NON-CERTIFICATED EMPLOYEES RETIREMENT PLAN OF THE JUNIOR COLLEGE DISTRICT OF ST. LOUIS, St. Louis, Missouri FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION
TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR S REPORT...1 FINANCIAL STATEMENTS Statement of Net Assets Available for Benefits...2 Statement of Changes in Net Assets Available for Benefits...3 Notes to Financial Statements...4 SUPPLEMENTAL INFORMATION...12 Schedule of Employer Contributions (Unaudited)...13
Retirement Committee Non-Certificated Employees Retirement Plan of the Junior College District of St. Louis, St. Louis County, Missouri St. Louis, Missouri Independent Auditor s Report We have audited the accompanying statement of net assets available for benefits of the Non- Certificated Employees Retirement Plan of the Junior College District of St. Louis, St. Louis County, Missouri (the Plan ) as of, and the related statement of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plan s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial status of the Non-Certificated Employees Retirement Plan of the Junior College District of St. Louis, St. Louis County, Missouri as of, and the changes in its financial status for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying Schedule of Employer Contributions (Unaudited) ( Schedule ) on pages 13 and 14 is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board, and we did not audit and do not express an opinion on such information. This Schedule is the responsibility of the Plan s management. We have applied to the Schedule certain limited procedures prescribed by professional standards, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the Schedule. Peoria, Illinois November 3, 2010 1
OF THE JUNIOR COLLEGE DISTRICT OF ST. LOUIS, STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS ASSETS Investments, at fair value: Common/commingled funds $ 53,149,927 Money market funds 510,565 Total investments 53,660,492 Receivables: Pending trades, net 364,000 Contributions - employer 42,532 Contributions - employee 42,532 Accrued interest 38 Total receivables 449,102 Total assets 54,109,594 LIABILITIES Accrued expenses 120,157 Total liabilities 120,157 NET ASSETS AVAILABLE FOR BENEFITS $ 53,989,437 The accompanying notes are an integral part of the financial statements. 2
OF THE JUNIOR COLLEGE DISTRICT OF ST. LOUIS, STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS Year Ended INVESTMENT INCOME Net appreciation in fair value of investments $ 4,844,160 Interest and dividends 1,331,058 Total investment income 6,175,218 Less investment expense 120,126 Net investment income 6,055,092 CONTRIBUTIONS Junior College District of St. Louis, St. Louis County, Missouri 955,597 Participants 955,597 Total contributions 1,911,194 Total additions 7,966,286 DEDUCTIONS Benefits paid directly to participants 2,636,781 Administrative expenses 209,900 Total deductions 2,846,681 NET INCREASE 5,119,605 NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF YEAR 48,869,832 NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $ 53,989,437 The accompanying notes are an integral part of the financial statements. 3
NOTES TO THE FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Non-Certificated Employees Retirement Plan of the Junior College District of St. Louis, St. Louis County, Missouri (the Plan ) is a single-employer defined benefit pension plan which covers non-certificated employees. The Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974 as the Junior College District of St. Louis, St. Louis County, Missouri (the College ) is a political subdivision of the State of Missouri. The Plan is administered by the Retirement Committee comprised of five appointed members. The Trustee of the Plan is State Street Bank. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities, and the actuarial present value of accumulated plan benefits at the date of the financial statements. Actual results could differ from those estimates. Basis of Accounting The financial statements of the Plan are prepared using the accrual basis of accounting and present the net assets available for benefits and changes in those net assets. Employer and employee contributions are recognized as revenues in the period in which employee services are performed. Benefits are recognized when due and payable in accordance with the terms of the Plan. Plan expenses are recorded when the corresponding liabilities are incurred, regardless of when payment is made. Investments Investments of the Plan are stated at the fair value as determined by the Trustee. Investments traded on a national exchange are valued at reported sales prices. Investments that do not have an established market are reported at estimated fair value. Cash equivalents, which are comprised of money market funds, are reported at cost, which approximates fair value. The investment policy of the Plan states that up to 60 percent and no less than 30 percent of the Plan s assets may be invested in equity securities and up to 60 percent and no less than 30 percent of the Plan s net assets may be invested in fixed income securities. Cash reserves are invested in money market instruments that will not exceed 10 percent of the portfolio. 4
NOTES TO THE FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investments (Continued) Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plan s gains and losses on investments bought and sold as well as held during the year. Actuarial Present Value of Accumulated Plan Benefits Accumulated plan benefits are those future periodic payments, including lump-sum distributions, that are attributable under the Plan s provisions to the service employees have rendered. Accumulated plan benefits include benefits expected to be paid to retired participants or their beneficiaries, beneficiaries of participants who have died, and present participants or their beneficiaries. The actuarial present value of accumulated plan benefits is determined by an actuary from Towers Perrin, using end of the Plan year benefit information, and is the amount that results from applying actuarial assumptions to adjust the accumulated plan benefits to reflect the time value of money (through discounts for interest) and the probability of payment (by means of decrements such as for death, disability, withdrawal, or retirement) between the valuation date and the expected date of payment. Selected significant actuarial assumptions used in the valuations are as follows: 1. Mortality: RP 2000 Table projected to 2012 using Scale AA. 2. Termination of Employment: Sarason s T-6 table with rates at all ages adjusted by the assumed rates of disablement. 3. Disablement: 1987 Commissioners Group Disability Table with a 12-month elimination period. 4. Retirement: Graded rates. 5. Benefit Commencement Date for Vested Terminations: Age 60, or current age if greater. 5
NOTES TO THE FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Actuarial Present Value of Accumulated Plan Benefits (Continued) 6. Marital Status: (a) Percent Married 100 percent. (b) Age Difference Males are assumed to be three years older than their spouses. 7. Investment Return: (a) (b) Contribution Requirement Calculations Actuarial Present Value of Accrued Benefit Calculation 7.75 percent per year, compounded annually. 7.75 percent per year, compounded annually. 8. Pay Increases: 4.75 percent per year, compounded annually. 9. Expenses: $240,000 10. Lump Sum Elections: 65 percent at retirement. 11. Lump Sum Interest Rate 5 percent The foregoing actuarial assumptions are based on the presumption that the Plan will continue. Were the Plan to terminate, different actuarial assumptions and other factors might be applicable in determining the actuarial present value of accumulated plan benefits. The actuarial present value of accumulated plan benefits is reported based on certain assumptions pertaining to interest rates, inflation rates, and employee demographics, all of which are subject to change. Due to uncertainties inherent in the estimations and assumptions process, it is at least reasonably possible that changes in these estimates and assumptions in the near term would be material to the financial statements. Payment of Benefits Benefit payments to participants are recorded upon distribution. 6
NOTES TO THE FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Tax Status of the Plan The Internal Revenue Service has determined and informed the Plan by a letter dated September 13, 2000, that the Plan is designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. NOTE 2 - PLAN DESCRIPTION The following brief description of the Plan is provided for general information purposes only. Participants should refer to the Plan agreement for more complete information. The plan is a defined benefit pension plan covering all non-certificated employees employed by the College on a regular basis (at least 32 hours weekly and at least nine months yearly). The Plan allows benefit service for permanent non-certificated employees to begin following 13 biweekly payroll periods of employment. Total payroll covered by the Plan for the year ended was $21,987,355. The Plan is considered to be part of the College s financial reporting entity as a retirement fund. At July 1, 2010, the date of the most recent actuarial valuation, membership in the Plan consisted of the following: Active participants 655 Vested terminations 41 Retirees and beneficiaries 149 Disabled participants 1 The funding policy of the Plan requires that each participant contribute 4 percent of his/her annual covered compensation, as defined by the Plan. The College, in accordance with the provisions of the Plan, is required to make annual contributions equal to the employee contributions. Participants terminating and requesting a refund of accumulated contributions prior to becoming vested in the plan forfeit the right to receive any portion of the College s contribution on their behalf. In addition, participants terminating prior to the end of the fiscal year will not receive any interest earned on their accruals for the year. 7
NOTES TO THE FINANCIAL STATEMENTS NOTE 2 - PLAN DESCRIPTION (CONTINUED) The Plan provides a retirement benefit with full benefits for employees who attain the age of 60 with five years of credited service and actuarially reduced benefits for those employees who attain age 55 with five years of credited service or completion of at least 25 years of credited service at any age prior to attainment of age 60. Retirement benefits are based on length of service and average annual compensation for any four calendar years of credited service, which yields the highest average, only taking into account the last ten calendar years of credited service. Participants are 100 percent vested at all times in their contributions and earned interest. Additionally, the participants are vested in their accrued benefits earned after five years of credited service and would be eligible for such benefits at either their early or normal retirement date. Participants may elect to receive their pension benefits in the form of a life annuity, a joint and survivor annuity, a level income option or a lump sum payment. In 2007, the Plan was amended to include a partial lump sum option, which enables the Plan participants to receive 50 percent of their retirement benefit as a lump sum and the remaining 50 percent as a monthly annuity payment. Benefits may be increased at certain times to reflect cost-of-living changes and other increases as defined in the Plan agreement. Upon termination, vested participants may also elect to withdraw their accumulated contributions plus accrued interest, under certain time restrictions, which forfeits the participant s right to the portion of the benefit funded by matching contributions from the College. Upon termination or death of a nonvested participant, the participant will receive a refund of all of his or her accumulated contributions plus accrued interest. The Plan also provides death benefits which vary depending on the method of payment option selected by the participant. In the event the Plan is partially or totally terminated, the Plan s assets will be distributed in the following order: (a) (b) (c) Accumulated contributions on the date of termination for each non-retired participant and for each retired participant or their beneficiary receiving payments; the amount of the actuarial reserve on the date of termination for future benefit payments based on the participant s accumulated contributions; Retirement benefits to be paid to each retired participant or beneficiary, not provided above; Retirement benefits accrued for each participant who has reached his or her regular retirement date and has not retired, not provided above; 8
NOTES TO THE FINANCIAL STATEMENTS NOTE 2 - PLAN DESCRIPTION (CONTINUED) (d) (e) Retirement benefits that are vested for each participant with a break in service or deferred vested benefits who have not reached their regular retirement date if the break of service occurred on the date of termination, not provided above; and Retirement benefits accrued for each retired participant, not already provided for above. Any balance remaining after settling all liabilities mentioned above reverts to the College. NOTE 3 - INVESTMENTS The following table presents the fair value of investments. Investments that represent 5 percent or more of the Plan s net assets are separately identified. Fund Fair Value Columbia Management Core Fixed Income Fund $ 19,472,721 Columbia Management Diversified Value Fund 4,269,939 Columbia Management International Equity Fund 5,355,927 Columbia Management Large Cap Growth Fund 4,260,556 Columbia Management Large Cap Enhanced Core Fund 14,424,215 Columbia Management Small Cap Growth Fund 5,366,569 $ 53,149,927 During the year ended, the Plan s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows: Common/commingled funds $ 4,844,160 9
NOTES TO THE FINANCIAL STATEMENTS NOTE 4 - BENEFIT OBLIGATIONS As of July 1, 2010, the date of the most current valuation, the actuarial present value of accumulated plan benefits is as follows: Benefit Information Date July 1, 2010 Actuarial present value of accumulated plan benefits: Active participants $ 31,452,388 Retirees and beneficiaries 10,902,298 Other vested benefits 4,861,110 Total vested benefits 47,215,796 Actuarial present value of non-vested benefits 724,770 Total actuarial present value of accumulated plan benefits $ 47,940,566 The above actuarial present value of accumulated plan benefits was calculated using a 7.75 percent projected investment rate of return. As this is an estimate, actual results could differ. The changes in the actuarial present value of accumulated plan benefits from the previous benefit information date were as follows: July 1, 2010 Actuarial present value of accumulated plan benefits, beginning of year $ 46,688,477 Increase (decrease) during the year attributable to: Benefits paid (2,636,781) Interest 3,502,307 Benefits accumulated 386,563 Net increase 1,252,089 Actuarial present value of accumulated plan benefits, end of year $ 47,940,566 10
NOTES TO THE FINANCIAL STATEMENTS NOTE 5 - RISKS AND UNCERTAINTIES The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rates, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect account balances and the amounts reported in the statement of net assets available for benefits. This information is an integral part of the accompanying financial statements. 11
SUPPLEMENTAL INFORMATION 12
SCHEDULE OF EMPLOYER CONTRIBUTIONS (Unaudited) The schedules of funding progress and employer contributions are presented herewith as required supplementary information. Schedule of Funding Progress Actuarial Actuarial Unfunded Actuarial UAAL as a Actuarial Value of Accrued Accrued Liability Funded Covered Percentage of Valuation Asset Liability (UAAL) Ratio Payroll Covered Payroll Date (a) (b) (b a) (a / b) (c) ((b a) / c) 7/1/2010 $ 60,299,169 $ 62,552,831 $ 2,253,662 96.40 % $ 21,987,355 10.25 % 7/1/2009 58,474,674 61,951,728 3,477,054 94.39 22,609,390 15.38 7/1/2008 60,499,411 58,436,131 (2,063,280) 103.53 21,040,740 (9.81) 7/1/2007 58,866,220 55,112,008 (3,754,212) 106.81 20,868,836 (17.99) 7/1/2006 56,101,885 53,253,798 (2,848,087) 105.35 21,147,515 (13.47) 7/1/2005 52,476,687 49,875,507 (2,601,180) 105.22 20,419,217 (12.74) 7/1/2004 49,738,554 46,921,958 (2,816,596) 106.00 20,388,956 (13.81) 7/1/2003 48,997,492 45,926,000 (3,071,492) 106.69 19,577,063 (15.69) Schedule of Employer Contributions Annual Year Ended Required Percentage June 30 Contribution Contributed 2010 $1,615,510 59% 2009 857,756 106 2008 613,364 141 2007 719,034 123 2006 717,075 119 2005 871,222 96 2004 803,213 106 2003 747,749 112 13
SCHEDULE OF EMPLOYER CONTRIBUTIONS 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 follows: Valuation Date: July 1, 2010 Actuarial Cost Method: Asset Valuation Method: Aggregate Actuarial Cost Method The initial value chosen was the average of cost value and market value as of July 1, 1992. In years following, the prior actuarial value is projected on an expected basis using the valuation interest assumption, which is currently 7.75 percent. Twenty percent of the difference between the projected value and the current market value is added to derive the new actuarial value. Mortality: (a) Active lives RP 2000 Table projected to 2012 using Scale AA (b) Retired lives RP 2000 Table projected to 2012 using Scale AA (c) Disabled lives RP 2000 Table projected to 2012 using Scale AA Post-retirement Benefit Increase: Investment Rate of Return: Projected Salary Increases: 4.00 percent per annum and the total accumulated increase may not exceed 36 percent. 7.75 percent per annum, compounded annually. 4.75 percent per annum, compounded annually. 14