of Covered Payroll 9.45% 8.92% 8.93%

15 8 LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY A. Derivation of the Current UAAL 1. Last Year's UAAL $ 40,237, Last Year's Employer Normal Cost 1,912, Last Year's Contributions 6,035, Interest at the Assumed Rate on: a. 1 and 2 for one year 3,203,367 b. 3 from dates paid 227,024 c. a - b 2,976, This Year's Expected UAAL Prior to Revision: c 39,090, Change in UAAL Due to Plan Amendments and/or Changes in Actuarial Assumptions 3,077, This Year's Expected Revised UAAL: ,167, This Year's Actual UAAL 39,233, This Year's Gain (Loss): 7-8 2,934, Gain (Loss) Due to Investments 2,076, Gain (Loss) Due to Other Causes 857,606

16 9 B. UAAL Amortization Period and Payments Original UAAL Current UAAL Amortization Period Years Payment Years (Years) Amount Remaining Amount After Changes Payment Before Changes 10/1/ $ 1,186,913 8 $ 422,477 $ 66,345 $ 66,539 10/1/ (251,209) 8 (251,342) (39,470) (39,586) 10/1/ , ,840 65,774 65,966 10/1/ ,468,138 8 (253,216) (39,765) (39,881) 10/1/ ,834, ,600, , ,538 10/1/ ,882, ,935, , ,258 10/1/ ,259, ,739, , ,503 10/1/ ,714, ,912, , ,534 10/1/ (318,655) 16 (355,440) (35,394) (35,594) 10/1/ ,939, ,394, , ,024 10/1/ (900,158) 16 (978,325) (97,419) (97,969) 10/1/ (188,490) 16 (204,317) (20,345) (20,460) 10/1/ , ,297 38,068 38,283 10/1/ ,185, ,406, , ,312 10/1/ ,143, ,251, , ,751 10/1/ ,447, ,447, , ,979 10/1/ (1,022,572) 16 (1,022,425) (101,810) (102,385) 10/1/ ,705, ,707, , ,492 10/1/ ,515, ,517, , ,073 10/1/ ,866, ,828, , ,687 10/1/ ,716, ,695, , ,821 10/1/ (1,370,010) 19 (1,350,801) (123,062) (123,864) 10/1/ ,885, ,844, , ,859 10/1/ (2,934,233) 20 (2,934,233) (260,878) (262,648) 10/1/ ,077, ,077, ,595 N/A $ 39,562,945 $ 39,233,763 $ 4,164,973 $ 3,911,232

17 10 C. Amortization Schedule The UFAAL is being amortized as a level percent of future covered payroll assuming such payroll will grow each year by the lesser of 4% and the average payroll growth over the last ten years, which was 0.36%. The expected amortization schedule is as follows: Amortization Schedule Year Expected UAAL 2014 $ 39,233, ,698, ,034, ,312, ,880, ,538, ,947,

18 11 ACTUARIAL GAINS AND LOSSES The assumptions used to anticipate mortality, employment turnover, investment income, expenses, salary increases, and other factors have been based on long range trends and expectations. Actual experience can vary from these expectations. The variance is measured by the gain and loss for the period involved. If significant long term experience reveals consistent deviation from what has been expected and that deviation is expected to continue, the assumptions should be modified. The net actuarial gains in previous years have been as follows: Year Ended Gain (Loss) 12/31/1985 $ 181,199 12/31/1986 (336,412) 12/31/1987 (660,630) 12/31/1988 (451,052) 12/31/ ,086 9/30/1990 (539,869) 9/30/1991 1,078,459 9/30/ ,748 9/30/1993 (1,066,821) 9/30/1994 (93,091) 9/30/ ,263 9/30/ ,249 9/30/1997 1,828,716 9/30/1998 2,037,510 9/30/1999 3,346,772 9/30/2000 (1,805,911) 9/30/2001 (2,165,849) 9/30/2002 (6,863,232) 9/30/2003 (2,994,766) 9/30/2004 (1,714,720) 9/30/ ,158 9/30/ ,490 9/30/2007 (359,256) 9/30/2008 (4,185,867) 9/30/2009 (4,143,171) 9/30/2010 (1,447,973) 9/30/2011 (3,705,133) 9/30/2012 (4,866,784) 9/30/2013 1,370,010 9/30/2014 2,934,233

19 12 Actuarial Gain (+) or Loss (-) ($Mill) $10 $8 $6 $4 $2 $0 ($2) ($4) ($6) ($8) ($10) ($12) ($14) ($16) ($18) ($20) ($22) ($24) ($26) ($28) $10 $8 $6 $4 $2 $0 ($2) ($4) ($6) ($8) ($10) ($12) ($14) ($16) ($18) ($20) ($22) ($24) ($26) ($28) Plan Year End Gain or Loss Cumulative

20 13 The fund earnings and salary increase assumptions have considerable impact on the cost of the plan so it is important that they are in line with the actual experience. The following table shows the actual fund earnings and salary increase rates compared to the assumed rates for the last few years: Investment Return Salary Increases Year Ending Actual Assumed Actual Assumed 12/31/ % 6.5 % 10.9 % 6.0 % 12/31/ /31/ /31/ /31/ /31/ /31/ /31/ /30/1990 (9 mos.) /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2002 (0.1) /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ Averages 8.8 % % --- Total fund results prior to separation into General and Police in 1986.

21 14 The actual investment return rates shown above are based on the actuarial value of assets. The actual salary increase rates shown above are the increases received by those active members who were included in the actuarial valuations both at the beginning and end of each year. 30% 25% 20% 15% 10% 5% 0% -5% History of Investment Return Based on Actuarial Value of Assets 30% 25% 20% 15% 10% 5% 0% -5% Plan Year End Actual Assumed History of Salary Increases 14% 12% 10% 8% 6% 4% 2% 0% 14% 12% 10% 8% 6% 4% 2% 0% Plan Year End Compared to Previous Year Actual Assumed

22 15 Actual (A) Compared to Expected (E) Decrements Among Active Employees Year Ended Number Added Service & Active During DROP Disability Terminations Members Year Retirement Retirement Death Vested Other Totals End of A E A E A E A E A A A E Year 9/30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ Yr Totals* * Totals are through current Plan Year only.

23 16 HISTORICAL VALUATION RESULTS Val'n Date Number of Members 1 Active Inactive Covered Annual Payroll 1 Actuarial Value of Assets UFAAL Employer Normal Cost Amount % of Pay 1/1/ $ 5,703,940 $ 4,953,500 $ 728,731 $ 129, % 1/1/ ,514,471 5,898, , , /1/ ,173,390 6,436, , , /1/ ,668,454 7,904, , , /1/ ,820,151 10,100,479 1,307, , /1/ ,108,630 10,859,440 1,452, , /1/ ,023,664 14,027,539 1,473, , /1/ ,001,031 16,637,504 2,573, , /1/ ,454,248 18,618,995 2,519, , /1/ ,292,218 21,924,161 2,698, , /1/ ,064,960 25,303,657 1,753, , /1/ ,539,843 29,746,333 2,622, , /1/ ,015,723 34,879,164 2,542, , /1/ ,506,544 41,829,160 2,050, , /1/ ,777,048 49,929, ,423 (57,421) (0.36) 10/1/ ,929,486 53,758,722 1,855, , /1/ ,059,949 55,419,236 2,277, , /1/ ,451,750 55,158,979 5,548,781 1,892, /1/ ,539,070 58,910,214 10,376,330 1,864, /1/ ,253,162 64,718,388 16,020,922 1,894, /1/ ,118,286 71,882,352 15,554,753 2,010, /1/ ,493,537 79,088,714 15,399,642 1,988, /1/ ,865,527 87,235,903 15,825,342 2,078, /1/ ,254,829 92,678,027 19,936,768 2,164, /1/ ,919,456 97,541,924 24,292,681 2,160, /1/ ,773, ,385,150 24,973,187 1,837, /1/ ,999, ,533,538 31,145,574 1,915, /1/ ,518, ,715,029 38,828,261 1,912, /1/ ,405, ,214,428 40,237,497 2,001, /1/ ,026, ,516,999 39,233,763 2,082, Does not include employees who transferred to the Police Officers' System

24 17 Recent History of Number of Members Actuarial Valuation Date Inactive Members Active Members $30.0 Recent History of Covered Annual Payroll ($Mill) $25.0 $20.0 $15.0 $10.0 $5.0 $0.0 Actuarial Valuation Date

25 18 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 ($500) Recent History of Employer Normal Cost ($000) 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% Actuarial Valuation Date Employer NC Amount NC as % of Payroll

26 19 RECENT HISTORY OF REQUIRED AND ACTUAL CONTRIBUTIONS Valuation Applies to Year Ending Required Contributions Amount % of Pay Actual Date Contributions 1/1/86 9/30/87 $ 255, % $ 255,606 1/1/87 9/30/88 289, ,396 1/1/88 9/30/89 421, ,230 1/1/89 9/30/90 564, ,826 1/1/90 9/30/91 845, ,574 10/1/90 9/30/92 992, ,296 10/1/91 9/30/93 891, ,186 10/1/92 9/30/94 979, ,963 10/1/93 9/30/95 1,330, ,330,522 10/1/94 9/30/96 1,409, ,409,509 10/1/95 9/30/97 1,276, ,276,850 10/1/96 9/30/98 1,404, ,404,794 10/1/97 9/30/99 1,119, ,119,686 10/1/98 9/30/00 707, ,372 10/1/99 9/30/01 65, ,662 10/1/00 9/30/02 472, ,765 10/1/01 9/30/03 878, ,407 10/1/02 9/30/04 2,441, ,441,739 10/1/03 9/30/05 2,723, ,723,481 10/1/04 9/30/06 3,112, ,112,143 10/1/05 9/30/07 3,241, ,241,125 10/1/06 9/30/08 3,328, ,328,863 10/1/07 9/30/09 3,494, ,494,677 10/1/08 9/30/10 3,876, ,876,717 10/1/09 9/30/11 4,188, ,188,999 10/1/10 9/30/12 4,150, ,969,534 10/1/11 9/30/13 4,969, ,969,534 10/1/12 9/30/14 6,035, ,035,177 10/1/13 9/30/15 6,540, N/A 10/1/14 9/30/16 6,794, N/A

27 20 SCHEDULE OF FUNDING PROGRESS (Recent History of UAAL and Funded Ratio) Val'n Date Actuarial Value of Assets (a) Entry Age Actuarial Accrued Liability AAL: (b) Unfunded AAL (UAAL) (b) - (a) Funded Ratio (a) / (b) Covered Payroll (c) UAAL As % of Covered Payroll (b-a)/(c) 10/1/91 $14,027,539 $14,366,577 $339, % $11,023, % 10/1/92 16,637,504 16,647,429 9, ,001, /1/93 18,618,995 21,046,362 2,427, ,454, /1/94 21,924,161 24,684,374 2,760, ,292, /1/95 25,303,657 26,779,370 1,475, ,064, /1/96 29,746,333 30,904,897 1,158, ,539, /1/97 34,879,164 34,284,547 (594,617) ,015,723 (4.0) 10/1/98 41,829,160 38,656,225 (3,172,935) ,506,544 (20.5) 10/1/99 49,929,207 42,611,083 (7,318,124) ,777,048 (46.4) 10/1/00 53,758,722 46,385,838 (7,372,884) ,929,486 (43.6) 10/1/01 55,419,236 55,018,316 (400,920) ,059,949 (2.2) 10/1/02 55,158,979 64,111,663 8,952, ,451, /1/03 58,910,214 69,286,544 10,376, ,539, /1/04 64,718,388 80,739,310 16,020, ,253, /1/05 71,882,352 87,437,105 15,554, ,118, /1/06 79,088,714 94,488,356 15,399, ,493, /1/07 87,235, ,061,245 15,825, ,865, /1/08 92,678, ,614,795 19,936, ,254, /1/09 97,541, ,834,605 24,292, ,919, /1/10 102,385, ,358,337 24,973, ,773, /1/11 105,533, ,679,112 31,145, ,999, /1/12 107,715, ,543,290 38,828, ,518, /1/13 115,214, ,451,925 40,237, ,405, /1/14 (b) 124,516, ,673,497 36,156, ,026, /1/14 (a) 124,516, ,750,762 39,233, ,026, (a) = after changes (b) = before changes

28 21 ACTUARIAL ASSUMPTIONS AND COST METHOD Valuation Methods Actuarial Cost Method - Normal cost and the allocation of benefit values between service rendered before and after the valuation date were determined using an Individual Entry-Age Actuarial Cost Method having the following characteristics: (i) the annual normal cost for each individual active member, payable from the date of employment to the date of retirement, is sufficient to accumulate the value of the member s benefit at the time of retirement; (ii) each annual normal cost is a constant percentage of the member s year by year projected covered pay. Actuarial gains/(losses), as they occur, reduce (increase) the Unfunded Actuarial Accrued Liability. Financing of Unfunded Actuarial Accrued Liabilities - Unfunded Actuarial Accrued Liabilities (full funding credit if assets exceed liabilities) were amortized by level (principal & interest combined) percent-of-payroll contributions over a reasonable period of future years. Actuarial Value of Assets - The Actuarial Value of Assets phases in the difference between the expected return on the actuarial value of assets and the actual return on the market of assets at the rate of 20% per year. The Actuarial Value of Assets is further adjusted to the extent necessary to fall within the corridor whose lower limit is 80% of the Market Value of plan assets and whose upper limit is 120% of the Market Value of plan assets. During periods when investment performance exceeds the assumed rate, Actuarial Value of Assets will tend to be less than Market Value. During periods when investment performance is less than assumed rate, Actuarial Value of Assets will tend to be greater than Market Value. Valuation Assumptions The actuarial assumptions used in the valuation are shown in this Section. Economic Assumptions The investment return rate assumed in the valuation is 7.5% per year, compounded annually (net after investment expenses). The Wage Inflation Rate assumed in this valuation was 3% per year. The Wage Inflation Rate is defined to be the portion of total pay increases for an individual that are due to macro-economic forces including productivity, price inflation, and labor market conditions. The wage inflation rate does not include pay changes related to individual merit and seniority effects. The assumed real rate of return over wage inflation is defined to be the portion of total investment return that is more than the assumed wage inflation rate. Considering other economic assumptions, the 7.5% investment return rate translates to an assumed real rate of return over wage inflation of 4.5%. The active member population is assumed to remain constant. For purposes of financing the unfunded liabilities, total payroll is assumed to grow at 4% per year. The most recent ten year average is 0.36%.

29 22 Administrative Expenses paid out of the fund are assumed to be the average of actual expenses over the previous two years. Pay increase assumptions for individual active members are shown below. Part of the assumption for each age for merit and/or seniority increase, and the other 3% recognizes wage inflation, including price inflation, productivity increases, and other macro-economic forces. The rates of salary increase used are in accordance with the following table. This assumption is used to project a member s current salary to the salaries upon which benefits will be based. % Increase in Salary Age Merit and Seniority Base (Economic) Total Increase % 3.0% 4.5% % 3.0% 4.5% % 3.0% 4.5% % 3.0% 4.5% % 3.0% 4.5% % 3.0% 4.5% % 3.0% 4.5% % 3.0% 4.5% Demographic Assumptions The mortality table was the RP 2000 Combined Healthy Participant Mortality Tables for males and females. The provision for future mortality improvements is being made by using Scale AA after The rates below reflect the RP 2000 Tables. Sample Probability of Future Life Attained Dying Next Year Expectancy (years) Ages (in 2014) Men Women Men Women % 0.13 % This assumption is used to measure the probabilities of each benefit payment being made after retirement. For active members, the probabilities of dying before retirement were based upon the same mortality table as members dying after retirement. For disabled retirees, the regular mortality tables are set forward 5 years in ages to reflect impaired longevity.

30 The rates of retirement used to measure the probability of eligible members retiring during the next year were as follows: Number of Years After First Eligibility for Normal Retirement 0-1 Probability of Normal Retirement 30 % Rates of separation from active membership were as shown below (rates do not apply to members eligible to retire and do not include separation on account of death or disability). This assumption measures the probabilities of members remaining in employment. Members with less than 5 Years of Service Years of Service Turnover % % % % % Members with more than 5 Years of Service Sample Ages Turnover % % % % % % % %

31 24 Rates of disability among active members (25% of disabilities are assumed to be service-connected). Sample Ages % Becoming Disabled Within Next Year % Changes since the prior valuation The investment rate of return was lowered from 7.6% to 7.5% per year, compounded annually, net after investment expenses. Additionally, the percentage of the RP 2000 Combined Healthy Participant Mortality Tables for males and females recognized was increased from 80% to 100%.

32 25 Miscellaneous and Technical Assumptions Administrative & Investment Expenses Benefit Service Decrement Operation Decrement Timing Eligibility Testing Forfeitures Incidence of Contributions Marriage Assumption Normal Form of Benefit Pay Increase Timing Service Credit Accruals The investment return assumption is intended to be the return net of investment expenses. Annual administrative expenses are assumed to be equal to the average of the prior two years expenses. Assumed administrative expenses are added to the Normal Cost. Service calculated based on completed months is used to determine the amount of benefit payable. Disability and mortality decrements operate during retirement eligibility. Decrements of all types are assumed to occur at the beginning of the year. Eligibility for benefits is determined based upon the age nearest birthday and service nearest whole year on the date the decrement is assumed to occur. For vested separations from service, it is assumed that 0% of members separating will withdraw their contributions and forfeit an employer financed benefit. It was further assumed that the liability at termination is the greater of the vested deferred benefit (if any) or the member s accumulated contributions. Employer contributions are assumed to be made at the end of each biweekly pay period. Member contributions are assumed to be received continuously throughout the year based upon the computed percent of payroll shown in this report, and the actual payroll payable at the time contributions are made. 100% of males and 100% of females are assumed to be married for purposes of death-in-service benefits. Male spouses are assumed to be three years older than female spouses for active member valuation purposes. A life annuity is the normal form of benefit. End of fiscal year. This is equivalent to assuming that reported pays represent amounts paid to members during the year following the valuation date. It is assumed that members accrue one year of service credit per year.

33 26 GLOSSARY Actuarial Accrued Liability (AAL) Actuarial Assumptions Actuarial Cost Method Actuarial Equivalent Actuarial Present Value (APV) Actuarial Present Value of Future Benefits (APVFB) Actuarial Valuation Actuarial Value of Assets The difference between the Actuarial Present Value of Future Benefits, and the Actuarial Present Value of Future Normal Costs. Assumptions about future plan experience that affect costs or liabilities, such as: mortality, withdrawal, disablement, and retirement; future increases in salary; future rates of investment earnings; future investment and administrative expenses; characteristics of members not specified in the data, such as marital status; characteristics of future members; future elections made by members; and other items. A procedure for allocating the Actuarial Present Value of Future Benefits between the Actuarial Present Value of Future Normal Costs and the Actuarial Accrued Liability. Of equal Actuarial Present Value, determined as of a given date and based on a given set of Actuarial Assumptions. The amount of funds required to provide a payment or series of payments in the future. It is determined by discounting the future payments with an assumed interest rate and with the assumed probability each payment will be made. The Actuarial Present Value of amounts which are expected to be paid at various future times to active members, retired members, beneficiaries receiving benefits, and inactive, nonretired members entitled to either a refund or a future retirement benefit. Expressed another way, it is the value that would have to be invested on the valuation date so that the amount invested plus investment earnings would provide sufficient assets to pay all projected benefits and expenses when due. The determination, as of a valuation date, of the Normal Cost, Actuarial Accrued Liability, Actuarial Value of Assets, and related Actuarial Present Values for a plan. An Actuarial Valuation for a governmental retirement system typically also includes calculations of items needed for compliance with GASB No. 67. The value of the assets as of a given date, used by the actuary for valuation purposes. This may be the market or fair value of plan assets or a smoothed value in order to reduce the year-to-year volatility of calculated results, such as the funded ratio and the actuarially required contribution (ARC).

34 27 Amortization Method Amortization Payment Amortization Period Annual Required Contribution (ARC) A method for determining the Amortization Payment. The most common methods used are level dollar and level percentage of payroll. Under the Level Dollar method, the Amortization Payment is one of a stream of payments, all equal, whose Actuarial Present Value is equal to the UAAL. Under the Level Percentage of Pay method, the Amortization Payment is one of a stream of increasing payments, whose Actuarial Present Value is equal to the UAAL. Under the Level Percentage of Pay method, the stream of payments increases at the rate at which total covered payroll of all active members is assumed to increase. That portion of the plan contribution or ARC which is designed to pay interest on and to amortize the Unfunded Actuarial Accrued Liability. The period used in calculating the Amortization Payment. The employer s periodic required contributions, expressed as a dollar amount or a percentage of covered plan compensation. The ARC consists of the Employer Normal Cost and Amortization Payment. Closed Amortization Period Employer Normal Cost Equivalent Single Amortization Period Experience Gain/Loss Funded Ratio GASB GASB No. 27 and GASB No. 67 A specific number of years that is reduced by one each year, and declines to zero with the passage of time. For example if the amortization period is initially set at 30 years, it is 29 years at the end of one year, 28 years at the end of two years, etc. The portion of the Normal Cost to be paid by the employer. This is equal to the Normal Cost less expected member contributions. For plans that do not establish separate amortization bases (separate components of the UAAL), this is the same as the Amortization Period. For plans that do establish separate amortization bases, this is the period over which the UAAL would be amortized if all amortization bases were combined upon the current UAAL payment. A measure of the difference between the normal cost rate from last year and the normal cost rate from this year. The ratio of the Actuarial Value of Assets to the Actuarial Accrued Liability. Governmental Accounting Standards Board. These are the governmental accounting standards that set the accounting rules for public retirement systems and the employers that sponsor or contribute to them. Statement No. 27 sets the accounting rules for the employers that sponsor or contribute to public retirement systems, while Statement No. 67 sets the rules for the systems themselves. Normal Cost The annual cost assigned, under the Actuarial Cost Method, to the current plan year.

35 28 Open Amortization Period Unfunded Actuarial Accrued Liability Valuation Date An open amortization period is one which is used to determine the Amortization Payment but which does not change over time. In other words, if the initial period is set as 30 years, the same 30-year period is used in determining the Amortization Period each year. In theory, if an Open Amortization Period is used to amortize the Unfunded Actuarial Accrued Liability, the UAAL will never completely disappear, but will become smaller each year, either as a dollar amount or in relation to covered payroll. The difference between the Actuarial Accrued Liability and Actuarial Value of Assets. The date as of which the Actuarial Present Value of Future Benefits are determined. The benefits expected to be paid in the future are discounted to this date.

36 SECTION C PENSION FUND INFORMATION

37 28 Statement of Plan Assets Item September A. Cash and Cash Equivalents (Operating Cash) $ 5,704 $ 8,495 B. Receivables: 1. Member Contributions $ - $ - 2. Employer Contributions State Contributions Investment Income and Other Receivables 1,984,191 2,518, Total Receivables $ 1,984,191 $ 2,518,583 C. Investments 1. Short Term Investments $ 4,811,580 $ 4,215, Domestic Equities 70,086,840 62,974, International Equities 18,577,042 17,479, Domestic Fixed Income 39,041,139 37,723, International Fixed Income Real Estate 5,221,623 4,702, Private Equity Total Investments $ 137,738,224 $ 127,095,073 D. Liabilities 1. Benefits Payable $ (18,610) $ (83,505) 2. Accrued Expenses and Other Payables (1,913,007) (3,266,274) 3. Total Liabilities $ (1,931,617) $ (3,349,779) E. Total Market Value of Assets Available for Benefits $ 137,796,502 $ 126,272,372 F. Reserves 1. State Contribution Reserve $ - $ - 2. DROP Accounts 5,163,997 4,197, Total Reserves $ 5,163,997 $ 4,197,443 G. Total Market Value of Assets Available for Benefits $ 132,632,505 $ 122,074,929 H. Allocation of Investments 1. Short Term Investments 3.49% 3.32% 2. Domestic Equities 50.88% 49.55% 3. International Equities 13.49% 13.75% 4. Domestic Fixed Income 28.35% 29.68% 5. International Fixed Income 0.00% 0.00% 6. Real Estate 3.79% 3.70% 7. Private Equity 0.00% 0.00% 8. Total Investments % %

38 29 Statement of Net Changes in Plan Assets Item September A. Market Value of Assets at Beginning of Year $ 126,272,372 $ 112,554,953 B. Revenues and Expenditures 1. Contributions a. Employee Contributions $ 1,758,587 $ 1,942,436 b. Employer Contributions 6,035,177 4,969,534 c. State Contributions - - d. Purchased Service Credit - 54,762 e. Total $ 7,793,764 $ 6,966, Investment Income a. Interest, Dividends, and Other Income $ 2,952,949 $ 3,117,857 b. Net Realized Gains/(Losses) 6,901,933 4,556,260 c. Net Unrealized Gains/(Losses) 3,199,362 7,902,936 d. Investment Expenses (679,628) (574,104) e. Net Investment Income $ 12,374,616 $ 15,002, Benefits and Refunds a. Refunds $ (566,255) $ (339,723) b. Regular Benefits Paid (6,909,170) (6,254,412) c. DROP Distributions (1,026,635) (1,576,230) e. Total $ (8,502,060) $ (8,170,365) 4. Administrative and Miscellaneous Expenses $ (142,190) $ (81,897) 5. Transfers $ - $ - C. Market Value of Assets at End of Year 1. Market Value at End of Year $ 137,796,502 $ 126,272, Less DROP Account Balances 5,163,997 4,197, Final Market Value at End of Year $ 132,632,505 $ 122,074,929

39 30 Year Ended 9/30 Reconciliation of DROP Accounts Balance at Beginning of Year Credits Interest Distributions Balance at End of Year 2010 $ 1,007,046 $ 656,203 $ 118,624 $ (143,027) $ 1,638, $ 1,638,846 $ 1,060,899 $ (55,396) $ (246,362) $ 2,397, $ 2,397,987 $ 1,517,244 $ 466,760 $ (777,807) $ 3,604, $ 3,604,184 $ 1,672,568 $ 496,921 $ (1,576,230) $ 4,197, $ 4,197,443 $ 1,574,322 $ 418,867 $ (1,026,635) $ 5,163,997

40 31 Actuarial Value of Assets Year Ended September 30: A. Funding Value Beginning of Year $119,411,871 $111,319,213 B. Market Value End of Year 137,796, ,272,372 C. Market Value Beginning of Year 126,272, ,554,953 D. Non-Investment Net Cash Flow (850,486) (1,285,530) E. Investment Income E1. Market Total: B - C - D 12,374,616 15,002,949 E2. Amount for Immediate Recognition 9,042,984 8,522,086 E3. Amount for Phased-In Recognition: E1-E2 3,331,632 6,480,863 F. Phased-In Recognition of Investment Income F1. Current Year: 0.20 x E3 666,326 1,296,173 F2. First Prior Year 1,296,173 1,583,091 F3. Second Prior Year 1,583,091 (1,604,499) F4. Third Prior Year (1,604,499) 135,536 F5. Fourth Prior Year 135,536 (554,199) F6. Total Recognized Investment Gain/(loss) 2,076, ,102 G. Funding Value End of Year G1. Preliminary Funding Value: A + D + E2 + F6 129,680, ,411,871 G2. Upper Corridor Limit: 120% x B 165,355, ,526,846 G3. Lower Corridor Limit: 80% x B 110,237, ,017,898 G4. Funding Value 129,680, ,411,871 G5. Reserved for DROP Balances 5,163,997 4,197,443 G6. Adjusted Funding Value 124,516, ,214,428 H. Difference between Market & Funding Value 8,115,506 6,860,501 I. Recognized Net Rate of Return 9.35% 8.47% J. Net Market Value Rate of Return 9.83% 13.41% K. Ratio of Funding Value to Market Value 94.11% 94.57%

41 32 Investment Rate of Return Year Ending Market Value Actuarial Value 12/31/1974 (2.4) % NA 12/31/ NA 12/31/ NA 12/31/ % 12/31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/ /30/1990 (9 mos.) /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2001 (4.8) 4.2 9/30/2002 (3.1) (0.1) 9/30/ /30/ /30/ /30/ /30/ /30/2008 (13.4) 5.3 9/30/ /30/ /30/ /30/ /30/ /30/ Average Returns: Last 5 Years 9.9 % 5.9 % Last 10 Years All Years 9.4 % 8.8 % * Net of investment expenses starting in 2006 The above rates are based on the retirement system s financial information reported to the actuary. They may differ from figures that the investment consultant reports, in part because of differences in the handling of administrative and investment expenses, and in part because of differences in the handling of cash flows. Results up to 1987 are prior to separation of Fund into General and Police Funds. Market Value is net of investment expenses starting in 2006.

42 SECTION D FINANCIAL ACCOUNTING INFORMATION

43 33 FASB NO. 35 INFORMATION A. Valuation Date October 1, 2014 October 1, 2013 B. Actuarial Present Value of Accumulated Plan Benefits 1. Vested Benefits a. Members Currently Receiving Payments $ 91,541,460 $ 85,219,424 b. Terminated Vested Members 3,215,758 3,496,099 c. Other Members 49,064,848 47,442,088 d. Total 143,822, ,157, Non-Vested Benefits 6,670,364 8,143, Total: 1d ,492, ,301, Accumulated Contributions of Active Members 15,489,447 15,167,012 C. Changes in the Actuarial Present Value of Accumulated Plan Benefits 1. Total Value at Beginning of Year 144,301, ,353, Changes During the Period Attributable to: a. Plan Amendment 0 0 b. Change in Actuarial Assumptions 2,756,009 2,571,830 c. Latest Member Data, Benefits Accumulated and Decrease in the Discount Period 12,484,961 14,642,408 d. Benefits Paid (9,049,747) (8,266,703) e. Net Increase 6,191,223 8,947, Total Value at End of Period 150,492, ,301,207 D. Market Value of Assets 132,632, ,074,929

44 34 ANNUAL PENSION COST AND NET PENSION OBLIGATION (GASB STATEMENT NO. 27) Employer FYE September Annual Required Contribution (ARC) $ 6,035,177 $ 4,969,534 Interest on Net Pension Obligation (NPO) (640) (689) Adjustment to ARC (1,135) (1,226) Annual Pension Cost (APC) 6,035,672 4,970,071 Contributions made 6,035,177 4,969,534 Increase (decrease) in NPO NPO at beginning of year (8,417) (8,954) NPO at end of year (7,922) (8,417) *To be determined THREE YEAR TREND INFORMATION Fiscal Annual Pension Actual Year Ending Cost (APC) Contribution Percentage of APC Contributed Net Pension Obligation 9/30/2012 $ 4,151,166 $ 4,150, % $ (8,954) 9/30/2013 4,970,071 $ 4,969, (8,417) 9/30/2014 6,035,672 6,035, (7,922)

45 35 REQUIRED SUPPLEMENTARY INFORMATION GASB Statement No. 27 The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation: Valuation date October 1, 2014 Contribution Rates: Employer (and State) 29.66% Plan Members Tier % Tier % Actuarial Cost Method Amortization Method Remaining amortization period Asset valuation method Entry Age Normal Level percent, closed 20 years 20% of the difference between actual and expected investment return is recognized each year Actuarial assumptions: Investment rate of return 7.5% Projected salary increases 4.5% Includes inflation and other general increases at 3.0% Cost-of-living adjustments Not Applicable

46 36 SCHEDULE OF CHANGES IN THE EMPLOYER S NET PENSION LIABILITY AND RELATED RATIOS GASB Statement No. 67 Fiscal year ending September 30, 2014 Total pension liability Service Cost $ 3,620,576 Interest 12,085,438 Benefit Changes - Difference between actual & expected experience 79,049 Assumption Changes - Benefit Payments (7,935,805) Refunds (566,255) Net Change in Total Pension Liability 7,283,003 Total Pension Liability - Beginning 159,649,368 Total Pension Liability - Ending (a) $ 166,932,371 Plan Fiduciary Net Position Contributions - Employer and State $ 6,035,177 Contributions - Member 1,758,587 Net Investment Income 12,374,616 Benefit Payments (7,935,805) Refunds (566,255) Administrative Expense (142,190) Other - Net Change in Plan Fiduciary Net Position 11,524,130 Plan Fiduciary Net Position - Beginning 126,272,372 Plan Fiduciary Net Position - Ending (b) $ 137,796,502 Net Pension Liability - Ending (a) - (b) 29,135,869 Plan Fiduciary Net Position as a Percentage of Total Pension Liability % Covered Employee Payroll* $ 22,026,645 Net Pension Liability as a Percentage of Covered Employee Payroll % * Expected covered payroll for fiscal year ending September 30, 2014

47 37 SCHEDULE OF THE EMPLOYER S NET PENSION LIABILITY GASB Statement No. 67 Total Plan Net Position Net Pension Liability FY Ending Pension Plan Net Net Pension as a % of Total Covered as a % of September 30, Liability Position Liability Pension Liability Payroll* Covered Payroll 2014 $ 166,932,371 $ 137,796,502 $ 29,135, % $ 22,026, % * Expected covered payroll for fiscal year ending September 30, 2014