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Agenda 03-17-15 • BOYNTON BEACH POLICE OFFICERS' PENSION FUND SPECIAL BOARD MEETING Tuesday, March 17, 2015 @ 10:30 AM Renaissance Commons Executive Suites 1500 Gateway Blvd., Suite #220 Boynton Beach, FL 33426 AGENDA I. CALL TO ORDER — Toby Athol, Chair II. AGENDA APPROVAL III. APPROVAL OF MINUTES — Special Meeting September 9, 2014 Quarterly Meeting February 10, 2015 W. FINANCIAL REPORTS: A) Davidson, Jamieson & Cristini, PL - Richard Cristini and Jeanine Bittinger — 1) Audit — Financial Statement for PYE 9 -30 -2015 2) Annual 2014 State Report 3) Renewal contract - B) Gabriel, Roeder, Smith & Co — Pete Strong - 1) Actuarial Valuation Report 10 -01 -2014 V. CORRESPONDENCE: 1) Russell Account Services Email 3 -5 -2015 — RIFL Memorandum & PPM Supplement VI. OLD BUSINESS: A) Updated Board of Trustee listing 3 -10 -2015 B) Trustee Liability Coverage Renewal effective 4 -15 -2015 - VII. NEW BUSINESS: A. Invoices for review and approval: 1. Bonni Jensen PA — Service January/February 2015- $2,263.50 2. Burgess Chambers & Assoc — First Quarter 2015 Fee - $6,250 B) Attorney Report - Bonni Jensen — N/A VIII. PENSION ADMINISTRATOR'S REPORT — N/A IX PUBLIC COMMENTS: 1 1 ' X. ADJOURNMENT: Next Regular Meeting Date — Tuesday, May 12 2015 @ 10:30 a.m. — Renaissance Commons If you cannot attend, please call Barbara @ 561 -739 -7972 NOTICE IF A PERSON DECIDES TO APPEAL ANY DECISION MADE BY THE POLICE OFFICERS' PENSION BOARD WITH RESPECT TO ANY MATTER CONSIDERED AT THIS MEETING, HE /SHE WILL NEED A RECORD OF THE PROCEEDINGS AND, FOR SUCH PURPOSE, HE/SHE MAY NEED TO ENSURE THAT A VERBATIM RECORD OF THE PROCEEDING IS MADE, WHICH RECORD INCLUDES THE TESTIMONY AND EVIDENCE UPON WHICH THE APPEAL IS TO BE BASED. F.S. 286.0105) THE CITY SHALL FURNISH APPROPRIATE AUXILIARY AIDS AND SERVICES WHERE NECESSARY TO AFFORD AN INDIVIDUAL WITH A DISABILITY AN EQUAL OPPORTUNITY TO PARTICIPATE IN AND ENJOY THE BENEFITS OF A SERVICE, PROGRAM, OR ACTIVITY CONDUCTED BY THE CITY. PLEASE CONTACT CITY CLERK'S OFFICE, (561) 742 -6060 AT LEAST TWENTY -FOUR HOURS PRIOR TO THE PROGRAM OR ACTIVITY IN ORDER FOR THE CITY TO REASONABLY ACCOMMODATE YOUR REQUEST. S: \CC \WPUANET \POLICE PENSION FUND.doc 2 MINUTES OF THE BOYNTON BEACH POLICE OFFICERS' PENSION FUND SPECIAL BOARD MEETING HELD ON TUESDAY, SEPTEMBER 9, 2014 AT 10:00 A.M. AT RENAISSANCE COMMONS EXECUTIVE SUITES 1500 GATEWAT BLVD., SUITE 220, BOYNTON BEACH, FLORIDA PRESENT: Toby Athol, Chair Barbara LaDue, Pension Administrator Jason Llopis, Secretary Bonni Jensen, Board Attorney Scott Caudell John Huntington ABSENT: Joe DeGiulio ALSO PRESENT: Scott Bauer, Pension Resource Center Gary Chapman, former Board Chairman (via phone) I. CALL TO ORDER — Toby Athol, Chair Chair Athol called the meeting to order at approximately 10 a.m. 11. AGENDA APPROVAL This item was not addressed. 111. APPROVAL OF MINUTES None. IV. FINANCIAL REPORTS None. V. CORRESPONDENCE None. VI. OLD BUSINESS None. VII. NEW BUSINESS: A.) Invoices for review and approval: 1. Perry & Jensen — Service August 2014 - $1,993.65 Meeting Minutes Special Police Pension Board Boynton Beach, Florida September 9, 2014 Attorney Jensen requested .clarification if Ms. Shaffer was being replaced. Mr. Bauer responded they were working with her. He anticipated Ms. Shaffer would continue with programing and would retire by about 2017. By then, her system would have been replaced by the upgraded system Mr. Bauer would use. A web access interface would be included, and with the upgrades, Plan members could access their own calculations and other items such as DROP statements. Mr. Bauer explained there have been no discussions with the Firefighters' Plan about this change. Attorney Jensen noted she spoke with Counsel for the Firefighters' Pension Plan, Adam Levinson, and the Board Chairman, Luke Henderson, and it appeared they were on board with the change because they use the same system. Mr. Bauer explained if the change was made together (Police and Firefighters' Plans), they would reduce the fee, which would be split between the two Boards. Attorney Jensen received confirmation from Mr. Bauer that Rackspace would be replaced and they would have remote hosting, data storage and web access. She also inquired if they would assist the Board with obtaining another computer for the system. Mr. Bauer responded they could assist. They included in the proposal technical support. They could purchase a computer, invoice the Plan, and help transition to the new system. Chair Chapman thought all would dovetail. Ms. LaDue noted the custodian, State Street, issues the checks, which Mr. Bauer confirmed would continue. Ms. LaDue clarified she performs a shadow run of the pension payments and the DROP accounts; however, that is done for the Police Plan only. Members would have their own passwords and passwords would be managed by The Resource Centers. The new system could take and accept electronic applications, and have the capability to handle loans, applications and other items that could be addressed in the future. It was noted DROP loans were managed through Ms. Schaffer's system. Attorney Jensen inquired if Ms. Schaffer's services have to be terminated. The support agreement with her was replaced with an agreement with Mr. Bauer and she would be paid through the agreement with the Pension Resource Center. Rackspace cost $825 each month, which was split with the Firefighters' Plan. Ms. Schaffer's fee of about $2,500 a year was also split with the Firefighters' Pension Plan. His proposal covered system changes. Mr. Chapman commented there may be unforeseen changes. Mr. Bauer responded his proposal covered charges to the program and required updates. His retainer fee included those types of changes. He agreed the transition would be smooth and Ms. Shaffer was in agreement with the transition. Monthly, new y, charges would be a few hundred d dollars less and offer more amenities than was previously available. Fire already has member access to DROP accounts and was web based through Allerius. A question was posed if members having access to DROP account statements would be able to make withdrawals. Mr. Bauer responded it would not be done online. They would submit an application for withdrawal and they could submit an electronic application. Chair Athol would like to have those capabilities available, but acknowledged it was not currently an accepted practice in the pension arena at this time. 3 • Meeting Minutes Special Police Pension Board Boynton Beach, Florida September 9, 2014 Motion Mr. Caudell moved to approve. Mr. Llopis seconded the motion that unanimously passed. Yp There were three Alive and Well statements outstanding. Chair Athol suggested withholding payment until they responded. IX. PUBLIC COMMENTS: None. X. ADJOURNMENT: Motion There being no further business to discuss, Chair Athol adjoumed the meeting. Catherine Cherry 4 Minutes Specialist 022415 5 teY' .,s5i MINUTES OF THE BOYNTON BEACH POLICE OFFICERS' PENSION FUND QUARTERLY MEETING HELD ON TUESDAY, FEBRUARY 10, 2015, AT 10:30 A.M. RENAISSANCE EXECUTIVE SUITES, SUITE 220, CONFERENCE ROOM 1 1500 GATEWAY BOULEVARD, BOYNTON BEACH, FLORIDA PRESENT: Toby Athol, Chair Bonni Jensen, Board Counsel Jason Llopis, Secretary (arrived 12:11 p.m.) Barbara LaDue, Pension Administrator Scott Caudell John Huntington ABSENT: Joe DeGiulio I. CALL TO ORDER — Toby Athol, Chair Chair Athol called the meeting to order at 10:31 a.m. VI. Financial Reports A. Quarterly Investment Review December 31, 2014 1) Russell Investment Group — MaryJane Serene CFA c) Ed Garcia, Portfolio Manager — Conference Call - RTC REEF (Private Real Estate Fund) also Public Real estate (Heard out of Order) Ed Garcia, Senior Portfolio Manager for the Private Real Estate Investments, the Board has was present by phone. Ms. Serene, Certified Financial Analyst, explained he also had experience on the research side of the investment arena and would provide information on how they select the investments for the Board. He would discuss the possibility of using core private real estate as a substitute for the investments in core fixed income because they share the income yield component. Given the outlook for interest rates, it may be a good source of diversification. Also present was Karen Pheneger, Client Service Analyst, who works on the Board's account. Mr. Garcia gave a brief summary of the Board's investments in the public real estate securities fund, globally. The Board does not see these line items on their statements, but public real estate was included in the REITs and the Multi -Asset Core (MAC) portfolio. He thought it was appropriate to have real estate exposure and liquidity. Additionally, public real estate securities provided access to property sectors that were Meeting Minutes Police Pension Board Boynton Beach, Florida February 10, 2015 Mr. Garcia explained the RTC Real Estate Equity Fund's outlook and performance. Discussion followed if they were investing in a group that purchases real estate and not buildings if the Board invested in one of the listed companies. Mr. Garcia explained a group purchases the buildings. A typical holding period was between seven and 10 years. Russell Investments looks at underlying holdings and the fund. Each year, they conduct a thorough analysis of the metrics on a relative basis to each of the funds and the capital market statistics to validate the valuation approach the underlying managers take. They review the disposition activity in the portfolio to determine if the returns from the sales supported the valuation they carried on the books. Mr. Garcia explained real estate securities were similar to REIT funds. The team was not buying stocks. They hire managers to buy the stocks. If they wanted to sell their holdings in the company, they would use the proceeds to buy another retail real estate security. Ms. Serene explained there were two ways to obtain exposure to real estate. One way was through global real estate which is listed and equity securities that are traded like any other stocks. The majority of what Mr. Garcia discussed was on the private side. They were not purchasing a stock that had a connection to real estate. Managers are purchasing physical properties. On the private side, the strategy was to buy and hold. If selling property earlier, it would be related to a deteriorating market, a market not favored by a tenant or the tenant mix changed. The property would be listed with a broker to sell. On the public side, it would be traded on an exchange. Stocks in the real estate securities fund trade frequently, unlike on the private side that has much less trading, providing Tess volatility. Mr. Garcia explained they would like to add a little more risk on the margin, and they were considering the Morgan Stanley Prime Plus fund. It would only be about 5% of the portfolio, but it would incrementally add to the fund. Mr. Garcia explained the fund outperformed the benchmark for all time periods by 58 basis points; 53 basis points for the one -year period, 58 basis points for the three -year period, and 78 basis points over a five -year period. The objective to exceed the benchmark was very achievable moving forward. Mr. Garcia reviewed the property type diversification relative to the benchmark and the target ranges. Exposures were reasonable and the managers make tilts to reflect their views in the market environment. The benchmark did not meet the typical benchmark requirements. It was a representative sample of the market place. There are 22 funds in the index and another five core funds that are investible, but they did not meet the requirements t� be in the index. The benchmark limit was 40% of leverage and funds above that were not eligible to be included. It had to also have at least 80% overall occupancy in the portfolio. Ms. Serene clarified they take the 22 managers equally weighted, then compare them relative to their fund which were the properties weighted by Mr. Garcia when he set up the fund. There is no fund for their queue, but some of the underlying funds they invest in, due to the strong demand for the product had entry queues. 3 • Meeting Minutes Police Pension Board Boynton Beach, Florida February 10, 2015 IV. FINANCIAL REPORTS: A) Quarterly Investment Review December 31, 2014 Ms. Serene announced the Russell Conference and invited all to attend. The Conference will be April 3" in New Orleans. Russell Senior Management will be present at the Conference, but Ms. Serene did not know if representatives from the London Stock Exchange Group would attend. 1) Russell Investment Group — MJ (Candioto) Serene, CFA a) Investment Review — Ms. Serene reviewed trends affecting results which were declining oil prices, slow growth in Europe and a slowdown in emerging markets with a decrease in expected demands, and central banks diverged. She anticipated the Federal Reserve would un- anchor the short -term rates and make an adjustment midway through the year. A review of currency showed for the fourth quarter, developed non -U.S. equity came in negative due to currency. From a U.S. perspective for someone who did not hedge currency exposures, non -U.S. developed was down 3.5 %, but in local currency, the fund would have earned 2 %. Ms. Serene explained the Board invested in the MAC Fund in August 2012. When they did, instead of being unhedged, they went into a fund that was 50% hedged, which played out very well. Russell Investments expects the U.S. to have continued strength with 3% growth in the GDP in the next year. Inflation was just under 2% and the January job numbers did not come in over 250,000. They expect 200,000 jobs a month for the rest of the year. From an equity perspective, the U.S. was over - valued compared to other areas of the world. The fund started in January with $75.5 million. The fund had inflows of $6.1 million and outflows of $6.5 million. Appreciation was at $6.5 million. The fund ended the year at $81.5 million, adjusted for the real estate. The performance report showed, net of fees for the prior year, the portfolio returned about 7.85 %, which was 20 basis points higher than the total portfolio, due to the real estate. Over the last three months, the portfolio returned about 2.7 %. It outperformed the custom benchmark by about 20 basis points. The driver of relative performance for the quarter was from the MAC fund, which outperformed by about 100 basis points. Real estate was at 3.7% for the quarter and 12.9% year -to -date, with strong returns coming out of private real estate. Ms. Serene noted there was 30% in the MAC and 5% in the private real estate fund. The Board had discussed reconsidering the 30% allocation in the MAC fund, and taking 4% or 5% from the MAC to further diversify. She noted the MAC anchors the fund should there be a pullback in equities, and she did not favor increasing equity exposure. She suggested slightly increasing exposure to private real estate and thought there would be more Tong -term exposure over the next 10 years. 5 Meeting Minutes Police Pension Board _ Boynton Beach, Florida February 10, 2015 departures from Russell Investments as a result of the acquisition, and any material changes. c) Ed Garcia, Portfolio Mgr — Conference Call - RTC REEF (Private real estate fund) also Public Real estate. This item was heard earlier in the meeting. 2.) Burgess Chambers & Associates - Head of Research Frank Wan a) Fund Performance review — Frank Wan, Head of Research, Burgess Chambers & Associates, commented they are monitoring oil usage, its export, and the surplus very carefully. The fund performance review reflected the fund earned 2.8% for the first quarter. Year - to -date, the fund was flat. The fixed income allocation was at 32% and was a substitute for private real estate, which was a conservative asset. When added together, the fund had about 37.5% in conservative assets, while all else was aggressive. Mr. Wan would be comfortable lowering fixed income to no less than 25 %, assuming they took similar exposure to real estate. He explained real estate, in general, was fairly priced and some of the publically- traded real estate was more expensive. Since 2008, the number of permits for new construction decreased. At some point, there will be a large disparity between rental prices and home ownership and real estate prices would fall. He noted all plans were looking to real estate as a way to diversify, and more institutional investing was occurring, which was driving up some prices. He thought the U.S. economy would be the driver in real estate and the creation of jobs would create higher occupancy levels. For the quarter to -date, the Plan was at 3% and real estate returns were 3.7% for the quarter. Bonds, for the one -year period were at 6.8 %. Mr. Wan distributed a handout and reviewed three underlying managers in the new Absolute Fixed - Income product. Rates, as of December 31 measured by the 10 -year U.S. Treasury, were at 2.2 %. Sound operating countries had lower rates, U.S. inflation increased, and the 2014 CPI showed inflation was up 7.6 %. The Federal Reserve was aiming for a core inflation rate of 2.1 % or 2.2 %, and the lower rates helped the economy, but did not over drive the economy. When rates go up, the Absolute product would outperform, but it was not known when rates would increase. They will monitor the product. The last time the Federal Reserve kept the rates low was in the 1940s, and there was no secular decline in interest rates since 1981. When the rates start increasing, the allocations will be corrected. The product was protected until rates reach 4% to 4.5 %. 7 Meeting Minutes Police Pension Board Boynton Beach, Florida February 10, 2015 new schedule would not increase fees for changes made inside the core fund. They could obtain the same access Tess expensively. Motion Mr. Llopis moved to approve the new fee structure that will be proposed to Attorney Jensen with the additional information that does not necessarily take affect now. They were not in the Absolute fund yet, but would be. Mr. Caudell seconded the motion that unanimously passed. (Karen Pheneger left the meeting at 12:56 p.m.) (The Board took a short recess at 12:57 p.m. and reconvened at 1:04 p.m.) V. CORRESPONDENCE: 1) State Street letter of 12 -23 -2014 — Death Check Service Ms. LaDue explained the Death Check Service was an additional benefit from State Street. VI. OLD BUSINESS: A) Disability Applications: Update /Status 1) Robert Epstein — Resolution of case — Letter of 2 -2 -2015 Attorney Jensen advised the case was over. She received the Order yesterday assessing funds for attorney fees and the insurance company agreed to accept it. She spoke with Paul Kelley who indicated he would be forwarding the check to her. 2) Gregory Kenny — Rescinded application 10 -29 -2014 Attorney Jensen explained Officer Kenny was applying for disability. Based on correspondence, he was on light duty. They provided another doctor report, were gathering the information and will set him up for another exam. The first exam was unclear and was an analysis of what was occurring. It was noted Officer Kenny was involved in another car accident. Officer Wilmer Rodriguez submitted an application for disability. His doctor indicated he was fit for duty with a minute chance of re- injury. Since he was on full duty, Attorney Jensen thought he should withdraw his application. She thought there should be some sort of indication given they cannot perform duties and likely would not be able to perform. Chair Athol agreed to contact Officer Rodriguez to rescind his application. B) Response in reference to media coverage on Pensions Attorney Jensen advised she will deliver a completed report in about a week. 9 Meeting Minutes Police Pension Board Boynton Beach, Florida February 10, 2015 variable rates; however, Attorney Jensen received correspondence that additional Plan language or changes to the Plan may be needed. The outcome could be they would not treat the DROP accounts as a defined benefit, and consider it a defined contribution plan. They would have to do away with the variable rate and only offer the fixed. From all reports and the FPPTA, it did not appear this would be instituted retroactively. If it were, many programs would have problems. To provide an analysis for the provision, the League of Cities decided to compare the 60 months of accumulations in the DROP account at the end of the term, to the accumulation of 60 months of benefit payments, to see if the DROP accounts were less. Discussion ensued Defined Contribution plans could lose money, and the worst scenario was to use a fixed rate. Attorney Jensen thought it was a quagmire. She hoped the IRS would recognize this issue surfaced through no fault of the Board and hoped the Determination Letter, which the IRS was currently reviewing, would be effective beyond January 2016. 2) Proposed amendment to Disability Provision - to include 30 -60 days to file Application for Disability after termination of employment. Attorney Jensen distributed a section of the Plan dealing with disability retirement. Proposed paragraph A showed what the benefit was, when it was payable, what occurred if the member recovered, or if it went to Workers' Compensation. A provision was added that terminated vested or non - vested members could not apply for disability benefits, except that those terminated by the City for medical reasons may apply for disability within 30 days after termination. Motion Mr. Caudell moved to accept the proposed amendment. Mr. Huntington seconded the motion that unanimously passed. 3) Summary Plan Description (SPD) — Review & Approval Attorney Jensen advised a letter from Pete Strong, Plan Actuary, regarding the Summary Plan Description was included. She reviewed the document and advised the proposed amendment indicated one had to be a member to apply. She did not think it had to be included at this time since the Board already had a proposed amendment. 4) Legislative updates Special Tax Notice and Mileage Rates. Attorney Jensen reviewed a proposed bill requiring all governmental plans to use a mortality table used by the Florida Retirement System, (FRS). She explained FRS does not just use the RP 2000 Table, rather they have three different tables: one for active 11 Meeting Minutes Police Pension Board Boynton Beach, Florida February 10, 2015 E) Extensions for GASB Statement No 67 & No 68 — Email 12 -4 -14 by GFOA This item was the same as Item D. F) Fiduciary Liability Insurance NCPERS — Process of obtaining quote for renewal term 4- 10- 2015/4-10 -2016 Ms. LaDue sent this information to NCPERS. They also needed the current auditor's report and valuation. The deadline to pay the insurance premium was April 10 regardless of who the vendor was. They had not yet received any quotes and had always used the same vendor. Ms. LaDue agreed to provide an update at the Special Meeting on March 17 VIII. PENSION ADMINISTRATOR'S REPORT 1. Benefits as of 02 -01 -2015 This item was for information only. 2. Pension System Update — Jan 21, 2015 provided backup material and Plan documentation for review and implementation for the upgrade. Ms. LaDue sent the requested information on January 22, 2015. Mr. Bauer would review it and contact the Board. She agreed to follow up on the information by March 17 3. Special Board Meeting for Audit & Actuarial Valuation Reports — March 17, 2015, on Tuesday at 10:30 AM Chair Athol announced the meeting date. IX. COMMENTS None. X. ADJOURNMENT There being no further business to discuss, Chair Athol adjourned the meeting at 1:56 p.m. f d Catherine Cherry Minutes Specialist 022715 030315 17 hrs 13 Barbara Ladue From: Russell Account Services [AccSery @RUSSELL.COM] Sent: Thursday, March 05, 2015 10:47 PM To: Ladueb @bbpdpension.com Subject: City of Boynton Beach Police Retirement Fund - RIFL PPM with Supplements and Addendum 2/27/15 Attachments: 00 RIFL PPM With Supplements and Addendum (Marked) 2.27.2015.pdf; 053 City of Boynton Beach RIFL PPM 2.27.15.pdf t .s RIFL Memorandum and PPM Supplement We are writing to notify you of changes to the Confidential Private Placement Memorandum (the "Memorandum ") and the Supplements to the Memorandum (collectively, the "PPM Supplement ") of Russell Institutional Funds, LLC ( "RIFL "). The following summary is not a substitute for reviewing the Memorandum and revised PPM Supplement, and we urge you to do so and to contact your client representative with any questions you may have regarding these changes. The Memorandum and Supplements to the PPM reflect the following changes, effective March 31, 2015, unless otherwise stated: The Russell Global Small Cap Fund is operational and open to new investors. The benchmark for the Russell High Yield Bond Fund changed from a global high yield constrained index to a developed markets high yield constrained index. Minor updates were made to the Russell High Yield Bond Fund's investment strategy and objectives to include asset - backed securities. Please contact your Russell Account Executive at 800 - 455 -3782 if you have any questions. Russell Investments 1301 Second Ave, 18th Floor Seattle, WA 98101 800 -455 -3782 Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional. RIFL funds are not mutual funds, but are funds of the Russell Institutional Funds, LLC; they are private placements. Russell Investments is a trade name and registered trademark of Frank Russell Company, a Washington USA corporation, which operates through subsidiaries worldwide and is part of London Stock Exchange Group. Copyright O Russell Investments 2015. All rights reserved. Revised: March 2015 ' 1 5 REGULAR MEMBERS Fund Established by Ord. 245 (1953) * Commission Appointed - Four -year Term * *Elected by Police Officers - Four -year Term + Board Appointed - Four -year Term (Terms amended from two to four years per Ord. 10 -05, effective 02/02/10) 2015 MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST FUND MEMBER EXPIRES PHONE PROFESSION ATHOL, Det. Toby — Chair 12/18 742 -6100 Police PO Box 310 (33425 -0310) Appt'd 4/2003 AtholTa(�bbfl.us Department *CAUDELL, Inv. Scott 12/18 742 -6100 Police PO Box 310 (33425 -0310) Appt'd 4/2004 CaudellS anbbfl.us Department +HUNTINGTON, John 12/17 Retired Police PO Box 310 (33425 -0310) Aprvd 7/2/13 john007z3ahotmail.com Officer * *LLOPIS, Det. Jason — Secretary 12/18 742 -6100 Police PO Box 310 (33425 -0310) Elected 05/2008 LlopisJ a(�bbfl.us Department * *DEGIULIO, Joe 12/17 742 -6100 Police PO Box 310 (33425 -0310) Elected 6/28/13 deciiulioAbbfi.us Department PENSION ADMINISTRATOR: LA DUE, Barbara Updated: 03/10/2015 LAW OFFICES OF BONNI JENSEN, P.A. February 25, 2015 Via Email Boynton Beach Police Officers' Pension Fund Toby Athol 1500 Gateway Blvd., Suite 220 Boynton Beach, FL 33426 Re: Legal Services Provided Invoice #72946 Dear Toby: Enclosed please find the Firm's invoice for services rendered for the period that ended 2/15/2015. Your current balance due is $5- r,35'2:14" If you have any questions, please do not hesitate to contact me. � Sincerely yours, :).//eade,"--/; Bonni S. Jensen Signed in Ms. Jensen's absence to expedite delivery BSJ /Ig Enclosure Copy to: Barbara LaDue Via Email Only 400 EXECUTIVE CENTER DRIVE, SUITE 207 ♦ WEST PALM BEACH, FLORIDA 33401 -2922 PHONE: (561) 686 -6550 • FAX: (561) 686 -2802 LAW OFFICES OF BONNI JENSEN, P.A. 400 Executive Center Drive Suite 207 West Palm Beach, FL 33401 -2922 bsjteam @robertdklausner.com & bonni @robertdklausner.com Invoice submitted to: Boynton Beach Police Officers' Pension Fund Attn: Chairman 1500 Gateway Blvd., Suite 220 Boynton Beach, FL 33426 Copy to: Barbara LaDue - Via Email February 25, 2015 In Reference To: FOR PROFESSIONAL SERVICES RENDERED AS FOLLOWS: Client / File No.: 0188 Invoice #72946 Professional Services Hrs /Rate Amount Attendance at Trustee Meetings Attendance at Trustee Meetings 2/10/2015 BSJ Attend Meeting 3.50 787.50 Attendance at Trustee Meetings 225.00 /hr Attendance at Trustee Meetings 2/12/2015 LG Review Post Meeting Folder 0.40 30.00 Attendance at Trustee Meetings 75.00 /hr SUBTOTAL: [ 3.90 817.50] Disability Disability 1/27/2015 PH Revise Interrogatories Form 0.30 22.50 E -mail to Barbara LaDue 75.00 /hr Disability • Boynton Beach Police Officers' Pension Fund Page 2 Hrs /Rate Amount Disability 1/27/2015 BSJ Review and revise Interrogatories 0.20 45.00 Disability 225.00/hr Disability 2/2/2015 BSJ E -mail to Toby Athol re: Status of Kenny & Rodriguez 0.10 22.50 Disability 225.00/hr SUBTOTAL: [ 0.60 90.00] DROP DROP 1/16/2015 PH Revise Memorandum re: Internal Revenue Service Position on DROP per 0.30 22.50 Bonni's mark up 75.00/hr E -mail to Trustees & Administrator re: Memorandum and Letter from Internal Revenue Service dated 12 -8 -14 DROP SUBTOTAL: [ 0.30 22.50] IRS Determination Letter IRS Determination Letter 1/21/2015 BSJ Review Fax from Internal Revenue Service Reviewer 0.20 45.00 IRS Determination Letter 225.00 /hr IRS Determination Letter 2/4/2015 BSJ Review Faxed Letter from Jennifer Thimmadasaiah with the Internal 2.00 450.00 Revenue Service 225.00/hr Draft Response to Fax Review Plan Document Research Internal Revenue Code Review Determination Letter Application IRS Determination Letter IRS Determination Letter 2/6/2015 BSJ Correspondence with Internal Revenue Service in Response to Fax dated 0.50 112.50 1/21/15 225.00/hr IRS Determination Letter Boynton Beach Police Officers' Pension Fund Page 3 Hrs /Rate Amount IRS Determination Letter 2/6/2015 PH E -mail to Administrator, Chairman & Secretary re: Response Letter to 0.30 22.50 Fax dated 1/21/15 & Exhibits 75.00 /hr Ship via UPS to Jennifer Thimmadasaiah with the Internal Revenue Service Fax to Jennifer Thimmadasaiah with the Internal Revenue Service IRS Determination Letter SUBTOTAL: [ 3.00 630.00] Meeting Notices and Agendas Meeting Notices and Agendas 2/9/2015 PH Prepare Attorney Report, Handouts, and Notebook for upcoming Meeting 1.50 112.50 - 2/10/15 75.00 /hr Meeting Notices and Agendas SUBTOTAL: [ 1.50 112.50] Minutes of Trustee Meetings Minutes of Trustee Meetings 2/8/2015 BSJ Review Minutes from 11/18/14 Meeting 0.25 56.25 Minutes of Trustee Meetings 225.00 /hr SUBTOTAL: [ 0.25 56.25] Participant - Kenny Participant - Kenny 2/4/2015 BSJ Review & Respond to email from Toby Athol re: Disability Application 0.20 45.00 Reactivated 225.00/hr Participant - Kenny Participant - Kenny BSJ Correspondence with Julie Oldbury re: Update Work Status of Gregory 0.50 112.50 Kenny 225.00/hr Participant - Kenny Boynton Beach Police Officers' Pension Fund Page 4 Hrs /Rate Amount Participant - Kenny 2/4/2015 PH E -mail to Julie Oldbury, Barbara LaDue, Toby Athol, & Jason Llopis re: 0.10 7.50 Update Work Status of Gregory Kenny 75.00 /hr Participant - Kenny SUBTOTAL: [ 0.80 165.00] Participant - Rodriquez Participant - Rodriguez 1/26/2015 BSJ Review email from Barbara LaDue re: Wilmer Rodriguez Application 0.75 168.75 Review Application 225.00/hr E -mail to Barbara LaDue Participant - Rodriguez Participant - Rodriguez 1/28/2015 BSJ Review & Respond to emails from Barbara LaDue & Toby Athol re: 0.35 78.75 Rodriguez Application 225.00/hr Participant - Rodriguez Participant - Rodriguez 1/30/2015 BSJ Review email from Toby Athol re: Rodriguez on Full Duty • 0.06 13.50 Participant - Rodriguez 225.00/hr SUBTOTAL: [ 1.16 261.00] For professional services rendered 11.51 $2,154.75 Additional Charges : Bill File 2/15/2015 Fax Charges 3.00 Copy Charges 59.70 SUBTOTAL: [ 62.70] Boynton Beach Police Officers' Pension Fund Page 5 Amount IRS Determination Letter 2/6/2015 United Parcel Service Invoice No.: 0000F49280075 46.05 Tracking #1ZF492802994077355 to Jennifer Thimmadasaiah with the Internal Revenue Service re: Internal Revenue Service Determination Letter SUBTOTAL: [ 46.05] Total additional charges $108.75 For professional services rendered 11.51 $2,263.50 Total amount of this bill $2,263.50 Previous balance $3,088.64 Balance due J 2 '--" BURGESS CHAMBERS & ASSOCIATES, INC. Invoice INVESTMENT ADVISORS S.E.C. REGISTERED 315 E. Robinson Street, Suite 690 Date Invoice # Orlando, Florida 32801 3/5/2015 15 -76 Bill To Boynton Beach Police Officers' Pension Barbara La Due, Administrator 1500 Gateway Blvd, Suite 220 Boynton Beach, Florida 33426 Description Amount First Quarter 2015 Investment and Performance Monitoring and Advisory Fee per Contract 6,250.00 Total $6,250.00 Phone # Fax # (407) 644-0111 (407) 644-0694 PROFESSIONAL SERVICES AGREEMENT THIS AGREEMENT is entered into effective March 17, 2015 by and between the BOARD OF TRUSTEES ( "Trustees ") OF BOYNTON BEACH POLICE OFFICERS' PENSION FUND ( "Fund ") and DAVIDSON, JAMIESON & CRISTINI, P.L. ( "Auditor "). WITNESSETH: WHEREAS, the Fund has been established for the purpose of providing retirement and related benefits to eligible participants and beneficiaries and defraying reasonable expenses of administering the Fund; and WHEREAS, the Auditor represents that it is skilled in the area of public accounting and auditing services; and WHEREAS, the Trustees are required by Florida Statutes Chapter §185 to retain a certified public accountant to conduct annual independent audits; and WHEREAS, the Trustees desire that the Auditor serve as the Independent Auditor for the Fund and the Auditor is willing to so serve. NOW, THEREFORE, in consideration of the mutual agreements herein contained, it is covenanted and agreed as follows: 1. Appointment of Auditor. The Trustees appoint the Auditor to provide the following services to the Fund: 1.1 Prepare the financial statements of the fund based upon records provided by the Fund's service providers; Page 1 of 8 • _ 2.1 Generally accepted auditing standards as issued by the American Institute of Certified Public Accountants (AICPA); 2.2 Government Auditing Standards as issued by the U.S. General Accounting Office; 2.3 Circular No. A -133 Audits . of State and Local Governments, Office of Management and Budget, and the provisions of the Single Audit Act of 1996 and any subsequently issued provisions. 2.4 . Rules of the Auditor General for the State of Florida relating to Florida Statutes, Section 11.45 and Section 216.349; and 2.5 Other rules as applicable. 3. Reports to be issued. The Auditor shall issue the following reports to the Trustees: 3.1 Report on the fair presentation of the financial statements in conformity with generally accepted accounting principles;. 3.2 Report on the internal control structure based on the Auditor's understanding of the control structure and assessment of control risk; 3.3 Report on compliance with laws and regulations; 3.4 A "management letter," 3.5 Annual Report to State of Florida; and 3.6 Any other reports that may be required by the above standards. Page3of8 6.3 Auditor shall use reasonable efforts subject to applicable laws, regulations and professional standards, to complete the field work by December 31, and deliver a draft report no later than February 28 of the year following the fiscal year end. The final report will be delivered by March 15. 6.4 Auditor may choose to perform interim work prior to September 30, fiscal year • end. 6.5 Fund agrees to provide all reasonable cooperation as requested by the Auditor. 6.5.1 In the event that the Auditor believes the work will not be completed in a timely manner, then the Auditor shall provide notification to the Board of Trustees, the Administrator, and Legal Counsel of the delay and the reasons for the delay. 7. Record Retention. The Auditor shall maintain all records held by it pertaining to the Fund for seven years from the date of origination of such records. In addition, before any records maintained by the Auditor are destroyed, the Auditor must contact the Board for permission to do so. 8. Confidential Information. The Auditor shall maintain and protect in strictest confidence any and all data, information, and documents of and concerning the finances, business and affairs of the Fund which Auditor acquires in its performance of this Agreement. The Auditor agrees that none of the aforesaid data, information or documents, and none of the reports and analyses prepared by the Auditor as provided in Paragraph 3 hereof, or otherwise shall be disclosed to anyone except the Auditor's subcontractors, the Trustees, the Fund's actuary, the Fund's administrative manager, or legal counsel to the Trustees, except as otherwise agreed to in writing or as required by law. Page5of8 16. Termination. Notwithstanding an provision of this Agreement to the contrary, this Agreement may be terminated with 30 days notice by the Fund or 90 days notice by the Auditor, upon written notice with proof of delivery to the other party, at the . addresses given below: Fund: Boynton Beach Police Officers' Pension Fund c/o Barbara LaDue, Pension Administrator 1500 Gateway Blvd., Suite 220 Boynton Beach, FL 33426 Auditor: Richard A. Cristini, CPA, PA Davidson, Jamieson & Cristini, P.L. 1956 Bayshore Blvd. Dunedin, FL 34698 -25031 A copy of the notice should also be sent to Fund legal counsel: Bonni S. Jensen Klausner, Kaufman, Jensen & Levinson • 400 Executive Center Drive, Suite 207 West Palm Beach, FL 33401 If the Agreement is terminated by either party, the Auditor agrees to cooperate in furnishing information to any successor auditor. The balance of this page has been left blank intentionally. Page 7 of 8 EXHIBIT "A" Boynton Beach Police Officers' Pension Fund and Davidson, Jamieson & Cristini, P.L. Auditing Services Agreement Fee Schedule Annual Audit Services Year ending September 30, 2015 $ 11,500 Year ending September 30, 2016 $ 12,500 Year ending September 30, 2017 $ 13,500 Additional Services as Approved by the Board of Trustees Preparation of Annual Report $ 2,000 Tasks to be determined by the Board $ 150 per hour /I ./Cli \-- v7 ite144.4 GROI Gabriel, Roeder, Smith & Company ,a Consultants & Actuaries One East Broward Blvd. Invoice Suite 505 Ft. Lauderdale, Florida 33301 -1804 (954) 527-1616 Date Invoice 3/13/2015 412521 Bill To: Please Remit To: Attention: Ms. Barbara La Due Dept. # 78009 Pension Administrator _ Gabriel, Roeder, Smith & Company Municipal Police Officers' Retirement Fund PO Box 78000 City of Boynton Beach Detroit, Michigan 48278 -0009 Renaissance Executive Suites 1500 Gateway Blvd., Suite 220. ' • Boynton Beach, Florida 33426 . • • . . . .. • • Federal Tax ID 38 1691268 . Arr Ch t1O05�S(T - fourt For professional actuarial services rendered for the Boynton Beach Municipal Police Officers' Retirement Fund through 2/28/2015 • Charges since 12/31/2014 for preparation of the 10/1/2014 Actuarial Valuation Report; 4,412.00 total charges to date equal $11,898 GASB 67 true -up letter (dated 1/9/2015), with final GASB 67 disclosure information as of 450.00 9/30/2014 $4,862 Amount Due • PLEASE INDICATE THE INVOICE NUMBER ON YOUR REMITTANCE. THANK YOU. Page 1 of 1 . 5 REGULAR MEMBERS Fund Established by Ord. 245 (1953) * Commission Appointed - Four -year Term * *Elected by Police Officers - Four -year Term + Board Appointed - Four -year Term (Terms amended from two to four years per Ord. 10 -05, effective 02/02/10) f I'S 2015 MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST FUND 1 MEMBER EXPIRES PHONE PROFESSION *ATHOL, Det. Toby — Chair 12/18 742 -6100 Police PO Box 310 (33425 -0310) Appt'd 4/2003 AtholT(abbfl.us Department *CAUDELL, Inv. Scott 12/18 742-6100 Police PO Box 310 (33425 -0310) Appt'd 4/2004 CaudeiIS (�bbfl.us Department +HUNTINGTON, John 12/17 Retired Police PO Box 310 (33425 -0310) Aprvd 7/2/13 john007z3hotmail.com Officer * *LLOPIS, Det. Jason — Secretary 12/18 742 -6100 Police PO Box 310 (33425 -0310) Elected 05/2008 LlopisJ(a�bbfl.us Department * *DEGIULIO, J „de 12/17 742 -6100 Police r PO Box 310 (33425 -0310) Elected 6/28/13 degiuiioi @bbfl.us Department PENSION ADMINISTRATOR: LA DUE, Barbara Updated: 03/10/2015 S: \CC \WP \BOARDS \LISTS \2015 Board List \POLICE OFFICERS' PENSION BD.doc 1 1 1 1 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND 1 FINANCIAL STATEMENTS September 30, 2014 and 2013 1 1 1 1 1 1 1 DAVIDSON, JAMIESON & CRISTINI, P.L. Certified Public Accountants 1 1 1 1 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR'S REPORT 1 FINANCIAL STATEMENTS STATEMENTS OF FIDUCIARY NET POSITION 3 1 STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION 4 NOTES TO FINANCIAL STATEMENTS 5 1 REQUIRED SUPPLEMENTAL INFORMATION 1 SCHEDULE OF CHANGES IN THE CITY'S NET PENSION LIABILITY AND RELATED RATIOS 25 1 SCHEDULE OF CONTRIBUTIONS 26 NOTES TO THE SCHEDULE OF CONTRIBUTIONS 27 ' ADDITIONAL INFORMATION SCHEDULES OF INVESTMENT AND ADMINISTRATIVE EXPENSES 28 1 1 1 1 • 1 1 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 The Board of Trustees Boynton Beach Police Officers' ' Pension Fund Boynton Beach, Florida ' INDEPENDENT AUDITOR'S REPORT Report on Financial Statements We have audited the accompanying financial statements of the Boynton Beach Police Officers' Pension Fund (Plan), which comprise the statements of fiduciary net position as of ' September 30, 2014 and 2013, 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 1 States of America; this includes the design, implementation, and maintenance of intemal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. 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. An audit involves performing procedures to obtain evidence about the amounts and disclosures in ' the fmancial 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 1 1 1 The Board of Trustees ' Boynton Beach Police Officers' Pension Fund Boynton Beach, Florida 1 ' Opinion In our opinion, the fmancial statements referred to above present fairly, in all material respects, the ' fiduciary net position of the Boynton Beach Police Officers' Pension Fund as of September 30, 2014 and 2013, and the changes in fiduciary net position for the years then 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 taken as a whole. The accompanying required supplementary information on pages 25 through 27 of the ' Boynton Beach Police Officers' Pension Fund is required by Governmental Accounting Standards Board Statement No. 67 and is not a required part of the basic financial statements. The additional fomation g is eturps of add anlys and loi ' pa inrt r of the bas on pa financ e 28 pr state ed entsfor . p p oohs i nformation itional has been ais s ubjected is a so to n the t a audit requred 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 I all material respects, in relation to the basic fmancial 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 I 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 1 affected by this missing information. A • e L Vim , ,, 1 March 11, 2015 1 2 1 111 BOYNTON BEACH POLICE OFFICERS' PENSION FUND 1 STATEMENTS OF FIDUCIARY NET POSITION I September 30, 2014 and 2013 Assets 1 2014 2013 Cash $ 25,518 $ 25,894 Receivables: DROP loans 238,163 173,596 Broker - dealers 370,379 348,783 Total receivables 608,542 522,379 1 Investments at fair value: ' Multi manager bond investment fund 22,669,808 20,759,282 Multi asset core investment fund 29,300,544 27,141,597 Large capital defensive equity investment fund 19,631,376 17,672,434 Real estate investment fund 4,181,355 3,042,335 Total investments 75,783,083 68,615,648 Prepaid expenses 10,046 5,998 Total assets 76,427,189 69,169,919 1 Liabilities Accounts payable 145,124 141,953 1 Total liabilities 145,124 141,953 Net position restricted for pensions $ 76,282,065 $69,027,966 See Notes to Financial Statements. 1 3 1 I BOYNTON BEACH POLICE OFFICERS' PENSION FUND I STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION Years ended September 30, 2014 and 2013 1 1 Additions: 2014 2013 Contributions: Employer $ 4,159,736 $ 4,236,485 I Plan members 885,669 902,696 Plan members, buy -back 25,706 88,220 Rollover to DROP 28,186 126,821 I Total contributions 5,099,297 5,354,222 Intergovernmental revenue: 1 Chapter 185 state excise tax rebate 645,579 619,853 Total intergovernmental revenue 645,579 619,853 I Investment income (loss): Net appreciation (depreciation) in fair value of investments 7,719,065 6,632,321 Interest 38 5,185 1 Other 1,022 1,358 Total investment income 7,720,125 6,638,864 I Less investment expenses 565,922 519,021 1 Net investment income (loss) 7,154,203 6,119,843 I Total additions 12,899,079 12,093,918 Deductions: I - Benefits: Age and service 4,203,164 3,530,394 Disability 353,503 337,374 I Beneficiaries 40,516 63,945 Drop payments 880,006 389,249 Refunds 42,665 67,665 I Administrative expenses 125,126 105,935 Total deductions 5,644,980 4,494,562 I Net increase in net position 7,254,099 7,599,356 Net position restricted for pensions: Beginning of year 69,027,966 61,428,610 I End of year $ 76,282,065 $ 69,027,966 1 See Notes to Financial Statements. 1 4 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND 1 NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 1. Description of the Plan I The following brief description of the Boynton Beach Police Officers' Pension Plan (Plan) is provided for general information purposes only. Participants should refer 1 to the Plan Agreement for more complete information. General - The Plan was created in 1981 by Section 18 of an Ordinance adopted by I the City of Boynton Beach, Florida. This Ordinance was substantively amended in 2001, 2002, 2006 and 2009. I The Plan is a defined benefit pension plan covering all full -time police officers 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. I In addition, the Plan is a local law plan subject to provisions of Chapter 185 of the State of Florida Statutes. I The Plan, in accordance with the above statutes, is governed by a five member pension board. Two police officers, two City residents and a fifth member elected by the other four members constitute the pension board. The City and the Plan participants are I 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, 2014 the Plan's I membership consisted of: Retirees and beneficiaries: Currently receiving benefits 116 I Drop Retirees 51 Terminated employees entitled to benefits but not yet receiving them 7 1 Total 174 1 Current employees: Vested 70 I Nonvested 75 Total 145 I At September 30, 2013, the date of the most recent actuarial valuation, there were 106 retirees and beneficiaries receiving benefits. 1 I 5 11 BOYNTON BEACH POLICE OFFICERS' PENSION FUND NOTES TO FINANCIAL STATEMENTS I September 30, 2014 and 2013 1 1. Description of Plan (Continued) I Pension Benefits - The p ension plan provides retirement, death and disability P P benefits for its participants. A participant may retire with normal benefits after reaching I age 55 and accumulating 10 or more years of credited service, at 20 years of service without regard to age, or at age 50 with 15 years of credited service. Normal retirement benefits are based on 3.5% of the participant's final average salary times the number of his 1 or her credited years of service. The final average salary for purposes of calculating benefits is the participant' s average salary during the five highest years of the last ten years of creditable service prior to retirement. I A participant with 10 or more years of credited service is eligible for deferred retirement. These benefits begin upon application on or after reaching age 55 and are I 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 1.5% per year for each • year by which the participant' s age at retirement preceded the participant' s normal 1 retirement age. Monthly Supplemental Retirement Benefit - Effective October 1, 2006, any retiree I or beneficiary receiving pension benefits is entitled to a monthly supplemental pension benefit. The benefit pool will be funded by 100% of the annual earnings and 10% of the principal created by the contributions received. I The benefit pool shall be divided according to the total number of years of service rendered by all retirees, with a cap of 40 years. The shares will be divided on a pro -rata I basis as defined in the ordinances. The supplemental benefits was to be funded by a 1% contribution from the Members and a 1% contribution by the City. Effective with the Chapter 185 monies I received for calendar year 2001, the excess Chapter 185 dollars will be allocated to fund the City's contributions until the Chapter 185 dollars are received for calendar year 2005 or, if earlier, until the entire 1% of the City contributions are covered by the increase in the I Chapter 185 monies. Employees will contribute to this benefit through 20 years of service. The actuarial value of the monthly supplemental benefit reserve at September 30, 1 2013 was approximately $2,080,498. 1 1 I 6 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND 1 NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 ' 1. Description of Plan (Continued) Deferred Retirement Option Plan - Any Plan participant who is eligible to receive a normal retirement pension may elect to participate in a deferred retirement option plan ' (DROP) while continuing his or her active employment as a police officer. 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. The Plan provides for a participant to elect a partial lump sum withdrawal. 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 two ways. The selection of the earnings program shall be irrevocable and shall be made prior to the first deposit into the DROP account. 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 both A and B. Participants, (after separation from service) may borrow from their DROP accounts ' a minimum of $5,000 up to a maximum equal to the 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 bear interest at the lowest bank rate at the issue date for the loan. Principal ' and interest is paid ratably through monthly payments. 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 disability. 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 fmal salary. ' Disability benefits for non - service related disabilities are paid to a participant for life. Benefits are calculated at 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 death of the spouse. The spouse will receive the accrued normal retirement benefit taking into account compensation earned and service credited as of the date of death with a minimum benefit equal to 30% of average fmal compensation. ' Beneficiaries of participants who die prior to vesting will receive a refund of the participants accumulated contributions. ' 7 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND 1 NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 I 1. Description of Plan (Continued) Post retirement death benefits are a able to the participant's eligible widow PY P p g I 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. 1 2. Summary of Significant Accounting Policies I 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 I 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 I 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 I recognized when due and payable in accordance with the terms of the plan. Basis of Presentation - The accompanying financial statements are presented in I 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 I 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 1 required under the terms of the Plan Ordinance and the amendments thereto. Valuation of Investments - Investments in investment funds common stock and 1 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 1 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 I 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. 1 I S 8 • BOYNTON BEACH POLICE OFFICERS' PENSION FUND ' NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 2. Summary of Significant Accounting Policies (Continued) ' Investment income is recognized on the accrual basis as earned. Unrealized appreciation in fair value of investments includes the difference between cost and fair value ' of investments held. The net realized and unrealized investment appreciation or depreciation for the year is reflected in the Statement of Changes in Plan Net Position. ' Custody of Assets - Custodial and investment services are provided to the Plan under contract with the Russell Trust Company. The Plan's investment policies are governed by Florida State Statutes and ordinances of the City of Boynton Beach, Florida. 1 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 I Chapter 185 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 65% 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. Actuarial Cost Method - The Plan' s actuarial cost method id 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 1 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, 2014 and 2013, which are separately issued documents. Anyone wishing further information about the City is referred to the City's 1 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 Police Officers. The provisions of the Plan provide for retirement, disability, and survivor benefits. 1 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND ' NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 2. Summary of Significant Accounting Policies (Continued) 1 Funding Policy - Participants are required to contribute 7.0% of their annual earnings to the Plan. Prior to 1986, contributions to the Plan were made on an after -tax 1 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 years ended September 30, 2014 and 2013 was 37.71% and 32.08 %, respectively This rate consists of 18.87% and 18.28% of member salaries to pay normal costs plus 18.84% and 13.80% to 1 amortize the unfunded actuarially accrued liability pursuant to the September 30, 2013 actuarial valuation. I Administrative Costs - All administrative costs of the Plan are fmanced through employee and City contributions. ' 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. 1 1 1 10 1 II I I BOYNTON BEACH POLICE OFFICERS' PENSION FUND ' NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 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. Restatement - Certain figures in the financial statements for the fiscal year ended September 30, 2013 have been restated to conform to the presentation used in the financial ' statements for the fiscal year ended September 30, 2014. New Accounting Pronouncements - Governmental Accounting Standards Board (GASB) 67, Financial ReportingforPension 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 Police Officers' Pension Plan (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. GASB 67 is effective for fiscal years beginning after June 15, 2013. The implementation of GASB 1 67 did not significantly impact the accounts receivable and investment balances, as they were already accounted for in accordance with GASB 67 requirements and therefore no restatement ofthe 2013 balances were necessary. The Plan's implementation consist ofthe ' assumptions and actuarial calculation of total and net pension liability, comprehensive footnote disclosures regarding the pension liability calculation and assumptions and increased investment activity disclosures. 1 1 1 1 11 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 3. Deposits and Investments 1 Deposits At year end September 30, 2014 the carrying amount of the Plan's deposits was $25,518 and the bank balance was $26,576. 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. Russell Trust Company (Russell) 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 investments. 1 Investments Investments that are not evidenced by securities that exist in physical or book- 1 entry form include investments in open -ended alternative investment funds. The Plan's investments other than cash held by its administrative manager, are 1 segregated into a separate account and managed under a separate investment agreement with Russell Investment group. This agreement gives Russell custodianship and the authority to manage the investments. These assets are invested in accordance with the specific investment guidelines as set forth in the Plan's Investment Policy Statement. Investment management fees are 1 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. Multi Asset Core Fund, Multi Manager Bond ' Fund, Large Capital Defensive Equity Fund, and Real Estate Investment Fund are privately placed funds, which operates as alternative investments which offer their shares at the net asset value (NAV) of the funds. 12 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 3. Deposits and Investments (Continued) I The alternative investment funds invest in equity, fixed, international and real estate investments. The investments in the underlying funds are generally valued at fair ' value as determined by the management of the fund by reference to the value of the underlying fund's assets, if available, or by the valuation of a fund' s underlying assets as provided by the general partner or investment manager, if the assets are not publicly traded. The fund may also hold certain investments which may be valued by a single market maker. While the fund managers use their best judgment in estimating the fair value of underlying funds, there are inherent limitations in any estimation technique. Accordingly the fair ' value of alternative investment funds have been estimated by the Plan's management in the absence of readily ascertainable market values. Therefore, the values of such funds are not necessarily indicative of the amount that could be realized in a current transaction. The fair 1 values may differ significantly from the values that would have been used had a ready market for the underlying funds existed, and the difference could be material. Future confirming events will also affect the estimates of fair value, and the effect of such events on the estimates of fair value could be material. The alternative investment fund expose the Plan to certain risks, including liquidity risks, counterparty risks, foreign political economic, and governmental risks, and market I risk. In addition, these investments may have initial lock -up periods, as well as restrictions for liquidating positions in these funds, that make the investment non- current and non- marketable. ' The alternative investments are valued using the net asset value (NAV) provided by the investment managers of these funds. 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 NAV's unit price is quoted on a private market that is not active; however, the unit price is based on underlying investments which are traded on an active market. The values of these alternative investments are not necessarily indicative of the ' amount that could be realized in a current transaction. The fair value may differ significantly from the value that would have been used had a ready market for the underlying funds 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 estimated fair value could be material. 1 1 1 13 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND NOTES TO FINANCIAL STATEMENTS ' September 30, 2014 and 2013 1 3. Deposits and. Investments (Continued) 1 Investments (Continued) ' The Plan had no investments that individually represented 5% or more of the Plan's net assets available for benefits as of September 30, 2014. ' Further, the Plan has no instrument that, in whole or in part, is accounted for as a derivative instrument under GASB statement No. 53, Accounting and Financial Reporting for Derivative Instruments during the current Plan year. The Plan held the following fixed income investments as of September 30, 2014: 1 2014 Rating ' Fair Standard Effective & Duration Investment Type Value Poor's (Years) Multi manager bond 1 investment fund $ 22,669,808 AA 6.3 1 Total $ 22,669,808 1 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. 1 14 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND NOTES TO FINANCIAL STATEMENTS 1 September 30, 2014 and 2013 1 3. Deposits and Investments (Continued) 1 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 1 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 I 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 1 form. Investing in Foreign Markets - Investing in foreign markets may involve special I 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 1 economic developments. Moreover, securities of foreign governments may be less liquid, subj ect to delayed settlements, taxation on realized or unrealized gains, and their prices are more volatile than those of comparable securities in U.S. companies. 1 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 I prevailing rate established by the foreign country. Foreign tax withholdings are reflected as a reduction of dividend income in the statement of changes in fiduciary net position. 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 risks inherent in the ownership and 1 operation of real estate. These risks include, among others, those normally associated with changes in the general economic climate, trends in the industry including creditworthiness of tenants, competition for tenants, changes in tax laws, interest rate levels, the availability 1 of financing and potential liability under environmental and other laws. 1 1 1 15 i 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 3. Deposits and Investments (Continued) 1 Investment Asset Allocation - The Plan's adopted asset allocation policy as of 1 September 30, 2014 is as follows: Asset Class Target Allocation 1 Global equity 30.0% Domestic equity 25.0 ' Bonds 32.0 Private real estate 5.0 REITS 2.0 ' MLP's 2.0 Commodities 2.0 Cash 2.0 ' Total 100% 1 Rate of Return - For the year ended September 30, 2014 the annual money- weighted rate of return on pension plan investments, net of pension plan investment expense, was 11.00 percent. The money - weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. 1 1 1 1 1 1 ' 16 1 I BOYNTON BEACH POLICE OFFICERS' PENSION FUND I NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 4. Net Increase (Decrease) in Realized and 1 Unrealized Appreciation (Depreciation) of Investments The Plan's investments appreciated (depreciated) in value during the years ended I September 30, 2014 and 2013 as follows:: 2014 I Realized Unrealized Appreciation Appreciation (Depreciation) (Depreciation) Total I Investments at fair value as determined by quoted market price: I Multi manager bond investment fund $ 347,914 $ 858,658 $ 1,206,572 Multi asset core investment fund 510,217 2,295,360 2,805,577 I Large capital defensive equity investment fund 284,054 3,033,842 3,317,896 Real estate equity investment fund - 389,020 389,020 I Net increase (decrease) in realized and unrealized appreciation (depreciation) of investments $ 1,142,185 $ 6,576,880 $ 7,719,065 I 2013 I Realized Unrealized Appreciation Appreciation (Depreciation) (Depreciation) Total I Investments at fair value as determined by quoted market price: I Multi manager bond investment fund $ 73,950 $ (158,331) $ (84,381) Multi asset core investment fund 3,402,570 3,173,849 6,576,419 Large capital defensive equity I investment fund - (190,341) (190,341) Real estate equity investment fund - 330,624 330,624 I Net increase (decrease) in realized and unrealized appreciation (depreciation) of investments 5 3,476,520 $ 3,155,801 $ 6,632,321 1 1 17 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND I NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 4. Net Increase (Decrease) in Realized and 1 Unrealized Appreciation (Depreciation) of Investments (Continued) The calculation of realized gains and losses is independent of the calculation of net 1 appreciation (depreciation) in the fair value of plan investments. Unrealized gains and losses on investments sold in 2014 that had been held for more I than one year were included in net appreciation (depreciation) reported in the prior year. ' 5. Investments The Plan's investments at both carrying value and cost or adjusted cost as of I September 30, 2014 and 2013 are summarized as follows: 2014 2013 1 Market Market Investment Cost Value Cost Value 1 I Multi manager bond investment fund $ 17,829,322 $ 22,669,808 $ 16,777,453 $ 20,759,282 Multi asset core investment fund 22,680,085 29,300,544 22,816,498 27,141,597 I Large capital defensive equity Investment fund 16,787,875 19,631,376 17,862,774 17,672,434 I Real estate equity investment fund 3,450,000 4,181,355 2,700,000 3,042,335 Total investments $ 60,747,282 $ 75,783,083 $ 60,156,725 $ 68,615,648 1 1 1 1 1 1 18 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND I NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 6. Designations I A ortion of the plan's net assets are designated for benefits that accrue in relation to P the DROP account as further described in Note 1. Allocations to the DROP plan account for I the year ended September 30, 2014 are presented below as determined in the Plan's most recent accounting and valuation available for the fiscal year ended September 30, 2013: 2014 Designated for DROP accounts (fully funded) $ 8,643,403 I Designated for the supplemental pension distribution reserve 2,080,498 1 Total designated net position 10,723,901 1 Undesignated net position 65,558,164 Total plan net position $ 76,282,065 7. Plan Assumption Changes The actuarial assumptions which were implemented beginning October 1, 2013 are . I summarized as follows: I ➢ . The mortality table, which was updated two years ago to the RP -2000 Combined Healthy Participant Mortality Tables for males and females, including projections for future improvements in mortality rates, continues to be phased in this year. I ➢. The assumed withdrawal rates, which were updated two years ago (please see the actuarial assumptions and methods section), continue to be phased in this year. I These revisions are being phased in over a five -year period, beginning with the October 1, 2011 actuarial valuation. In this year's actuarial valuation, 60% of the revised rates and 40% ' of the prior rates are used. In the previous year's actuarial valuation 40% of the revised rates and 60% of the prior rates were used. This change caused an increase in the contribution of 1 1.23% covered payroll. 1 1 1 19 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND I NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 8. Plan Termination I Although it has not expressed an intention to do so, the City may terminate the Plan at g P Y Y I 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 police officer in the Plan at such termination I date would be non - forfeitable. I 9. Commitments and Contingencies As described in Note 1, certain members of the Plan are entitled to refunds of their I accumulated contributions, without interest, upon termination of employment with the City prior to being eligible for pension benefits. At September 30, 2014, aggregate contributions from active members of the Plan were approximately $7,575,000. The portion of these I contributions which are refundable to participants who may terminate with less than Sri years of service has not been determined. 1 10. Risk and Uncertainties 1 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 I 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. i I 11. DROP Loans During the fiscal year ended September 30 2014, certain DROP participants borrowed 1 g Y P � P p from their respective DROP accounts. These loans require repayment in sixty months at ' interest rates based on the interest rate published by an established local bank at the time that the loan was issued. 1 1 I 20 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND ' NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 ' 11. DROP Loans (Continued) A schedule of the changes of these loans is summarized as follows: ' Balance Balance 9/30/13 Additions Repayments 9/30/14 DROP Loans Receivable September 30, 2014 $ 173,596 $ 150,000 $ 85,433 $ 238,163 Future minimum annual principal payments on these loans are as follows: ' September 30 2015 $ 64,156 2016 59,350 1 2017 46,790 2018 42,917 2019 24,950 Total $ 238,163 1 Loan interest income for the year ended September 30, 2014 was $5,816. 1 12. Rent Expense The Fund and Boynton Beach Firefighters' 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 $981 per month plus applicable sales taxes and is prorated 50/50 for each plan, respectively. During the years ended September 30, 2014 and 2013, rent expense for the Fund under the lease agreement was $6,707 and $7,279, respectively. ' 13. Plan Amendments 1 The Plan was not amended during the fiscal years ended September 30, 2014 and 2013. 1 1 21 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND ' NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 14. Net Pension Liability of the City 1 The components of net position liability of the City of Boynton Beach (City) as of September 30, 2014 were as follows: Total Pension Liability $ 111,783,071 Plan Fiduciary Net Position (76,282,065) City's Net Pension Liability $ 35,501,006 ' Plan Fiduciary Net Position as a percentage of total pension liability 68.24% Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2013 using the following actuarial assumptions applied to all measurement periods. ' Inflation 4.00% Salary increases 5.0% to 6.5% depending on age, including inflation • Investment rate of return 7.75% I 1 1 1 1 1 ' 22 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND I NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 14. Net Pension Liability of the City (Continued) I The long-term expected rate of return on pension plan investments was determined using P p P g a I 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 I 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 of I September 30, 2014 are summarized in the following table: Investment I Asset Long-Tenn Expected Real Rate Allocation Asset Class of Return 1 30.0% Global equity 2.24% 25.0 Domestic equity 4.80 32.0 Bonds 2.44 1 5.0 Private real estate 7.10 2.0 REIT's 11.20 2.0 MLP's 16.90 I 2.0 Commodities 4.90 2.0 Cash 4.10 1 Discount Rate - The discount rate of 7.75% was used to measure the total pension liability. This single discount rate was based on the expected rate of return on pension plan I investments of 7.75 %. 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 I 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 I return on pension plan investments (7.75 %) was applied to all period of projected benefit payments to determine the total pension liability. 1 1 1 23 1 I BOYNTON BEACH POLICE OFFICERS' PENSION FUND 1 NOTES TO FINANCIAL STATEMENTS September 30, 2014 and 2013 1 ' 14. Net Pension Liability of the City (Continued) 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 discount rate of 7.75 %, 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 Discount 1% Decrease Rate 1% Increase 6.75% 7.75% 8.75% City's Net Pension Liability $ 47,828,446 $ 35,501,006 $ 25,162,922 1 1 1 1 1 1 1 1 1 24 1 1 1 1 �1 1 REQUIRED SUPPLEMENTARY INFORMATION 1 1 1 1 1 1 1 1 1 1 • 1 BOYNTON BEACH POLICE OFFICER' PENSION FUND SCHEDULE OF CHANGES IN THE CITY'S I NET PENSION LIABILITY AND RELATED RATIOS Last Fiscal Year I September 30, 2014 1 Total pension liability: Service cost $ 2,809,815 Interest 8,234,704 I Benefit changes - Differences between actual and expected experience (129,636) Assumption changes - 1 Benefit payments, Refunds (5,477,189) (42,665) Other (adjustments to reserves) 255,655 1 Net change in total pension liability 5,650,684 Total pension liability - beginning 106,132,387 I Total pension liability - ending (a) $ 111,783,071 I Plan fiduciary net position: Contributions - employer $ 4,159,736 Contributions - non - employer contribution entity 645,579 I Contributions - members 911,375 Net investment income 7,154,203 Benefit payments (5,477,189) 1 Refunds (42,665) Administrative expense (125,126) 1 Other (rollovers into DROP) 28,186 Net change in plan fiduciary net position 7,254,099 1 • Plan fiduciary net position - beginning J. 69,027,966 Plan fiduciary net position - ending (b) $ 76,282,065 I Net Pension Liability - Ending (a) - (b) $ 35,501,006 1 Plan fiduciary net position as a percentage of total pension liability 68.24% I Covered employee payroll $ 11,070,871 Net pension liability as a percentage of covered employee payroll 320.67% 1 1 25 ' BOYNTON BEACH POLICE OFFICER' PENSION FUND I SCHEDULE OF CONTRIBUTIONS Last Fiscal Year 1 Fiscal Actual ' Year Actuarially Contribution Contributions Ended Determined Actual deficiency Covered as a Percentage of September 30, Contribution Contribution (Excess) Payroll Covered Payroll 2014 $ 4,560,918 $ 4,624,823 $ (63,905) $ 11,070,871 41.77% 1 1 1 1 1 1 � 1 1 1 '11 26 1 BOYNTON BEACH POLICE OFFICER' PENSION FUND NOTES TO THE SCHEDULE OF CONTRIBUTIONS ' September 30, 2014 Last Fiscal Year 1 Valuation date: October 1, 2013 Notes Actuarially determined contribution rates are calculated as 1 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 percent of payroll closed Remaining amortization period 23 years ' Asset valuation method 5 -year smoothed market Inflation 4.0% Salary increases 5.0% to 6.5% depending on age, including inflation Investment rate of return 7.75% Retirement age Experience -based table of rates that are specific to the type 1 of eligibility condition Mortality 60% RP -2000 Combined Healthy Participant Mortality ' Table for males and females with mortality improvement projected to all future years after 2000 using Scale AA: 40% 1983 Group Annuity Mortality Table for males and 1 females 1 1 1 ' 27 1 1 1 1 1 j I 1 ADDITIONAL INFORMATION 1 1 1 1 1 1 1 1 BOYNTON BEACH POLICE OFFICERS' PENSION FUND I SCHEDULES OF INVESTMENT AND ADMINISTRATIVE EXPENSES Years ended September 30, 2014 and 2013 2014 2013 Investment Administrative Investment Administrative I Expenses Expenses Expenses Expenses I Expenses: Actuary fees $ - - $ 12,139 $ $ 19,971 Administrator's fees - 27,393 - 21,055 I Audit fees - 11,000 - 10,500 Bank charges - 143 - 90 1 Computer service - 5,906 - 5,748 Directors' liability insurance - 21,048 - 11,402 I Dues and subscriptions - 600 - 600 Investment managers' fees: Russell Trust Company 545,922 - 499,021 - Legal fees - 16,523 - 11,932 Medical advisor 1,045 I Office expenses - 1,557 - 804 Office rent - 6,707 - 7,279 II Pension program maintenance - 3,114 - 3,605 Performance monitor 20,000 - 20,000 - I Seminars and training - 15,073 - 8,504 Printing expense 2,878 4,445 - 1 $ 565,922 $ 125,126 $ 519,021 $ 105,935 1 Percentage of plan net position 0.74% 0.16% 0.75% 0.15% 1 1 1 1 1 28 ■ Gabriel Roeder Smith & Company ■ GRS Consultants & Actuaries u • u • ■ CITY OF BOYNTON BEACH MUNICIPAL POLICE OFFICERS' RETIREMENT FUND ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, 2014 ANNUAL EMPLOYER CONTRIBUTION IS DETERMINED BY THIS VALUATION FOR THE ■ PLAN YEAR ENDING SEPTEMBER 30, 2016 • • 1 • ■ Gabriel Roeder Smith & Company One East Broward Blvd. 954.527.1616 phone Consultants 8c Actuaries Suite 505 954.525.0083 fax ■ Ft. Lauderdale, FL 33301-1804 www.gabrielroeder.com ■ ■ March 6, 2015 Board of Trustees City of Boynton Beach Municipal Police Officers' Retirement Fund ■ Boynton Beach, Florida ■ Dear Board Members: ■ The results of the October 1, 2014 Annual Actuarial Valuation of the City of Boynton Beach Municipal Police Officers' Retirement Fund are presented in this report. ■ This report was prepared at the request of the Board and is intended for use by the Retirement System and those ■ designated or approved by the Board. This report may be provided to parties other than the System only in its entirety and only with the permission of the Board. The purpose of the valuation is to measure the System's funding progress, to determine the employer ■ contribution rate for the fiscal year ending September 30, 2016, and to determine the actuarial information for Governmental Accounting Standards Board (GASB) Statement No. 27 and No. 67. This report also includes estimated GASB Statement No. 67 information for the fiscal year ending September 30, 2015. This report should not be relied on for any purpose other than the purpose described above. The findings included in this report are based on data or other information through September 30, 2014. Future ■ actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic ■ assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or ■ additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. ■ The valuation was based upon information furnished by the Plan Administrator concerning Retirement System ■ benefits, fmancial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We checked for internal and year -to -year consistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided by the Plan Administrator. This report was prepared using certain assumptions prescribed by the Board as described in Section B. The undersigned actuaries are members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. The ■ signing actuaries are independent of the plan sponsor. ■ This report has been prepared by actuaries who have substantial experience valuing public employee retirement systems. To the best of our knowledge the information contained in this report is accurate and fairly presents • the actuarial position of the Retirement System as of the valuation date. All calculations have been made in conformity with generally accepted actuarial principles and practices, with the Actuarial Standards of Practice ■ issued by the Actuarial Standards Board and with applicable statutes. ■ i This actuarial valuation and/or cost determination was prepared and completed by me or under my direct ■ supervision, and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate. In my 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 is no benefit or expense to be provided by the plan and/or paid from ■ the plan's assets for which liabilities or current costs have not been established or otherwise taken into 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. ■ Respectfully submitted, ■ GABRIEL, ROEDER, SMITH AND COMPANY ■ /1/Y-1 ' eter N. Strong, FSA, FCA 1 AAA J-. ffr: r Amrose, MAAA Enrolled Actuary No. 14 -0 . • 5 nro led Actuary No. 14 -06599 ■ Gabriel Roeder Smith & Company. 1111 I IIII TABLE OF CONTENTS R Section Title Page 1111 A Discussion of Valuation Results 1 Chapter Revenue 5 1 EN B Valuation Results ■ 1. Participant Data 6 ■ 2. Annual Required Contribution (ARC) 7 3. Actuarial Value of Benefits & Assets 8 ■ 4. Calculation of Employer Normal Cost 9 5. Liquidation of the Unfunded Frozen . Actuarial Accrued Liability 10 6. Actuarial Gains and Losses 11 ■ , 7. Actual Compared to Expected Decrements 17 8. Cost of Living Adjustment 18 Il 9. Recent History of Valuation Results 19 10. Recent History of Required and • Actual Contributions 20 11. Actuarial Assumptions and Cost Method 21 12. Glossary of Terms 26 II C Pension Fund Information II 1. Summary of Assets 29 ■ 2. Summary of Fund's Income and Disbursements 30 3. Calculation of Actuarial Value of Assets 31 ■ 4. Investment Rate of Return 33 ■ D Financial Accounting Information ■ 1. FASB No. 35 34 2. GASB No. 27 35 ii 3. GASB No. 67 37 • E Miscellaneous Information 1 11111 1. Reconciliation of Membership Data 42 ' 2. Age /Service /Salary Distributions 43 1111 ■ F Summary of Plan Provisions 45 II II II II IN GRS • • • • ■ • • • SECTION A • DISCUSSION OF VALUATION RESULTS • • li • • • • ■ • ■ • ■ • • • • • • • ■ • • • GRS ■ 1 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 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 FYE 9/30/16 For FYE 9/30/15 Based on Based on ■ 10/1/2014 10/1/2013 Increase Valuation Valuation (Decrease) ■ Required Employer /State Contribution $ 4,856,392 $ 4,830,346 $ 26,046 As % of Covered Payroll 42.26 % 41.73 % 0.53 % ■ Estimated State Contnbution $ 465,087 $ 465,087 $ 0 As % of Covered Payroll 4.05 % 4.02 % 0.03 % ■ Required Employer Contribution $ 4,391,305 $ 4,365,259 $ 26,046 As % of Covered Payroll 38.21 % 37.71 % 0.50 % ■ The required employer contribution has been computed under the assumption that the amount to be ■ received from the State next year will be at least $465,087. The City may not take credit for State revenue in excess of $465,087. If the next payment from the State falls below $465,087, the City must raise its ■ contribution by the difference. ■ The employer contribution listed above is for the City's fiscal year ending September 30, 2016 and has ■ been calculated assuming the employer contribution is made on October 1, 2015. The actual City contribution ■ for the fiscal year ending September 30, 2014 was $4,159,736, which slightly exceeded the required contribution. ■ GRS ■ ■ 3 ■ The net actuarial gain for the year has caused a decrease in the annual required employer contribution of 1.18% of covered payroll. ■ Funded Ratio ■ The funded ratio was 62.3% this year compared to 59.1% last year. Before the change in assumptions ■ described above, the funded ratio was 62.6 %. The funded ratio is equal to the actuarial value of assets divided by the actuarial accrued liability. ■ Analysis of Change in Employer Contribution ■ ■ The components of change in the required employer contribution are as follows: ■ Contribution Rate Last Year 37.71 % ■ Actuarial Experience (1.18) Change in Administrative Expense 0.03 ■ Amortization Payment on UAL 0.49 Change in State Contribution (0.03) ■ Change in Normal Cost Rate (0.03) ■ Change in Assumptions and Methods 1.22 Contribution Rate This Year 38.21 ■ ■ ■ Required Contributions in Later Years ■ The current calculated City contribution requirement is 38.21% of payroll starting October 1, 2015. ■ For future planning purposes, the City contribution rate is expected to increase by approximately 1.22% of ■ payroll during the next year due to the continued phase in of the assumption changes, assuming there are no ■ gains or losses. ■ It is important to keep in mind that under the asset smoothing method, gains and losses are recognized ■ over five years. As of September 30, 2014, the market value of assets exceeded the actuarial value of assets by $3,391,389. Once all the gains and losses through September 30, 2014 are fully recognized in the actuarial ■ asset values, the contribution rate will decrease by roughly 1.6% of payroll before any other changes are taken ■ into account, unless there are offsetting losses. Another important factor to consider is the annual payment on the unfunded accrued liability (UAL). ■ This payment is computed as a level percentage of covered payroll under the assumption that covered payroll ■ ■ GRS ■ ■ 5 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. Base Amount Previous Plan Year $ 465,087 ■ 2. Amount Received for Previous Plan Year 645,579 ■ 3. Benefit Improvements Made in Previous Plan Year 0 ■ 4. Excess Funds for Previous Plan Year: (2) - (1) - (3) 180,492 ■ 5. Accumulated Excess at Beginning of Previous Year 41,929 ■ 6. Prior Excess Used in Previous Plan Year 152,637 ■ 7. Accumulated Excess as of Valuation Date ■ (Available for Benefit Improvements) 69,784 ■ 8. Base Amount This Plan Year 465,087 ■ II ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ GRS • • • • • • • SECTION B • VALUATION RESULTS • • • • • • • • • • • • • • • • • • • • • • • • GRS El • 6 1. 1111 PARTICIPANT DATA ■ October 1, 2014 October 1, 2013 ■ ACTIVE MEMBERS IN Number 139 141 ■ Covered Annual Payroll $ 11,142,832 $ 11,302,523 Average Annual Payroll $ 80,164 $ 80,160 IN Average Age 38.7 37.8 ■ Average Past Service 10.3 9.5 Average Age at Hire 28.4 28.3 • ■ RETIREES & BENEFICIARIES & DROP • Number 102 101 ■ Annual Benefits $ 4,806,738 $ 4,704,070 Average Annual Benefit $ 47,125 $ 46,575 II Average Age 58.3 57.7 • DISABILITY RETIREES II • Number 14 15 El Average Benefits $ 288,518 $ 311,885 Average Annual Benefit $ 20,608 $ 20,792 ■ Average Age 63.9 63.0 III TERMINATED VESTED MEMBERS ■ 1. Number 7 6 Annual Benefits $ 157,128 $ 129,803 II Average Annual Benefit $ 22,447 $ 21,634 II Average Age 38.6 37.3 II El il is GRS ■ l l II ■ 8 IN ACTUARIAL VALUE OF BENEFITS AND ASSETS IIII A. Valuation Date October 1, 2014 October 1, 2014 October 1, 2013 ■ Current Assumptions Prior Assumptions ( with 80% phase -in of (with 60% phase -in of New Mortality and New Mortality and ■ Termination rates) Termination rates) II. Benefits Actuarial Present Value of All Projected Benefits for 1. Active Members 111 a. Service Retirement Benefits $ 60,644,027 $ 59,179,496 $ 57,644,897 . b. Vesting Benefits 2,511,817 2,503,516 2,697,084 c. Disability Benefits 3,855,663 3,776,073 3,850,236 ■ d. Preretirement Death Benefits 815,796 935,136 948,166 e. Retum of Member Contributions 30,799 34,515 43,588 ■ f. Total 67,858,102 66,428,736 65,183,971 2. Inactive Members ■ a. Service Retirees & Beneficiaries 54,468,058 54,015,915 53,162,097 b. Disability Retirees 2,428,942 2,393,440 2,648,527 III c. Terminated Vested Members 1,115,450 1,111,070 869,788 d. Total 58,012,450 57,520,425 56,680,412 I. 3. Total for All Members 125,870,552 123,949,161 121,864,383 ■ C. Actuarial Accrued (Past Service) Liability per GASB No. 25 99,965,363 99,504,095 95,951,447 ■ D. Actuarial Value of Accumulated Plan Benefits perFASBNo. 35 88,601,310 87,847,886 84,102,687 ■ E. Plan Assets Ill 1. Market Value 65,711,402 65,711,402 58,900,850 2. Actuarial Value 62,320,013 62,320,013 56,693,338 ■ F. Unfunded Actuarial Accrued Liability: C - E2 37,645,350 37,184,082 39,258,109 ■ G. Actuarial Present Value of Projected Covered Payroll 100,306,242 98,290,720 103,892,263 III H. Actuarial Present Value of Projected Member Contributions 7,021,437 6,880,350 7,272,459 III I. Accumulated Contributions of MI Active Members 6,800,856 6,800,856 6,247,797 III III II II III II 1 ■ in GRS . 11 ■ 1 ■ LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY ■ A. UAAL Amortization Period and Payments ■ Original UAAL Current UAAL Amortization 11 Date Period Years ■ Established (Years) Amount Remaining Amount Payment III 10/1/98 30 $ 1,331,353 14 $ 1,438,424 $ 128,037 10/1/99 30 1,656,722 15 1,812,453 153,034 III 10/1/01 30 185,619 16 203,451 16,366 10 /1 /01 30 46,601 17 51,777 3,983 III 10/1/04 30 1,166,935 20 1,332,290 91,347 10/1/05 30 2,985,574 21 3,413,391 226,392 NI 10/1/06 30 13,646,165 21 15,601,580 1,034,770 10/1/06 30 2,307,394 22 2,637,069 169,558 III 10/1/07 30 16,404 23 18,645 1,164 10/1/08 30 3,582,504 24 4,020,977 244,375 III 10/1/10 30 3,419,100 25 3,783,544 224,124 10 /1 /10 30 1,404,570 26 1,530,043 88,473 III 10/1/11 30 4,476,765 27 4,778,077 270,069 10/1/11 30 1,634,520 27 1,744,531 98,605 III 10/1/12 30 (2,249,576) 28 (2,332,668) (129,046) 10/1/12 30 412,194 28 427,419 23,645 10/1/12 30 (426,604) 28 (442,362) (24,472) . 10/1/13 30 (794,394) 29 (810,661) (43,945) III 10/1/13 30 430,545 29 439,361 23,817 10/1/14 30 (2,463,259) 30 (2,463,259) (130,988) 10/1/14 30 461,268 30 461,268 24,529 ■ $ 33,230,400 $ 37,645,350 $ 2,493,837 . III ■ B. Amortization Schedule III The UAAL is being amortized as a level percent of payroll over the number of years remaining in the amortization I . period. The expected amortization schedule is as follows: ■ Amortization Schedule III Year Expected UAAL 2014 $ 37,645,350 ■ 2015 37,875,698 2016 38,016,471 ■ 2017 38,056,370 2018 37,983,106 ■ 2019 37,783,259 2024 34,323,763 ■ 2029 25,085,297 2034 9,624,756 ■ 2039 (362,936) 2043 - ■ GRS 11 IN II 12 Change in Employer 11 Year Ended Cost Rate * Gain (Loss) ■ 12/31/82 0.46 % $ (56,551) 12/31/83 1.92 (265,213) • 12/31/84 (0.04) 6,977 al 12/31/85 (0.85) 185,443 12/31/86 (0.59) 158,678 IIII 12/31/87 1.67 (516,444) 12/31/88 0.74 (254,892) III 12/31/89 (0.52) 206,590 ■ 9/30/90 0.24 (94,609) 9/30/91 (0.74) 286,744 . 9/30/92 0.35 (142,237) 9/30/93 (1.34) 564,365 • 9/30/94 2.57 (1,370,604) ■ 9/30/95 (1.01) 574,379 9/30/96 (1.56) 938,153 i 9/30/97 (1.60) 1,008,362 9/30/98 (2.85) 1,694,077 • 9/30/99 (0.88) 568,386 III 9/30/00 (3.16) 1,596,887 9/30/01 3.92 (1,978,307) . 9/30/02 9.58 (5,069,210) 9/30/03 3.22 (1,870,014) 1111 9/30/04 2.75 (1,615,637) 9/30/05 1.85 (1,083,369) • 9/30/06 1.46 (2,307,394) 9/30/07 0.02 (16,404) 9/30/08 1.84 (3,582,504) i 9/30/09 1.54 (3,419,100) 9/30/10 0.66 (1,404,570) ■ 9/30/11 1.98 (4,476,765) 9/30/12 (1.01) 2,249,576 • 9/30/13 (0.38) 794,394 ■ 9/30/14 (1.18) 2,463,259 • * Before 9/30/06, change in Employer Normal Cost. i ■ ■ ■ r GRS 11 ■ ENE 14 ■ ■ ■ Change in Employer Cost Rate ■ 24% _ : 24% 22% - = 22% ■ 20% - - 20% 18% _ _ 18% ■ 16 %- -; 16% 14% = = 14% ■ 12% - 12% 10 %= _ 10% 1111 8% - [1 = 8% 6% 0 111 4/0— 4% 1` C ( L' C L _ � i r P �� 1. �� ' f', °` p o /o -4% - - -4% ■ -6% - - -6% $% = - -8% ■ e 4 ry� 4%>9°° g �� p�� c c \� �\� cf)(o 0 ^ f/ e)e \p e\p q\O ‘V \O eP \O 0\O^ \O c\Oc \\C \\ 4\ 'e\ \ "� \. ■ Plan Year End ■ times Change in Employer Cost Rate — 4— Cumulative Change ■ 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: ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ GRS ■ ■ ■ 16 ■ ■ Histo ry of Investment Return Based on Actuarial Value of Assets ■ ■ ■ 18% - 18% 13% A i - 13% ■ 8% ■. *Alf 8% ■ 3% - 3% 1 1 1 1 1 1 1' 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1,, 1, I, ■ -2% - 2 °/a -7% — -7% ■ < c\ K\cb ^ <1� , < �� ,qr� , <), , �q��q��q��q����� ,ti��.'.4* ■ Plan Year End ■ —U— Actual —4— Assumed ■ ■ History of Salary Increases 25% _ . 25% ■ 20% - - 20% ■ 15% - - 15% 10% r v � = 10% 5% ■ 0% 1 1 1 1 1 1 1 1 1 1 1 1 1-4 1 1 1 1 1 1 1 1 -1 1 1 1 1 1 1 1 I 0% ■ -5% = = -5% 1� \ ^ \ �� \ ���� \ � 4 : b . , .A1.(3 *'<L\cb<Y \ p ) e q c c e � c e c q 0\Q e\s CVsePe\b cPec e\O eec\ >41\ \q.5e ■ ■ Plan Year End Compared to Previous Year —al— Actual —4— Assumed ■ ■ ■ ■ ■ ■ GRS ■ • II ® 18 • III IN SUPPLEMENTAL PENSION DISTRIBUTION IIII 1111 Cumulative Actuarial Gains (Losses) Balance at ■ Year Ending B e ginning Gain (Loss) Supplemental Balance at III 9/30 of Year Interest for Year Payment End of Year 2000 $ 0 $ 0 $ 1,596,887 $ 0 $ 1,596,887 ■ 2001 1,596,887 135,735 (1,978,307) 0 (245,685) 2002 (245,685) (20,883) (5,069,210) 0 (5,335,778) • 2003 (5,335,778) (453,541) (1,870,014) 0 (7,659,333) III 2004 (7,659,333) (651,043) (1,615,637) 0 (9,926,013) 2005 (9,926,013) (843,711) (1,083,369) 0 (11,853,093) ■ 2006 (11,853,093) (948,247) (2,307,394) 0 (15,108,735) 2007 (15,108,735) (1,208,699) (16,404) 0 (16,333,838) . 2008 (16,333,838) (1,306,707) (3,582,504) 0 (21,223,049) 2009 (21,223,049) (1,697,844) (3,419,100) 0 (26,339,992) II 2010 (26,339,992) (2,107,199) (1,404,570) 0 (29,851,762) II 2012 (29,851,762) (2,388,141) (4,476,765) 0 (36,716,668) 2012 (36,716,668) (2,845,542) 2,249,576 0 (37,312,634) ■ 2013 (37,312,634) (2,891,729) 794,394 0 (39,409,969) 2014 (39,409,969) (3,054,273) 2,463,259 0 (40,000,983) ■ Under certain conditions, participants in payment status can receive a supplemental distribution per • Section 18 -177 of the Plan. The cumulative actuarial gain for plan years beginning after 9/30/1999 must be a positive Il amount for a supplemental payment to occur. IIII I � III 1 • i II III II IN ■ GRS ■ •11••• ••••11111••1111•111••••11•111111••111111111• n RECENT HISTORY OF REQUIRED AND ACTUAL CONTRIBUTIONS /`) End of Required Contributions C Year To Employer & State Estimated State Net Employer Actual Contributions Valuation Which Valuation % o f % of % of Applies Amount Payroll Amount Payroll Amount Payroll Employer State Total 10/1/98 9/30/99 863,996 13.88 427,874 6.87 436,122 7.01 426,129 427,874 854,003 10/1/99 9/30/00 920,372 12.92 427,874 6.00 492,498 6.92 490,425 429,945 920,370 10 /1 /00 9/30/01 742,646 10.75 429,945 6.22 312,701 4.53 312,701 430,572 743,273 10 /1 /01 9/30/02 1,053,863 16.08 443,454 6.77 610,409 9.31 610,409 443,454 1,053,863 10/1/02 9/30/03 1,929,458 26.14 443,454 6.01 1,486,004 20.13 1,486,004 465,087 1,951,091 10/1/03 9/30/04 2,343,601 29.60 465,087 5.87 1,878,514 23.73 1,878,514 465,087 2,343,601 10/1/04 9/30/05 2,571,109 35.67 465,087 6.45 2,106,022 29.22 2,106,022 465,087 2,571,109 10/1/05 9/30/06 2,808,957 35.85 465,087 5.93 2,343,870 29.92 2,343,870 465,087 2,808,957 10/1/06 9/30/07 3,030,547 32.58 465,087 5.00 2,565,460 27.58 2,685,841 465,087 3,150,928 10/1/07 9/30/08 3,236,241 31.43 465,087 4.52 2,771,154 26.91 2,771,154 465,087 3,236,241 10/1/08 9/30/09 3,710,169 32.17 465,087 4.03. 3,245,082 28.14 3,245,082 465,087 3,710,169 10/1/09 9/30/10 4,153,603 33.13 465,087 3.71 3,688,516 29.42 3,688,516 465,087 4,153,603 10/1/09 9/30/11 3,997,173 31.78 465,087 3.70 3,532,086 28.08 3,552,348 465,087 4,017,435 10/1/10 9/30/12 4,098,955 32.55 465,087 3.69 3,633,868 28.86 3,633,868 465,087 4,098,955 10 /1 /11 9/30/13 4,701,572 36.68 465,087 3.63 4,236,485 33.05 4,236,485 465,087 4,701,572 10/1/12 9/30/14 4,560,918 38.54 465,087 3.93 4,095,831 34.61 4,159,736 465,087 4,624,823 10/1/13 9/30/15 4,830,346 41.73 465,087 4.02 4,365,259 37.71 na na na 10/1/14 9/30/16 4,856,392 42.26 465,087 4.05 4,391,305 38.21 na • na na N O ■ ■ 22 ■ The rates of salary increase are as follows: ■ % Increase in Salary ■ Age Merit and Base Total II 20 (Economic) Increase 20 2.5% 4.0% 6.5% ■ 25 2.5% 4.0% 6.5% 30 2.5% 4.0% 6.5% ■ 35 2.5% 4.0% 6.5% ■ 40 1.5% 4.0% 5.5% 45 1.0% 4.0% 5.0% ■ 50 1.0% 4.0% 5.0% II 55 1.0% 4.0% 5.0% Projected service retirement benefits are increased to allow for the inclusion of unused sick and vacation ■ pay in average final earnings. The increase amount is unique for each member based on the number of II hours of accumulated sick and vacation time reported for each member as of June 18, 2013. III exceeding purposes of financing the unfunded liabilities, total payroll is assumed to grow at 4% per year, but not exceeding the average annual increase over the most recent ten years. The most recent ten -year average is II. 4.45%. III Demographic Assumptions ■ The mortality table was the RP -2000 Combined Healthy Participant Mortality Tables for males and females with future improvements in mortality projected to all future years using Scale AA. These rates ■ are being phased in from the table used previously (1983 Group Annuity Mortality table - rates shown on the next page) over a five year period, beginning October 1, 2011. As of October 1, 2014, 80% of the ■ rates below are being applied along with 20% of the rates on the top of the next page. ■ RP -2000 Combined Healthy Participant Mortality ■ Sample Probability of Future Life Attained Dying Next Year Expectancy (years ) ■ Ages (in 2014) Men Women Men Women ■ 50 0.17 % 0.13 % 34.26 35.63 55 0.28 0.24 29.14 30.66 ■ 60 0.54 0.47 24.21 25.89 II 65 1.05 0.90 19.60 21.40 70 1.80 1.56 15.41 17.28 111 75 3.11 2.51 11.63 13.56 1111 80 5.59 4.16 8.41 10.25 ■ 11 ■ ■ ■ 11 GRS 1 ■ III 24 ■ 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). These rates are being ■ phased in from the table used in the previous report (rates shown below) over a five year period. This assumption measures the probabilities of members remaining in employment. As of October 1, 2014, • 80% of these rates are being applied along with 20% of the prior rates (being phased out). Years Sample % of Active Members ■ of Service Ages Separating Within Next Year 0 - 1 ALL 15.0% ■ 1 - 2 10.0% ■ 2 -3 7.0% 3 -4 5.0% II 4 - 5 4.0% I ■ At least 5 25 4.0% 30 3.0% 35 2.0% • 40 1.0% 45 0.0% I i Prior Rates (Being Phased Out) . Sample % of Active Members Ages Separating Within Next Year • 20 20.0% 1 ■ 25 17.0% 30 13.2% ■ 35 8.0% 40 0.0% III 45 0.0% ■ 50 0.0% 55 0.0% II ■ Rates of disability among active members (90% of disabilities are assumed to be service connected). ■ Sample % Becoming Disabled Ell 20 within Next Year 20 0.14 % • 25 0.15 30 0.18% III 35 0.23 % III 40 0.30 % ■ 45 0.51 % 50 1.00 % II 55 1.55 % si II GRS ■ ■ 26 1 GLOSSARY 1 III 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, II 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 Cost 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. in 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 The amount of funds required to provide a payment or series of payments • (APV) in the future. It is determined by discounting the future payments with an assumed interest rate and with the assumed probability each payment will II be made. III 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 i 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. II 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 II retirement system typically also includes calculations of items needed for compliance with GASB, such as the Funded Ratio and the Annual ■ Required Contribution (ARC). I. 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 II or a smoothed value in order to reduce the year -to -year volatility of II calculated results, such as the funded ratio and the actuarially required contribution (ARC). II 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 IN MI GRS ■ 28 ■ 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. • • ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ GRS • • • • • • • SECTION C • PENSION FUND INFORMATION • • • • • • • • • • • • • • • • • • • GRS • II II 29 ■ SUMMARY OF ASSETS September 30 Item 2014 2013 II A. Cash and Cash Equivalents (Operating Cash) $ 25,518 $ 25,894 ■ B. Receivables: ■ 1. Member Contributions $ - $ - 2. Employer Contributions - - III 3. State Contributions - - ■ 4. Buy -Backs 59,307 53,824 5. Receivable for Securities Sold 380,425 354,781 ■ 6. DROP Loans 238,163 173,596 III 7. Total Receivables $ 677,895 $ 582,201 C. Investments 1 1111 1. Short-Term Investments $ - $ - II 2. Domestic Equities (Large cap defensive) 19,631,376 17,672,434 3. Real Estate 4,181,355 3,042,335 ■ 4. Multi -Asset Core Fund (Equities) 29,300,544 27,141,597 5. Multi- Manager Bond Fund (Fixed Income) 22,669,808 20,759,282 ■ 6. Total Investments $ 75,783,083 $ 68,615,648 ■ D. Liabilities and Reserves 1. Benefits Payable $ - $ - III 2. Accrued Expenses and Other Payables (145,124) (141,953) III 3. Total Liabilities and Reserves $ (145,124) $ (141,953) E. Total Market Value of Assets Available for Benefits $ 76,341,372 $ 69,081,790 III F. Reserves III 1. State Contribution Reserve $ (69,784) $ (41,929) 2. DROP Accounts (8,497,374) (8,058,513) 3. Supplemental Benefit Reserve (2,062,812) (2,080,498) III $ (10,629,970) $ (10,180,940) III G. Market Value Net of Reserves $ 65,711,402 $ 58,900,850 H. Allocation of Investments III 1. Short-Term Investments 0.00% 0.00% ■ 2. Domestic Equities (Large cap defensive) 25.90% 25.76% 3. Real Estate 5.52% 4.43% III 4. Multi -Asset Core Fund (Equities) 38.67% 39.56% 5. Multi- Manager Bond Fund (Fixed Income) 29.91% 30.25% . 6. Total Investments 100.00% 100.00% i ■ 1 ■ II GRS ■ ■■■■.■ Ill ■■■I III ■■■■r■■■■■■■■■■r■■■ 2 ACTUARIAL VALUE OF ASSETS (f) Valuation Date — September 30 2013 2014 2015 2016 2017 2018 A. Actuarial Value of Assets Beginning of Year $ 61,060,471 $ 66,874,278 $ - $ - $ - $ - B. Market Value End of Year 69,081,790 76,341,372 - - - - C. Market Value Beginning of Year 61,472,139 69,081,790 - - - - D. Non - Investment/Administrative Net Cash Flow 1,489,808 105,379 E. Investment Income El. Actual Market Total: B -C -D 6,119,843 7,154,203 - - - _ E2. Assumed Rate of Return 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% E3. Assumed Amount of Return 4,789,917 5,186,840 - - - - E4. Amount Subject to Phase -In: E1 —E3 1,329,926 1,967,363 - - - - F. Phase -In Recognition of Investment Income Fl. Current Year: 0.2 x E4 265,985 393,473 - - - - F2. First Prior Year 980,811 265,985 393,473 - - - F3. Second Prior Year (942,079) 980,811 265,985 393,473 - - F4. Third Prior Year 85,296 (942,079) 980,811 265,985 393,473 - F5. Fourth Prior Year (855,931) 85,296 (942,079) 980,811 265,985 393,472 F6. Total Phase -Ins 465 918 783 486 ( ) 698,190 1640 269 659,458 393,472 G. Actuarial Value of As s e is End of Ye ar Gl. Preliminary Actuarial Value of Assets: $ 66,874,278 $ 72,949,983 $ - $ - $ - $ - G2. Upper Corridor Limit: 120 % *B 82,898,148 91,609,646 - - - - G3. Lower Corridor Limit: 80 % *B 55,265,432 61,073,098 - - - - G4. Funding Value End of Year 66,874,278 72,949,983 - - - - G5. Less: State Contribution Reserve (41,929) (69,784) - - - - G6. Less: DROP Account Balances (8,058,513) (8,497,374) - _ - - G7. Less: Supplemental Benefit Reserve (2,080,498) (2,062,812) - - - - G8. Final Funding Value End of Year 56,693,338 62,320,013 - _ - - H. Difference between Market & Actuarial Value $ 2,207,512 $ 3,391,389 $ - $ - $ - $ - I. Actuarial Rate of Return 7.00% 8.92% 0.00% 0.00% 0.00% 0.00% J. Market Value Rate of Return 9.84% 10.35% 0.00% 0.00% 0.00% 0.00% K. Ratio of Actuarial Value to Market Value 96.80% 95.56% 0.00% 0.00% 0.00% 0.00% w III • 33 u 11 INVESTMENT RATE OF RETURN 11 ■ Investment Rate of Return 11 Year Ended Market Value I Actuarial Value 12/31/82 16.4 % 9.3 % ■ 12/31/83 12.3 9.0 12/31/84 11.9 11.5 ■ 12/31/85 23.0 16.8 12/31/86 19.0 17.6 • 12/31/87 0.3 4.4 II 12/31/88 10.4 9.0 12/31/89 20.6 15.4 II 9/30/90 (9 mos.) (1.9) 1.7 9/30/91 14.4 11.6 • 9/30/92 10.0 9.7 9/30/93 12.6 11.9 • 9/30/94 1.1 3.5 III 9/30/95 19.1 12.9 9/30/96 12.8 10.8 ■ 9/30/97 20.2 13.1 9/30/98 10.1 12.9 • 9/30/99 10.5 13.5 9/30/00 9.8 12.1 . 9/30/01 (9.1) 7.5 III 9/30/03 (9.2) (4.7) 9/30/03 16.1 2.8 $ 9/30/04 8.3 2.6 9/30/05 10.6 3.0 • 9/30/06 6.9 5.7 • 9/30/07 13.1 9.9 9/30/08 (15.1) 4.2 ■ 9/30/09 (0.8) 2.8 9/30/10 10.2 3.0 ■ 9/30/11 (0.6) 1.6 ■ 9/30/12 18.0 6.9 9/30/13 9.8 7.0 ■ 9/30/14 10.3 8.9 Average Returns: Last Five Years 9.4 % 5.4 % ■ Last Ten Years 5.8 % 5.3 % All Years 8.7 % 8.0 % II II II GRS • • • • • • • SECTION D • FINANCIAL ACCOUNTING INFORMATION • • • • • • • • • • • • • • • • • • • • • • • GRS • II ■ 34 II FASB NO. 35 INFORMATION • A. Valuation Date October 1, 2014 October 1, 2013 B. Actuarial Present Value of Accumulated 111 Plan Benefits II 1. Vested Benefits II b. Members Currently Receiving Payments $ 56,897,000 $ 55,810,624 b. Terminated Vested Members 1,115,450 869,788 . c. Other Members 30,086,448 26,853,954 d. Total 88,098,898 83,534,366 Ill 2. Non - Vested Benefits 502,412 568,321 IN 3. Total Actuarial Present Value of Accumulated II Plan Benefits: ld + 2 88,601,310 84,102,687 • 4. Accumulated Contributions of Active Members 6,800,856 6,247,797 • C. Changes in the Actuarial Present Value of . Accumulated Plan Benefits ■ 1. Total Value at Beginning of Year 84,102,687 79,453,983 ■ 2. Increase (Decrease) During the Period Attributable to: ■ a. Plan Amendment 0 (287,739) II b. Change in Actuarial Assumptions 753,424 713,688 c. Latest Member Data, Benefits Accumulated II and Decrease in the Discount Period 9,286,287 9,373,299 ■ d. Benefits Paid (Net basis, including credits to DROP accounts) (5,541,088) (5,150,544) III e. Net Increase 4,498,623 4,648,704 III 3. Total Value at End of Period 88,601,310 84,102,687 • D. Market Value of Assets 65,711,402 58,900,850 E. Actuarial Assumptions - See page entitled . Actuarial Assumptions and Methods III II II II ■ GRS • • 36 ■ REQUIRED SUPPLEMENTARY INFORMATION ■ GASB Statement No. 27 ■ ■ ■ The information presented in the required supplementary schedules was detei�nined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation: Valuation Date October 1, 2014 ■ Contribution Rates: ■ Employer (and State) 42.26% Plan Members 7.00% Actuarial Cost Method Entry Age Normal ■ Amortization Method Level percent of • payroll, closed • Remaining Amortization Period 30 years ■ Asset Valuation Method 5 -year smoothed market ■ Actuarial Assumptions: ■ Investment rate of return 7.75% ■ Projected salary increases 5.0% to 6.5% depending on age ■ Includes inflation and other general increases at 4.0% Cost of Living adjustments NA ■ ■ ■ ■ ■ ■ ■ ■ ■ • ■ GRS ■ ■ 38 ■ SCHEDULE OF THE EMPLOYER'S NET PENSION LIABILITY ■ GASB Statement No. 67 ■ ■ Total Plan Net Position Net Pension Liability FY Ending Pension Plan Net Net Pension as a % of Total Covered as a % of ■ September 30, Liability Position Liability Pension Liability Payroll Covered Payroll ■ 2014 $ 111,783,071 $ 76,282,065 $ 35,501,006 68.24% $ 11,070,871 320.67% 2015* 116,794,051 82,762,969 34,031,082 70.86% 11,142,832 305.41% ■ ■ * These figures are estimates only. Actual figures will be provided after the end of the fiscal year. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ GRS ■ ■ 40 ■ NOTES TO SCHEDULE OF CONTRIBUTIONS GASB Statement No. 67 ■ Valuation Date : October 1, 2014 ■ Notes 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 22 years ■ Asset Valuation Method 5 -year smoothed market Inflation 4.0% Salary Increases 5.0% to 6.5% depending on age, including inflation ■ Investment Rate of Return 7.75% Retirement Age Experience -based table of rates that are specific to the type of eligibility condition Mortality 80% RP -2000 Combined Healthy Participant Mortality Table for males and females with mortality improvement projected to all future years after 2000 using Scale AA; 20% 1983 Group Annuity Mortality Table for males and females ■ Other Information: 1111 Notes See Discussion of Valuation Results on Page 1 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ I ■ ■ GRS ■ • • • • • SECTION E • MISCELLANEOUS INFORMATION • • • • • • • • • • • • • • • • • • • • • • • • GRS • ■ ■ 42 ■ ■ RECONCILIATION OF MEMBERSHIP DATA ■ From 10/1/13 From 10/1/12 To 10/1/14 To 10/1/13 ■ I A. Active Members I ■ 1. Number Included in Last Valuation 141 146 ■ 2. New Members Included in Current Valuation 5 5 3. Non - Vested Employment Terminations (3) (3) ■ 4. Vested Employment Terminations (2) (4) II 6. DROP Participation (2) (2) 6. Service Retirements 0 (1) ■ 7. Disability Retirements 0 0 8. Deaths 0 0 ■ 9. Number Included in This Valuation 139 141 ■ I B. Terminated Vested Members ■ 1. Number Included in Last Valuation 6 4 2. Additions from Active Members 2 4 ■ 3. Lump Sum Payments/Refund of Contributions (1) (1) A 4. Payments Commenced 0 (1) 5. Deaths 0 0 ■ 6. Other - -Return to Actives 0 0 7. Number Included in This Valuation 7 6 ■ 1 C. DROP Plan Members ■ 1. Number Included in Last Valuation 12 14 ■ 2. Additions from Active Members 2 2 3. Retirements (3) (4) ■ 4. Deaths Resulting in No Further Payments 0 0 ■ 5. Other 0 0 6. Number Included in This Valuation 11 12 ■ I D. Service Retirees, Disability Retirees and Beneficiaries I ■ 1. Number Included in Last Valuation 104 98 II 2. Additions from Active Members 0 1 3. Additions from Terminated Vested Members 0 1 • 4. Additions from DROP Plan 3 4 5. Deaths Resulting in No Further Payments (2) 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 105 104 ■ ■ GRS S II • 44 • INACTIVE PARTICIPANT SCATTER II Deceas ed with Terminated Vested Disabled Retired Beneficiary II Age Total Total Total Age Group Number Benefits Number Benefits Number Benefits Number Benefits ■ Under 20 - - - - - - - - 20 -24 - - _ - - ■ 25 -29 - - - - - - - - 30 -34 3 67,992 - _ - - - - III 35 -39 2 32,055 - - ■ 40 -44 1 48,758 - - - - - - . 45-49 - - - - 14 823,477 - - 50 -54 1 8,323 2 43,710 22 1,245,979 1 23,843 ■ 55 -59 - - 3 55,011 27 1,311,253 - - ■ 60 -64 - - 3 63,138 16 647,157 - - ■ 65 -69 - - 3 75,670 11 456,444 1 9,397 70 -74 - - 2 25,903 8 209,859 - - ■ 75 -79 - - 1 25,086 1 51,692 - - Ill 80 -84 - - - - 1 27,637 - - 1 ■ 85 -89 - - - - - - - - 90 -94 - - - - - - - - ■ 95 -99 - - - - - - - - III 100 & Over - - - - - - - - II Total 7 157,128 14 288,518 100 4,773,498 2 33,240 II Average Age 39 64 58 58 III 1 III III • • III II 1 III ■ GRS . ■ • • • • • • SECTION F • SUMMARY OF PLAN PROVISIONS • • • • • • • • • • • • • • • I • • • • • • • • • GRS ■ 45 ■ SUMMARY OF PLAN PROVISIONS ■ ■ A. Ordinances Plan established under the Code of Ordinances for the City of Boynton Beach, Florida, Chapter 18, ■ Article III, and was most recently amended under Ordinance No.11 -011 passed and adopted on its ■ second reading on December 16, 2010. The Plan is also governed by certain provisions of Chapter 185, Florida Statutes, Part VII, Chapter 112, Florida Statutes and the Internal Revenue Code. The ■ Plan has also amended the definition of pensionable compensation effective June 18, 2013 in compliance with Senate Bill 1128. ■ B. Effective Date ■ August 15, 1981 ■ C. Plan Year ■ October 1 through September 30 ■ 111 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 police officers are eligible to participate on the first day of employment. ■ F. Credited Service Service is measured as the aggregate numbers of years and fractional parts of years of service for ■ which a police officer 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 ■ Total cash remuneration including up to 300 hours of overtime and lump sum payments for the lesser ■ of the amount of sick and vacation leave accumulated as of June 18, 2013 or the amount cashed out ■ at retirement, but exclusive of any payments for extra duty or special detail work. ■ II. Average Final Compensation (AFC) ■ The average of Compensation over the highest 5 years during the last 10 years of Credited Service. ■ ■ ■ ■ GRS ■ 1 47 Supplemental Benefit: All retirees in pay status are entitled to a monthly supplemental pension benefit paid in a lump sum on October 1 of each year. The supplemental benefit is funded by a 1% of pay contribution from the members and a 1% of pay contribution from ■ the Chapter 185 money. The benefit pool is divided according to the total number of shares of all eligible retirees on a pro -rata basis. The number of shares allotted to . each eligible retiree is the sum of credited service at retirement (maximum of 20 years) and the number of years the participant has been retired (maximum of 20 ■ years). An individual retiree's distribution is the number of shares multiplied by the share value. The benefit ceases upon the later of the death of the retired member or ■ beneficiary. ■ 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 and unable to render ■ useful and efficient service as a police officer 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 the member's basic rate of earnings in effect on the date of disability, reduced by amounts payable under Worker's Compensation and Social Security PIA ■ with a minimum benefit being the greater of the accrued Normal Retirement benefit on the date of disability or 42% of AFC. Normal Form ■ of Benefit: 10 Years Certain and Life thereafter; other options are also available. ■ COLA: None ■ Supplemental Benefit: All retirees in pay status are entitled to a monthly supplemental pension benefit ■ paid in a lump sum on October 1 of each year. The supplemental benefit is funded by a 1% of pay contribution from the members and a 1% of pay contribution from ■ the Chapter 185 money. The benefit pool is divided according to the total number of shares of all eligible retirees on a pro -rata basis. The number of shares allotted to each eligible retiree is the sum of credited service at retirement (maximum of 20 years) and the number of years the participant has been retired (maximum of 20 years). An individual retiree's distribution is the number of shares multiplied by the share value. The benefit ceases upon the later of the death of the retired member or beneficiary. M. Non - Service Connected Disability Eligibility: Any member with 10 years of Credited Service who becomes totally and ■ permanently disabled and unable to render useful and efficient service as a police officer is eligible for a disability benefit. ■ Benefit: The accrued Normal Retirement Benefit taking into account compensation eamed ■ and service credited as of the date of disability with a minimum benefit equal to 25% of AFC and a maximum benefit equal to 60% of AFC. GRS ■ 49 ■ Normal Form of Benefit: Paid until death or remarriage of spouse; or 10 years to the member's estate. ■ COLA: None ■ Supplemental ■ Benefit: All retirees and beneficiaries in pay status are entitled to a monthly supplemental pension benefit paid in a lump sum on October 1 of each year. The supplemental ■ benefit is funded by a 1% of pay contribution from the members and a 1% of pay ■ contribution from the Chapter 185 money. The benefit pool is divided according to the total number of shares of all eligible retirees on a pro -rata basis. The number of ■ shares allotted to each eligible retiree is the sum of credited service at retirement (maximum of 20 years) and the number of years the participant has been retired ■ (maximum of 20 years). An individual retiree's distribution is the number of shares multiplied by the share value. The benefit ceases upon the later of the death of the ■ retired member or beneficiary. ■ 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. ■ ■ 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, the 50 %, 66 2/3 %, 75% and 100% Contingent Annuitant options and the 1111 50 %, 66 2/3 %, 75% and 100% Survivor Annuity options. ■ R. Vested Termination ■ Eligibility: A member has earned a non - forfeitable right to Plan benefits after the completion of 5 years of Credited Service if they elect to leave their accumulated contributions in ■ the fund. ■ Benefit: The benefit is the member's accrued Normal Retirement Benefit as of the date of termination. ■ For members with at least 5 years of Credited Service, the benefit begins on the date ■ that would have been the member's Normal Retirement date had they continued employment until attaining age 55 with 10 years of Credited Service or upon reaching what would have been 20 years of Credited Service. Alternatively, members with at least 10 years of Credited Service 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: None ■ ■ GRS ■ 51 ■ 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 and 10 years of Credited Service, or • (2) age 50 and 15 years of Credited Service, or II (3) 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. U 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. A percentage of the DROP credited at the same rate earned by the Plan and the ■ remaining percentage credited with earnings at a guaranteed rate of 7 %. Normal Form U of Benefit: Options include a lump sum, equal annual payments over 5 years, or monthly installments based upon actuarial tables until the balance is paid out. COLA: None Supplemental ■ Benefit: DROP retirees are entitled to a monthly supplemental pension benefit paid in a lump sum on October 1 of each year. The supplemental benefit is funded by a 1% of pay contribution from the members and a 1% of pay contribution from the Chapter 185 money. The benefit pool is divided according to the total number of shares of all eligible retirees on a pro -rata basis. The number of shares allotted to each eligible retiree is the sum of credited service at retirement (maximum of 20 ■ years) and the number of years the participant has been retired (maximum of 20 ■ years). An individual retiree's distribution is the number of shares multiplied by the share value. The benefit ceases upon the later of the death of the retired member or beneficiary. ■ Y. Other Ancillary Benefits ■ There are no ancillary benefits not required by statutes but which might be deemed a City of Boynton Beach Municipal Police Officers' Retirement Fund liability if continued beyond the ■ availability of funding by the current funding source. ■ GRS ■