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Agenda 11-01-17 6,� Y �` CITY OF BOYNTON BEACH 4IBOYNTON MUNICIPAL FIREFIGHTERS 4181kFIRE PENSION TRUST FUND IN 4111616 Tah '' 13790 NW 4 Street, Suite 105 Sunrise, Florida 33325 Telephone: 954.636.7170 & 561.340.3470 Toll Free Fax: 866.769.0678 AGENDA CITY OF BOYNTON BEACH MUNICIPAL FIREFIGHTERS PENSION TRUST FUND 2080 High Ridge Road Boynton Beach, FL 33426 February 7 at 9:oo A.M. 1. CALL TO ORDER 2. ROLL CALL 3. PUBLIC DISCUSSION' 4. CONSENT AGENDA a. Warrant(Invoices)Ratifications/Approvals b. Review of Previous Meeting Minutes 5. NEW/UNFINISHED BUSINESS 6. AUDITOR'S REPORT a. Audit Report 7. ACTUARY REPORT a. GRS-Valuation Report 8. MONITOR REPORT a. And Co Consulting--David West 9. ATTORNEY'S REPORT a. Sick&Vac Time Rollover to Fund for Non-DROP &DROP members b. Death Benefit Options 10. PLAN ADMINISTRATOR'S REPORT a. Death Checks-Derek Hernandez passed away 12/1/2017 b. Refunds- c. New DROP Members:Gregorek, Tamihi,Kilcooley d. Retiree Change in Benefit Amount—Daniel Bell e. DROP Reports- f. 5th Member Position Appointment g. PPCC AWARD for Fund 11. OPEN DISCUSSION 12. ADJOURNMENT 13. NEXT MEETING DATE: May 2, 2017 at 9 A.M. IN COMPLIANCE OF STATE LAW, THE BOARD OF TRUSTEES FINDS THAT A PROPER AND LEGITIMATE PURPOSE IS SERVED WHEN MEMBERS OF THE PUBLIC HAVE BEEN GIVEN A REASONABLE OPPORTUNITY TO BE HEARD ON A MATTER BEFORE THE BOARD. THEREFORE,THE BOARD OF TRUSTEES HAVE Dk.n.RMINED AND DECLARED THAT THEY WILL A LOT FIFTEEN(15)MINUTES IN TOTAL FOR THIS PURPOSE;HOWEVER EACH PERSON IS LIMITED TO NO MORE THAN THREE(3)MINUTES TO COMMENT AT EACH MEETING. � IC r Iffy 1 �ffi r r r , r � r t 3 , S Retirement Consulting Retirement P:954.527.1616 F:954.525.0083 www.grsconsulting.com Consulting February 7, 2018 Board of Trustees City of Boynton Beach Municipal Firefighters' Pension Trust Fund Boynton Beach, Florida Re: City of Boynton Beach Municipal Firefighters' Pension Trust Fund Actuarial Valuation as of October 1,2017 and Actuarial Disclosures Dear Board Members: The results of the October 1, 2017 Annual Actuarial Valuation of the City of Boynton Beach Municipal Firefighters' Pension Trust Fund are presented in this report. The computed contribution rate shown on page 1 may be considered as a minimum contribution rate that complies with the Board's funding policy. Users of this report should be aware that contributions made at that rate do not guarantee benefit security. Given the importance of benefit security to any retirement system, we suggest that contributions to the System in excess of those presented in this report be considered. The contribution rate in this report is determined using the actuarial assumptions and methods disclosed in Section B of this report.This report does not include a robust assessment of the risks of future experience not meeting the actuarial assumptions, as the assessment of these risks was outside the scope of this assignment. We encourage a review and assessment of investment and other significant risks that may have a material effect on the Plan's financial condition. 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. GRS is not responsible for unauthorized use of this report. The purposes of the valuation are to measure the System's funding progress,to determine the employer contribution rate for the fiscal year ending September 30, 2019, and to determine the actuarial information for Governmental Accounting Standards Board (GASB) Statement No. 67. This report also includes estimated GASB Statement No. 67 information for the fiscal year ending September 30, 2018.This report should not be relied on for any purpose other than the purpose described herein. Determinations of financial results associated with the benefits described in this report,for purposes other than those identified above may be significantly different. The findings in this report are based on data and other information through September 30, 2017. Future actuarial measurements may differ significantly from the current measurements presented in this report Board ofTrustees City ofBoynton Beach Municipal Firefighters' Pension Trust Fund February 7, 2O1O due tosuch factors asthe following: plan experience differing from that anticipated bxthe 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 ananalysis ofthe potential range ofsuch future measurements. This valuation assumed the continuing ability ufthe plan sponsor tomake the contributions necessary to fund this plan.A determination regarding whether or not the plan sponsor is actually able to do so is outside our scope ofexpertise and was not performed. The valuation was based upon information furnished by the Plan Administrator concerning Retirement System benefits,financial transactions, plan provisions and active members,terminated members, retirees and beneficiaries. VVechecked for internal reasonability and yeapto-yearconsistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided by the Plan Administrator. in addition,this report was prepared using certain assumptions approved by the Board and prescribed by the Florida Statutes as described in the section of this report entitled Actuarial Assumptions and Cost Methods.The prescribed assumptions are the assumed mortality rates detailed in the Actuarial Assumptions and Cost Methods section in accordance with Florida House Bill 1309 (codified in Chapter 2O15-157). 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 City of Boynton Beach Municipal Firefighters' Pension Trust Fund auofthe 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. Peter N.Strong and Jeffrey Amrose actuaries are members of the American Academy of Actuaries.These actuaries meet the Academy's Qualification Standards to render the actuarial opinions contained herein. The signing actuaries are independent ofthe plan sponsor. This actuarial valuation and/or cost determination was prepared and completed by us or under our direct supervision, and vveacknowledge responsibility for the results. Tothe best ofour knowledge,the results are complete and accurate. In our opinion,the techniques and assumptions used are reasonable, meet the requirements and intent of Part VII, Chapter 112, Florida Statutes,and are based on generally accepted actuarial principles and practices. There isnobenefit orexpense tobeprovided bythe plan and/or paid from the plan's assets for which liabilities or current costs have not been established or otherwise taken into Board ofTrustees City of Boynton Beach Municipal Firefighters' Pension Trust Fund February 7,2O18 account in the valuation. All known events or trends which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation. Gabriel, Roeder,Smith &Company will be pleased to review this valuation report with the Board of Trustees and 10answer any questions pertaining tothe valuation. Respectfully submitted, GABR|ELROEDER,SMITH &COMPANY TABLE OF CONTENTS Section Title Page A Discussion of Valuation Results 1. Comparison of Required Employer Contributions 1 2. Chapter Revenue 5 B Valuation Results 1. Participant Data 6 2. Actuarially Determined Employer Contribution (ADEC) 7 3. Actuarial Value of Benefits and Assets 8 4. Calculation of Employer Normal Cost 9 5. Liquidation of the Unfunded Actuarial Accrued Liability 10 6. Actuarial Gains and Losses 14 7. Actual Compared to Expected Decrements 19 8. Cumulative Actuarial Gains(Losses) 20 9. Recent History of Valuation Results 21 10. Recent History of Required and Actual Contributions 22 11. Actuarial Assumptions and Cost Method 23 12. Glossary of Terms 29 C Pension Fund Information 1. Summary of Assets 32 2. Pension Fund Income and Disbursements 33 3. Actuarial Value of Assets 34 4. Reconciliation of DROP Accounts 35 5. Investment Rate of Return 36 D Financial Accounting Information 1. FASB No. 35 37 2. GASB No. 67 38 E Miscellaneous Information 1. Reconciliation of Membership Data 44 2. Age/Service/Salary Distributions 45 F Summary of Plan Provisions 47 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund Consulting SECTION DISCUSSION OF VALUATION RESULTS DISCUSSION OF VALUATION RESULTS Comparison of Required Employer Contributions A comparison of the required employer contribution developed in this and the last actuarial valuation is shown below. The required contribution dollar amounts shown below are estimates only. The contribution policy of the City is to contribute the dollar amount determined by multiplying the required percentage of payroll determined as of the valuation date by the projected pensionable payroll for the year. For HE 9/30/19 For HE 9/30/18 Based on Based on 10/1/2017 10/1/2016 Increase Valuation Valuation (Decrease) if contributed on if contributed on 10/1/2018 10/1/2017 Required Employer/State Contribution $ 6,409,551 $ 6,157,171 $ 252,380 As%of Covered Payroll 55.42 % 56.09 % (0.67) % Estimated State Contribution $ 781,954 $ 781,954 $ 0 As%of Covered Payroll 6.76 % 7.12 % (0.36) % Prepaid Contribution $ 0 $ 77,632 $ (77,632) As%of Covered Payrol l 0.00 % 0.71 % (0.71) % Required Employer Contribution $ 5,627,597 $ 5,297,585 $ 330,012 As%of Covered Payroll 48.66 % 48.26 % 0.40 % The required employer contribution has been computed under the assumption that the amount to be received from the State this year and next year will be at least$781,954. If the State revenue is less than this amount,the City will have to make up the difference. The employer contribution listed above is for the City's fiscal year ending September 30, 2019 and has been calculated as though payment is made in a single lump sum on October 1, 2018.The total minimum required employer contribution for the fiscal year ending September 30, 2017 was$5,075,517.The actual employer contribution for the fiscal year ending September 30, 2017 was$5,075,517. Revisions in Benefits There have been no changes in benefits since the prior valuation. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -1- Consulting Revisions in Actuarial Assumptions or Methods There have been no changes in actuarial assumptions or methods since the prior valuation. Actuarial Experience There was a net actuarial experience gain of$691,612 for the year,which means that overall actual experience was more favorable than expected. The actuarial gain is primarily due to a higher than expected return on the actuarial value of assets.The net investment return on the actuarial value of assets was 9.29% versus an assumed return of 7.50%.The net investment return on the market value of assets was 12.98%.The gain was offset somewhat by average salary increases that were higher than expected (8.4%actual versus 6.3% expected), more retirements than expected (4 actual versus 2 expected)and fewer retiree deaths than expected (0 versus 1.5 expected). The net actuarial gain for the year has caused a decrease in the annual required employer contribution of 0.37%of covered payroll, or about$43,000. As a result of the 1-year contribution lag and the more than$1 million increase in the contribution requirement from the October 1, 2015 actuarial valuation (made in fiscal year 2017)to the October 1, 2016 actuarial valuation (to be made in fiscal year 2018),the actual contribution applied toward the UAL amortization bases during FY 2017 was over$1 million less than the scheduled amounts calculated in the October 1, 2016 actuarial valuation.This caused an increase in this year's contribution of approximately$80,000. Additional Payments Toward Unfunded Actuarial Liability As initiated in 2015,the City of Boynton Beach and the Firefighters' Union have mutually consented to use$1,000,000 of the Accumulated Excess State Contribution reserve to reduce the Plan's Unfunded Actuarial Liability(UAL) in three annual increments ($333,333 applied as of October 1, 2015 and October 1, 2016, and $333,334 applied as of October 1, 2017). As of October 1, 2017, $333,334 was used to eliminate the UAL amortization base created on October 1, 1992 and reduce the UAL amortization base created on October 1, 1996.The net effect was a decrease in the annual required employer contribution of 0.65%of covered payroll, or $75,176. Change in Covered Payroll Covered payroll as of October 1, 2017 was$11,282,228 versus$10,684,549 last year.Amortization payments on the unfunded liability were scheduled to increase 2.74%per year, and the Normal Cost tends to remain a level percentage of pay, so as payroll increases,the dollar amount of the required contribution increases.This year's increase in covered payroll caused the annual required employer contribution to increase by approximately$220,000. Funded Ratio The funded ratio was 62.6%this year compared to 60.0%last year. The funded ratio was 62.3%this year before recognizing the additional payment toward the UAL from the Excess State Reserve. The funded ratio is equal to the actuarial value of assets divided by the actuarial accrued liability. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -2- Consulting Analysis of Change in Employer Contribution The components of change in the required employer contribution are as follows: Contribution rate last year 48.26 % Additional UAAL Payment from State Reserve (0.65) Experience (Gains) or Losses (0.37) Revision in Assumptions/Methods 0.00 Change in Payroll Growth Assumption for UAAL Amortization 0.60 Other Changes in Amortization Payments on UAAL (0.17) Normal Cost Rate (0.09) Administrative Expense 0.01 State Contribution 0.36 Prepaid Contribution (available last year, not this year) 0.71 Contribution rate this year 48.66 % According to Florida Administrative Code (Statute 112),the payroll growth assumption may not exceed the average payroll growth during the last ten years.The ten year average rate this year was equal to 2.51% compared to the assumed rate of 4.0%. Using a 2.51%payroll growth assumption instead of the prior valuation ten year average rate of 2.74%in the amortization of the UAL caused an increase in the annual required employer contribution of 0.60%of covered payroll, or about$69,000. Required Contributions in Later Years The current calculated City contribution requirement is 48.66%of payroll starting October 1, 2018. Under the asset smoothing method, market value gains and losses are recognized over five years. As of October 1, 2017,the market value of assets exceeded the actuarial value by$4,164,054. Once all the gains and losses through September 30, 2017 have been fully recognized in the actuarial value of assets,the employer contribution rate will decrease by roughly 2.26%of payroll unless there are offsetting losses. Another important factor to consider looking down the road is the annual payment on the unfunded actuarial liability(UAL). This payment is currently computed as a level percentage of covered payroll under the assumption that covered payroll will rise by 2.51%per year(as limited under Florida Statute 112.64). According to Florida Statute 112.64,this payroll growth assumption may not exceed the average payroll growth during the last ten years,which is currently 2.51%. As previously mentioned,the decrease from the prior valuation's ten year average rate of 2.74%to 2.51%caused an increase in the employer contribution rate by 0.60%of covered pay. If the ten-year average payroll growth rate falls below 0%,then the UAL will have to be amortized as a level dollar amount. If the UAL were amortized as a level dollar amount this year,the employer contribution would have increased by an additional 6.94%of covered pay(or about$803,000). Looking ahead to next year, if payroll remains level from this year to next year,the 10-year average payroll growth will be approximately 1.08%. Using 1.08%instead of 2.51%would have increased the employer contribution by an additional 3.86%of covered pay (or about$446,000). Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -3- Consulting Relationship to Market Value If Market Value had been the basis for the valuation,the City contribution rate would have been 46.40% and the funded ratio would have been 65.7%. The funded ratio on a market value basis was 60.5%last year. 13th Check Provision The Plan provides for a 13th check if there is a net actuarial gain for the previous year. Though the Plan experienced a gain during the prior plan year,the cumulative balance of actuarial gains and losses is negative (a net loss), so no funds are available to provide 13th checks in 2017. Conclusion The funded ratio is 62.6%this year,whereas it was over 100%in the year 2000. Steps have been taken in recent years to address this issue, such as strengthening the actuarial assumptions, including lowering the investment return assumption from 8.5%to 7.5%over time, and applying an additional $1,000,000 towards the unfunded liability. However,we recommend further steps be considered, such as reducing the amortization period in the amortization of the unfunded liability. The remainder of this Report includes detailed actuarial valuation results,financial information, miscellaneous information and statistics, and a summary of plan provisions. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -4- Consulting CHAPTER REVENUE Increments in Chapter revenue over that received in 1998 must first be used to fund the cost of compliance with minimum benefits. Once minimums are met, any subsequent additional Chapter revenue must be used to provide extra benefits. As of the valuation date, all minimum Chapter requirements have been met. Actuarial Confirmation of the Use of State Chapter Money 1. Fire Regular $ 781,954 Fire Supplemental 0 Total Base Amount Previous Plan Year 781,954 2. Fire Regular 883,314 Fire Supplemental 0 Total Amount Received for Previous Plan Year 883,314 3. Adjustment to Base Amount Due to Reevaluation of COLA cost 0 4. Excess Funds for Previous Plan Year 101,360 5. Accumulated Excess at Beginning of Previous Year 2,298,809 6. Prior Excess Used in Previous Plan Year 0 7. Accumulated Excess as of September 30, 2017 (Available for Benefit Improvements) 2,400,169 8. Excess Used as of October 1, 2017 to Reduce the Plan's Unfunded Actuarial Liability 333,334 9. Accumulated Excess as of Valuation Date 2,066,835 10. Fire Regular 781,954 Fire Supplemental 0 Base Amount This Plan Year-Fire 781,954 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -5- Consulting SECTION VALUATION RESULTS PARTICIPANT DATA October 1,2017 October 1,2016 ACTIVE MEMBERS Number 124 122 Covered Annual Payroll $ 11,282,228 $ 10,684,549 Average Annual Payroll $ 90,986 $ 87,578 Average Age 38.4 38.7 Average Past Service 10.6 10.6 Average Age at Hire 27.8 28.1 RETIREES& BENEFICIARIES& DROP Number 107 102 Annual Benefits $ 6,061,150 $ 5,708,958 Average Annual Benefit $ 56,646 $ 55,970 Average Age 62.2 61.8 DISABILITY RETIREES Number 2 2 Annual Benefits $ 112,644 $ 111,312 Average Annual Benefit $ 56,322 $ 55,656 Average Age 47.8 46.8 TERMINATED VESTED MEMBERS Number 3 3 Annual Benefits $ 109,334 $ 123,959 Average Annual Benefit $ 36,445 $ 41,320 Average Age 44.8 45.1 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -6- Consulting ACTUARIALLY DETERMINED EMPLOYER CONTRIBUTION(ADEC) A. Valuation Date October 1, 2017 October 1, 2017 October 1, 2016 AfterAdditional Before Additional UAAL Payment UAAL Payment B. ADECto Be Paid During Fiscal Year Ending 9/30/2019 9/30/2019 9/30/2018 C. Assumed Date of EmployerContrib. 10/1/2018 10/1/2018 10/1/2017 D. Annual Payment to Amortize Unfunded Actuarial Liability $ 3,732,868 $ 3,806,018 $ 3,598,572 E. Employer Normal Cost 2,519,728 2,519,728 2,394,174 F. ADEC if Paid on the Valuation Date: D+E 6,252,596 6,325,746 5,992,746 G. ADEC Adjusted for Frequency of Payments 6,252,596 6,325,746 5,992,746 H. ADEC as%of Covered Payroll 55.42 % 56.07 % 56.09 I. Covered Payroll per Valuation 11,282,228 11,282,228 10,684,549 J. Assumed Rate of Increase in Covered Payroll to Contribution Year 2.51 % 2.51 % 2.74 K. Covered Payroll for Contribution Year 11,565,412 11,565,412 10,977,306 L. ADEC for Contribution Year: HxK 6,409,551 6,484,727 6,157,171 M. Estimate of State Revenue in Contribution Year 781,954 781,954 781,954 N. Actuarially Determined Employer Contribution (ADEC) in Contribution Year 5,627,597 5,702,773 5,375,217 O. ADEC as%of Covered Payroll in Contribution Year: N-K 48.66 % 49.31 % 48.97 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -7- Consulting ACTUARIAL VALUE OF BENEFITS AND ASSETS A. Valuation Date October 1, 2017 October 1,2017 October 1, 2016 AfterAdditional Before Additional UAAL Payment UAAL Payment B. Actuarial Present Value of All Projected Benefits for 1. Active Members a. Service Retirement Benefits $ 76,149,671 $ 76,149,671 $ 71,018,613 b.Vesting Benefits 4,279,645 4,279,645 4,141,114 c. Disability Benefits 1,891,907 1,891,907 1,841,550 d. Preretirement Death Benefits 672,670 672,670 645,940 e. Return of Member Contributions 156,915 156,915 136,384 f.Total 83,150,808 83,150,808 77,783,601 2. Inactive Members a. Service Retirees&Beneficiaries 75,205,990 75,205,990 70,823,399 b. Disability Retirees 1,691,379 1,691,379 1,669,471 c.Terminated Vested Members 1,339,205 1,339,205 1,582,923 d.Total 78,236,574 78,236,574 74,075,793 3. Total for All Members 161,387,382 161,387,382 151,859,394 C. Actuarial Accrued (Past Service) Liability 132,091,634 132,091,634 123,821,633 D. Actuarial Value of Accumulated Plan Benefits per FASB No. 35 119,126,697 119,126,697 111,634,458 E. Plan Assets 1. Market Value 86,807,764 86,474,430 74,883,095 2. Actuarial Value 82,643,710 82,310,376 74,236,519 F. Unfunded Actuarial Accrued Liability: C-E2 49,447,924 49,781,258 49,585,114 G. Actuarial Present Value of Projected Covered Payroll 90,721,035 90,721,035 86,121,631 H. Actuarial Present Value of Projected Member Contributions 10,886,524 10,886,524 10,334,596 I. Accumulated Value of Member Contributions 10,603,778 10,603,778 10,027,287 J. Funded Ratio: E2/C 62.69/o 62.3% 60.0% Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -8- Consulting ENTRY AGE NORMAL METHOD CALCULATION OF EMPLOYER NORMAL COST A. Valuation Date October 1, 2017 October 1, 2016 B. Normal Cost for 1. Service Retirement Benefits $ 3,192,014 $ 3,033,396 2. Vesting Benefits 286,466 264,783 3. Disability Benefits 156,770 153,805 4. Preretirement Death Benefits 37,960 35,555 5. Return of Member Contributions 44,319 42,000 6. Total for Future Benefits 3,717,529 3,529,539 7. Assumed Amount for Administrative Expenses 156,066 146,781 8. Total Normal Cost 3,873,595 3,676,320 C. Expected Member Contribution 1,353,867 1,282,146 D. Employer Normal Cost: B&C 2,519,728 2,394,174 E. Employer Normal Cost as a%of Covered Payroll 22.33% 22.41% Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -9- Consulting LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY BEFORE ADDITIONAL UAAL PAYMENT A. UAAL Amortization Period and Payments Original UAAL Current UAAL Amortization Date Period Years Established (Years) Amount Remaining Amount Payment 10/1/1992 30 $ 795,483 5 $ 68,586 $ 15,051 10/1/1996 26 807,234 5 503,466 110,485 10/1/1997 30 1,201,102 10 1,156,995 141,965 10/1/1999 30 613,865 12 671,745 71,734 10/1/2000 30 (1,240,378) 13 (1,360,519) (137,015) 10/1/2001 30 857,564 14 975,327 93,165 10/1/2003 30 4,337,161 16 5,219,468 454,934 10/1/2004 30 4,373,725 17 5,319,611 445,511 10/1/2005 30 (1,004,416) 18 (1,231,635) (99,436) 10/1/2005 30 3,040,117 18 3,727,855 300,968 10/1/2006 30 2,426,747 19 2,974,611 232,187 10/1/2006 30 1,889,229 19 2,315,744 180,759 10/1/2007 30 (12,675) 20 (15,400) (1,165) 10/1/2007 30 (1,424,046) 20 (1,733,060) (131,128) 10/1/2008 30 4,046,900 21 4,882,499 358,926 10/1/2009 30 3,681,910 22 4,394,104 314,502 10/1/2010 30 1,249,043 23 1,472,695 102,820 10/1/2010 30 2,256,012 23 2,659,972 185,712 10/1/2010 30 (43,572) 23 (51,373) (3,587) 10/1/2011 30 1,378,822 24 1,592,449 108,639 10/1/2011 30 3,739,943 24 4,319,393 294,673 10/1/2012 30 1,446,560 25 1,610,199 107,506 10/1/2012 30 (161,237) 25 (179,476) (11,983) 10/1/2013 30 199,486 26 219,191 14,343 10/1/2013 30 818,309 26 899,138 58,834 10/1/2013 30 3,401,164 26 3,737,115 244,534 10/1/2014 30 (408,227) 27 (438,593) (28,163) 10/1/2014 30 1,753,497 27 1,883,934 120,973 10/1/2015 30 (209,489) 28 (220,079) (13,885) 10/1/2016 30 (1,022,696) 29 (1,051,448) (65,248) 10/1/2016 30 5,982,170 29 6,150,356 381,665 10/1/2017 30 (691,612) 30 (691,612) (42,258) $ 44,077,695 $49,781,258 $3,806,018 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -10- Consulting B. Amortization Schedule The UAAL is being amortized as a level percent of payroll over the number of years remaining in the amortization period. The expected amortization schedule is as follows: Amortization Schedule Year Expected UAAL 2017 $ 49,781,258 2018 49,423,378 2019 48,935,969 2020 48,306,727 2021 47,522,380 2022 46,568,579 2027 39,600,327 2032 27,248,232 2037 13,013,609 2042 2,689,105 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -11- Consulting LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY AFTER ADDITIONAL UAAL PAYMENT A. UAAL Amortization Period and Payments Original UAAL Current UAAL Amortization Date Period Years Established (Years) Amount Remaining Amount Payment 10/1/1996 26 $ 807,234 5 $ 238,718 $ 52,386 10/1/1997 30 1,201,102 10 1,156,995 141,965 10/1/1999 30 613,865 12 671,745 71,734 10/1/2000 30 (1,240,378) 13 (1,360,519) (137,015) 10/1/2001 30 857,564 14 975,327 93,165 10/1/2003 30 4,337,161 16 5,219,468 454,934 10/1/2004 30 4,373,725 17 5,319,611 445,511 10/1/2005 30 (1,004,416) 18 (1,231,635) (99,436) 10/1/2005 30 3,040,117 18 3,727,855 300,968 10/1/2006 30 2,426,747 19 2,974,611 232,187 10/1/2006 30 1,889,229 19 2,315,744 180,759 10/1/2007 30 (12,675) 20 (15,400) (1,165) 10/1/2007 30 (1,424,046) 20 (1,733,060) (131,128) 10/1/2008 30 4,046,900 21 4,882,499 358,926 10/1/2009 30 3,681,910 22 4,394,104 314,502 10/1/2010 30 1,249,043 23 1,472,695 102,820 10/1/2010 30 2,256,012 23 2,659,972 185,712 10/1/2010 30 (43,572) 23 (51,373) (3,587) 10/1/2011 30 1,378,822 24 1,592,449 108,639 10/1/2011 30 3,739,943 24 4,319,393 294,673 10/1/2012 30 1,446,560 25 1,610,199 107,506 10/1/2012 30 (161,237) 25 (179,476) (11,983) 10/1/2013 30 199,486 26 219,191 14,343 10/1/2013 30 818,309 26 899,138 58,834 10/1/2013 30 3,401,164 26 3,737,115 244,534 10/1/2014 30 (408,227) 27 (438,593) (28,163) 10/1/2014 30 1,753,497 27 1,883,934 120,973 10/1/2015 30 (209,489) 28 (220,079) (13,885) 10/1/2016 30 (1,022,696) 29 (1,051,448) (65,248) 10/1/2016 30 5,982,170 29 6,150,356 381,665 10/1/2017 30 (691,612) 30 (691,612) (42,258) $43,282,212 $ 49,447,924 $3,732,868 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -12- Consulting B. Amortization Schedule The UAAL is being amortized as a level percent of payroll over the number of years remaining in the amortization period. The expected amortization schedule is as follows: Amortization Schedule Year Expected UAAL 2017 $ 49,447,924 2018 49,143,680 2019 48,715,903 2020 48,152,790 2021 47,441,605 2022 46,568,579 2027 39,600,327 2032 27,248,232 2037 13,013,609 2042 2,689,105 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -13- Consulting 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 gain (loss)for the past year is computed as follows: A. Derivation of the Current UAAL 1. Last Year's UAAL $ 49,585,114 2. Last Year's Employer Normal Cost 2,394,174 3. Last Year's Contributions 5,075,517 4. Interest at the Assumed Rate on: a. land 2 for one year 3,898,447 b. 3from dates paid 329,348 c. a- b 3,569,099 5. This Year's Expected UAAL: 1+2-3+4c 50,472,870 6. This Year's Actual UAAL(Before any changes in benefits and/or assumptions) 49,781,258 7. Net Actuarial Gain (Loss): (5) - (6) 691,612 8. Gain (Loss) due to investments 1,665,458 9. Gain (Loss) due to othersources (973,846) Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -14- Consulting Net actuarial gains in previous years have been as follows: Change in Employer Year Ended Cost Rate Gain (Loss) 12/31/83 0.77 % $ (111,129) 12/31/84 0.13 (20,619) 12/31/85 1.27 (227,011) 12/31/86 0.50 (99,006) 12/31/87 (1.18) 279,837 12/31/88 0.52 (128,401) 12/31/89 0.41 (106,588) 9/30/90 (1.42) 371,790 9/30/91 2.09 (638,650) 9/30/92 1.61 (476,505) 9/30/93 (1.07) 483,965 9/30/94 1.76 (800,443) 9/30/95 0.56 (270,698) 9/30/96 (1.95) 895,789 9/30/97 (3.08) 1,049,747 9/30/98 (2.78) 1,020,121 9/30/99 (1.89) 722,161 9/30/00 (2.21) 891,463 9/30/01 4.44 (1,682,484) 9/30/02 9.11 (3,495,525) 9/30/03 11.31 (5,238,993) 9/30/04 4.88 (4,373,725) 9/30/05 3.04 (3,040,117) 9/30/06 1.44 (1,889,229) 9/30/07 (0.01) 12,675 9/30/08 2.33 (4,056,993) 9/30/09 2.16 (3,681,910) 9/30/10 1.25 (2,256,012) 9/30/11 2.12 (3,739,943) 9/30/12 (0.09) 161,237 9/30/13 0.12 (199,486) 9/30/14 (0.22) 408,227 9/30/15 (0.11) 209,489 9/30/16 (0.57) 1,022,696 9/30/17 (0.37) 691,612j Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -15- Consulting Actuarial Gain (+)or Loss(-) $7 $7 5 5 3 3 1 1 -$$3 -$$3 -$5 -$5 - 9 - 9 0-$11 -$110 - 13 - 13_ - 17 - 172 - 19 -119 - 21 - 21 - 23 - 23 -125 - 25 - 27 - 27 - 29 -129 - 31 - 31 - 33 - 33 -$35 -$35 Plan Year End Gain or Loss *Cumulative Change in Employer Cost Rate 40% 40% 35% 35% 30% 30% 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% -5% -5% -10% -10% -15% -15% -20% -20% -25% -25% -30% -30% -35% -35% -40% -40% Plan Year End Change in Employer Cost Rate Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -16- Consulting 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 12/31/1977 7.6 % 7.0 % 10.3 % 12/31/1978 7.0 7.0 21.3 % (2 years) 12/31/1979 7.5 7.0 10.3 12/31/1980 7.9 7.0 19.0 (2 years) 12/31/1981 9.0 7.0 30.5 7.0 12/31/1982 11.9 7.0 11.0 7.0 12/31/1983 13.9 7.0 6.4 7.0 12/31/1984 11.1 10.0 8.8 10.0 12/31/1985 18.7 10.0 14.5 10.0 12/31/1986 13.4 10.0 11.4 10.0 12/31/1987 10.3 10.0 19.7 10.0 12/31/1988 9.8 10.0 6.1 10.0 12/31/1989 14.8 10.0 12.8 10.0 9/30/1990 (9 mos.) 1.4 7.5 6.7 7.5 9/30/1991 13.1 10.0 8.0 10.0 9/30/1992 11.2 10.0 4.9 10.0 9/30/1993 9.7 8.0 4.0 6.5 9/30/1994 3.1 8.0 2.0 6.5 9/30/1995 9.3 8.0 10.3 6.5 9/30/1996 9.8 8.0 (0.2) 6.5 9/30/1997 12.6 8.0 5.9 6.5 9/30/1998 12.4 8.0 6.1 6.5 9/30/1999 14.1 8.0 13.3 6.5 9/30/2000 13.3 8.5 10.3 6.5 9/30/2001 8.0 8.5 4.8 6.5 9/30/2002 2.3 8.5 12.1 6.5 9/30/2003 3.5 8.5 10.0 6.5 9/30/2004 2.2 8.5 11.0 6.5 9/30/2005 2.5 8.5 11.7 6.5 9/30/2006 5.3 8.5 13.3 9.2 9/30/2007 9.3 8.50 9.2 8.9 9/30/2008 3.0 8.25 13.6 8.9 9/30/2009 0.9 8.25 7.6 8.9 9/30/2010 2.5 8.25 1.8 8.9 9/30/2011 0.9 8.10 3.7 8.1 9/30/2012 2.7 7.95 (2.8) 7.1 9/30/2013 8.1 7.80 1.9 8.7 9/30/2014 8.8 7.65 7.2 6.0 9/30/2015 7.3 7.50 4.9 6.2 9/30/2016 9.2 7.50 6.3 5.9 9/30/2017 9.3 7.50 8.4 6.3 Averages 8.2 % --- 8.5 % --- 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 the end of each year. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -17- Consulting History of Investment Return Based on Actuarial Value of Assets 20% 20% 15% - 15% 10% 10% ... "" 5% 5% 0% 0% -V AA A-' J� ,1�1 1�1� 11� 1�� Plan Year End — —Actual *Assumed History of Salary Increases 35% 35% 30% 30% 1 25% 25% 20% 20/°- ° 15% 15% A �R 10% 10% 0% _ . 0% -5% -5% C�� �� C�, Plan Year End Compared to Previous Year ------Actual +Assumed Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -18- Consulting Actual (A) Compared to Expected (E) Decrements Among Active Employees Number Added Service& Active During DROP Disability Terminations Members Year Year Retirement Retirement Death Vested Other Totals End of Ended A E A E A E A E A A A E Year 9/30/2002 1 10 6 5 0 0 0 0 1 3 4 3 83 9/30/2003 15 1 1 5 0 0 0 0 0 0 0 3 97 9/30/2004 22 14 13 4 0 0 0 0 0 1 1 3 105 9/30/2005 1 4 2 1 0 0 0 0 0 2 2 4 102 9/30/2006 19 3 0 2 0 0 0 0 1 2 3 4 118 9/30/2007 5 4 1 3 0 0 0 0 0 3 3 4 119 9/30/2008 5 1 0 5 1 0 0 0 0 0 0 4 123 9/30/2009 1 6 5 6 0 0 0 0 0 1 1 4 118 9/30/2010 11 4 3 3 0 0 0 0 0 1 1 4 125 9/30/2011 0 11 10 8 0 0 0 0 1 0 1 4 114 9/30/2012 3 2 1 2 0 0 0 0 1 0 1 4 115 9/30/2013 10 7 6 2 0 0 0 0 0 1 1 4 118 9/30/2014 3 2 0 1 0 0 0 0 0 2 2 2 119 9/30/2015 1 2 1 1 0 0 0 0 1 0 1 2 118 9/30/2016 11 7 4 1 1 0 0 0 1 1 2 2 122 9/30/2017 10 8 4 2 0 0 0 0 1 3 4 2 124 9/30/2018 4 0 0 2 16 Yr Totals * 118 86 57 51 2 0 0 0 7 20 27 53 * Totals are through current Plan Year only. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -19- Consulting Cumulative Actuarial Gains (Losses) The Plan provides for a 13th check if there is a net actuarial gain for the previous year. There was an actuarial gain during the prior plan year. However,there is a limitation on 13th checks tied to actuarial gains provided in Chapter 112.61, Florida Statutes. The cumulative amount used to pay for 13th checks may not exceed the cumulative amount of actuarial gains. Since the cumulative amount of gains is negative(a net loss), no 13th check is payable. Cumulative Actuarial Gains(Losses) Balance at Year Ending Beginning Gain (Loss) Balance at 9/30 of Year for Year 13th Check End of Year 2001 0 (1,682,484) 0 (1,682,484) 2002 (1,682,484) (3,495,525) 0 (5,178,009) 2003 (5,178,009) (5,238,993) 0 (10,417,002) 2004 (10,417,002) (4,373,725) 0 (14,790,727) 2005 (14,790,727) (3,040,117) 0 (17,830,844) 2006 (17,830,844) (1,889,229) 0 (19,720,073) 2007 (19,720,073) 12,675 0 (19,707,398) 2008 (19,707,398) (4,056,993) 0 (23,764,391) 2009 (23,764,391) (3,681,910) 0 (27,446,301) 2010 (27,446,301) (2,256,012) 0 (29,702,313) 2011 (29,702,313) (3,739,943) 0 (33,442,256) 2012 (33,442,256) 161,237 0 (33,281,019) 2013 (33,281,019) (199,486) 0 (33,480,505) 2014 (33,480,505) 408,227 0 (33,072,278) 2015 (33,072,278) 209,489 0 (32,862,789) 2016 (32,862,789) 1,022,696 0 (31,840,093) 2017 (31,840,093) 691,612 0 (31,148,481) Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -20- Consulting rr G o ul > 110 It 01 It O M It O 01 I- M O .-I 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M l0 00 n 00 M m Ln 00 n l0 O O 00 n M M Ln ci 00 ci m n Ln Q' O n m M 00 -1 N m Ln O ci N Ln m O ::i, Ln O W l0 00 00 N O n M U fl. l0 00 N ci N N � '::1- 00 l0 N Ln M Ln n Ln O m N '::I- '::I- N M .-i m C Ln Ln '::I- MN M m ci ::I- r, O N 00 O O -1 l0 Ln m ci N cc7 W c-I ci ci N N N (M (M (M (M (M (M G t U f6 N _ m Z `� ci Ln m O 0 ci O M ci Ln Ln ci ::rM n l0 Ln Ln oo n l0 O O n lN n n n Ln Ln Ln ci ci ::I: Ln 1:3: ci O 1:3: O ::I: W l0 l0 m O M ci ci M Ln m l0 O DGJ o N ci ci O N N O W Ln M O W n m M Ln Ln Ln n m W m i n ci ci ci W W m C d ci ci ci ci ci ci ci .-i N N N N N N N N (M (M '::I- '::I- a LU M N Ln W m O ci n O n O m W Ln O m a l0 M N M n l0 m M n n 0 V Ln Ln n Ln ::i- W O Ln m N O m � N M 00 n l0 N m � m N l0 .-i m C :: Ln l0 ci n N M m m Ln l0 O O W n M Ln ci ci o c-I m n Ln N Ln +�+ Q Z 3 l0 O W N W .-i .-i Ln O O l0 Ln m O ::r Ln O W M 00 n N O '::1- M Ln n O 0 n W l0 ::r W m l0 ::r to ::i- m Ln M Ln n Ln O W n '::I- l0 N M n m n N U r Ln Ln C M N .-i '::1- 00 -1 '::1- n O N 00 O m ci Ln Ln m O N M l0 Q Q c-I ci ci N N N (M N (M (M (M (M -:: -:: Ln Ln a W C C p N ci n Ln -i 00 M ci O m ci N l0 N M O M O 00 ci M ci l0 l0 N l0 OC •— L W O Ln M Ln O N n m m M O N m n N n n l0 m 00 n m LQci n 7 3 +p+ a N M M l0 W n l0 l0 n m W W W n l0 Ln Ln Ln Ln l0 n n n n n l0 Cf m d W •L � LL � � O O .-i M N m ci M l0 ci ci O O O M M M N M LnN N N U m l0 n N 00 O '::1- 00 '::1- '::1- M '::I- m N O '::1- '::1- n .--I 4 N N N Ln Ln Ln Ln -p E p ci n O O O N N m l0 N Ln 00 Ln Ln Ln n Ln ci M M M M m m m m O % ++ 3 W l0 W Ln W Ln m ci ci Ln ::r Mm m m m m m m M M ci ci ci ci O Ln l0 Ln m .-i oo Ln Ln l0 W l0 m � W W W n W M N O O O W W W W N •3 W E ci ci ci ci N N M M M M M � � Ln Ln Ln Ln Ln Ln l0 l0 n n n n n n n x ate, Q z °C V W p p M to n Ln oo ::r l0 ::r oo .-i to ::r M .-i m oo ci n to n 00 00 '::1- O m N L M Ln -1 ::,: l0 Ln n ci O Ln W N ::,: Ln l0 M M Ln O ci W Ln n ci O :3: Ln Ln ::r l0 l0 l0 l0 M O Ln Ln l0 n N '::I- N N M Ln ::r Ln O ::1- 00 m m l0 Ln d c-1 ci ci ci ci ci ci ci ci .-i N N M M M M M M M M Ln Ln LA 7L Ln n n O M n W Ln l0 n O m N 00 M N .-i m 00 l0 Ln m 00 M n .-i .-i • ci N m '::I- Ln N 00 m M '::I- l0 m ci Ln l0 n m n ci n l0 ci l0 ci W ci n Ln p l0 M l0 N ci n M c-I N ci ci l0 N 00 Ln M N n c-I N N M l0 Ln ci Ln Q 3 ::r n l0 n n l0 O n N N Ln m Ln W m ::r Ln O W l0 .-i N l0 Ln l0 Ln n m E O M N M O n .-i m .-i m N Ln Ln 00 M l0 ::1- 00 n O n n N M Ln n Ln O LLL E l0 l0 l0 n W n n Ln Ln N W M l0 m M l0 W M l0 l0 n N N l0 W O .--I Zl Q .-i .-i .-i N N N M M M M Ln l0 l0 C N M Ln l0 n 00 m O -1 N M Ln l0 n 00 m O -1 N M Ln l0 n 00 m C H t O N •- O O O O O O O O O O O O O O O O O O O O O O O O O O O O iCL M M M M M M M M M M M M M M M M M M M M M M M M M M M M LU N S 3 a \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ } 3 o Q m m m m m m m m m m m m m m m m m m m m m m m m m m m m M ,::r Ln l0 n W m O ci N M ::r Ln l0 n 00 m m O ci N M '::I- Ln l0 n *' ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci E— O lC 0 ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci ci �U > ACTUARIAL ASSUMPTIONS AND COST METHOD 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 actual and expected investment earnings over a period of 5 years. The Actuarial Value of Assets will be 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 7.50% per year, compounded annually(net after investment expenses). The Wage Inflation Rate assumed in this valuation is 3.5%per year. The Wage Inflation Rate is defined to be the portion of total pay increases for an individual that are due to macroeconomic 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 Price Inflation Rate assumed in this valuation is 2.5% per year. The assumed real rate of return over price inflation is defined to be the portion of total investment return that is more than the assumed inflation rate. Considering other economic assumptions,the 7.50%investment return rate translates to an assumed real rate of return over price inflation of 5.0%. The active member population is assumed to remain constant. For purposes of financing the unfunded liabilities,total payroll is assumed to grow at 4.00% per year. The average increase over the most recent ten Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -23- Consulting years is 2.51%. Florida administrative code requires using the lesser of the two rates for purposes of amortizing unfunded liabilities as a level percent of pay, but not less than zero. Pay increase assumptions for individual active members are shown below. Part of the assumption for each age is for merit and/or seniority increase, and the other 3.5% recognizes wage inflation, including price inflation, productivity increases, and other macroeconomic forces. The rates of salary increase used for individual members 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 Years of Merit and Wage Total Service Seniority Inflation Increase 1 11.0% 3.5% 14.5% 2 8.5% 3.5% 12.0% 3 8.5% 3.5% 12.0% 4 6.0% 3.5% 9.5% 5 1.5% 3.5% 5.0% 6 4.0% 3.5% 7.5% 7 1.5% 3.5% 5.0% 8 1.5% 3.5% 5.0% 9 4.0% 3.5% 7.5% 10-15 0.5% 3.5% 4.0% 16-19 5.0% 3.5% 8.5% 20&Over 0.0% 3.5% 3.5% Demographic Assumptions The mortality table is the RP-2000 Combined Healthy Participant Mortality Table (for pre-retirement mortality) and the RP-2000 Mortality Table for Annuitants (for post-retirement mortality), with mortality improvements projected to all future years after 2000 using Scale BB. For males, the base mortality rates include a 90% blue collar adjustment and a 10%white collar adjustment. For females,the base mortality rates include a 100%white collar adjustment. These are the same rates currently in use for Special Risk Class members of the Florida Retirement System (FRS), as mandated by Florida House Bill 1309. FRS Healthy Post-Retirement Mortality for Special Risk Class Members Sample Probability of Future Life Attained Dying Next Year Expectancy(years) Ages(in 2017) Men Women Men Women 50 0.54 % 0.23 % 33.90 38.31 55 0.67 0.32 29.26 33.29 60 0.90 0.47 24.68 28.39 65 1.31 0.74 20.28 23.65 70 2.01 1.24 16.15 19.19 75 3.26 2.09 12.43 15.11 80 5.37 3.51 9.23 11.49 This assumption is used to measure the probabilities of each benefit payment being made after retirement. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -24- Consulting FRS Healthy Pre-Retirement Mortality for Special Risk Class Members Sample Probability of Future Life Attained Dying Next Year Expectancy(years) Ages(in 2017) Men Women Men Women 50 0.23 % 0.15 % 34.89 38.66 55 0.39 0.24 29.77 33.51 60 0.71 0.39 24.89 28.49 65 1.23 0.70 20.33 23.67 70 2.01 1.24 16.15 19.19 75 3.26 2.09 12.43 15.11 80 5.37 3.51 9.23 11.49 This assumption is used to measure the probabilities of active members dying prior to retirement. For disabled retirees,the mortality table used was 60%of the RP-2000 for Disabled Annuitants with ages set back 4 years for males and set forward 2 years for females, and 40%of the RP2000 Annuitant Mortality Table with a White Collar adjustment with no age setback, both with no provision being made for future mortality improvements.These are the same rates currently in use for Special Risk Class members of the Florida Retirement System (FRS), as mandated by Florida House Bill 1309. FRS Disabled Mortality for Special Risk Class Members Sample Probability of Future Life Attained Dying Next Year Expectancy(years) Ages(in 2017) Men Women Men Women 50 1.67 % 0.91 % 23.74 27.06 55 2.03 1.26 20.77 23.37 60 2.47 1.67 17.91 19.90 65 3.07 2.24 15.15 16.62 70 3.90 3.18 12.52 13.58 75 5.30 4.60 10.02 10.86 80 7.59 6.66 7.80 8.48 The rates of retirement used to measure the probability of eligible members retiring during the next year were as follows: Retirement Rates S Age e <50 50-54 55 56-59 60+ r 10- 19 N/A 10.0% 40.0% 40.0% 100.0% V 20 40.0% 80.0% 80.0% 100.0% 100.0% i 21- 24 40.0% 80.0% 100.0% 100.0% 100.0% c 25+ 50.0% 80.0% 100.0% 100.0% 100.0% e The rate of retirement is 10%for each year of eligibility for early retirement. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -25- Consulting 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. Sample %of Active Members Ages Separating Within Next Year 20 1.5 % 25 1.5 30 1.5 35 1.5 40 2.5 45 1.5 50 1.0 55 0.0 Rates of disability among active members (75%of disabilities are assumed to be service-connected). Sample %Becoming Disabled Ages within Next Year 20 0.09 % 25 0.10 30 0.12 35 0.15 40 0.20 45 0.34 50 0.67 55 1.03 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -26- Consulting Miscellaneous and Technical Assumptions Administrative& Investment The investment return assumption is intended to be the return net of Expenses 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. Benefit Service Exact fractional service is used to determine the amount of benefit payable. Cost of Living Increases Benefits are increased by 2%per year beginning five years after benefit commencement. Decrement Operation Disability and mortality decrements operate during retirement eligibility. Decrement Timing Decrements of all types are assumed to occur at the beginning of the year. Eligibility Testing 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. Forfeitures 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. Incidence of Contributions The employer contribution is assumed to be made in one full payment on October 1St of each year (at the beginning of the fiscal year). 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. Liability Load Projected retirement benefits are loaded by a unique amount for each member to allow for the inclusion of unused sick and vacation pay in final average earnings. These individual loads are based on the number of hours of unused sick and vacation reported for each member as of September 27, 2013. Marriage Assumption 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. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -27- Consulting Normal Form of Benefit A ten year certain and life thereafter annuity is the Normal Form of Benefit. Poy Increase Timing Beginning of fiscal year.This is equivalent to assuming that reported pays represent amounts paid to members during the year ended on the valuation date. Service Credit Accruols It is assumed that members accrue one year of service credit per year. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -28- Consulting GLOSSARY Actuarial Accrued Liability The difference between the Actuarial Present Value of Future Benefits, (AAL) and the Actuarial Present Value of Future Normal Costs. Actuarial Assumptions 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. Actuarial Cast Method 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. Actuarial Equivalent Of equal Actuarial Present Value, determined as of a given date and based on a given set of Actuarial Assumptions. Actuarial Present Value (APV) 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. Actuarial Present Value of The Actuarial Present Value of amounts which are expected to be paid at Future Benefits(APVFB) 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. Actuarial Valuation 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. Actuarial Value of Assets 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 determined employer contribution (ADEC). Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -29- Consulting Actuarially Determined The employer's periodic required contributions, expressed as a dollar Employer Contribution amount or a percentage of covered plan compensation, determined (ADEQ under GASB. The ADEC consists of the Employer Normal Cost and Amortization Payment. Amortization Method 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. Amortization Payment That portion of the plan contribution or ADEC which is designed to pay interest on and to amortize the Unfunded Actuarial Accrued Liability. Amortization Period The period used in calculating the Amortization Payment. Closed Amortization Period 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. Employer Normal Cost The portion of the Normal Cost to be paid by the employer. This is equal to the Normal Cost less expected member contributions. Equivalent Single For plans that do not establish separate amortization bases (separate Amortization Period 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. Experience Gain/Loss A measure of the difference between actual experience and that expected based upon a set of Actuarial Assumptions, during the period between two actuarial valuations.To the extent that actual experience differs from that assumed, Unfunded Actuarial Accrued Liabilities emerge which may be larger or smaller than projected. Gains are due to favorable experience, e.g.,the assets earn more than projected, salaries do not increase as fast as assumed, members retire later than assumed, etc. Favorable experience means actual results produce actuarial liabilities not as large as projected by the actuarial assumptions. On the other hand, losses are the result of unfavorable experience, i.e., actual results that produce Unfunded Actuarial Accrued Liabilities which are larger than projected. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -30- Consulting Funded Ratio The ratio of the Actuarial Value of Assets to the Actuarial Accrued Liability. GASB Governmental Accounting Standards Board. GASB No. 68 and These are the governmental accounting standards that set the accounting GASB No. 67 rules for public retirement systems and the employers that sponsor or contribute to them. Statement No. 68 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. Open Amortization Period 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. Unfunded Actuarial Accrued The difference between the Actuarial Accrued Liability and Actuarial Liability Value of Assets. Valuation Date 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. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -31- Consulting SECTION C PENSION FUND INFORMATION SUMMARY OF ASSETS September 30 Item 2017 2016 A. Cash and Cash Equivalents (Operating Cash) $ 685,956 $ B. Receivables: 1. Member Contributions $ - $ - 2. Employer Contributions - 43,059 3. State Contributions - 923,246 4. Investment Income and Other Receivables 322,209 180,708 5. Prepaid Expenses 3,622 4,670 6. Total Receivables $ 325,831 $ 1,151,683 C. I nvestments 1. Short Term Investments $ 3,208,149 $ 604,761 2. Domestic Equities 48,162,026 46,452,887 3. International Equities 15,104,332 12,791,093 4. Domestic Fixed Income 27,627,431 18,147,153 5. International Fixed Income - 3,554,896 6. Real Estate 9,358,834 8,716,700 7. Private Equity - - 8. Total Investments $ 103,460,772 $ 90,267,490 D. Liabilities 1. Benefits Payable $ - $ - 2. Accrued Expenses and Other Payables (102,816) (277,747) 3. Prepaid City Contribution (77,632) (77,632) 4. Total Liabilities $ (180,448) $ (355,379) E. Total Market Value of Assets Available for Benefits $ 104,292,111 $ 91,063,794 F. Reserves 1. State Contri buti on Reserve $ (2,066,835) $ (2,298,809) 2. DROP Accounts (15,417,512) (13,881,890) 3. Total Reserves $ (17,484,347) $ (16,180,699) G. Market Value Net of Reserves $ 86,807,764 $ 74,883,095 F. Allocation of Investments 1. Short Term Investments 3.10% 0.67% 2. Domestic Equities 46.55% 51.46% 3. International Equities 14.60% 14.17% 4. Domestic Fixed Income 26.70% 20.10% 5. International Fixed Income 0.00% 3.94% 6. Real Estate 9.05% 9.66% 7. Private Equity 0.00% 0.00% 8. Total Investments 100.00% 100.00% Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -32- Consulting PENSION FUND INCOME & DISBURSEMENTS September 30 Item 2017 2016 A. Market Value of Assets at Beginning of Year $ 91,063,794 $ 80,406,693 B. Revenues and Expenditures 1. Contributions a. Employee Contributions $ 1,346,307 $ 1,308,804 b. Employer Contributions 4,293,563 4,117,788 d. State Contri buti ons 883,314 923,246 e. Service Purchase 130,808 176,324 f. Rol I over to DROP 70,279 271,411 g. Total $ 6,724,271 $ 6,797,573 2. Investment Income a. Interest, Dividends,and Other Income $ 1,796,842 $ 2,439,764 b. Net Realized Gains/(Losses) 3,521,426 1,732,104 C. Net Unrealized Gains/(Losses) 7,159,343 5,324,595 d. Investment Expenses (312,505) (298,977) e. Net Investment Income $ 12,165,106 $ 9,197,486 3. Benefits and Refunds a. Refunds $ (53,290) $ - b. Regular Monthly Benefits (4,975,760) (4,522,836) C. DROP Distributions (481,000) (654,000) d. Ad Hoc Payments from State Reserve - - e. Total $ (5,510,050) $ (5,176,836) 4. Administrative and Miscellaneous Expenses $ (151,010) $ (161,122) 5. Tra nsfers $ - $ - C. Market Value of Assets at End of Year $ 104,292,111 $ 91,063,794 D. Reserves 1. State Contribution Reserve $ (2,066,835) $ (2,298,809) 2. DROP Accounts (15,417,512) (13,881,890) 3. Total Reserves $ (17,484,347) $ (16,180,699) E. Market Value Net of Reserves $ 86,807,764 $ 74,883,095 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -33- Consulting m O 00 00 O O O LQ Ln Ln O O O 0 0 0 N O O w t/? t/? H O 00 Ln :3- O O O O LQ Ln :3- O O O O 'en O I� LD cl Lp O O O M 1� r-I d N O Ln LD L qj)• qj)• i i i i i o i i i i N LIl Ql M i i i i i i i i i o 0 0 ' O 00 Ln r-I N O O O LQ LL n LD 0 111 O O O O M 1, LD Ln 0- N O Ln O Ln Q- rl rl U O m m r-I ^ 0 O O O U LIl i n n r-1 O O O N O ^ LD 01 Lr O ri O O O 1l LD rl lD m N O m O1:3- mLLI 0 rl rl ++ C co Q m MT r-1 LD O LD rl m m O1:3- m rl M M rl M N O1:3- 1:3- 0 0 0 rl r-I m r-I O 0 1, M m m r-I m m m m M m m M r1 —1 LD Ln 01 00 r1 O N rl 1- N r1 Ln r1 01 Ln 1, N M :3, O Ln LD O m m 1- N O N 01 O >, n N N M M LI1 ^ N N lD Q1 V O P V 00 O M 00 LD 1- M N Q1 N lD ® r1 r1 01 LD LD LD oo oo M 1, LD r1 O LD N Ln M N LD r1 � O LD r1 01 U O 1:3� N O O rl 01 rl O Ln O 1- lD r-I r-I 1:3- r-I O MT LD 00 r1 N O :3- r1 r1 N LD Ln r-I r-I rl O LI1 M O N V N LD F 01 O 01 rl O N 00 O r-I 00 00 Wrl r-I r-I r-I Q LD :3- M Ln LD N 1:3- Ln 00 O :3- Ln oo M Ln oo Q1 O Q1 Ln LD o 0 0 N 01 01 r-I 00 0 r1 1, Ln r1 oo Ln 01 LD r1 Ln M r1 O 01 r1 01 1, N LD 01 r-I 1l LD LD :3- L!1 N N MT N N M M N N Ln O N oo oo Ln O Ln N O N l0 M LD 01 1- ^ O n a Lr O CZF M n LD rl 1- 00 rl LD M LD 01 r1 Ol G r1 LD O Ln 01 O 01 1, LD r1 O r1 :3- r1 1, Ln r1 01 oo M oo rl 01 J N N O � � r-I M 00 Ln O � n oo 1:3- N 00 1:3- N 00 N00 LD Q rl rl O rl 01 lD N rl rl O 01 N O N M 00 O1 00 01 O 1l 01 rl 1l n dry/ t/? li Q V �F Q O m ON > C L N LTA v E m O N > Y U o — C O U w Q m L OA L L 0p m > ca L ca O C v d O O 0p W '� z .. N >- N 1Fo M O to > 0 L O 0 �.R L C O `� Q L } +-' U 7 OA OA '♦3 > N O N fB -a co C of a) m a�L-+ m i N ca C w > ��. O Ly -C N 7 .� ate+ .. = W of }' *' O *' m N w L d O v aA c m °J O O x y E +' `n O E O O C N ca L ca N J J w + O ca +' O f6 CL Q O c a OA a~ N O N O 0 } N } w Q O O N u 0p > d > y w m C OU LL Q 5 = O L '� L .� n G1 L M OJ D_ � i Q w 0 fD 7 7 E G N w +-' OA a-+ '� OL O_ t (p .� U U 00 +m-+ 7 m 7 °A > m m c — E E c c o o f D_ > E L L V) D w v —L° v v > E L L O °� >' v v O O v L , — " O M m 7 Q Q Q Q ,n U w V) H w H M D_ D —i w w w w w M y o U L L . f6 U O > rl N -M rl N MLI lD rl N M 4 Ln' LD 1� }�00 `� `1 M f�6 > Q Z _ w w w w D_ w w w w w w Q C7 C7 C7 C7 C7 C7 C7 (D O Q Q m U 6 w Li d = = — Y RECONCILIATION OF DROP ACCOUNTS Value at beginning of year $ 13,881,890 Adjustment to beginning of year balance + 88,718 Payments credited to accounts + 998,820 Rollovers into DROP + 70,279 Net Loan Activity - 135,413 Investment Earnings credited + 994,218 Withdrawals from accounts - 481,000 Value at end of year 15,417,512 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -35- Consulting INVESTMENT RATE OF RETURN Investment Rate of Return Year Ended Market Value Actuarial Value 12/31/1982 NA % 11.9 % 12/31/1983 15.2 13.9 12/31/1984 11.7 11.1 12/31/1985 23.1 18.7 12/31/1986 11.8 13.4 12/31/1987 5.3 10.3 12/31/1988 10.9 9.8 12/31/1989 15.9 14.8 9/30/1990 (9 mos.) (1.6) 1.4 9/30/1991 19.6 13.1 9/30/1992 12.7 11.2 9/30/1993 13.1 9.7 9/30/1994 0.2 3.1 9/30/1995 18.8 9.3 9/30/1996 13.1 9.8 9/30/1997 24.5 12.6 9/30/1998 11.4 12.4 9/30/1999 11.8 14.1 9/30/2000 9.4 13.3 9/30/2001 (7.7) 8.0 9/30/2002 (5.6) 2.3 9/30/2003 15.3 3.5 9/30/2004 6.4 2.2 9/30/2005 7.9 2.5 9/30/2006 5.2 5.3 9/30/2007 12.3 9.3 9/30/2008 (17.1) 3.0 9/30/2009 (0.2) 0.9 9/30/2010 8.5 2.5 9/30/2011 (0.9) 0.9 9/30/2012 17.1 2.7 9/30/2013 13.6 8.1 9/30/2014 10.2 8.8 9/30/2015 0.4 7.3 9/30/2016 11.1 9.2 9/30/2017 13.0 9.3 Average Returns: Last Five Years 9.6 % 8.5 % Last Ten Years 5.1 % 5.2 % All Years 8.7 °% 8.2 °% Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -36- Consulting SECTION D FINANCIAL ACCOUNTING INFORMATION FASB NO.35 INFORMATION A. Valuation Date October 1, 2017 October 1, 2016 B. Actuarial Present Value of Accumulated Plan Benefits 1. Vested Benefits a. Members Currently Receiving Payments $ 76,897,369 $ 72,492,870 b. Terminated Vested Members 1,339,205 1,582,923 c. Other Members 38,748,680 35,403,951 d. Total 116,985,254 109,479,744 2. Non-Vested Benefits 2,141,443 2,154,714 3. Total Actuarial Present Value of Accumulated Plan Benefits: 1d +2 119,126,697 111,634,458 4. Accumulated Contributions of Active Members 10,603,778 10,027,287 C. Changes in the Actuarial Present Value of Accumulated Plan Benefits 1. Total Value at Beginning of Year 111,634,458 98,889,292 2. Increase (Decrease) Duringthe Period Attributable to: a. Plan Amendment 0 0 b. Change in Actuarial Assumptions 0 5,409,053 c. Latest Member Data, Benefits Accumulated and Decrease in the Discount Period 13,520,109 12,733,299 d. Benefits Paid net of DROP activity (6,027,870) (5,397,186) e. Net Increase 7,492,239 12,745,166 3. Total Value at End of Period 119,126,697 111,634,458 D. Market Value of Assets 86,807,764 74,883,095 E. Actuarial Assumptions- See page entitled Actuarial Assumptions and Methods Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -37- Consulting SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION LIABILITY AND RELATED RATIOS GASB Statement No. 67 Fiscal year ending September 30, 2018* 2017 2016 2015 2014 Total pension liability Service Cost $ 3,717,529 $ 3,330,443 $ 3,204,682 $ 2,988,536 $ 2,772,724 Interest 11,183,020 10,066,945 9,542,671 8,955,215 8,188,369 Benefit Changes - - - - - Difference between actual &expected experience 1,224,054 668,799 (498,197) 708,071 (28,363) Assumption Changes - 6,644,861 1,809,581 Benefit Payments (6,509,993) (5,456,760) (5,176,836) (4,304,149) (4,292,070) Refunds (20,555) (53,290) (4,622) (50,673) Other(Increase in Excess State Reserve) (231,974) (231,973) (192,041) 259,251 312,239 Other(Rollovers into DROP) - 70,279 271,411 139,860 343,843 Net Change in Total Pension Liability 9,362,081 15,039,304 7,151,690 10,551,743 7,246,069 Total Pension Liability-Beginning 148,770,660 133,731,356 126,579,666 116,027,923 108,781,854 Total Pension Liability-Ending(a) $158,132,741 $ 148,770,660 $133,731,356 $126,579,666 $116,027,923 Plan Fiduciary Net Position Contributions -Employer(from City) $ 5,297,585 $ 4,293,563 $ 4,195,420 $ 3,930,996 $ 3,522,147 Contributions -Employer(from State) 883,314 883,314 923,246 963,573 1,016,561 Contributions -Non-Employer Contributing Entity - - - - - Contributions -Members 1,353,867 1,477,115 1,485,128 1,251,530 1,291,773 Net Investment Income 8,033,353 12,165,106 9,197,486 282,853 7,187,580 Benefit Payments (6,509,993) (5,456,760) (5,176,836) (4,304,149) (4,292,070) Refunds (20,555) (53,290) (4,622) (50,673) Administrative Expense (156,066) (151,010) (161,122) (132,439) (122,390) Other(Rollovers into DROP) - 70,279 271,411 139,860 343,843 Net Change in Plan Fiduciary Net Position 8,881,505 13,228,317 10,734,733 2,127,602 8,896,771 Plan Fiduciary Net Position-Beginning 104,369,743 91,141,426 80,406,693 78,279,091 69,382,320 Plan Fiduciary Net Position-Ending(b) $113,251,248 $ 104,369,743 $ 91,141,426 $ 80,406,693 $ 78,279,091 Net Pension Liability-Ending(a)-(b) 44,881,493 44,400,917 42,589,930 46,172,973 37,748,832 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 71.62 % 70.15 % 68.15 % 63.52 % 67.47 % Covered Employee Payroll $ 11,282,228 $ 11,219,225 $ 10,906,700 $ 9,962,067 $ 9,925,925 Net Pension Liability as a Percentage of Covered Employee Payroll 397.81 % 395.76 % 390.49 % 463.49 % 380.31 % *These figures are estimates only. Actual figures will be provided after the end of the fiscal year. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -38- Consulting 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 Coverd Payroll 2014 $116,027,923 $ 78,279,091 $ 37,748,832 67.47% $9,925,925 380.31% 2015 126,579,666 80,406,693 46,172,973 63.52% 9,962,067 463.49% 2016 133,731,356 91,141,426 42,589,930 68.15% 10,906,700 390.49% 2017 148,770,660 104,369,743 44,400,917 70.15% 11,219,225 395.76% 2018* 158,132,741 113,251,248 44,881,493 71.62% 11,282,228 397.81% *These figures are estimates only. Actual figures will be provided after the end of the fiscal year. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -39- Consulting NOTES TO NET PENSION LIABILITY GASB Statement No. 67 Valuation Date: October 1, 2017 Measurement Date: September30, 2018 Methods and Assumptions Used to Determine Net Pension Liability: Actuarial Cost Method Entry Age Normal Inflation 2.5% Salary Increases Varies by years of service from 3.5% to 14.5% (see Table in Actuarial Assumptions Section) Investment Rate of Return 7.50% Retire mentAge Rates vary by age and years of service (see Table in Actuarial Assumptions Section) Mortality RP-2000 Combined Healthy Participant Mortality Table (for pre- retirement mortality) and the RP-2000 Mortality Table for Annuitants (for post-retirement mortality), with mortality improvements projected to all future years after 2000 using Scale BB. For males,the base mortality rates include a 90% blue collar adjustment and a 10% white collar adjustment. Forfemales,the base mortality rates include a 100%white collar adjustment.These are the same rates currently in use for Special Risk Class members of the Florida Retirement System (FRS), as mandated by Florida House Bill 1309. Other Information: Notes See Discussion of Valuation Results on Page 1. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -40- Consulting SCHEDULE OF CONTRIBUTIONS GASB Statement No. 67 Actuarially Contribution Actual Contribution FY Ending Determined Actual Deficiency Covered as a %of September 30, Contribution Contribution (Excess) Payroll Covered Payroll 2014 $ 4,226,469 $ 4,226,469 $ - $ 9,925,925 42.58% 2015 4,635,318 4,635,318 - 9,962,067 46.53% 2016 4,899,742 4,977,374 (77,632) ** 10,906,700 45.64% 2017 5,075,517 5,075,517 - 11,219,225 45.24% 2018* 6,157,171 6,079,539 77,632 ** 11,282,228 53.89% *These figures are estimates only. Actual figures will be provided after the end of the fiscal year. **A prepaid contribution of $77,632 (resulting from the fiscal year 2016 excess contribution) will be applied toward the Actuarially Determined Contribution for the fiscal year ending September 30, 2018. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -41- Consulting NOTES TO SCHEDULE OF CONTRIBUTIONS GASB Statement No. 67 Valuation Date: October 1, 2016 Notes Actuarially determined contribution rates are calculated as of the October 1st, which is two years prior to the end of the fiscal year in which contributions are reported. Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage of Payroll, Closed Remaining Amortization Period 21 years (Single equivalentamortization period) Asset Valuation Method 5-year smoothed market Inflation 2.5% Salary Increases Varies by years of service from 3.5% to 14.5% (see Table in Actuarial Assumptions Section) Investment Rate of Return 7.50% Retirement Age Rates vary by age and years of service (see Table in Actuarial Assumptions Section) Mortality RP-2000 Combined Healthy Participant Mortality Table (for pre- retirement mortality) and the RP-2000 Mortality Table for Annuitants (for post-retirement mortality), with mortality improvements projected to all future years after 2000 using Scale BB. For males, the base mortality rates include a 90% blue collar adjustment and a 10% white collar adjustment. For females, the base mortality rates include a 100% white collar adjustment. These are the same rates currently in use for Special Risk Class members of the Florida Retirement System (FRS), as mandated by Florida House Bill 1309. Other Information: Notes See Discussion of Valuation Results on Page 1 of the October 1, 2016Actuarial Valuation Report Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -42- Consulting SINGLE DISCOUNT RATE GASB Statement No. 67 A single discount rate of 7.50% was used to measure the total pension liability. This single discount rate was based on the expected rate of return on pension plan investments of 7.50%. The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the total actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments (7.50%) was applied to all periods of projected benefit payments to determine the total pension liability. Regarding the sensitivity of the net pension liability to changes in the single discount rate, the following presents the plan's net pension liability, calculated using a single discount rate of 7.50%, as well as what the plan's net pension liability would be if it were calculated using a single discount rate that is 1- percentage-point lower or 1-percentage-point higher: Sensitivity of the Net Pension Liability to the Single Discount Rate Assumption Current Single Discount 1%Decrease Rate Assumption 1%Increase 6.50% 7.50% 8.50% $62,855,228 $44,881,493 $30,161,620 *These figures are estimates only. Actual figures will be provided after the end of the fiscal year. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -43- Consulting SECTION MISCELLANEOUS INFORMATION RECONCILIATION OF MEMBERSHIP DATA From 10/1/16 From 10/1/15 To 10/1/17 To 10/1/16 A. Active Members 1. Number Included in Last Valuation 122 118 2. New Members Included in Current Valuation 10 10 3. Non-Vested Employment Terminations (3) (1) 4. Vested Employment Terminations (1) (1) 5. DROP Participation (4) (3) 6. Service Retirements 0 (1) 7. Disability Retirements 0 (1) 8. Deaths 0 0 9. Transferfrom General Employees 0 1 10. Numberincluded in This Valuation 124 122 B. Terminated Vested Members 1. Number Included in Last Valuation 3 2 2. Additions from Active Members 1 1 3. Lump Sum Payments/Refund of Contributions 0 0 4. Payments Commenced (1) 0 5. Deaths 0 0 6. Other 0 0 7. Number Included in This Valuation 3 3 C. DROP Plan Members 1. Number Included in Last Valuation 10 13 2. Additions from Active Members 4 3 3. Retirements (1) (6) 4. Deaths Resulting in No Further Payments 0 0 5. Other(Death Resulting in Survivor Benefits) 0 0 6. Number Included in This Valuation 13 10 D. Service Retirees, Disability Retirees and Beneficiaries 1. Number Included in Last Valuation 94 86 2. Additions from Active Members 0 2 3. Additions from Terminated Vested Members 1 0 4. Additions from DROP Plan 1 6 5. Deaths Resulting in No Further Payments 0 0 6. Deaths Resulting in New Survivor Benefits 0 0 7. End of Certain Period - No Further Payments 0 0 8. Other-- Lump Sum Distributions 0 0 9. Number Included in This Valuation 96 94 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -44- Consulting ACTIVE PARTICIPANT DISTRIBUTION Years of Service to Valuation Date Age Group 0-1 1-2 2-3 3-4 4-5 5-9 10-14 15-19 20-24 25+ Totals 15-19 NO. 0 0 0 0 0 0 0 0 0 0 0 TOT PAY 0 0 0 0 0 0 0 0 0 0 0 AVG PAY 0 0 0 0 0 0 0 0 0 0 0 20-24 NO. 1 1 0 0 1 0 0 0 0 0 3 TOT PAY 43,793 58,544 0 0 84,534 0 0 0 0 0 186,871 AVG PAY 43,793 58,544 0 0 84,534 0 0 0 0 0 62,290 25-29 NO. 7 3 0 0 3 3 0 0 0 0 16 TOT PAY 306,554 177,260 0 0 243,174 238,014 0 0 0 0 965,002 AVG PAY 43,793 59,087 0 0 81,058 79,338 0 0 0 0 60,313 30-34 NO. 1 1 0 1 5 4 6 0 0 0 18 TOT PAY 43,793 55,000 0 67,886 365,146 332,236 517,307 0 0 0 1,381,368 AVG PAY 43,793 55,000 0 67,886 73,029 83,059 86,218 0 0 0 76,743 35-39 NO. 1 1 0 2 1 8 17 1 0 0 31 TOT PAY 43,793 61,393 0 141,702 79,189 676,526 1,515,445 110,420 0 0 2,628,468 AVG PAY 43,793 61,393 0 70,851 79,189 84,566 89,144 110,420 0 0 84,789 40-44 NO. 0 0 0 0 0 1 14 12 0 0 27 TOT PAY 0 0 0 0 0 87,422 1,307,329 1,377,287 0 0 2,772,038 AVG PAY 0 0 0 0 0 87,422 93,381 114,774 0 0 102,668 45-49 NO. 0 1 0 0 0 1 11 6 3 0 22 TOT PAY 0 63,838 0 0 0 85,777 1,044,274 671,564 368,421 0 2,233,874 AVG PAY 0 63,838 0 0 0 85,777 94,934 111,927 122,807 0 101,540 50-54 NO. 0 1 0 0 0 0 2 4 0 0 7 TOT PAY 0 142,066 0 0 0 0 176,031 443,650 0 0 761,747 AVG PAY 0 142,066 0 0 0 0 88,016 110,913 0 0 108,821 55-59 NO. 0 0 0 0 0 0 0 0 0 0 0 TOT PAY 0 0 0 0 0 0 0 0 0 0 0 AVG PAY 0 0 0 0 0 0 0 0 0 0 0 60-64 NO. 0 0 0 0 0 0 0 0 0 0 0 TOT PAY 0 0 0 0 0 0 0 0 0 0 0 AVG PAY 0 0 0 0 0 0 0 0 0 0 0 65-99 NO. 0 0 0 0 0 0 0 0 0 0 0 TOT PAY 0 0 0 0 0 0 0 0 0 0 0 AVG PAY 0 0 0 0 0 0 0 0 0 0 0 TOT NO. 10 8 0 3 10 17 50 23 3 0 124 TOT AMT 437,933 558,101 0 209,588 772,043 1,419,975 4,560,386 2,602,921 368,421 0 10,929,368 AVG AMT 1 43,793 69,763 0 69,863 77,204 83,528 91,208 113,170 122,807 01 88,140 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -45- Consulting INACTIVE PARTICIPANT DISTRIBUTION Deceased with Terminated Vested Disabled Retired Beneficiary Total Total Total Total Age Number Benefits Number Benefits Number Benefits Number Benefits Under 20 - - - - - - - - 20-24 - - - - - - - - 25-29 - - - - - - - - 30-34 - - - - - - - - 35-39 1 22,894 - - - - - - 40-44 - - 1 68,694 - - - - 45-49 2 86,440 - - 7 512,131 - - 50-54 - - 1 43,950 18 1,372,629 1 29,935 55-59 - - - - 18 1,230,151 1 57,724 60-64 - - - - 25 1,157,834 - - 65-69 - - - - 20 1,125,728 1 41,107 70-74 - - - - 4 182,977 - - 75-79 - - - - 4 174,234 3 67,809 80-84 - - - - 1 6,951 1 14,517 85-89 - - - - 1 17,708 1 16,142 90-94 - - - - - - 1 53,573 95-99 - - - - - - - - 100&Over - - - - - - - - Total 3 109,334 2 112,644 98 5,780,343 9 280,807 Average Age 45 48 61 74 Liability 1,339,205 1,691,379 72,732,863 2,473,127 Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -46- Consulting SECTION F SUMMARY OF PLAN PROVISIONS SUMMARY OF PLAN PROVISIONS A. Ordinances Plan established under the Code of Ordinances for the City of Boynton Beach, Florida, Chapter 18,Article IV, and was most recently amended under Ordinance No. 16-020 passed and adopted on its second reading on October 4, 2016. The Plan is also governed by certain provisions of Chapter 175, Florida Statutes, Part VII, Chapter 112, Florida Statutes and the Internal Revenue Code. B. Effective Date Date was not provided. C. Plan Year October 1 through September 30 D. Type of Plan Qualified,governmental defined benefit retirement plan;for GASB purposes it is a single employer plan. E. Eligibility Requirements All full-time firefighters are eligible to participate. F. Credited Service Service is measured as the total length of employment for which the firefighter received Compensation from the City and made Member Contributions to the plan. No service is credited for any periods of employment for which the member received a refund of their contributions. G. Compensation Cash compensation exclusive of bonuses and incentive pay, but including overtime earnings not to exceed 300 hours and lump sum payment of accumulated unused sick and vacation hours, but not to exceed the number of accumulated sick and vacation hours as of September 27, 2013. H. Final Average Compensation(FAC) The average of Compensation over the highest 3 years during the last 10 years of Credited Service. I. Normal Retirement Eligibility: A member may retire on the first day of the month coincident with or next following the earlier of: (1)age 55 and 10 years of Credited Service, or (2) 20 years of Credited Service regardless of age. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -47- Consulting Benefit: 3.00%of FAC multiplied by years of Credited Service. Normal Form of Benefit: 10 Years Certain and Life thereafter;other options are also available. COLA: Each retiree, beneficiary and disability retiree who retires or enters the DROP on or after December 1, 2006 will receive a 2.0%increase in benefits on October 1St of each year beginning 5 years after retirement. J. Early Retirement Eligibility: A member may elect to retire earlier than the Normal Retirement Eligibility upon attainment of age 50 and 10 years of Credited Service. Benefit: The Normal Retirement Benefit is reduced by 3.0%for each year by which the Early Retirement date precedes the Normal Retirement date. Normal Form of Benefit: 10 Years Certain and Life thereafter;other options are also available. COLA: Each retiree, beneficiary and disability retiree who retires or enters the DROP on or after December 1, 2006 will receive a 2.0%increase in benefits on October 1St of each year beginning 5 years after retirement. K. Delayed Retirement Same as Normal Retirement taking into account compensation earned and service credited until the date of actual retirement. L. Service Connected Disability Eligibility: Any member who becomes totally and permanently disabled as a result of an act occurring in the performance of service for the City is immediately eligible for a disability benefit. Benefit: 66 2/3%of Compensation in effect on the date of disability, reduced by amounts payable under Social Security PIA with a minimum benefit equal to 42%of FAC. Normal Form of Benefit: Payable until death or recovery from disability; other options are also available. COLA: Each disability retiree who retires on or after December 1, 2006 will receive a 2.0% increase in benefits on October 1St of each year beginning 5 years after retirement. M. Non-Service Connected Disability Eligibility: Any member with 10 years of Credited Service who becomes totally and permanently disabled is immediately eligible for a disability benefit. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -48- Consulting Benefit: 2.5%of FAC multiplied by years of Credited Service with a minimum benefit equal to 25% of FAC. Normal Form of Benefit: Payable until death or recovery from disability; other options are also available. COLA: Each disability retiree who retires on or after December 1, 2006 will receive a 2.0% increase in benefits on October 1St of each year beginning 5 years after retirement. N. Death in the Line of Duty Eligibility: Members are eligible for survivor benefits after the completion of 10 or more years of Credited Service. Benefit: Spouse will receive 2.5%of the member's FAC multiplied by years of Credited Service. Normal Form of Benefit: Paid until death or remarriage of spouse. COLA: Each surviving spouse whose benefits began on or after December 1, 2006 will receive a 2.0%increase in benefits on October 1St of each year beginning 5 years after benefits began. The beneficiary of a plan member with less than 10 years of Credited Service at the time of death will receive a refund of the member's accumulated contributions. O. Other Pre-Retirement Death Eligibility: Members are eligible for survivor benefits after the completion of 10 or more years of Credited Service. Benefit: Spouse will receive 2.5%of the member's FAC multiplied by years of Credited Service. Normal Form of Benefit: Paid until death or remarriage of spouse. COLA: Each surviving spouse whose benefits began on or after December 1, 2006 will receive a 2.0%increase in benefits on October 1St of each year beginning 5 years after benefits began. The beneficiary of a plan member with less than 10 years of Credited Service at the time of death will receive a refund of the member's accumulated contributions. P. Post Retirement Death Benefit determined by the form of benefit elected upon retirement. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -49- Consulting Q. Optional Forms In lieu of electing the Normal Form of benefit,the optional forms of benefits available to all retirees are a Single Life Annuity or the 50%, 66 2/3%, 75%and 100%Joint and Survivor options. A Social Security option is also available for members retiring prior to the time they are eligible for Social Security retirement benefits. R. Vested Termination Eligibility: A member has earned a non-forfeitable right to Plan benefits after the completion of 10 years of Credited Service. Benefit: The benefit is the member's accrued Normal Retirement Benefit as of the date of termination. Benefit begins on the date that would have been the member's Normal Retirement date had they continued employment.Alternatively, members can elect a reduced Early Retirement benefit any time after age 50. Normal Form of Benefit: 10 Years Certain and Life thereafter;other options are also available. COLA: Each member who retires on or after December 1, 2006 will receive a 2.0%increase in benefits on October 1St of each year beginning 5 years after retirement. Members terminating employment with less than 10 years of Credited Service will receive a refund of their own accumulated contributions. S. Refunds Eligibility: All members terminating employment with less than 10 years of Credited Service are eligible. Optionally,vested members (those with 10 or more years of Credited Service) may elect a refund in lieu of the vested benefits otherwise due. Benefit: Refund of the member's contributions. T. Member Contributions 12%of compensation U. Employer Contributions Chapter 175 Premium Tax Refunds and any additional amount determined by the actuary needed to fund the plan properly according to State laws. V. Cost of Living Increases Each retiree, beneficiary and disability retiree who retires or enters the DROP on or after December 1, 2006 will receive a 2.0%increase in benefits on October 1St of each year beginning 5 years after retirement. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -50- Consulting W. 13`h Check In years in which a cumulative net actuarial gain has been determined,there shall be payable an ad-hoc thirteenth check paid in December. X. Deferred Retirement Option Plan Eligibility: Plan members who have less than 30 years of Credited Service but have met one of the following criteria are eligible for the DROP: (1)age 55 with 10 years of Credited Service, or (2) 20 years of Credited Service regardless of age. Members who meet eligibility must submit a written election to participate in the DROP. Benefit: The member's Credited Service and FAC are frozen upon entry into the DROP. The monthly retirement benefit as described under Normal Retirement is calculated based upon the frozen Credited Service and FAC. Maximum DROP Period: The earlier of 5 years of participation in the DROP or 30 years of employment. Interest Credited: The member's DROP account is credited at an interest rate based upon the option chosen by the member. Members must elect from 1 of the 3 following options: 1. Gain or loss at the same rate earned by the Plan, or 2. Guaranteed rate of 7%, or 3. The rate earned by a self-directed account utilizing mutual funds selected by the Board. Normal Form of Benefit: Options include a lump sum or equal periodic payments. COLA: Each member who enters the DROP on or after December 1, 2006 will receive a 2.0% increase in benefits on October 1St of each year beginning 5 years after retirement. Y. Other Ancillary Benefits There are no ancillary retirement type benefits not required by statutes but which might be deemed a City of Boynton Beach Municipal Firefighters' Pension Trust Fund liability if continued beyond the availability of funding by the current funding source. Z. Changes from Previous Valuation There have been no changes since the prior valuation. Retirement City of Boynton Beach Municipal Firefighters' Pension Trust Fund -51- Consulting CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN FINANCIAL STATEMENTS September 30, 2017 and 2016 DAVIDSON, JAMIESON & CRISTINI, P.L. Certified Public Accountants CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR'S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FINANCIAL STATEMENTS STATEMENTS OF FIDUCIARY NET POSITION . . . . . . . . . . . . . . . . . . . 3 STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION. . . . . . . 4 NOTES TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 5 REQUIRED SUPPLEMENTAL INFORMATION SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SCHEDULE OF RATIOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SCHEDULE OF CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 NOTES TO SCHEDULE OF CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SCHEDULE OF INVESTMENT RETURNS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 ADDITIONAL INFORMATION SCHEDULES OF INVESTMENT AND ADMINISTRATIVE EXPENSES. . . . . . 40 i Davidson, Jamieson & Cristini, P.L. Certified Public Accountants 1956 Bayshore Boulevard Dunedin,Florida 34698-2503 (727)734-5437 or 736-0771 FAX(727)733-3487 Member Members of the Firm American Institute of John N.Davidson,CPA,CVA Certified Public Accountants Harry B.Jamieson,CPA Florida Institute of Richard A.Cristini,CPA,CPPT,CGFM Certified Public Accountants Jeanine L.Bittinger,CPA,CPPT Karen Curran,CPA,CVA The Board of Trustees City of Boynton Beach Firefighters' Pension Plan Boynton Beach, Florida INDEPENDENT AUDITOR'S REPORT Report on Financial Statements We have audited the accompanying financial statements of City of Boynton Beach Firefighters' Pension Plan (Plan),which comprise the statements of fiduciary net position as of September 30, 2017 and 2016, and the related statements of changes in fiduciary net position for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements The Plan's Board of Trustees is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits 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,whether due to fraud or error. An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment,including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Plan's preparation and fair presentation of the financial statements, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management,as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 1 The Board of Trustees City of Boynton Beach Firefighters' Pension Plan Boynton Beach, Florida Opinion In our opinion,the financial statements referred to above present fairly,in all material respects,the fiduciary net position of the City of Boynton Beach Firefighters'Pension Plan as of September 30, 2017 and 2016,and the changes in fiduciary net position for the years the ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Our audits were made for the purpose of forming an opinion on the basic financial statements as a whole. The accompanying required supplementary information on pages 35 through 39 of the City of Boynton Beach Firefighters' Pension Plan is required by Governmental Accounting Standards Board Statement No.67 and is not a required part of the basic financial statements. The additional information on page 40 is presented for purposes of additional analysis and is also not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion,the above information is fairly stated,in all material respects,in relation to the basic financial statements as a whole. Other Information Management has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements,is required by the Governmental Accounting Standards Board,who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. ti February 3, 2018 2 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN STATEMENTS OF FIDUCIARY NET POSITION September 30, 2017 and 2016 Assets 2017 2016 Cash $ 685,956 $ 42 Receivables: DROP loans 140,009 - Interest and dividends 130,932 71,445 Broker-dealers 51,268 109,263 Employer - 43,059 Chapter 175 state excise tax rebate - 923,246 Total receivables 322,209 1,147,013 Investments at fair value: U.S. Government obligations 11,184,019 3,374,725 U.S. Government agency obligations 122,809 1,006,350 Municipal obligations 246,792 210,717 Domestic corporate obligations 4,859,698 3,962,283 Domestic fixed income investment funds 11,214,113 9,593,078 International fixed income investment fund - 3,554,896 Domestic stocks 24,843,913 22,104,029 Domestic equity investment funds 23,318,113 24,348,858 Real estate investment funds 9,358,834 8,716,700 International equity investment funds 15,104,332 12,791,093 Temporary investments 3,208,149 604,761 Total investments 103,460,772 90,267,490 Prepaid expenses 3,622 4,628 Total assets 104,472,559 91,419,173 Liabilities Accounts payable 55,824 125,501 Accounts payable,broker-dealers 46,992 152,246 Total liabilities 102,816 277,747 Net position restricted for pensions $ 104,369,743 $ 91,141,426 See Notes to Financial Statements. 3 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION Years ended September 30, 2017 and 2016 2017 2016 Additions: Contributions: Employer $ 4,293,563 $ 4,195,420 Plan members 1,346,307 1,308,804 Plan members,buy-back 130,808 176,324 Rollover to DROP 70,279 271,411 Total contributions 5,840,957 5,951,959 Intergovernmental revenue: Chapter 175 state excise tax rebate 883,314 923,246 Total intergovernmental revenue 883,314 923,246 Investment income: Net appreciation (depreciation)in fair value of investments 10,680,769 7,056,699 Interest 189,206 215,039 Dividends 1,600,835 2,211,621 Commission recapture 2,101 628 Class action settlement 4,700 12,026 Other - 450 Total investment income 12,477,611 9,496,463 Less investment expenses 312,505 298,977 Net investment income 12,165,106 9,197,486 Total additions 18,889,377 16,072,691 Deductions: Benefits: Age and service 4,637,562 4,251,192 Disability 111,312 47,507 Beneficiaries 226,886 225,637 Drop payments 481,000 652,500 Refunds 53,290 - Administrative expenses 151,010 161,122 Total deductions 5,661,060 5,337,958 Net increase in net position 13,228,317 10,734,733 Net position restricted for pensions: Beginning of year 91,141,426 80,406,693 End of year $ 104,369,743 $ 91,141,426 See Notes to Financial Statements. 4 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 1. Description of the Plan The following brief description of the Boynton Beach Firefighters' Pension Plan (Plan)is provided for general information purposes only. Participants should refer to the Plan Agreement for more complete information. General-The Plan was created in 1958 by Section 21-95 of an Ordinance adopted by the City of Boynton Beach, Florida. This Ordinance was substantively amended in 1983, 1993, 2000 and 2002. The Plan is a defined benefit pension plan covering all full-time firefighters of the City of Boynton Beach, Florida(City).Participation in the Plan is required as a condition of employment. The Plan provides for pension,death and disability benefits. In addition, the Plan is a local law plan subject to provisions of Chapter 175 of the State of Florida Statutes. The Plan, in accordance with the above statutes, is governed by a five member pension board. Two firefighters,two City residents and a fifth member elected by the other four members constitute the pension board. The Fire Chief occupies an exofficio, non- voting position on the board of trustees. The Chief shall have the opportunity to participate in all board discussions and activities but shall not be counted for the purpose of a quorum nor shall he be entitled to move or second the adoption of any issue or vote on any matter before the board. The City and the Plan participants are obligated to fund all Plan costs based upon actuarial valuations. The City establishes benefit levels while the board establishes the actuarial methods followed by the Plan. During the fiscal year ended September 30, 2017 the Plan's membership consisted of: Retirees and beneficiaries: Currently receiving benefits 89 Drop Retirees 15 Terminated employees entitled to benefits but not yet receiving them 3 Total 107 Current employees: Vested 76 Nonvested 46 Total 122 At September 30,2016,the date of the most recent actuarial valuation,there were 97 retirees and beneficiaries receiving benefits. 5 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 1. Description of Plan (Continued) Pension Benefits - The pension plan provides retirement, death and disability benefits for its participants. A participant may retire with normal benefits after reaching age 55 and accumulating 10 or more years of credited service or at 20 years of service without regard to age.Normal retirement benefits are based on 3.0% of the participant's final average salary times the number of his or her credited years of service. The final average salary for purposes of calculating benefits is the participant's average salary during the three highest years of the last ten years of creditable service prior to retirement. Salary excludes bonuses and incentive pay received by a firefighter during that three year period. A participant with 10 or more years of credited service is eligible for early retirement. These benefits begin upon application on or after reaching age 50 and are computed the same as normal retirement,based upon the participant's final average salary and credited service at the date of termination. Benefits are reduced 3%per year for each year by which the participant's age at retirement preceded the participant's normal retirement age. There have been revisions in benefits since the 2012 valuation to reflect Senate Bill 1128. The definition of pensionable compensation has been changed to limit overtime pay to 300 hours per year effective September 27, 2013 and to limit the number of accumulated unused sick and vacation hours to the lesser of the number of hours accumulated as of September 27, 2013 and the number of hours cashed out at retirement. This change caused an initial increase in the employer contribution of 0.72% of covered payroll due to the fact the current average accumulated sick and vacation hours exceed the average amounts assumed for actuarial valuation purposes. Over time, however, this change will reduce the cost of the Plan. Cost of Living Adjustment - The Plan provides for a 2% annual cost-of-living adjustment(COLA)commencing five years after retirement from the City or entry into the DROP Plan. This becomes available effective December 1, 2011 for all members who retire or enter into the DROP on or after December 1,2006;eligible members also includes all retirees electing early retirement and all disability retirees who enter pay status on or after December 1, 2006. The actuarial cost of this benefit was financed by an increase in the participants contribution rate from 7% to 12%. Ad Hoc Supplemental Benefits - Certain retirees are eligible to receive annual distributions funded exclusively with available Chapter 175 premium tax revenue. Terms of the benefit provide that each eligible retiree shall receive a distribution of available funds for up to five hundred dollars per year of credited service for each year of credited service in the Plan not to exceed twenty years. 6 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 1. Description of Plan (,Continued) Deferred Retirement Option Plan-Any Plan participant who is eligible to receive an early or normal retirement pension may elect to participate in a deferred retirement option plan(DROP)while continuing his or her active employment as a firefighter. Upon participation in the DROP, the participant becomes a retiree for all Plan purposes so that he or she ceases to accrue any further benefits under the pension plan. Normal retirement payments that would have been payable to the participant as a result of retirement are accumulated and invested in the DROP to be distributed to the participant upon his or her termination of employment. Participation in the DROP ceases for a Plan participant after the earlier of 5 years or the attainment of 30 years of service. An employee's account in the DROP program shall earn interest in one of three ways. The selection of the earnings program may be changed each year in January. The options are summarized as follows: A. Gain or loss interest at the same rate as the Plan; or, B. At an annual fixed rate of seven percent(7%); or, C. A combination of the fixed and variable rates Beginning with the fiscal year ended September 30,2017,participants may borrow from their DROP accounts a minimum of$5,000 up to a maximum equal to or lesser of $50,000 or 50 percent of their DROP account balance. The loans are secured by the balance in the members'DROP account and bearinterest at the lowest published prime rate at the issue date for the loan. Principal and interest is paid ratably through monthly payments. Supplemental Pension Distributions - The Board of Trustees each year may approve a supplemental distribution from a net actuarial gain as calculated by the Plan's actuary. The distribution shall be paid to the extent of the actuarial gains attributable to retirees and beneficiaries which have been set aside in a supplemental pension reserve. In years in which the Plan's actuarial gain is sufficient to support the payment of a thirteenth check,the payment shall be made in December. The Board did not approve a supplemental distribution for the fiscal years ended September 30, 2017 and 2016. Disability Benefits -Disability benefits for service related disabilities are paid to a participant for life. Benefits are calculated as 66 2/3% of the participant's salary at the time of retirement. This amount is reduced by any social security and workers' compensation benefits received and will not be less than 42% of the participant's average monthly salary. 7 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 1. Description of Plan (,Continued) Disability benefits for non-service related disabilities are paid to a participant for life. Benefits are calculated using a 2 /2% accrual rate with a minimum of 25% of the participant's final average salary. Death Benefits-Preretirement death benefits for participants with at least 10 years of service are payable until the spouses death or remarriage. Benefits are calculated at 2 /z% of the participant's average final salary at the time of death. Beneficiaries of participants who die prior to vesting will receive a refund of the participants accumulated contributions. Post retirement death benefits are payable to the participant's eligible widow depending on the survivor's benefit selected. Refund of Participant Contributions -A participant who terminates employment and is ineligible for pension benefits is refunded his or her contribution without interest. 2. Summary of Significant Accounting Policies Basis of Accounting -Basis of accounting is the method by which revenues and expenses are recognized in the accounts and are reported in the financial statements. The accrual basis of accounting is used for the Plan. Under the accrual basis of accounting, revenues are recognized when they are earned and collection is reasonably assured, and expenses are recognized when the liability is incurred. Plan member contributions are recognized in the period in which the contributions are due. City contributions to the plan as calculated by the Plan's actuary, are recognized as revenue when due and the City has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Basis of Presentation - The accompanying financial statements are presented in accordance with Governmental Accounting Standards Board (GASB) Statement 67, Financial Reporting for Defined Benefit Pension Plans and the Codification of Governmental Accounting and Financial Reporting Standards which covers the reporting requirements for defined benefit pensions established by a governmental employer. The accompanying financial statements include solely the accounts of the Plan which include all programs, activities and functions relating to the accumulation and investment of the assets and related income necessary to provide the service, disability and death benefits required under the terms of the Plan Ordinance and the amendments thereto. 8 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 2. Summary of Significant Accounting Policies (Continued) Valuation of Investments - Investments in common stock and bonds traded on a national securities exchange are valued at the last reported sales price on the last business day of the year; securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the mean between the past reported bid and asked prices;investments in securities not having an established market value are valued at fair value as determined by the Board of Trustees. The fair value of an investment is the amount that the Plan could reasonably expect to receive for it in a current sale between market participants,other than in a forced or liquidation sale. Purchases and sales of investments are recorded on a trade date basis. The Plan's investments include an alternative investments in the U.S.Real Estate Investment Fund, the ASB Real Estate Fund, LBC Credit Partners Fund and Crescent Direct Lending Fund. These funds are privately placed and operates in a manner comparable to a mutual fund in many respects. The funds invest in a diverse portfolio of real estate, futures, options and certain other investments with varying market capitalizations. The investments in the underlying funds are generally valued daily at fair value as determined by the management of the fund by reference to the value of the underlying securities,if available,or by the valuation of a security as provided by the general partner or investment manager,if the securities are not publicly traded. While the fund manager use its best judgment in estimating the fair values of underlying securities, there are inherent limitations in any estimation technique. Therefore,the values of such securities are not necessarily indicative of the amount that could be realized in a current transaction. The fair values may differ significantly from the values that would have been used had a ready market for the underlying securities existed, and the differences could be material. Future confirming events will also effect the estimates of fair value,and the effect of such events on the estimates of fair value could be material. These alternative investment funds expose the Plan to certain risks, including liquidity risks,counterparty risks,foreign political,economic and governmental risks,and market risk. In addition, these investments may have initial lock-up periods, as well as restrictions for liquidating positions in these funds,that make the investments non-current and non-marketable. Investment income is recognized on the accrual basis as earned. Unrealized appreciation in fairvalue of investments includes the difference between cost and fairvalue of investments held. The net realized and unrealized investment appreciation or depreciation for the year is reflected in the Statement of Changes in Fiduciary Net Position. 9 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 2. Summary of Significant Accounting Policies (Continued) Custody of Assets - Custodial and investment services are provided to the Plan under contract with a national trust company having trust powers. The Plan's investment policies are governed by Florida State Statutes and ordinances of the City of Boynton Beach, Florida. Authorized Plan Investments - The Board recognizes that the obligations of the Plan are long-term and that its investment policy should be made with a view toward performance and return over a number of years. The general investment objective is to obtain a reasonable total rate of return defined as interest and dividend income plus realized and unrealized capital gains or losses commensurate with the prudent investor rule and Chapter 175 of the Florida Statutes. Permissible investments include obligations of the U.S. Treasury and U.S. agencies,high capitalization common or preferred stocks,pooled equity funds,high quality bonds or notes,foreign securities and fixed income funds. In addition,the Board requires that Plan assets be invested with no more than 70% in stocks and convertible securities measured at cost at the end of each reporting period. Further information regarding the permissible investments from the Plan can be found in the Statement of Investment Policies and Objectives. Actuarial Cost Method - The Plan changed its actuarial cost method from the Frozen Entry Age to the Entry Age Normal Method for funding purposes. This method allocates the actuarial present value of each participant's projected benefit on a level basis over the participant's earnings from the date of entry into the Plan through the date of retirement. Reporting Entity-The financial statements presented are only for the Plan and are not intended to present the basic financial statements of the City of Boynton Beach, Florida. The Plan is included in the City's Comprehensive Annual Financial Report (CAFR) for the years ended September 30, 2017 and 2016, which are separately issued documents. Anyone wishing further information about the City is referred to the City's CAFR. The Plan is a pension trust fund (fiduciary fund type) of the City which accounts for the single employer defined benefit pension plan for all City Firefighters. The provisions of the Plan provide for retirement, disability, and survivor benefits. 10 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 2. Summary of Significant Accounting Policies (Continued) Funding Policy - Participants are required to contribute 12.0% of their annual earnings to the Plan. Prior to 1986, contributions to the Plan were made on an after-tax basis. Subsequent to this date, contributions are made on a pre-tax basis pursuant to an amendment to the Plan. These contributions are designated as employee contributions under Section 414(h)(2) of the Internal Revenue Code. Contribution requirements of the Plan's participants are established and may be amended by the City of Boynton Beach, Florida. A rehired member may buy back one or more years of continuous past service by paying into the Plan the amount of contributions that the participant would otherwise have paid for such continuous past service,plus the interest that would have been earned had such funds been invested by the Plan during that time. The City's funding policy is to make actuarially computed monthly contributions to the Plan in amounts, such that when combined with participants' contributions and the State insurance excise tax rebate,all participants'benefits will be fully provided for by the time that they retire. The City's actuarially determined contribution rate for the year ended September 30,2017 and 2016 was 48.26 % and 41.48% ,respectively. This rate consists of 25.86% and 20.88% of member salaries to pay normal costs plus 22.41% and 20.66% to amortize the unfunded actuarially accrued liability pursuant to the September 30,2016 actuarial valuation. Administrative Costs - All administrative costs of the Plan are financed through employee contributions and charges against the DROP accounts and supplemental distributions. Cash - The Plan considers money market and demand account bank and broker- dealer deposits as cash. Temporary investments,shown on the balance sheet are composed of investments in short-term custodial proprietary money market funds. Federal Income Taxes -A favorable determination letter indicating that the Plan is qualified and exempt from Federal income taxes was not issued by the Internal Revenue Service. The Board believes that the Plan is designed and continues to operate in compliance with the applicable requirements of the Internal Revenue Code. 11 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 2. Summary of Significant Accounting Policies (Continued) 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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Subsequent Events -Management has adopted the provisions set forth in GASB Statement No. 56, Subsequent Events and considered subsequent events through the date of the audit report which is the date that the financial statements were available to be issued. New Accounting Pronouncements - Governmental Accounting Standards Board (GASB)67,Financial Reportingfor Pension Plans and GASB 68,Accounting&Financial Reporting for Pensions (Employer), address accounting and financial reporting requirements for pension plan activities. The City of Boynton Beach Firefighters'Pension Fund (Plan)is a single employer pension plan as defined by GASB 67. The requirements for GASB 67 require changes in presentation of the financial statements, notes to the financial statements, and required supplementary information. It is important to note that the disclosures related to GASB 67 are accounting measurements,not actuarial measurements of the funded status of the Plan, and not used to develop employer contribution rates. GASB 72,Fair Value Measurement and Application, addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement provides guidance for determining a fair value measurement for financial reporting purposes. This statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. Fair value is described as an exit price. Fair value measurements assume a transaction takes place in a government's principal market, or a government's most advantageous market in the absence of a principal market. The fair value also should be measured assuming that general market participants would act in their economic best interest. Fair value should not be adjusted for transaction costs. 12 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 3. Deposits and Investments Deposits At year end September 30, 2017 the carrying amount of the Plan's deposits was $685,956 and the bank balance was $685,956. The bank balance was covered by federal depository insurance and, for the amount in excess of such federal depository insurance, by the State of Florida's Security for Public Deposits Act. Provisions of the Act require that public deposits may only be held at qualified public depositories. The Act requires each qualified public depository to deposit with the State Treasurer eligible collateral equal to or in excess of the required collateral as determined by the provisions of the Act.In the event of a failure by a qualified public depository, losses in excess of federal depository insurance and proceeds from the sale of the securities pledged by the defaulting depository, are assessed against the other qualified public depositories of the same type as the depository in default. Salem Trust Company(Salem)periodically holds uninvested cash in its capacity as custodian for the Plan. These funds exist temporarily as cash in the process of collection from the sale of securities or mutual funds. Investments Investments that are not evidenced by securities that exist in physical or book- entry form include investments in open-ended mutual or alternative investment funds. The Plan's investments other than cash held by its administrative manager, are segregated into a separate account and managed under separate investment agreements with Schroder Management,Ltd.,Anchor Capital Advisors,L.L.C.,and DSM Capital Partners, L.L.C.All of these accounts give Salem the custodianship,but give Schroder Management, Ltd,Anchor Capital Advisors,L.L.C., and DSM Capital Partners the authority to manage the investments. The Vanguard 500 Index Fund and the Vanguard MidCap Fund are open-ended exchange traded funds and PIMCO Diversified Domestic Fixed Income Fund, the American Funds Europacific Fund,and the WCM Focused International Growth Fund are mutual funds. 13 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 3. Deposits and Investments (,Continued) Investments (Continued) These assets are invested in accordance with the specific investment guidelines as set forth in the Statement of Investment Policies and Objectives.Investment management fees are calculated quarterly as a percentage of the fair market value of the Plan's assets managed. The Plan's investments are uninsured and unregistered and are held in custodians' or the Bank's accounts in the Plan's name. The U.S.Real Estate Investment fund,the ASB Real Estate Fund (held by the Chevy Chase Trust), the LBC Credit Partners Investment Fund, and the Crescent Direct Lending Fund are privately placed funds,which operate as alternative investment funds which offers their shares at the net asset value (NAV) of the fund.The NAV is based on the value of the underlying assets owned by the fund minus its liabilities and then divided by the number of shares or percentage of ownership outstanding. The exchange traded funds are commonly referred to as`ETFs". ETFs are funds that trade like other publicly-traded securities and are designed to track an index. Similar to shares of an index mutual fund, each share of the Fund represents a partial ownership in an underlying portfolio of securities intended to track a market index. Unlike shares of a mutual fund, which can be bought and redeemed from the issuing fund by all shareholders at a price based on NAV, only authorized participants may purchase or redeem shares directly from the Fund at NAV. Also, unlike shares of a mutual fund, the shares of the Fund are listed on a national securities exchange and trade in the secondary market at market prices that change throughout the day. The Fund invests in aparticular segment of the securities market and seeks to track the performance of a securities index that generally is not representative of the market as a whole. The Plan had no investments that individually represented 5% or more of the Plan's net assets available for benefits as of September 30, 2017. Further,the Plan has no instrument that,in whole or in part,is accounted for as a derivative instrument under GASB 53,Accounting and FinancialReportingforDerivative Instruments during the current Plan year. 14 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 3. Deposits and Investments (,Continued) Investments (Continued) The Plan held the following fixed income investments as of September 30,2017: Rating Standard Effective Fair & Duration Investment Type Value Poor's (Years) U.S. Government obligations S 11,184,019 AA 5.2 U.S. Government agency obligations 122,809 AA 4.9 Municipal obligations 246,792 A 5.4 Domestic corporate obligations 4,859,698 BBB -AA 4.6 Domestic fixed income investment funds 11,214,113 - - Temporary investment funds 3.208.149 AA Daily Total S 30,835,580 Interest Rate Risk-Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment in debt securities. Generally,the longer the time to maturity, the greater the exposure to interest rate risk. Through its investment policies the Plan manages its exposure to fair value losses arising from increasing interest rates.The Plan limits the effective duration of its investment portfolio through the adoption of nationally accepted risk measure bench marks. Credit Risk-Credit risk is the risk that a debt issuer will not fulfill its obligations. Consistent with state law the Plan's investment guidelines limit its fixed income investment to a quality rating of`A' or equivalent as rated by one ore more recognized bond rating service at the time of purchase. The Plan's fixed income portfolio may not include more than 10% of its investments in securities having a quality rating of Baa. 15 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 3. Deposits and Investments (Continued) Investments (Continued) Custodial Credit Risk-Custodial credit risk is defined as the risk that the Plan may not recover cash and investments held by another party in the event of a financial failure. The Plan requires all securities to be held by a third party custodian in the name of the Plan. Securities transactions between a broker-dealer and the custodian involving the purchase or sale of securities must be made on a"delivery vs.payment"basis to ensure that the custodian will have the security or money,as appropriate,in hand at the conclusion of the transaction. The investments in mutual funds and investment partnerships are considered unclassified pursuant to the custodial credit risk categories of GASB Statement No. 3, because they are not evidenced by securities that exist in physical or book-entry form. Investing in Foreign Markets - Investing in foreign markets may involve special risks and considerations not typically associated with investing in companies in the United States of America. These risks include revaluation of currencies,high rates of inflation, repatriation restrictions on income and capital, and future adverse political, social, and economic developments. Moreover,securities of foreign governments may be less liquid, subject to delayed settlements,taxation on realized orunrealized gains,and theirprices are more volatile than those of comparable securities in U.S. companies. Foreign Tax Withholdings and Reclaims -Withholding taxes on dividends from foreign securities are provided for based on rates established via treaty between the United States of America and the applicable foreign jurisdiction, or where no treaty exists at the prevailing rate established by the foreign country. Foreign tax withholdings are reflected as a reduction of dividend income in the statement of operations. Where treaties allow for a reclaim of taxes,the Fund will make a formal application for refund. Such reclaims are included as an addition to dividend income. Investing in Real Estate-The Plan is subject to the risks inherent in the ownership and operation of real estate. These risks include,among others,those normally associated with changes in general economic climate,trends in the industry including creditworthiness of tenants,competition for tenants,changes in tax laws,interest rate levels,the availability of financing and potential liability under environmental and other laws. 16 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 3. Deposits and Investments (Continued) Investments (Continued) Investment Asset Allocation - The Plan's adopted asset allocation policy as of September 30, 2017 is as follows: In order to provide for a diversified portfolio, the Board has engaged investment professional(s) to manage and administer the fund. The investment manager(s) are responsible for the assets and allocation of their mandate only and may be provided as an addendum to this policy with their specific performance objectives and investment criteria. The Board has established the following asset allocation targets for the total Plan: Asset Class Target Range Benchmark Index Broad Cap Value Equity 20% 15%-25% Russell 3000 Value Broad Large Cap Growth Equity 20% 15%-25% Russell 1000 Growth Large Cap Core Equity 5% 0%- 10% S&P 500 International Equity 15% 10%-20% MSCI-World x-U.S. Broad Market Fixed Income 10% 15%-25% Barclays Int.Aggregate TIPS* 5% 0%-7.5% Barclays TIPS Non-Core Global Bond 5% .0%-7% MS Global Brd Mkt x USD Real Estate* 10% 0%-15% NCREIF Property Alternative Investment* 10% 0%-20% TBD (mandate appropriate) *Benchmark will default to"broad market fixed income"if these portfolios are not funded. Targets and ranges above are based on market value of total Plan assets. The investment consultant will monitor the aggregate asset allocation of the portfolio, and will rebalance to the target asset allocation based on market conditions. If at the end of any calendar quarter, the allocation of an asset class falls outside of its allowable range, barring extenuating circumstances such as pending cash flows or allocation levels viewed as temporary, the asset allocation will be rebalanced into the allowable range. To the extent possible,contributions and withdrawals from the portfolio will be executed proportionally based on the most current market value available. The Board does not intend to exercise short-term changes to the target allocation. Rate of Return - For the year ended September 30, 2017 the annual money- weighted rate of return on pension plan investments, net of pension plan investment expense, was 12.86 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. 17 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 4. Net Increase (Decrease)in Realized and Unrealized Appreciation (Depreciation) of Investments The Plan's investments appreciated(depreciated)in value during the years ended September 30, 2017 and 2016 as follows: 2017 2016 Realized Unrealized Realized Unrealized Appreciation Appreciation Appreciation Appreciation (Depreciation) (Depreciation) Total (Depreciation) (Depreciation) Total Investments at fair value as determined by quoted market price: U.S.Government obligations $ (24,078) $ (97,479) $ (121,557) $ 21,982 $ 113,269 $ 135,251 U.S.Government agency obligations 2,463 (4,458) (1,995) 7,226 (10,059) (2,833) Municipal obligations - (3,552) (3,552) - 3,054 3,054 Domestic corporate obligations 3,367 (61,047) (57,680) 6,739 63,800 70,539 Domestic fixed income investment funds - 406,093 406,093 - 827,019 827,019 International fixed income investment fund 721,448 - 721,448 - (72,025) (72,025) Domestic stocks 1,349,374 2,521,565 3,870,939 1,468,806 1,326,940 2,795,746 Domestic equity investment funds 1,453,424 1,971,056 3,424,480 214,142 1,087,374 1,301,516 Real estate investment funds 15,428 469,869 485,297 13,209 683,461 696,670 International equity investment funds - 1,957,296 1,957,296 - 1,301,762 1,301,762 Net increase(decrease)in realized and unrealized appreciation (depreciation)of investments $ 3,521,426 $ 7,159,343 $ 10,680,769 $ 1,732,104 $ 5,324,595 $ 7,056,699 The calculation of realized gains and losses is independent of the calculation of net appreciation (depreciation)in the fair value of plan investments. Unrealized gains and losses on investments sold in 2017 that had been held for more than one year were included in net appreciation (depreciation) reported in the prior year. 18 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 5. Investments The Plan's investments at both carrying value and cost or adjusted cost as of September 30, 2017 and 2016 are summarized as follows: 2017 2016 Market Market Investment Cost Value Cost Value U.S.Government obligations $ 11,212,865 $ 11,184,019 $ 3,306,092 $ 3,374,725 U.S.Government agency obligations 121,731 122,809 1,000,814 1,006,350 Municipal obligations 242,246 246,792 202,619 210,717 Domestic corporate obligations 4,757,663 4,859,698 3,799,200 3,962,283 Domestic fixed income investment funds 9,995,658 11,214,113 8,780,716 9,593,078 International fixed income investment fund - - 4,276,344 3,554,896 Domestic stocks 17,884,130 24,843,913 17,665,810 22,104,029 Domestic equity investment funds 16,474,255 23,318,113 19,476,057 24,348,858 Real estate investment funds 5,517,462 9,358,834 5,345,196 8,716,700 International equity investment funds 12,488,797 15,104,332 12,132,854 12,791,093 Temporary investments 3,208,149 3,208,149 604,761 604,761 Total investments $ 81,902,956 $ 103,460,772 $ 76,590,463 $ 90,267,490 19 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 6. Designations A portion of the fiduciary net position is designated for benefits that accrue in relation to the DROP account as further described in Note 1. Allocations to the DROP plan account for the years ended September 30, 2017 and 2016 are presented below as determined in the TPA's most recent accounting and valuation available for the fiscal years ended September 30, 2017 and 2016: 2017 2016 Designated for DROP accounts (fully funded) $ 15,417,512 $ 13,881,890 Designated for the supplemental pension distribution reserve(13' check) - - Total designated net position 15,417,512 13,881,890 Undesignated net position 88,952,231 77,259,536 Total net position $ 104,369,743 $ 91,141,426 7. DROP Loans During the fiscalyears ended September 30,2017 and 2016,certain DROP participants borrowed from their respective DROP accounts. These loans require repayment in sixty months at interest rates based on the lowest prime rate of interest listed in the Wall Street Journal at the time that the loan is issued (currently 3.50%). A schedule of the changes of these loans is summarized as follows: Balance Balance 9/30/16 Additions Repayments 9/30/17 DROP Loans Receivable September 30 $ - $ 150,000 $ 9,991 $ 140,009 20 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 8. DROP Loans (Continued) Future minimum annual principal payments on these loans are as follows: September 30 2018 $ 28,258 2019 29,287 2020 30,354 2021 31,460 2022 20,650 Total $ 140,009 Loan interest income for the year ended September 30, 2017 was $2,134. 8. Plan Amendments There were no Plan amendments during the fiscal year ended September 30, 2017 and 2016. 9. Plan Termination Although it has not expressed an intention to do so, the City may terminate the Plan at any time by a written ordinance of the City Commission of Boynton Beach, duly certified by an official of the City. In the event that the Plan is terminated or contributions to the Plan are permanently discontinued,the benefits of each firefighter in the Plan at such termination date would be non-forfeitable. 21 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 10. Commitments and Contingencies As described in Note 1, certain members of the Plan are entitled to refunds of their accumulated contributions, without interest, upon termination of employment with the City prior to being eligible for pension benefits. At September 30,2017 and 2016, aggregate contributions from active members of the Plan were approximately $14,900,000 and$13,603,000,respectively.The portion of these contributions which are refundable to participants who may terminate with less than ten years of service has not been determined. 11. Risk and Uncertainties The Plan invests in a variety of investment funds. Investments in general are exposed to various risks, such as interest rate, credit, and overall volatility risk. Due to the level of risk associated with certain investments, it is reasonably possible that changes in the values of investments will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits. 12. Revisions in Actuarial Assumptions or Methods The mortality assumption was changed from the 1983 Group Annuity Mortality table for males and females to the mortality rates used by the Florida Retirement System (FRS)for Special Risk Class members. The current FRS mortality tables for healthy members are the RP-2000 Combined Healthy Participant Mortality Table(for pre-retirement mortality) and the RP-2000 Mortality Table for Annuitants (for postretirement mortality) with mortality improvements projected to all future years after 2000 using Scale BB. For males, the base mortality rates include a 90% blue collar adjustment and a 10%white collar adjustment. For females,the base mortality rates include a 100%white collar adjustment. This change was made in compliance with Florida House Bill 1309,which requires all public pension plans in Florida to use the same mortality tables used in either of the last two actuarial valuation reports of FRS effective no later than October 1, 2016. The impact of this assumption change was an increase in the required employer contribution of 4.76% of covered payroll, or about $523,000. 22 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 13. Rent Expense The Plan and Boynton Beach Police Officers'Pension Fund are obligated under a joint rental operating lease for office space,which expires on September 30, 2015. The base rent of the lease is $1,166 per month plus applicable sales tax and is prorated 50150 for each plan,respectively. This lease expired on July 31,2016. Rent expense for the fiscal year ended September 30, 2016 was $6,582. 13. Investment Measurement at Fair Value Fair Value Hierarchy The accounting standards break down the fair value hierarchy into three levels based on how observable the inputs are that make up the valuation. The most observable inputs are classified as Level 1 where the unobservable inputs are classified as Level 3. Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access. As a general rule, any asset that has a daily closing price and is actively traded will be classified as a Level 1 input. Level 2 inputs are inputs (other than quoted prices included within Level 1) that are observable for the asset or liability,either directly or indirectly. Inputs to the valuation methodology include: (1)quoted market prices for similar assets or liabilities in active markets,(2)quoted prices for identical or similar assets or liabilities in active markets, (3)inputs other than quoted prices that are observable for the asset or liability,and(4) inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified(contractual)term, the Level 2 input must be observable for substantially the full term of the asset or liability. As a general rule,if an asset or liability does not fall into the requirements of a Level 1 or Level 3 input, it would default to Level 2. With Level 2 inputs, there is usually data that can be easily obtained to support the valuation,even though it is not as easily obtained as a Level 1 input would be. 23 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 13. Investment Measurement at Fair Value (Continued) Fair Value Hierarchy (Continued) Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. As a general rule,Level 3 inputs are those that are difficult to obtain on a regular basis and require verification from an outside party, such as an auditor or an appraisal, to validate the valuation. Net asset value (NAV)is a common measurement of fair value for Level 1, Level 2, and Level 3 investments. A fund's NAV is simply its assets less its liabilities, and is often reported as a per share amount for fair value measurement purposes. The Plan would multiply the NAV per share owned to arrive at fair value. Level 1 investment in funds such as mutual funds report at a daily NAV per share and are actively traded. NAV also comes in to play for Level 2 and 3 investments. As a matter of convenience (or referred to in accounting literature as a"practical expedient"),a Plan can use the NAV per share for investments in a nongovernmental entity that does not have a readily determined fairvalue,such as an alternative investment. Investments measured at NAV as a practical expedient would be excluded from the fair value hierarchy because the valuation is notbased on actual market inputs but rather is quantified using the fund's reported NAV as a matter of convenience. The Plan categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles. The Plan has the following total recurring fair value measurements as of September 30, 2017 and 2016: 24 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 13. Investment Measurement at Fair Value (Continued) Fair Value Hierarchy (Continued) • Debt securities -Debt securities classified in Level f or Level 2 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used by International Data Pricing and Reference Data,LLC to value securities based on the securities'relationship to benchmark quoted prices. • Mutual funds - The rationale for inclusion in Level 1 or Level 2 points to the unobservable inputs involved in mutual fund pricing. Mutual funds do not trade using bid and ask, as with ETF's or common stock. Instead, the prices are determined by the net asset value of the underlying investments at the close of business for the next day's open. The underlying assets themselves may include a variety of Level 1 and Level 2 securities and some may be valued using matrix pricing which interpolates the price of a security based on the price of similar securities. • Fixed income funds - Valued using pricing models maximizing the use of observable input for similar securities. This includes basing value on yield currently available on comparable securities of issues with similar credit ratings. • Equity funds -Valued at market prices for similar assets in active markets. • Common stock - Valued at quoted market prices for identical assets in active markets. 25 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 13. Investment Measurement at Fair Value (Continued) Fair Value Hierarchy (Continued) Fair Value Measurements Using Quoted Prices in Active Significant Markets Other Significant for Identical Observable Unobservable September 30, Assets Inputs Inputs Investments by fair value level 2017 (Level 1) (Level 2) (Level 3) U.S.Governinent obligations $ 11,184,019 $ - $ 11,184,019 $ - U.S.Governinent agency obligations 122,809 122,809 - Municipal obligations 246,792 246,792 - Domestic corporate obligations 4,859,698 4,859,698 - Domestic fixed income investment funds 8,388,753 6,629,961 1,758,792 Domestic stocks 24,843,913 24,843,913 - - Domestic equity investment funds 23,318,113 23,318,113 - - International equity investment funds 15,104,332 15,104,332 - - Temporary investments 3,208,149 3,208,149 - - Total investments by fair value level $ 91,276,578 $ 66,474,507 $ 23,043,279 $ 1,758,792 Investment measured at the net asset value (NAV): Real estate investment funds) 9,358,834 Domestic fixed income investment fund 2,825,360 Total investments measured at NAV 12,184,194 Total investments measured at fair value $ 103,460,772 26 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 13. Investment Measurement at Fair Value (Continued) Fair Value Hierarchy (Continued) Level 3 Investments LBC Credit Partners III, L.P. invests in privately negotiated loans, actively rated corporate loans, and privately negotiated equity participations are carried at fair value. Changes in valuation of the privately negotiated corporate loans are calculated based on changes in the required yield of the investment. To calculate the changes in required yield, the partnership utilizes a pricing model that discounts the future expected cash flows of each loan at a rate equivalent to the sum of a minimum required spread,the risk premium applied, and the risk-free rate at the time of valuation. Fair value of each actively traded corporate loan is determined using available quoted prices. Fair value of privately negotiated equity participations is determined using a combination of market value comparables, acquisition purchase multiples, management projections, and internal assumptions on discount rates, growth rates, and other value drivers. There may be instances that necessitate the use of a different valuation approach as dictated by investment specific events. In substantially all of the partnerships' model-derived valuations, the inputs used to measure fair value fall into different levels of the fair value hierarchy. In such case, the investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The General Partner's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investments. 27 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 13. Investment Measurement at Fair Value (Continued) Fair Value Hierarchy (Continued) 2017 Redemption Redemption Fair Unfunded Frequency(if Notice Investments measured at NAV Value Cominitinents currently eligible) Period Real estate investment funds: U.S.Real Estate Investment Fund,LLC. $ 6,181,984 $ - Quarterly 60 days ASB Allegiance Real Estate Fund 3,176,850 - Quarterly 60 days Total real estate investment funds 9,358,834 $ - Domestic fixed income investment fund: Crescent Direct Landing Levered Fund 2,825,360 $ 1,246,753 Indefinite 90 days Total investments measured at NAV $ 12,184,194 1. The real estate investment funds are open end, commingled private real estate portfolios. These REIT-based funds are structured as Limited partnerships. Their primary focus is to invest in well-based income producing properties within maj or U.S.markets. The fair values of the investments in these funds have been determined using the NAV per unit of the Trusts ownership interest in partners' capital. The investments of the fund are valued quarterly. Withdrawal requests must be made 60 days in advance and may be paid in one or more installments. 2. The Crescent Direct Lending Levered Fund is intended a) to generate high current income while preserving capital by investing all capital contributions in the master fund and participating in its indirect investments primarily in senior secured loans(including first lien,unitranche and second lien loans) of private U.S. lower middle-market companies and in other permitted investments,including swap and hedging transactions; and 28 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 13. Investment Measurement at Fair Value (Continued) Fair Value Hierarchy (Continued) Investments measured at NAV (Continued) b) To enter into and perform any contracts and agreements, and carry on any activities, necessary in the fund for, or incidental to, the accomplishment of the foregoing purpose. c) Investments in the fund are valued at cost or fair market value on the most recent practicable date, less outstanding indebtedness incurred to acquire or for the purpose of acquiring the investments; d) For commodities, valuation is based on the initial margin or option premium deposited with the futures commission merchant. Swap agreements and similar financial contracts are valued at fair market value or cost(not notional amount). "Fair Market Value" shall mean a)with respect to Securities (other than Marketable Securities) that are traded in the interdealer market, external pricing sources, to the extent available,including broker/dealer quotes or pricing services,as determined in good faith by the General Partner,b)with respect to Marketable Securities (I) that are primarily traded on a securities exchange,the closing sale prince on the principal securities exchange on which they are traded on the date of determination or, if no sales occurred on such date, the mean between the closing "bid" and "asked"prices on such date and (ii) the principal market for which is or is deemed to be the over- the counter market,the closing sales price on the date of determination as published by NASDAQ or any similar organization,or if such price is not so published on any such date, the mean between the closing "bid" and "asked" prices, if available, on such date, which prices may be obtained from any reputable pricing service broker or dealer. The Plan understands that no market exists for this investment and it is not registered as an investment company under the investment company act of 1940. 29 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 13. Investment Measurement at Fair Value (Continued) Fair Value Hierarchy (Continued) Fair Value Measurements Using Quoted Prices in Active Significant Markets Other Significant for Identical Observable Unobservable September 30, Assets Inputs Inputs Investments by fair value level 2016 (Level 1) (Level 2) (Level 3) U.S.Governinent obligations $ 3,374,725 $ - $ 3,374,725 $ - U.S.Governinent agency obligations 1,006,350 - 1,006,350 - Municipal obligations 210,717 - 210,717 - Domestic corporate obligations 3,962,283 - 3,962,283 - Domestic fixed investment funds 6,802,954 - 4,314,997 2,487,957 International fixed income investment fund 3,554,896 - 3,554,896 - Domestic stocks 22,104,029 22,104,029 - - Domestic equity investment funds 24,348,858 24,348,858 - - International equity investment funds 12,791,093 12,791,093 - - Temporary investments 604,761 604,761 - - Total investments by fair value level $ 78,760,666 $ 59,848,741 $ 16,423,968 $ 2,487,957 Investment measured at the net asset value (NAV): Real estate investment funds 8,716,700 Domestic fixed income investment fund 2,790,124 Total investments measured at NAV 11,506,824 Total investments measured at fair value $ 90,267,490 30 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 13. Investment Measurement at Fair Value (Continued) Fair Value Hierarchy (Continued) 2016 Redemption Redemption Fair Unfunded Frequency(if Notice Investments measured at NAV Value Commitments currently eligible) Period Real estate investment funds: U.S.Real Estate Investment Fund,LLC. $ 5,611,868 $ - Quarterly 60 days ASB Allegiance Real Estate Fund 3,104,832 - Quarterly 60 days Total 8,716,700 $ - Domestic fixed income investment fund: Crescent Direct Landing Levered Fund 2,790,124 $ 1,274,502 Indefinite 90 days Total investments measured at NAV $ 11,506,824 14. Net Pension Liability of the City The components of net position liability of the City of Boynton Beach (City) as of September 30, 2017 were as follows: Total Pension Liability $ 148,770,660 Plan Fiduciary Net Position 104,369,743 City's Net Pension Liability $ 44,400,917 Plan fiduciary net position as a percentage of total pension liability 70.15% 31 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 14. Net Pension Liability of the City(Continued) Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2017 using the following actuarial assumptions applied to all measurement periods. Actuarial cost method Entry age normal Inflation 2.50% Salary increases Varies by years of service from 3.5% to 14.5% Investment rate of return 7.50% Retirement age Rates vary by age and years of service Mortality RP-2000 Combined Healthy Participant Mortality Table (for pre-retirement mortality), with mortality improvements projected to all future years after 2000 using Scale BB. For males, the base mortality rates include a 90% blue collar adjustment and a 10% white collar adjustment. For females, the base mortality rates include a 100% while collar adjustment. These are the same rates currently in use for Special Risk Class members of the Florida Retirement System (FRS), as mandated by Florida House Bill 1309. Notes See Discussion of Valuation Results in the October 1,2016 Actuarial Valuation;Effective as of October 1,2016,the mortality assumption was changed from the 1983 Group Annuity Mortality Table for males and females to the FRS tables described above. 32 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 14. Net Pension Liability of the City(Continued) The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation (as provided by the Fund's performance monitor)as of September 30,2017 are summarized in the following table: Target Allocation Long-Term Asset Group Proxy Real Return Domestic equity 45.0% 6.00% International equity 15.0% 8.50% Domestic bonds 25.0% 2.50% International bonds 5.00% 3.50% Real estate 10.0% 4.50% Discount Rate-A singe discount rate of 7.50%was used to measure the total pension liability. This single discount rate was based on the expected rate of return on pension plan investments of 7.50%. The projection of cash flows used to determine this single discount rate assumed thatplan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the total actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore,the long-term expected rate of return on pension plan investments (7.50%)was applied to all periods of projected benefit payments to determine the total pension liability. 33 CITY OF BOYNTON BEACH FIREFIGHTERS' PENSION PLAN NOTES TO FINANCIAL STATEMENTS September 30, 2017 and 2016 14. Net Pension Liability of the City(Continued) Sensitivity of the Net Pension Disability to Changes in the Discount Rate-Regarding the sensitivity of the net pension liability to changes in the single discount rate,the following presents the plan's net pension liability, calculated using a single discount rate of 7.50%, as well as what the plan's net pension liability would be if it were calculated using a single discount rate that is 1-percentage-point lower or 1-percentage-point higher: Sensitivity of the Net Pension Liability to the Single Discount Rate Assumption Current Single Discount 1%Decrease Rate Assumption 1%Increase 6.50% 7.50% 8.50% City's net pension liability $ 61,293,312 $ 44,400,917 $ 30,563,253 34 REQUIRED SUPPLEMENTARY INFORMATION oo G oo i 7 l� oo N � Vl .-. 7 7 0o N N •-. � 00 � Vl N 7 � 00 � 7 U O. U � 69 69 69 69 l� � G� � M M M G G l� 00 M N S2 -- F z a � 69 69 69 69 F. M �D �D •-. oo O 7 �D �D M 7 N •-. 7 00 — 7 l� �D 7 01 7 N oo lD N — Oi 71Vi M Vi l� �D — — 7 �D •-. G.. l� � w 7 t D C F 7 7 O O ol N 7 Wy (ry � 7 7 � � 00 � N � N M M � � M �-- �-- � N O G� [T] w M M 7 Vi v M M M 00 v N — �D O v N N �-- M 7 x M O c .�. M 7 7 — .N. .M. G O 7 F c m C7 .a � � es vv vv vv O � z x O w � O w O a F A � x 0 U � O � G U G Y j O � U L U O Utp �a U O _ ❑ on � ani �, c ° a o > O ° ° ❑ o 0 0 o E > a o C' O s _ O nJ '-' L O. ,a c O c O � L L L L J 'B 7 bu 7 7 fcn z « z \ 2 f 3 / \ � z w z 2 \ \ } \ � z z 4 / z z § � � \ z \ � j \ FA / Q z } � 0 ¥ \ 0 m w 0 ¥ { S % / / \ ƒ ( § j \ CL \ f 2 \ g t @ ƒ \ t \ 2 � \ \ ® ) ~ ƒ j } SCHEDULE OF CONTRIBUTIONS Last Four Fiscal Years Actual Fiscal Contribution Year Actuarially Contribution as a Percentage Ended Determined Actual Deficiency Covered of Covered September 30, Contribution Contribution (Excess) Payroll Payroll 2017 $ 5,075,517 $ 5,075,517 $ - $ 11,219,225 45.24% 2016 4,899,742 4,977,374 (77,632) 10,906,700 42.58% 2015 4,635,318 4,635,318 - 9,962,067 39.33% 2014 4,226,469 4,226,469 - 9,925,925 37.38% 37 NOTES TO THE SCHEDULE OF CONTRIBUTIONS September 30, 2017 Valuation date: October 1, 2015 Actuarially determined contribution rates are calculated as of October 1,which is two year(s)prior to the end of the fiscal year in which contributions are reported. Methods and Assumptions Used to Determine Contribution Rates: Actuarial cost method Entry age normal Amortization method Level percentage of payroll, closed Remaining amortization period 21 years Asset valuation method 5-year smoothed market Inflation 2.5% Salary Increases Varies by years of service from 3.5% to 14.5% Investment Rate of Return 7.50% Retirement Age Rates vary by age and years of service Mortality 1983 Group annuity Mortality Table for males and females Notes See discussion of valuation results on page 1 of the October 1, 2015 Actuarial Valuation report. 38 0 o M � s. � N N O. N 00 O l� M O � O N N O. yy N o O O � W � N � y Z O A F W x w 0 F- v k c m '6 > � c � O o � w � o c c ADDITIONAL INFORMATION CITY OF BOYNTON BEACH FIREFIGHTERS'PENSION PLAN SCHEDULE OF INVESTMENT AND ADMINISTRATIVE EXPENSES Years ended September 30,2017 and 2016 2017 2016 Investment Administrative Investment Administrative Expenses Expenses Expenses Expenses Expenses: Actuary fees $ $ 24,112 $ $ 32,112 Administrator fees 48,818 37,125 Audit fees 18,000 15,000 Bank charges 10 39 Computer support 1,470 3,359 Custodial fees 29,276 - 41,905 - Directors'liability insurance - 8,945 - 9,227 DROP administration 1,000 - 2,000 - Dues and subscriptions - 250 - 850 Investment managers'fees: ASB Allegiance 39,375 - 38,085 - Anchor Capital 67,644 63,202 DSM Capital 100,371 91,485 Schroeder 38,089 - 28,800 - Legal fees - 38,996 - 42,017 Office expenses 297 5,908 Offrice rent - 6,582 Pension program maintenance - - 1,908 Performance monitor 36,750 - 33,500 - Seminars and training - 10,112 - 6,995 $ 312,505 $ 151,010 $ 298,977 $ 161,122 Percentage of plan net position 0.29% 0.14% 0.33% 0.18% 40