April 20, 2018 VIA EMAIL Sheila Hutcheson, Plan Administrator 3860 Grantline Road Mims, FL 32754 Re: City of Cocoa General Employees' Retirement Plan Section 112.664, Florida Statutes Compliance Dear Sheila: Please find enclosed the annual disclosures that satisfy the October 1, 2017 financial reporting requirements made under Section 112.664. Our office will submit this information electronically to the Department of Management Services. However, it is important for you to be aware that this report must also be made available on the Plan or Plan Sponsor s website, if such website exists. A deadline for this website publication is not made clear in the law. In addition to the enclosed report, the Plan or Plan Sponsor's website must provide a link to the Division of Retirement's Actuarial Summary Fact Sheet for the Plan, and also report the previous five years' assumed and actual rates of return, along with their respective asset allocations. The Board should contact its Investment Consultant for this information. If there are any questions, concerns, or comments about any of the items contained in this report, please feel free to contact me. Respectfully submitted, Foster & Foster, Inc. By: Douglas H. Lozen, EA, MAAA Enrolled Actuary #17-7778 DHL/lke Enclosures cc via email: cc via email: Stu Kaufman, Board Attorney Anne Quesada, General Accounting Manager 13420 Parker Commons Blvd., Suite 104 Fort Myers, FL 33912 (239) 433-5500 Fax (239) 481-0634 www.foster-foster.com
CITY OF COCOA GENERAL EMPLOYEES' RETIREMENT PLAN SECTION 112.664, FLORIDA STATUTES COMPLIANCE With respect to the reporting standards for defined benefit retirement plans or systems contained in Section 112.664(1), F.S., the actuarial disclosures required under this section were 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, meet the requirements of Section 112.664(1), Florida Statutes, and Rule 60T-1.0035, Florida Administrative Code. By: Date: 4/20/2018 Douglas H. Lozen, EA, MAAA Enrolled Actuary #17-7778
INTRODUCTION When reviewing the following schedules, please note the following: 1) The purpose of producing this report is solely to satisfy the requirements set forth by Section 112.664, Florida Statutes, and is mandatory for every Florida public pension fund, excluding the Florida Retirement System (FRS). 2) None of the schedules shown have any impact on the funding requirements of the Plan. These schedules are for statutory compliance purposes only. 3) In the schedules that follow, the columns labeled ACTUAL represent the final recorded GASB 67/68 results. The columns labeled HYPOTHETICAL illustrate what the results would have been if different assumptions were used. 4) It is our opinion that the Plan s actual assumptions utilized in the October 1, 2017 Actuarial Valuation Report, as adopted by the Board of Trustees, are reasonable individually and in the aggregate, and represent our best estimate of future Plan experience. 5) The Number of Years Expected Benefit Payments Sustained calculated in Section II: Asset Sustainability should not be interpreted as the number of years the Plan has left until it is insolvent. This calculation is required by 112.664, Florida Statutes, but the numeric result is irrelevant, since in its calculation we are to assume there will be no further contributions to the Fund. As long as the Actuarially Determined Contribution is made each year the Plan will never become insolvent. City of Cocoa General Employees' Retirement Plan FOSTER & FOSTER 3
SECTION I - GASB SCHEDULE OF CHANGES IN NET PENSION LIABILITY FISCAL YEAR SEPTEMBER 30, 2017 ACTUAL HYPOTHETICAL 7.00% 5.00% 9.00% RP-2000 RP-2000 RP-2000 Generational Generational Generational Total Pension Liability Service Cost 14,181 26,026 8,011 Interest 1,249,866 1,109,185 1,338,836 Changes of Benefit Terms - - - Differences Between Expected and Actual Experience (810,338) (882,769) (756,015) Changes of Assumptions 320,883 462,455 231,462 Benefit Payments, Including Refunds of Employee Contributions (1,338,089) (1,338,089) (1,338,089) Net Change in Total Pension Liability (563,497) (623,192) (515,795) Total Pension Liability - Beginning 18,014,115 21,973,492 15,213,602 Total Pension Liability - Ending (a) $ 17,450,618 $ 21,350,300 $ 14,697,807 Plan Contributions - Employer 622,133 622,133 622,133 Contributions - Employee 4,993 4,993 4,993 Net Investment Income 1,621,502 1,621,502 1,621,502 Benefit Payments, Including Refunds of Employee Contributions (1,338,089) (1,338,089) (1,338,089) Administrative Expenses (58,842) (58,842) (58,842) Net Change in Plan 851,697 851,697 851,697 Plan - Beginning 12,879,533 12,879,533 12,879,533 Plan - Ending (b) $ 13,731,230 $ 13,731,230 $ 13,731,230 Net Pension Liability - Ending (a) - (b) $ 3,719,388 $ 7,619,070 $ 966,577 City of Cocoa General Employees' Retirement Plan FOSTER & FOSTER 4
SECTION II - ASSET SUSTAINABILITY Table 1 Plan Assumptions: 7.00% and RP-2000 Generational Mortality PROJECTION OF THE NUMBER OF YEARS ASSETS WILL SUSTAIN BENEFIT PAYMENTS Fiscal Year Beginning 10/1 Projected Beginning Projected Total Contributions Projected Benefit Payments* Projected Administrative Expense Projected Investment Earnings Projected Ending 2017 13,731,230-1,616,873-904,596 13,018,953 2018 13,018,953-1,387,035-862,780 12,494,698 2019 12,494,698-1,379,488-826,347 11,941,557 2020 11,941,557-1,372,703-787,864 11,356,718 2021 11,356,718-1,366,657-747,137 10,737,198 2022 10,737,198-1,358,337-704,062 10,082,923 2023 10,082,923-1,350,496-658,537 9,390,964 2024 9,390,964-1,341,843-610,403 8,659,524 2025 8,659,524-1,330,887-559,586 7,888,223 2026 7,888,223-1,311,975-506,256 7,082,504 2027 7,082,504-1,295,423-450,435 6,237,516 2028 6,237,516-1,276,873-391,936 5,352,579 2029 5,352,579-1,256,140-330,716 4,427,155 2030 4,427,155-1,235,020-266,675 3,458,810 2031 3,458,810-1,213,097-199,658 2,445,371 2032 2,445,371-1,191,340-129,479 1,383,510 2033 1,383,510-1,168,287-55,956 271,179 2034 271,179-1,143,914 - - - *All DROP Balances paid in 2017. Number of Years Expected Benefit Payments Sustained: 17.24 This projection assumes no further contributions, assumes no further benefit accruals, and assumes Market Value of Assets earn 7.00% interest. It is important to note that as long as the Actuarially Determined Contribution is made each year, the Plan will never become insolvent. Furthermore, State and local laws mandate that the Actuarially Determined Contribution be made each year. City of Cocoa General Employees' Retirement Plan FOSTER & FOSTER 5
SECTION II - ASSET SUSTAINABILITY PROJECTION OF THE NUMBER OF YEARS ASSETS WILL SUSTAIN BENEFIT PAYMENTS Table 2 Hypothetical Assumptions: 5.00% and RP-2000 Generational Mortality Fiscal Year Beginning 10/1 Projected Beginning Projected Total Contributions Projected Benefit Payments* Projected Administrative Expense Projected Investment Earnings Projected Ending 2017 13,731,230-1,616,873-646,140 12,760,497 2018 12,760,497-1,387,035-603,349 11,976,811 2019 11,976,811-1,379,488-564,353 11,161,676 2020 11,161,676-1,372,703-523,766 10,312,739 2021 10,312,739-1,366,657-481,471 9,427,553 2022 9,427,553-1,358,337-437,419 8,506,635 2023 8,506,635-1,350,496-391,569 7,547,708 2024 7,547,708-1,341,843-343,839 6,549,704 2025 6,549,704-1,330,887-294,213 5,513,030 2026 5,513,030-1,311,975-242,852 4,443,907 2027 4,443,907-1,295,423-189,810 3,338,294 2028 3,338,294-1,276,873-134,993 2,196,414 2029 2,196,414-1,256,140-78,417 1,018,691 2030 1,018,691-1,235,020 - - - *All DROP Balances paid in 2017. Number of Years Expected Benefit Payments Sustained: 13.82 This projection assumes no further contributions, assumes no further benefit accruals, and assumes Market Value of Assets earn 5.00% interest. It is important to note that as long as the Actuarially Determined Contribution is made each year, the Plan will never become insolvent. Furthermore, State and local laws mandate that the Actuarially Determined Contribution be made each year. City of Cocoa General Employees' Retirement Plan FOSTER & FOSTER 6
SECTION II - ASSET SUSTAINABILITY PROJECTION OF THE NUMBER OF YEARS ASSETS WILL SUSTAIN BENEFIT PAYMENTS Table 3 Hypothetical Assumptions: 9.00% and RP-2000 Generational Mortality Fiscal Year Beginning 10/1 Projected Beginning Projected Total Contributions Projected Benefit Payments* Projected Administrative Expense Projected Investment Earnings Projected Ending 2017 13,731,230-1,616,873-1,163,051 13,277,408 2018 13,277,408-1,387,035-1,132,550 13,022,923 2019 13,022,923-1,379,488-1,109,986 12,753,421 2020 12,753,421-1,372,703-1,086,036 12,466,754 2021 12,466,754-1,366,657-1,060,508 12,160,605 2022 12,160,605-1,358,337-1,033,329 11,835,597 2023 11,835,597-1,350,496-1,004,431 11,489,532 2024 11,489,532-1,341,843-973,675 11,121,364 2025 11,121,364-1,330,887-941,033 10,731,510 2026 10,731,510-1,311,975-906,797 10,326,332 2027 10,326,332-1,295,423-871,076 9,901,985 2028 9,901,985-1,276,873-833,719 9,458,831 2029 9,458,831-1,256,140-794,768 8,997,459 2030 8,997,459-1,235,020-754,195 8,516,634 2031 8,516,634-1,213,097-711,908 8,015,445 2032 8,015,445-1,191,340-667,780 7,491,885 2033 7,491,885-1,168,287-621,697 6,945,295 2034 6,945,295-1,143,914-573,600 6,374,981 2035 6,374,981-1,118,266-523,426 5,780,141 2036 5,780,141-1,091,457-471,097 5,159,781 2037 5,159,781-1,063,605-416,518 4,512,694 2038 4,512,694-1,034,690-359,581 3,837,585 2039 3,837,585-1,004,710-300,171 3,133,046 2040 3,133,046-973,863-238,150 2,397,333 2041 2,397,333-942,210-173,361 1,628,484 2042 1,628,484-909,669-105,628 824,443 2043 824,443-875,971 - - - *All DROP Balances paid in 2017. Number of Years Expected Benefit Payments Sustained: 26.94 This projection assumes no further contributions, assumes no further benefit accruals, and assumes Market Value of Assets earn 9.00% interest. It is important to note that as long as the Actuarially Determined Contribution is made each year, the Plan will never become insolvent. Furthermore, State and local laws mandate that the Actuarially Determined Contribution be made each year. City of Cocoa General Employees' Retirement Plan FOSTER & FOSTER 7
SECTION III - FUNDING ACTUAL AND HYPOTHETICAL CONTRIBUTIONS APPLICABLE TO THE FISCAL YEAR ENDING SEPTEMBER 30, 2019 Valuation Date: 10/1/2017 ACTUAL HYPOTHETICAL 7.00% 5.00% 9.00% RP-2000 RP-2000 RP-2000 Generational Generational Generational Total Required Contribution (Fixed $) $546,500 $760,891 $322,184 Total Required Contribution (% of Payroll) 513.8% 715.4% 302.9% Expected Member Contribution 5,886 5,722 6,052 Expected Sponsor Contribution (Fixed $) $540,614 $755,169 $316,132 Expected Sponsor Contribution (% of Payroll) 508.8% 710.4% 297.9% ASSETS Actuarial Value ¹ 13,879,523 13,879,523 13,879,523 Market Value ¹ 13,731,230 13,731,230 13,731,230 LIABILITIES Present Value of Benefits Active Members Retirement Benefits 1,194,551 1,569,888 948,623 Disability Benefits 1,225 1,462 1,052 Death Benefits 1,040 1,132 960 Vested Benefits 4,621 5,752 3,839 Refund of Contributions 0 0 0 Service Retirees 13,249,526 16,150,947 11,183,480 DROP Retirees ¹ 1,848,464 2,275,195 1,557,309 Beneficiaries 785,287 952,321 663,193 Disability Retirees 51,800 62,153 44,323 Terminated Vested 0 0 0 Total: 17,136,514 21,018,850 14,402,779 Present Value of Future Salaries 106,361 106,361 106,361 Present Value of Future Member Contributions 5,318 5,318 5,318 Total Normal Cost 12,257 22,515 6,939 Present Value of Future Normal Costs (Entry Age Normal) 12,258 22,515 6,939 Total Actuarial Accrued Liability ¹ 17,124,256 20,996,335 14,395,840 Unfunded Actuarial Accrued 3,244,733 7,116,812 516,317 Liability (UAAL) City of Cocoa General Employees' Retirement Plan FOSTER & FOSTER 8
SECTION III - FUNDING ACTUAL AND HYPOTHETICAL CONTRIBUTIONS APPLICABLE TO THE FISCAL YEAR ENDING SEPTEMBER 30, 2019 Valuation Date: 10/1/2017 ACTUAL HYPOTHETICAL 7.00% 5.00% 9.00% RP-2000 RP-2000 RP-2000 Generational Generational Generational PENSION COST Normal Cost ² 13,566 24,225 7,897 Administrative Expenses ² 65,127 63,310 66,962 Payment Required To Amortize UAAL ² 467,807 673,356 247,325 Total Required Contribution $546,500 $760,891 $322,184 ¹ The asset values and liabilities include accumulated DROP Balances as of 9/30/2017. ² The funding rate as of October 1, 2017 includes a 1.5 year interest load. City of Cocoa General Employees' Retirement Plan FOSTER & FOSTER 9