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01-12-2016 Agenda
CMOF SEMST�" HOME OF PELICAN ISLAND PUBLIC NOTICE POLICE PENSION BOARD January 12, 2016 The Police Pension Board will hold its quarterly meeting Tuesday, January 12, 2016 at 10:00 a.m. in the City Council Chambers, City Hall, 1225 Main St. Sebastian, Florida. Agenda Call to Begin Steve Marcinik, Chairman Vote to Excuse Absent Board Members Steve Marcinik, Chairman Public Comment Steve Marcinik, Chairman Approval of Minutes from December 1, 2015 Steve Marcinik, Chairman Old Business A. Review of Services Offered by Highland Capital Management, LLC Grant McMurry, Highland Capital B. Report on Terms of Board Members Ken Killgore, Board Member C. Report on Delivery of Summary Plan Description to Members Ken Killgore, Board Member D. Report on Fiduciary Insurance Coverage Ken Killgore, Board Member New Business E. Approval of Payment to Salem Trust for Quarter Ending 9/30//15 Steve Marcinik, Chairman F. Report on Annual City Contributions Made December 4, 2015 Ken Killgore, Board Member Based on 14.6% Minimum G. Review of Investment Portfolio & Asset Allocation Strategy Scott Owens, Morgan Stanley H. Fund Review Grant McMurry, Highland Capital I. Presentation of Actuarial Valuation as of October 1, 2015 Doug Lozen, Foster & Foster J. Consideration of WRAP Program 1. Contact Information on Plans Using the WRAP Program Scott Owens, Morgan Stanley 2. Projected Investment Cost Compared to Current Scott Owens, Morgan Stanley 3. Acceptability of the WRAP Program to Other Clients Lee Delmer, Pension Attorney 4. Board Member Comments/Action Steve Marcinik, Chairman K. Election of New Officers Steve Marcinik, Chairman L. Legal Updates: Lee Delmer, Pension Attorney 1. Report on Update of Operating Rules 2. Other Legal Matters M. Next Quarterly Meeting: March 15, 2016 Steve Marcinik, Chairman Ken Killgore Administrative Services Director/Pension Board Member City of Sebastian Please note: In accordance with Florida Statue 286.0105: any person who desires to appeal any decision at this meeting will need a record of the proceedings and for this purpose may need to ensure that a verbatim record of the proceedings is made which includes the testimony and evidence upon which the appeal is based. In accordance with Florida Statute 286.26: Persons with disabilities needing assistance to participate in any of these proceedings should contact the Administrative Services Department at 1225 Main Street, Sebastian, Florida 32958, or telephone 772-388-8205. Draft 12/01/2015 Minutes Sebastian Police Pension Board Minutes December 1, 2015 10:00 a.m. Sebastian City Council Chambers TYPE OF MEETING: Regular ATTENDEES: Board Members: Robert Zomok, Secretary Bruce Hoffman Ken Killgore Richard Snell EXCUSED Steve Marcinik, Chair CONSULTANTS: None SUBJECT CALL TO ORDER 10:00 a.m. In the excused absence of Steve Marcinik, Chairman, Richard Snell moved to have Bob Zomok, Secretary, chair this meeting. The motion was unanimously approved. There being a quorum present, Bob Zomok, called the meeting to order. SUBJECT UNFINISHED BUSINESS APPROVAL OF MINUTES 10:05 a.m. Ken Killgore motioned the minutes of the September 15, 2015 Board Meeting be approved. Motioned seconded by Bruce Hoffman and passed unanimously. Draft 12/01/2015 Minutes Consideration of "wrapping" consulting, custodial, and account management services into one "bundled" contract. I W Three concepts for consideration were discussed in detail — Transparency, Conflict of Interest, and Fiduciary Responsibility. The most important fact, understood by all on the Board, is the critical need to diversify Asset Allocation. With this fact as a given, the discussion proceeded. Scott Owens stated that the issue of Transparency would be addressed via the detailed reports the Board would receive vis-i- vis the performance of each asset manager. Part of the MSG fee is the research done to develop the suggested list of best -in -class asset managers. On the issue of Conflict of interest, Scott Owens pointed out that all transactions are outside the firm of Merrill Lynch Graystone (MSG). That firm collects only their fees for administering the "WRAP" program. All fees of asset managers are paid by the Plan and no fees from fund managers are recovered in any way by MSG. Fiduciary Responsibility would be assessed by Lee Definer. His firm has several clients who have converted to the "WRAP" structure to diversify their asset allocation. The WRAP program has the potential to reduce asset manager fees and custodial fees. The fee from MSG would increase. The Board selects the asset manager for each part of asset allocation. MSG would provide the Board with suggested managers; however, the Board retains the final approval in the selection process. Scott will provide the Board and Lee Delmer a copy of the Investor Services Agreement. Lee will review the acceptability of the WRAP program by clients of his firm. Scot is to send Bob Zomok contact information so that Bob can check with three (3) current Plans that have adopted and are using the WRAP program. Draft 12/01/2015 Minutes Action to continue evaluation of firms for custodial services and/or formally discontinue RFP process. The Board agreed to table this process and to defer to the consideration of the WRAP program. If the Board opts for the WRAP, the Fund Custodian is a part of that agreement. As and aside, Lee Delmer has been in touch with Salem Trust, (current custodian) and that firm will keep Lee apprised of the results of the next audit that firm will undergo. The reason the Board requested the initiation of the RFP process to replace Salem Trust was the "qualified" audit results they had recently received. CURRENT DISCUSSION: Recognition of an additional proposal from First State Trust Company The Board recognized receipt of the RFP submitted by First State Trust Company. Approval to execute Investment Management Agreement with Highland Capital Management, LLC Bob Zomok moved to approve and submit the Investment Agreement. Bruce Hoffman seconded the motion and it passed unanimously. Requirement to Distribute the Summary Plan Description was met on October 27, 2015. Bruce Hoffman asked if signatures were required from those receiving copies of the SPD. The Board will ask Lee Dehner at the next meeting. Public Comment: None Draft 12/O1/2015 Minutes SUBJECT NEW BUSINESS Approval of Payments: Reimburse the City of Sebastian for payments made to Richard Snell and Bruce Hoffman to attend the 45'b Annual Pension Trustee Conference. Bob Zomok motioned to approve the above listed payments. Ken Killgore seconded the motion and it passed unanimously. Other Matters: The following items were discussed: The Board would like to have a list showing the membership terms for each Board member Bruce Hoffman moved to elect new Board Officers at the January 12, 2016 meeting. This is called for under the Board's "Operating Rules and Procedures. Bob Zomok seconded the motion and it passed unanimously. As an adjunct to the election item, the Board determined the need to review and cause to have updated the Operating Rules and Procedures dated July 8, 2003. In that the Board has just approved the Agreement with Highland Capital Management, the Board asked Ken Killgore to contact Grant McMurry and have him bring a representative from Highland Management to provide a review of the services offered by Highland. The Board affirmed that Steve Marcinik's absence is an excused absence. The proposed meeting dates for calendar year 2016 are: January 12, March 15, June 14, September 20, and December 13. l3 Draft 12/01/2015 Minutes Next regularly scheduled meeting is January 12, 2016 at 10:00 a.m. in the Sebastian City Council Chambers. Agenda items include: Review list of membership terms Election of Officers Discussion of Operating Rules and Procedures Review of Fiduciary and Travel Insurance policies Review of incorporating the "Share Plan' into the Ordinance Review of the Investment Services Agreement. SUBJECT ADJOURNMENT 11:40 AM Having no further business for discussion, Secretary Zomok adjourned the meeting. Respectfully submitted, Bob Zomok, Secretary 5 POLICE RETIREMENT BOARD OF TRUSTEES 4-YEAR TERMS Two Members Appointed �y City Council Bob Zomok Term to expire 10/2017 Sebastian, FL 32958 Appointed 111212011 Bruce Hoffman Term to expire 10/2017 Sebastian, FL 32958 Appointed 10/09/2013 Two Members Appointed by Police Officers Officer Steven Marcinik Term to Expire 10/17 Officer Rich Snell Term to Expire 10117 One Member Appointed hy Board and Confirmed by City Council neb�IeF Ke�re--Ak 1,. - (<� ((T e_ I Term Expires Code 58-51 — Board shall select secretary from among its members. Y-1 CITY COUNCIL AGENDA TRANSMITTAL FORM COUNCIL MEETING DATE: September 24, 2014 AGENDA ITEM TITLE: Appoint Fifth Member to Police Pension Board of Trustees RECOMMENDATION: Move to Appoint Kenneth W. Killgore to the Sebastian Police Pension Board of Trustees BACKGROUND: In accordance with City Code Section 58-46(5)(1)(a), membership of the Police Pension Board of Trustees consists of five members, two that are legal residents of the City and appointed by the City Council and two that are police officers elected by a majority of active police officers. The City Council as a ministerial duty, appoints the fifth member, who has been chosen by a majority of the previous four members. With the departure of the Debbie Krueger, who was the currently appointed fifth member, a vacancy occurred. At the Police Pension Board of Trustees meeting on September 16, 2014, the three members present (one member had an excused absence), voted to appoint Mr. Killgore, who is currently the City's Administrative Services Director. IF AGENDA ITEM REQUIRES EXPENDITURE OF FUNDS: Total Cost: N/A Amount Budgeted in Current FY: N/A Amount of Appropriation Required: None Fund to Be Utilized for Appropriation: NIA j Administrative Services Department Review: � 1 l ATTACHMENTS: None. City Manager Authorization: Date: 121 of 253 Kenneth Killqore From: Sent: To: Cc: Subject: Attachments: All, Cynthia Watson Tuesday, October 27, 2015 3:20 PM Daniel Acosta; Benjamin Allison; Eric Antosia; Brad Bauer, John Blackledge; Jeffrey Bruckner; Michael Brandes; Rich Snell; Ronald Carlson; Ryan Matthews; Roy Cole; Robert Kyzer; Ritchie Revis; Robert Vafiades; Gene Carroll; Greg Witt; Steve Marcinik; Shawn Daley; Steven Powell; Todd Finnegan; Timothy Wood; Melissa Garrison; Mark Hepfer; Michelle Morris; Jason Gillette; John Grimmich; Jason Mills; Anthony Irwin; Ashley Penn; Ken Johnson; Kenneth McDonough; Peter Miller, Carlin Parker, Dino Savvidis; Bill Jursik Cynthia Watson; Kenneth Killgore Summary Plan Description for Police Plan Summary Plan Description for Police Plan 2015.pdf Attached please find the Summary Plan Description for Police Plan dated June 1, 2015 for the City of Sebastian Police Officers' Retirement. Cindy Cynthia Watson, MPAIR, PHR Human Resources Manager 1225 Main Street Sebastian, FL 32959 772-388-8222 cwatson@citvofsebastian.org AW TRAVELERS.! Wrap''® for Governmental Plans DESIGNATED BENEFIT PLAN FIDUCIARY LIABILITY COVERAGE DECLARATIONS POLICY NO. 106185885 Travelers Casualty and Surety Company of America Hartford, Connecticut (A Stock Insurance Company, herein called the Company) THIS LIABILITY COVERAGE IS WRITTEN ON A CLAIMS -MADE BASIS. THIS LIABILITY COVERAGE COVERS ONLY CLAIMS FIRST MADE AGAINST INSUREDS DURING THE POLICY PERIOD. THE LIMIT OF LIABILITY AVAILABLE TO PAY SETTLEMENTS OR JUDGMENTS WILL BE REDUCED BY DEFENSE EXPENSES, AND DEFENSE EXPENSES WILL BE APPLIED AGAINST THE RETENTION. THE COMPANY HAS NO DUTY TO DEFEND ANY CLAIM UNLESS DUTY -TO -DEFEND COVERAGE HAS BEEN SPECIFICALLY PROVIDED HEREIN. ITEM 1 BENEFIT PLAN: CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM Principal Address: 1225 MAIN STREET SEBASTIAN, FL 32958 ITEM 2 INSURANCE REPRESENTATIVE: Kenneth W. Killgore D/B/A: Principal Address: 1225 Main Street SEBASTIAN, FL 32958 ITEM 3 POLICY PERIOD: Inception Date: November01, 2014 Expiration Date: November01, 2017 12:01 A.M. standard time both dates at the Principal Address stated in ITEM 1. ITEM 4 ALL NOTICES OF CLAIM OR LOSS MUST BE SENT TO THE COMPANY BY EMAIL, FACSIMILE, OR MAIL AS SET FORTH BELOW: DBP-15001 Ed. 11-12 Page 1 of 3 ©2012 The Travelers Indemnity Company. All Rights Reserved ITEM 5 ITEM 6 ITEM 7 ITEM 8 Email:bfpclaims@travelers.com FAX:(888) 460-6622 Mail:Travelers Bond & Specialty Insurance Claim 385 Washington St. — Mail Code 9275-NB03F St Paul, MN 55102 Only those coverage features marked "® Applicable' are included in this Policy. DESIGNATED BENEFIT PLAN FIDUCIARY LIABILITY COVERAGE Limit of Liability: $1,000,000 for all Claims Settlement Program Limit of Liability $100,000 HIPAA Limit of Liability 502(c) Penalties Limit of Liability Additional Defense Applicable Coverage: Additional Defense Limit of Liability: Not Covered Retention: Prior and Pending Proceeding Date: Continuity Date: $1,000 $100, 000 $100, 000 November 01, 2014 November 01, 2014 PREMIUM FOR THE POLICY PERIOD: $9,243,00 $3, 081.00 TYPE OF CLAIM DEFENSE: Reimbursement ® Duty -to -Defend Policy Premium for each Settlement Program Notice, which amount is included within, and not in addition to, any applicable limit of liability which amount is included within, and not in addition to, any applicable limit of liability which amount is included within, and not in addition to, any applicable limit of liability ® Not Applicable for all Claims for each Claim under Insuring Agreement A Annual Installment Premium Only the type of coverage marked "®" is included in this Policy. EXTENDED REPORTING PERIOD:. Additional Premium Percentage: 75 % Additional Months: 12 DBP-15001 Ed. 11-12 Page 2 of 3 02012 The Travelers Indemnity Company. All Rights Reserved (If exercised in accordance with section V. CONDITIONS, M. EXTENDED REPORTING PERIOD, of the Designated Benefit Plan Fiduciary Liability Coverage) ITEM 9 RUN-OFF EXTENDED REPORTING PERIOD; Additional Premium Percentage: Not Applicable Additional Months: Not Applicable (If exercised in accordance with section V. CONDITIONS, K. CHANGE OF CONTROL, of the Designated Benefit Plan Fiduciary Liability Coverage) ITEM 10 ANNUAL REINSTATEMENT OF THE LIMIT OF LIABILITY: ® Applicable Not Applicable Only those coverage features marked "® Applicable' are included in this Policy. ITEM 11 FORMS AND ENDORSEMENTS ATTACHED AT ISSUANCE: DBP-16001-1112; DBP-17009-1112, DBP-17055-1112; DBP-19001-1112, DBP-19002-1112; DBP-19003-1112; DBP-19071-1112 THE DECLARATIONS, THE APPLICATION, THE DESIGNATED BENEFIT PLAN FIDUCIARY LIABILITY COVERAGE, AND ANY ENDORSEMENTS ATTACHED THERETO, CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE COMPANY AND THE INSURED. Countersigned By IN WITNESS WHEREOF, the Company has caused this Policy to be signed by its authorized officers. President, Bond & Financial Products DBP-15001 Ed. 11-12 ©2012 The Travelers Indemnity Company. All Rights Reserved Corporate Secretary Page 3 of 3 Sebastian Insurance LLC 1013 OS Highway 1 Invoice Sebastian, FL 32958 Date: Invoice No: Customer ID: Sebastian Police Officers' Retirement Trust Fund Amount Due: c/o 1225 Main Street Attn: Ken Killgore Sebastian, FL 32958 Customer ID SE011004111745 Due Date Producer 12/04/2015 Bill Kriener December 04,2015 5105 SE011004111745 $3,121.05 Description Effective /Expiration Policy Number Renewal 11/01/2014 11/01/2017 106195885 Amount Travelers Co Policy $3,081.00 Travelers Commercial Renewal- Surcharge (Cat & All FL Hurr 11/01/2014 11/01/2017 106195885 WraPAround Policy $40.05 Your payment is due at least five business days prior to the effective date Total to prevent a lapse in coverage. $3,121.05, Amount Paid $0.00 Amount Due $3 121,05' a Sebasdan Insurance LLC 1013 US Highway 1 Sebastian, FL 32958 Phone: (772) 589-1110 Fax: (772) 589-0731 Email: William@SebastianInsurance.com City of Sebastian Kenneth Kilgore 1225 Main Street Sebastian, FL 32958 kki Ilaore0CitvofSebastian.orq Fee Advice for Period Detail of Calculation: Flat Fee Sr SALEM TRUST G O M P A N Y July 1, 2015 October 8, 2015 A/C #3040031435 Sebastian Police to September 30, 2015 Annual Fee Quarterly Fee $5,000.00 $1,250.00 $5.00 Security Transactions Current Period Year To Date 9/30/2015 37 37 $5.00 12/31/2015 3/31/2016 6130/2016 (300 included in annual fee) $ Total $1,250.00 Total Amount Due $1,250.00 These fees will automatically be charged to your account. If you have any questions, please contact Karen Russo at (954) 426-5770 DEERFIELD BEACH TAMPA 455 FAIRWAY DRIVE, SUITE 103, DEERFIELD BEACH, FL 33441 TEL (877) 382-5268 FAX (954) 725-4493 wuw.salemtrustxom Sebastian Police Pension Unbundled versus All-inclusive Services Fee Comparison June 16, 2015 -Fees & Estimated Commissions ICC - Large Value 17.50% 2,100,000 0.550% 11,550 0.125% 2,625 0.675% 14,175 Wedgewood - Large Growth 17,50% 2,100,000 0.750% 15,750 0.125% 2,625 0.875% 18,375 Kennedy - Mid Value 2.50% 300,000 0.750% 2,250 0.200% 600 1.175% 2,850 Congress - Mid Growth 2.50% 300,000 0.800% 2,400 0.200% 600 1.175% 3,000 Kayne Anderson - Small Value 2.50% 300,000 0.750% 2,250 0.200% 600 1.175% 2,850 Apex - Small Growth 2.50% 300,000 1.000% 3,000 0.200% 600 1.175% 3,600 Lazard - International Value 5.00% 600,000 0.750% 4,500 0.200% 1,200 0.950% 5,700 Harding Loevner- International Growth 5.00% 600,000 0.800% 4,800 0.200% 1,200 1.000% 6,000 Lazard - Emerging Markets 5.00% 600,000 0.750% 4,500 0.200% 1,200 0.950% 5,700 Sage - Intermediate Fixed Income 40.00% 4.800.000 0.300% 14,400 0.075% 3.600 0.375% 18.000 Total Traditional Assets 100.00% 12,000,000 0.545% 65,400 0.124% 14,850 0.669% 80,250 Custodian Fees 0.042% 5,000 Consultant Fees ($13,500 annual hard dollar) 0.113% 13,500 Total Fee Based on $12 million in Traditional Assets 0.823% 98,750 All -Inclusive Fee Program (Based on assets of $12 million) 0.813% 97,560 Approximate Savings of All-inclusive vs. Unbundled Services Fee Program -0.010% (1,190) Additional Considerations - Flexibility to change money managers at low costs (no transaction fees) - All custody charges included (wiring fees, ACH transfer fees, checks, retiree 1099R reporting) - Additional attorney expenses in negotiating separate contracts with each manager - Lower investment manager asset minimums apply to bundled services program Pr000sed Manaaers' Institutional Asset Minimums /Per Informs PSN Database) ICC - Large Value N/A Wedgewood - Large Growth 1,000,000 Kennedy - Mid Value 5,000,000 Congress - Mid Growth 500,000 Kayne Anderson - Small Value 5,000,000 Apex - Small Growth 1,000,000 Lazard - International Value 5,000,000 Harding Loevner - International Growth 2,500,000 Lazard - Emerging Markets 5,000,000 Sage - Intermediate Fixed Income 3,000,000 The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, the accuracy cannot be guaranteed. CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM ACTUARIAL VALUATION AS OF OCTOBER 1, 2015 CONTRIBUTIONS APPLICABLE TO THE PLAN/FISCAL YEAR ENDING SEPTEMBER 30, 2017 Section I H V VI TABLE OF CONTENTS Title Introduction a. Summary of Report b. Changes Since Prior Valuation c. Comparative Summary of Principal Valuation Results Valuation Information a. Reconciliation of Unfunded Actuarial Accrued Liabilities b. Actuarial Assumptions and Methods c. Valuation Notes d. Partial History of Premium Tax Refunds e. Excess State Monies Reserve Trust Fund Member Statistics a. Statistical Data b. Age and Service Distribution c. Member Reconciliation Summary of Plan Provisions Governmental Accounting Standards Board Disclosure Information Page 5 7 8 13 14 16 17 18 19 22 23 24 25 27 !, FOSTER & FOSTER Ali 0AHitS AIIJU i UNi ) JLIAN i January 4, 2016 Mr. Ken Killgore, Administrative Services Director 1225 Main St. Sebastian, FL 32958 Re: City of Sebastian Police Officers' Retirement System Dear Ken: We are pleased to present to the Board this report of the actuarial valuation of the City of Sebastian Police Officers' Retirement System. The valuation was performed to determine whether the assets and contributions are sufficient to provide the prescribed benefits and to develop the appropriate funding requirements for the applicable plan year. Please note that this valuation may not be applicable for any other purposes. The valuation has been conducted in accordance with generally accepted actuarial principles and practices, including the applicable Actuarial Standards of Practice as issued by the Actuarial Standards Board, and reflects laws and regulations issued to date pursuant to the provisions of Chapters 112, and 185, Florida Statutes, as well as applicable federal laws and regulations. In our opinion, the assumptions used in this valuation, as adopted by the Board of Trustees, represent reasonable expectations of anticipated plan experience. Future actuarial measurements may differ significantly from the current measurements presented in this report for a variety of reasons including: changes in applicable laws, changes in plan provisions, changes in assumptions, or plan experience differing from expectations. In conducting the valuation, we have relied on personnel, plan design, and asset information supplied by the City and the Board of Trustees, financial reports prepared by the Plan's Custodian Bank, and the actuarial assumptions and methods described in the Actuarial Assumptions section of this report. While we cannot verify the accuracy of all this information, the supplied information was reviewed for consistency and reasonableness. As a result of this review, we have no reason to doubt the substantial accuracy of the information and believe that it has produced appropriate results. This information, along with any adjustments or modifications, is summarized in various sections of this report. 13420 Parker Commons Blvd., Suite 104 Fort Myers, FL 33912 • (239) 433-5500 • Fax (239) 481-0634 • www.foster-foster.com The undersigned is familiar with the immediate and long-term aspects of pension valuations, and meets the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions contained herein. All of the sections of this report are considered an integral part of the actuarial opinions. To our knowledge, no associate of Foster & Foster, Inc. working on valuations of the program has any direct financial interest or indirect material interest in the City of Sebastian, nor does anyone at Foster & Foster, Inc. act as a member of the Board of Trustees of the City of Sebastian Police Officers' Retirement System. Thus, there is no relationship existing that might affect our capacity to prepare and certify this actuarial report. If there are any questions, concerns, or comments about any of the items contained in this report, please contact me at 239-433-5500. Respectfully submitted, Foster & Foster, Inc. r By. Douglas . L n, EA, MAAA Enrolled Actuary #14-7778 DHL/lke Enclosures City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 14 SUMMARY OF REPORT The regular actuarial valuation of the City of Sebastian Police Officers' Retirement System, performed as of October 1, 2015, has been completed and the results are presented in this Report. The contributions developed in the valuation apply to the City's plan/fiscal year ended September 30, 2017. The funding requirements, compared with amounts developed in the February 19, 2015 Actuarial Impact Statement (determined as of October 1, 2014), are as follows: Valuation Date 10/1/2015 10/1/2014 Applicable Plan/Fiscal Yr. End 9/30/2017 9/30/2016 Total Required Contribution % of Total Annual Payroll 34.0% 24.4% Member Contributions (Est.) % of Total Annual Payroll 1 7.3% 7.3% City and State Required Contribution % of Total Annual Payroll 26.7% 17.1% State Contribution 2 123,482 123,482 % of Total Annual Payroll 5.6% 5.6% Balance from City 2 % of Total Annual Payroll 21.1 % 11.5 % 1 Reflects two-tier member contribution system as follows: Members hired before October 1, 2011: 8.0 % of Salary. Members hired after September 30, 2011: 5.0% of Salary. As new hires replace current members, the member contribution rate will eventually decrease to 5.0%. Updated rates will be reflected in future valuation reports. 2 The City may use up to $123,482 in State Contributions for determining its minimum funding requirements. For budgeting purposes, the required Sponsor Contribution (City and State) is 17.1% of Pensionable Earnings for the fiscal year ending September 30, 2016, and 26.7% of Pensionable Earnings for the fiscal year ending September 30, 2017. The precise City requirement for each year is the applicable City and State Contribution rate, less actual State Contributions (up to the maximum $123,482). Please also note the City has a prepaid contribution of $8,429.25 that is available to offset a portion of the above stated requirements for Fiscal 2016. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 15 Actuarial experience since the last valuation has been less favorable than expected, relative to the Plan's actuarial assumptions. The primary sources of unfavorable experience included a -0.45% investment return (Market Value basis) that fell significantly short of the 7.75% assumption and no employee turnover. There were no significant sources of actuarial gain. The balance of this Report presents additional details of the actuarial valuation and the general operation of the Fund. The undersigned would be pleased to meet with the Board of Trustees in order to discuss the Report and answer any pending questions concerning its contents. Respectfully submitted, FOSTER & FOSTER, INC. r By: Douglas . Lozen, EA; MAAA B: Y Dre D. Ballard, EA, MAAA City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 16 CHANGES SINCE PRIOR VALUATION Plan Chances As outlined in our Actuarial Impact Statement dated February 19, 2015, a limitation on overtime and lump sum payments of unused sick and annual leave time for inclusion in pensionable earnings has been implemented as follows: • For Credited Service after July 1, 2011, annual overtime shall not exceed 300 hours. Additionally, payment for unused sick and annual leave time shall not be considered pensionable for hours accrued after July 1, 2011. • Payment for overtime and unused sick and annual leave time at the time of termination shall not exceed the amounts in place on July 1, 2011. Actuarial Assumption/Method Changes In conjunction with this valuation, the investment return assumption has been lowered from 7.75% to 7.30% per year compounded annually, net of investment related expenses. Additionally, for purposes of the plan changes stated above, the load for projected final salary at retirement has been amended as follows: Service at 10/1/2014 5 or more years More than 2, less than 5 years Less than 2 years Previous Salary Load 20.0% 20.0% 20.0% Current Salary Load 20.0% 10.0% 0.0% City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 17 COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS New Assump Old Assump 10/1/2015 10/1/2015 10/ 1 /2014 A. Participant Data Number Included Actives 34 34 35 Service Retirees 9 9 8 Beneficiaries 1 1 1 Disability Retirees 2 2 2 Terminated Vested 6 6 6 Total 52 52 52 Total Annual Payroll $2,221,517 $2,221,517 $2,196,343 Payroll Under Assumed Ret. Age 2,221,517 2,221,517 2,196,343 Annual Rate of Payments to: Service Retirees 462,272 462,272 427,945 Beneficiaries 7,211 7,211 7,211 Disability Retirees 24,283 24,283 24,283 Terminated Vested 137,836 137,836 137,836 B. Assets Actuarial Value 11,284,026 11,284,026 11,253,240 Market Value 11,284,026 11,284,026 11,253,240 C. Liabilities Present Value of Benefits Actives Retirement Benefits 10,745,716 9,916,184 9,407,714 Disability Benefits 463,267 433,699 430,872 Death Benefits 70,947 66,463 66,361 Vested Benefits 143,002 131,217 131,589 Refund of Contributions 53,508 52,919 59,122 Service Retirees 4,897,109 4,724,967 4,446,914 Beneficiaries 30,477 30,184 35,584 Disability Retirees 180,936 176,504 184,449 Terminated Vested 1,114,113 1,048,880 990,626 Excess State Monies Reserve 84,863 84,863 62,645 Total 17,783,938 16,665,880 15,815,876 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 18 C. Liabilities - (Continued) Present Value of Future Salaries Present Value of Future Member Contributions Total Normal Cost Present Value of Future Normal Costs (EAN) Total Actuarial Accrued Liability Unfunded Actuarial Accrued Liability (UAAL) Funded Ratio (AVA / AL) D. Actuarial Present Value of Accrued Benefits Vested Accrued Benefits Inactives Actives Member Contributions Total Non -vested Accrued Benefits Total Present Value Accrued Benefits Funded Ratio (MVA / PVAB) Increase (Decrease) in Present Value of Accrued Benefits Attributable to: Plan Amendments Assumption Changes New Accrued Benefits Benefits Paid Interest Other Total New Assump Old Assump 10/1/2015 10/1/2015 19,396,152 18,933,202 1,420,038 1,386,144 587,258 553,031 3,656,418 3,242,336 12,656,566 11,952,590 1,372,540 668,564 89.2% 94.4% 6,222,635 5,980,535 3,379,556 3,112,651 1,071,768 1,071,768 10,673,959 10,164,954 839,545 769,099 11,513,504 10,934,053 98.0% 103.2% 0 0 579,451 0 0 481,617 0 (496,363) 0 769,650 0 0 579,451 754,904 10/1/2014 19,418,599 1,430,914 432,395 3,346,876 11,992,931 739,691 93.8% 5,657,573 2,894,342 963,020 9,514,935 664,214 10,179,149 110.6% City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 19 New Assump Old Assump Valuation Date 10/1/2015 10/1/2015 Applicable to Fiscal Year Ending 9/30/2017 9/30/2017 E. Pension Cost Normal Cost (with interest) % of Total Annual Payroll 1 27.4 25.9 Administrative Expenses (with interest) % of Total Annual Payroll 1 1.9 1.9 Payment Required to Amortize Unfunded Actuarial Accrued Liability over 29 years (as of 10/1/2015, with interest) % of Total Annual Payroll 1 4.7 2.5 Total Required Contribution % of Total Annual Payroll 1 34.0 30.3 Expected Member Contributions % of Total Annual Payroll 1 7.3 7.3 Expected City & State Contribution % of Total Annual Payroll 1 26.7 23.0 F. Past Contributions Plan Years Ending: 9/30/2015 Total Required Contribution 596,502 City and State Requirement 435,232 Actual Contributions Made: Members (excluding buyback) 161,270 City 311,750 State 123,482 2 Total 596,502 G. Net Actuarial (Gain)/Loss N/A 1 Contributions developed as of 10/1/2015 are expressed as a percentage of total annual payroll at 10/1/2015 of $2,221,517. 2 Reflects traditional interpretation of Chapter 99-1, Florida Statutes. 10/1/2014 9/30/2016 20.4 1.3 2.7 24.4 7.3 17.1 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 110 H. Schedule Illustrating the Amortization of the Total Unfunded Actuarial Accrued Liability as of: Projected Unfunded Year Accrued Liabilitv 2015 1,372,540 2016 1,363,951 2017 1,351,474 2024 1,118,917 2031 486,575 2037 52,258 2044 0 I. (i) 3 Year Comparison of Actual and Assumed Salary Increases Actual Assumed Year Ended 9/30/2015 4.75% 6.65% Year Ended 9/30/2014 7.03 % 6.91 % Year Ended 9/30/2013 1.68% 6.00% (ii) 3 Year Comparison of Investment Return on Actuarial Value Actual Assumed Year Ended 9/30/2015 -0.45% 7.75% Year Ended 9/30/2014 9.42% 7.75% Year Ended 9/30/2013 11.51 % 8.00% (iii) Average Annual Payroll Growth (a) Payroll as of: 10/1/2015 $2,221,517 10/1/2005 1,552,764 (b) Total Increase 43.07% (c) Number of Years 10.00 (d) Average Annual Rate 3.65% City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 111 STATEMENT BY ENROLLED ACTUARY This actuarial valuation 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, and in my opinion, the techniques and assumptions used are reasonable and meet the requirements and intent of Part VII, Chapter 112, Florida Statutes. 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. Douglas . Loz EA, MAAA Enrolled Actuary #14-7778 Please let us know when the report is approved by the Board and unless otherwise directed we will provide copies of the report to the following offices to comply with Chapter 112 Florida Statutes: Mr. Keith Brinkman Bureau of Local Retirement Systems Post Office Box 9000 Tallahassee, FL 32315-9000 Ms. Sarah Carr Municipal Police and Fire Pension Trust Funds Division of Retirement Post Office Box 3010 Tallahassee, FL 32315-3010 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 112 RECONCILIATION OF UNFUNDED ACTUARIAL ACCRUED LIABILITIES (1) Unfunded Actuarial Accrued Liability as of October 1, 2014 $739,691 (2) Sponsor Normal Cost developed as of October 1, 2014 269,866 (3) Expected administrative expenses for the year ended September 30, 2015 27,814 (4) Expected interest on (1), (2) and (3) 79,318 (5) Sponsor contributions to the System during the year ended September 30, 2015 435,232 (6) Expected interest on (5) 12,893 (7) Unfunded Actuarial Accrued Liability as of September 30, 2015 (1)+(2)+(3)+(4)-(5)-(6) 668,564 (8) Change to UAAL due to Assumption Change 703,976 (9) Unfunded Accrued Liability as of October 1, 2015 1,372,540 Type of Date Years 10/1/2015 Amortization Base Established Remaining Amount Amount method and benefit 10/1/2002 17 $544,335 $43,535 assumption change 10/1/2010 25 151,460 9,479 benefit change 10/l/2010 25 7,672 480 assumption changes 10/1/2013 18 (30,895) (2,376) benefit change 10/1/2014 29 (4,008) (231) assumption change 10/1/2015 20 703,976 50,496 1,372,540 101,383 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 113 Mortalitv Interest Rate Retirement Me Early Retirement Disabilitv Rate Termination Rate ACTUARIAL ASSUMPTIONS AND METHODS RP-2000 Table with no projection — Disabled lives set forward 5 years. We feel this assumption sufficiently accommodates expected mortality improvements. 7.30% per year compounded annually, net of investment related expenses. This is supported by the target asset allocation of the trust and the expected long-term return by asset class. Further, it falls below the national average utilized for public pension programs. Earlier of: 1) age 55 and 10 years of credited service, or 2) age 52 and 25 years of credited service, regardless of age. Also, any member who has reached Normal Retirement is assumed to continue employment for one additional year. We feel this assumption is reasonable based upon plan provisions. Commencing at the assumed Early Retirement Age (50), members are assumed to retire with an immediate subsidized benefit at the rate of 5% per year. We feel this assumption is reasonable based upon plan provisions. Age -based rates with increasing probability of disablement at higher ages. A sample of rates are shown below: Age Assumption 30 0.12% 40 0.21 50 0.54% 60 2.70% Additionally, it is assumed that 75% of disablements and active Member deaths are service related. This assumption was approved in conjunction with an actuarial experience study dated September 16, 2013. Credited Service Assumption First 2 Years 14.0% Years 3-9 5.7% Years 10-14 2.8% 15 Years and Greater 0% This assumption was approved in conjunction with an actuarial experience study dated September 16, 2013. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 114 Salary Increases Final Salary Load Credited Service Assumption First Year 16.0% Years 2-14 7.4% 15 Years and Greater 3.8% This assumption was approved in conjunction with an actuarial experience study dated September 16, 2013. Service on 10/1/2014 Load Assumption 5 or more years 20.0% More than 2, less than 5 years 10.0% Less than 2 years 0.0% Administrative Expenses $40,945 annually, based on prior year's actual expenses. Payroll Growth 3% for amortization of all UAAL bases. This is in compliance with Part VII of Chapter 112, Florida Statutes. Funding Method Frozen Initial Liability Cost Method. Actuarial Asset Method Market Value, net of investment -related expenses. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 115 VALUATION NOTES Total Annual Pavroll is the projected annual rate of pay for the fiscal year beginning on the valuation date of all covered Members. Present Value of Benefits is the single sum value on the valuation date of all future benefits to be paid to current Members, Retirees, Beneficiaries, Disability Retirees and Vested Terminations. Normal (Current Year's) Cost Rate is determined in the aggregate as the ratio of (a) and (b) as follows: (a) The present value of benefits for all Plan participants, less the actuarial value of assets, less the Unfunded Actuarial Accrued Liability (UAAL). (b) The present value of future compensation over the anticipated number of years of participation, determined as of the valuation date. The Normal Cost dollar requirement is the ratio of (a) and (b), multiplied by the Total Annual Payroll as of the valuation date. Frozen Initial Liabilitv Cost Method (Level Percent of Compensation) is the method used to determine required contributions under the Plan. The use of this method involves the systematic funding of the Normal Cost (described above) and the Unfunded Actuarial Accrued Liability (UAAL). The UAAL is reconciled each valuation with charges and credits as follows: (a) Charges: the Normal Cost for the prior year, in addition to interest at the valuation assumption, on the Normal Cost and prior year's UAAL balance. (b) Credits: Sponsor contributions with interest at the valuation assumption for investment return. New UAAL bases will be created only for changes in methods, assumptions, or benefits. Actuarial gains and losses are funded as part of the Normal Cost. Total Reauired Contribution is equal to the Normal Cost plus an amount sufficient to amortize the Unfunded Accrued Liability over no more than 30 years. The required amount is adjusted for interest according to the timing of sponsor contributions during the year. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 116 Received During Fiscal Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 PARTIAL HISTORY OF PREMIUM TAX REFUNDS Amount 18,464.00 28,744.00 26,385.00 32,503.00 36,089.00 39,753.00 46,790.00 112,773.00 68,646.00 82,877.00 92,713.77 106,715.77 117,621.48 117,621.48 117,621.48 122,800.00 137,781.90 134,851.83 133,477.13 139,262.54 145,960.60 147,867.54 145,700.02 Increase from Previous Year % 55.7% -8.2% 23.2% 11.0% 10.2% 17.7% 141.0% -39.1% 20.7% 11.9% 15.1% 10.2% 0.0% 0.0% 4.4% 12.2% -2.1 % -1.0% 4.3 % 4.8% 1.3% -1.5% City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 117 EXCESS STATE MONIES RESERVE 1 Actual Applicable Excess State State Contribution "Frozen" Amount Monies Reserve 2012 139,262.54 123,482.00 15,780.54 2013 145,960.60 123,482.00 22,478.60 2014 147,867.54 123,482.00 24,385.54 2015 145,700.02 123,482.00 22,218.02 Equals Current State Monies Reserve 84,862.70 ' Sebastian Police was a Chapter Plan until April 11, 2012. Accordingly, the Excess State Monies Reserve is not applicable for valuations prior to October 1, 2012. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 118 STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2015 ASSETS COST VALUE MARKET VALUE Cash and Cash Equivalents: Short Term Investments 290,969.67 290,969.67 Cash (40.16) (40.16) Total Cash and Equivalents 290,929.51 290,929.51 Receivables: Investment Income 29,985.78 29,985.78 Total Receivable 29,985.78 29,985.78 Investments: U. S. Bonds and Bills 512,045.04 511,954.18 Federal Agency Guaranteed Securities 189,043.20 197,101.76 Corporate Bonds 2,688,153.16 2,662,168.67 Municipal Obligations 149,061.65 157,347.29 Stocks 7,459,243.46 7,442,968.53 Total Investments 10,997,546.51 10,971,540.43 Total Assets 11,318,461.80 11,292,455.72 LIABILITIES Prepaid City Contribution 8,429.25 8,429.25 Total Liabilities 8,429.25 8,429.25 NET POSITION RESTRICTED FOR PENSIONS 11,310,032.55 11,284,026.47 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 119 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED SEPTEMBER 30, 2015 Market Value Basis ADDITIONS Contributions: Member City State Total Contributions Investment Income: Net Realized Gain (Loss) 546,225.86 Unrealized Gain (Loss) (766,783.88) Net Increase in Fair Value of Investments Interest & Dividends Less Investment Expense' Net Investment Income Total Additions DEDUCTIONS Distributions to Members: Benefit Payments Lump Sum PLOP Distributions Refunds of Member Contributions Total Distributions Administrative Expense Total Deductions Net Increase in Net Position NET POSITION RESTRICTED FOR PENSIONS Beginning of the Year End of the Year 161,270.30 311,749.56 145,700.02 (220,558.02) 254,688.64 (84,756.77) 468,219.12 20,880.74 7,262.70 'Investment related expenses include investment advisory, custodial and performance monitoring fees. 618,719.88 (50,626.15) 568,093.73 496,362.56 40,945.09 537,307.65 30,786.08 11,253,240.39 11,284,026.47 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 120 RECONCILIATION OF CITY'S SHORTFALL/(PREPAID) CONTRIBUTION FOR THE FISCAL YEAR ENDED (FYE) SEPTEMBER 30, 2015 (1) City and State Required Contribution Rate 20.2% (2) Pensionable Payroll Derived from Member Contributions $2,154,611.67 (3) City and State Required Contribution (1) x (2) 435,231.56 (4) Less Allowable State Contribution (123,482.00) (5) Equals Required City Contribution for Fiscal 2015 311,749.56 (6) Less 2014 Prepaid Contribution 0.00 (7) Less Actual City Contributions (320,178.81) (8) Equals City's Shortfall/(Prepaid) Contribution as of ($8,429.25) September 30, 2015 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 121 STATISTICAL DATA Actives - Hired before 4/11/2012 10/ 1 /2014 10/ 1 /2015 Number 27 26 Average Current Age 41.8 42.2 Average Age at Employment 29.2 28.8 Average Past Service 12.6 13.4 Average Annual Salary $66,859 $69,582 Actives - Hired on or after 4/11/2012 Number 8 8 Average Current Age 39.1 40.1 Average Age at Employment 37.7 37.7 Average Past Service 1.4 2.4 Average Annual Salary $48,894 $51,550 Service Retirees Number 8 9 Average Current Age 60.0 60.9 Average Annual Benefit $53,493 $51,364 Beneficiaries Number 1 1 Average Current Age 64.7 65.7 Average Annual Benefit $7,211 $7,211 Disabilitv Retirees Number 2 2 Average Current Age 66.7 67.7 Average Annual Benefit $12,142 $12,142 Terminated Vested' Number 4 4 Average Current Age 48.4 49.4 Average Annual Benefit $34,459 $34,459 1 Excludes non -vested members awaiting a refund of contributions. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 122 AGE AND SERVICE DISTRIBUTION PAST SERVICE AGE 0 1 2 3 4 5-9 10-14 15-19 20-24 25-29 30+ Total 15-19 0 0 0 0 0 0 0 0 0 0 0 0 20-24 0 0 0 0 0 0 0 0 0 0 0 0 25 - 29 0 0 1 2 0 1 0 0 0 0 0 4 30-34 0 0 0 0 0 2 1 0 0 0 0 3 35 - 39 0 1 0 1 0 2 2 0 0 0 0 6 40-44 0 0 0 0 1 3 1 4 0 0 0 9 45 - 49 0 0 0 0 0 1 2 2 1 1 0 7 50-54 0 0 1 0 0 0 0 1 0 0 1 3 55 - 59 0 2 0 0 0 0 0 0 0 0 0 2 60-64 0 0 0 0 0 0 0 0 0 0 0 0 65+ 0 0 0 0 0 0 0 0 0 0 0 0 Total 0 3 2 3 1 9 6 7 1 1 1 34 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 123 VALUATION PARTICIPANT RECONCILIATION 1. Active lives a. Number in prior valuation 10/1/2014 b. Terminations i. Vested (partial or full) with deferred benefits ii. Non -vested or full lump sum distribution received c. Deaths i. Beneficiary receiving benefits ii. No future benefits payable d. Disabled e. Retired f. Continuing participants g. New entrants h. Total active life participants in valuation 2. Non -Active lives (including beneficiaries receiving benefits) Service Retirees, Vested Receiving Receiving Death Benefits Benefits a. Number prior valuation 8 1 Retired 1 0 Vested Deferred 0 0 Death, With Survivor 0 0 Death, No Survivor 0 0 Disabled 0 0 Refund of Contributions 0 0 Rehires 0 0 Expired Annuities 0 0 Data Corrections 0 0 b. Number current valuation 9 1 1 Includes non -vested members awaiting a refund of contributions. 35 0 0 0 0 0 34 0 34 Receiving Disability Vested Benefits Deferred 1 Total 2 6 17 0 0 l 0 1 1 0 0 0 0 0 0 0 0 0 0 (1) (1) 0 0 0 0 0 0 0 0 0 2 6 18 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 124 SUMMARY OF PLAN PROVISIONS Elia_ ibility Full-time employees who are classified as full-time sworn Police Officers participate in the System as a condition of employment. Credited Service Total years and fractional parts of years of employment with the City as a Police Officer. Salary Total cash compensation reportable on Form W-2, paid during the fiscal year, for services rendered to the City as a Police Officer. For Credited Service after July 1, 2011, annual overtime shall not exceed 300 hours. Additionally, payment for unused sick and annual leave time shall not be considered pensionable for hours accrued after July 1, 2011. Also, payment for overtime and unused sick and annual leave time at the time of termination shall not exceed the amounts in place on July 1, 2011. Averalae Final Compensation Member Contributions Members hired prior to 10/l/I I Members hired after 9/30/11 Citv and State Contributions Normal Retirement Date Benefit Members hired prior to 4/11/12 Members hired after 4/10/12 Form of Benefit Average Earnings for the highest 5 years during the 10 years immediately preceding retirement or termination. 8% of Salary, effective October 1, 2012 (5% of Salary prior to that date). 5% of Salary. Remaining amount required in order to pay current costs and amortize unfunded past service cost, if any, over a period not exceeding 30 years. Earlier of: 1) age 55 and 10 years of Credited Service, or 2) age 52 and 25 years of Credited Service. 3.0% of Average Final Compensation times Credited Service. 2.0% of Average Final Compensation times Credited Service. Ten Year Certain and Life Annuity (options available). City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 125 Early Retirement Eligibility Age 50 and 10 Years of Credited Service. Benefit Accrued benefit, reduced 3% per year prior to Normal Retirement. Vesting Schedule 100% after 10 years of Credited Service. Benefit Amount Member will receive the vested portion of his (her) accrued benefit payable at the otherwise Normal Retirement Date. Disability Eligibility Service Incurred Covered from Date of Employment. Non -Service Incurred 10 years of Credited Service. Benefit Service Incurred Accrued benefit, but not less than 42% of Average Final Compensation. Non -Service Incurred Accrued benefit, but not less than 25% of Average Final Compensation. Duration Payable for life, with ten years certain, or until recovery (as determined by the Board). Death Benefits Pre -Retirement Not vested Refund of accumulated contributions. Vested: Accrued benefit payable to Beneficiary for 10 years at otherwise Normal Retirement Date. Post -Retirement Benefits payable to beneficiary in accordance with option selected at retirement. Board of Trustees a. Two City Council appointees, b. Two Members of the System, elected by the Membership, and c. Fifth Trustee elected by other 4 and appointed by City Council. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 126 Cii:I.::y/ STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2015 ASSETS MARKET VALUE Cash and Cash Equivalents: Short Term Investments 290,970 Cash (40) Total Cash and Equivalents 290,930 Receivables: Investment Income 29,986 Total Receivable 29,986 Investments: U. S. Bonds and Bills 511,954 Federal Agency Guaranteed Securities 197,101 Corporate Bonds 2,662,169 Municipal Obligations 157,347 Stocks 7,442,968 Total Investments 10,971,539 Total Assets 11,292,455 LIABILITIES Payables: Unearned Revenue 8,429 Total Liabilities 8,429 NET POSITION RESTRICTED FOR PENSIONS 11,284,026 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 127 Cii:I.::y/ STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED SEPTEMBER 30, 2015 Market Value Basis ADDITIONS Contributions: Member City State Total Contributions Investment Income: Net Increase in Fair Value of Investments Interest & Dividends Less Investment Expense' Net Investment Income Total Additions DEDUCTIONS Distributions to Members: Benefit Payments Lump Sum PLOP Distributions Refunds of Member Contributions Total Distributions Administrative Expense Total Deductions Net Increase in Net Position NET POSITION RESTRICTED FOR PENSIONS Beginning of the Year End of the Year 161,270 311,750 145,700 (220,559) 254,689 (84,757) 468,219 20,881 7,263 'Investment related expenses include investment advisory, custodial and performance monitoring fees. 618,720 (50,627) 568,093 496,363 40,945 537,308 30,785 11,253,241 11,284,026 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 128 Cii:I.::y/ NOTES TO THE FINANCIAL STATEMENTS (For the Year Ended September 30, 2015) Plan Description Plan Administration The Plan is a single -employer defined benefit pension plan administered by the Plan's Board of Trustees comprised of: a. Two City Council appointees, b. Two Members of the System, elected by the Membership, and c. Fifth Trustee elected by other 4 and appointed by City Council. Plan Membership as of October 1, 2014: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 11 Inactive Plan Members Entitled to But Not Yet Receiving Benefits b Active Plan Members 35 52 Benefits Provided The Plan provides retirement, termination, disability and death benefits. Normal Retirement: Date: Earlier of. 1) age 55 and 10 years of Credited Service, or 2) age 52 and 25 years of Credited Service. Benefit: Members hired prior to 4/11/12: 3.0% of Average Final Compensation times Credited Service. Members hired after 4/10/12: 2.0% of Average Final Compensation times Credited Service. Early Retirement: Date: Age 50 and 10 Years of Credited Service. Benefit: Accrued benefit, reduced 3% per year prior to Normal Retirement. Vesting: Schedule: 100% after 10 years of Credited Service. Benefit: Member will receive the vested portion of his (her) accrued benefit payable at the otherwise Normal Retirement Date. Disabilitv: Service Incurred: Covered from Date of Employment. Non -Service Incurred: 10 years of Credited Service. Benefit: Service Incurred: Accrued benefit, but not less than 42% of Average Final Compensation. Non -Service Incurred: Accrued benefit, but not less than 25% of Average Final Compensation. Pre -Retirement Death Benefits: Vested: Accrued benefit payable to Beneficiary for 10 years at otherwise Normal Retirement Date. Non -Vested: Refund of accumulated contributions. Contributions Member Contributions: Members hired prior to 10/01/2011: 8% of Salary, effective October 1, 2012 (5% of Salary prior to that date). Members hired after 09/30/2011: 5% of Salary. City and State Contributions: Remaining amount required in order to pay current costs and amortize unfunded past service cost, if any, over a period not exceeding 30 years. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 129 Cii:I.::y/ Investments Investment Policy: The following was the Board's adopted asset allocation policy as of September 30, 2015: Asset Class Domestic Equity International Equity Fixed Income Total Concentrations: Target Allocation 50% 10% 40% 100% The Plan did not hold investments in any one organization that represent 5 percent or more of the Pension Plan's Fiduciary Net Position. Rate of Return: For the year ended September 30, 2015, the annual money -weighted rate of return on Pension Plan investments, net of Pension Plan investment expense, was -0.45 percent. The money -weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 130 Cii:I.::y/ NET PENSION LIABILITY OF THE SPONSOR The components of the Net Pension Liability of the Sponsor on September 30, 2015 were as follows: Total Pension Liability $ 13,897,823 Plan Fiduciary Net Position $ (11,284,026) Sponsor's Net Pension Liability $ 2,613,797 Plan Fiduciary Net Position as a percentage of Total Pension Liability 81.19% Actuarial Assumptions: The Total Pension Liability was determined by an actuarial valuation as of October 1, 2014 updated to September 30, 2015 using the following actuarial assumptions: Inflation 3.00% Salary Increases 3.80% - 16.00% Discount Rate 7.30% Investment Rate of Return 7.30% Mortality Rate: RP-2000 Table with no projection. Disabled lives are set forward 5 years. Based upon other studies of municipal Police Officers, we feel this assumption sufficiently accommodates future mortality improvements. The actuarial assumptions used in the October 1, 2014 valuation were based on the results of an actuarial experience study for the period 1999-2012. The Long -Term Expected Rate of Return on Pension Plan investments was determined using a building-block method in which best - estimate ranges of expected future real rates of return (expected returns, net of Pension Plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the Long -Term Expected Rate of Return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the Pension Plan's target asset allocation as of September 30, 2015 are summarized in the following table: Long Term Expected Real Asset Class Rate of Return Domestic Equity 7.45% International Equity 7.55% Fixed Income 2.05% Discount Rate: The Discount Rate used to measure the Total Pension Liability was 7.30 percent. The projection of cash flows used to determine the Discount Rate assumed that Plan Member contributions will be made at the current contribution rate and that Sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the Member rate. Based on those assumptions, the Pension Plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the Long -Term Expected Rate of Return on Pension Plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. Current 1 % Decrease Discount Rate 1 % Increase 6.30% 7.30% 8.30% Sponsor's Net Pension Liability $ 4,347,305 $ 2,613,797 $ 1,152,074 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 131 Cii:I.::y/ SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS Last 10 Fiscal Years 09/30/2015 09/30/2014 09/30/2013 Total Pension Liability Service Cost 403,611 396,146 367,653 Interest 979,259 914,243 853,018 Change in Excess State Money 22,218 24,386 - Changes of benefit terms (4,316) - - Differences between Expected and Actual Experience (240,633) - - Changes of assumptions 686,918 - - Benefit Payments, including Refunds of Employee Contributions (496,363) (452,892) (465,435) Net Change in Total Pension Liability 1,350,694 881,883 755,236 Total Pension Liability - Beginning 12,547,129 11,665,246 10,910,010 Total Pension Liability - Ending (a) $ 13,897,823 $ 12,547,129 $ 11,665,246 Plan Fiduciary Net Position Contributions - Employer 311,750 401,103 396,603 Contributions - State 145,700 147,868 145,961 Contributions - Employee 161,270 160,494 154,683 Net Investment Income (50,627) 951,910 1,029,818 Benefit Payments, including Refunds of Employee Contributions (496,363) (452,892) (465,435) Administrative Expense (40,945) (27,814) (32,153) Net Change in Plan Fiduciary Net Position 30,785 1,180,669 1,229,477 Plan Fiduciary Net Position - Beginning 11,253,241 10,072,572 8,843,095 Plan Fiduciary Net Position - Ending (b) $ 11,284,026 $ 11,253,241 $ 10,072,572 Net Pension Liability - Ending (a) - (b) $ 2,613,797 $ 1,293,888 $ 1,592,674 Plan Fiduciary Net Position as a percentage of the Total Pension Liability 81.19% 89.69% 86.35% Covered Employee Payroll* $ 2,154,612 $ 2,106,767 $ 2,003,398 Net Pension Liability as a percentage of Covered Employee Payroll 121.31% 61.42% 79.50% Notes to Schedule: Changes of benefit terms: For the Fiscal year 2015, amounts reported as changes of benefit terms were resulted from a limitation on overtime and lump sum payments of unused sick and annual leave time for inclusion in pensionable earnings and has been implemented as follows: • For Credited Service after July 1, 2011, annual overtime shall not exceed 300 hours. Additionally, payment for unused sick and annual leave time shall not be considered pensionable for hours accrued after July 1, 2011. • Payment for overtime and unused sick and annual leave time at the time of termination shall not exceed the amounts in place on July 1, 2011. Changes of assumptions: For the Fiscal year 2015, amounts reported as changes of assumptions were resulted from lowering the investment return assumption from 7.75% to 7.30%. *For the Fiscal years 2013 and 2014, the Covered Employee Payroll figures were based on Pensionable Salary. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 132 Cii:I.::y/ Actuarially Determined Contribution Contributions in relation to the Actuarially Determined Contributions Contribution Deficiency (Excess) Covered Employee Payroll* Contributions as a percentage of Covered Employee Payroll SCHEDULE OF CONTRIBUTIONS Last 10 Fiscal Years 09/30/2015 09/30/2014 09/30/2013 435,232 524,585 506,860 435,232 524,585 520,085 $ - $ - $ (13,225) $ 2,154,612 $ 2,106,767 $ 2,003,398 20.20% 24.90% 25.96% *For the Fiscal years 2013 and 2014, the Covered Employee Payroll figures were based on Pensionable Salary. Notes to Schedule Valuation Date: 10/01/2013 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Funding Method: Frozen Initial Liability Cost Method. Amortization Method: Level Percentage of Pay, Closed. Remaining Amortization Period: 27 Years (as of 10/01/2013). Mortality: RP-2000 Table with no projection. Based on a study of over 650 public safety funds, this table reflects a 10% margin for future mortality improvements. (Disabled lives set forward 5 years). Interest Rate: 7.75% per year compounded annually, net of investment related expenses. Inflation: 3.0% per year. Retirement Age: Earlier of. 1) age 55 and 10 years of credited service, or 2) age 52 and 25 years of credited service, regardless of age. Also, any member who has reached Normal Retirement is assumed to continue employment for one additional year. Early Retirement: Commencing at the assumed Early Retirement Age (50), members are assumed to retire with an immediate subsidized benefit at the rate of 5% per year. Disability Rates: Age based rates with increasing probability of disablement at higher ages. A sample of rates are shown below: Age Assumption 30 0.12% 40 0.21% 50 0.54% 60 2.70% Additionally, it is assumed that 75% of disablements and active Member deaths are service related. Termination Rates: Credited Service Assumption First 2 Years 14.00% Years 3-9 5.70% Years 10-14 2.80% 15 Years and Greater 0.00% City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 133 Cii:I.::y/ Salary Increases: Credited Service Assumption First Year 16.00% Years 2-14 7.40% 15 Years and Greater 3.80% Final Salary Load: The projected salary at retirement is increased 20% to account for lump sum payments. Payroll Growth: 3% for amortization of all UAAL bases. Actuarial Asset Method: Market Value, net of investment -related expenses. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 134 Cii:I.::y/ SCHEDULE OF INVESTMENT RETURNS Last 10 Fiscal Years 09/30/2015 09/30/2014 09/30/2013 Annual Money -Weighted Rate of Return Net of Investment Expense -0.45% 9.42% 11.51% City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 135 C WO. OW NOTES TO THE FINANCIAL STATEMENTS (For the Year Ended September 30, 2015) General Information about the Pension Plan Plan Description The Plan is a single -employer defined benefit pension plan administered by the Plan's Board of Trustees comprised o£ a. Two City Council appointees, b. Two Members of the System, elected by the Membership, and c. Fifth Trustee elected by other 4 and appointed by City Council. Full-time employees who are classified as full-time sworn Police Officers participate in the System as a condition of employment. Plan Membership as of October 1, 2014: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 11 Inactive Plan Members Entitled to But Not Yet Receiving Benefits 6 Active Plan Members 35 52 Benefits Provided The Plan provides retirement, termination, disability and death benefits. Normal Retirement: Date: Earlier of. 1) age 55 and 10 years of Credited Service, or 2) age 52 and 25 years of Credited Service. Benefit: Members hired prior to 4/11/12: 3.0% of Average Final Compensation times Credited Service. Members hired after 4/10/12: 2.0% of Average Final Compensation times Credited Service. Earlv Retirement: Date: Age 50 and 10 Years of Credited Service. Benefit: Accrued benefit, reduced 3% per year prior to Normal Retirement. Vesting: Schedule: 100% after 10 years of Credited Service. Benefit: Member will receive the vested portion of his (her) accrued benefit payable at the otherwise Normal Retirement Date. Disabilitv: Service Incurred: Covered from Date of Employment. Non -Service Incurred: 10 years of Credited Service. Benefit: Service Incurred: Accrued benefit, but not less than 42% of Average Final Compensation. Non -Service Incurred: Accrued benefit, but not less than 25% of Average Final Compensation. Pre -Retirement Death Benefits: Vested: Accrued benefit payable to Beneficiary for 10 years at otherwise Normal Retirement Date. Non -Vested: Refund of accumulated contributions. Contributions Member Contributions: Members hired prior to 10/01/2011: 8% of Salary, effective October 1, 2012 (5% of Salary prior to that date). Members hired after 09/30/2011: 5% of Salary. Citv and State Contributions: Remaining amount required in order to pay current costs and amortize unfunded past service cost, if any, over a period not exceeding 30 years. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 136 Ci�.WO N Net Pension Liability The measurement date is September 30, 2015. The measurement period for the pension expense was October 1, 2014 to September 30, 2015. The reporting period is October 1, 2015 through September 30, 2016. The Sponsor's Net Pension Liability was measured as of September 30, 2015. The Total Pension Liability used to calculate the Net Pension Liability was determined as of that date. Actuarial Assumptions: The Total Pension Liability was determined by an actuarial valuation as of October 1, 2014 updated to September 30, 2015 using the following actuarial assumptions: Inflation 3.00% Salary Increases 3.80% - 16.00% Discount Rate 7.30% Investment Rate of Return 7.30% Mortality Rate: RP-2000 Table with no projection. Disabled lives are set forward 5 years. Based upon other studies of municipal Police Officers, we feel this assumption sufficiently accommodates future mortality improvements. The actuarial assumptions used in the October 1, 2014 valuation were based on the results of an actuarial experience study for the period 1999-2012. The Long -Term Expected Rate of Return on Pension Plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates of return (expected returns, Net of Pension Plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the Long -Term Expected Rate of Return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the Pension Plan's target asset allocation as of September 30, 2015 are summarized in the following table: Asset Class Domestic Equity International Equity Fixed Income Total Discount Rate: Target Allocation 50% 10% 40% 100% Long Term Expected Real Rate of Return 7.45% 7.55% 2.05% The Discount Rate used to measure the Total Pension Liability was 7.30 percent. The projection of cash flows used to determine the Discount Rate assumed that Plan Member contributions will be made at the current contribution rate and that Sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the Member rate. Based on those assumptions, the Pension Plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the Long -Term Expected Rate of Return on Pension Plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 137 C WO. OW CHANGES IN NET PENSION LIABILITY Balances at September 30, 2014 Changes for a Year: Service Cost Interest Change in Excess State Money Differences between Expected and Actual Experience Changes of assumptions Changes of benefit terms Contributions - Employer Contributions - State Contributions - Employee Contributions - Buy Back Net Investment Income Benefit Payments, including Refunds of Employee Contributions Administrative Expense Net Changes Balances at September 30, 2015 Sensitivity of the Net Pension Liability to changes in the Discount Rate. Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a)-(b) $ 12,547,129 $ 11,253,241 $ 1,293,888 403,611 979,259 22,218 (240,633) 686,918 (4,316) (496,363) 1,350,694 $ 13,897,823 $ 311,750 145,700 161,270 (50,627) (496,363) (40,945) 30,785 11,284,026 $ 403,611 979,259 22,218 (240,633) 686,918 (4,316) (311,750) (145,700) (161,270) 50,627 40,945 1,319,909 2,613,797 Current Discount 1 % Decrease Rate 1 % Increase 6.30% 7.30% 8.30% Sponsor's Net Pension Liability $ 4,347,305 $ 2,613,797 $ 1,152,074 Pension Plan Fiduciary Net Position. Detailed information about the pension Plan's Fiduciary Net Position is available in a separately issued Plan financial report. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 138 Ci�.MO M PENSION EXPENSE AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS For the year ended September 30, 2016, the Sponsor will recognize a Pension Expense of $475,917. On September 30, 2016, the Sponsor reported Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between Expected and Actual Experience - 206,256 Changes of assumptions 588,786 - Net difference between Projected and Actual Earnings on Pension Plan investments 643,275 - Employers contributions subsequent to the measurement date - Total $ 1,232,061 $ 206,256 The outcome of the Deferred Outflows of resources related to pensions resulting from Employer contributions subsequent to the measurement date will be recognized as a reduction of the Net Pension Liability in the year ended September 30, 2016. Other amounts reported as Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions will be recognized in Pension Expense as follows: Year ended September 30: 2017 $ 216,452 2018 $ 216,453 2019 $ 216,453 2020 $ 248,937 2021 $ 63,755 Thereafter $ 63,755 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 139 C WO. OW SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS Last 10 Fiscal Years Total Pension Liability Service Cost Interest Change in Excess State Money Changes of benefit terms Differences between Expected and Actual Experience Changes of assumptions Benefit Payments, including Refunds of Employee Contributions Net Change in Total Pension Liability Total Pension Liability - Beginning Total Pension Liability - Ending (a) Plan Fiduciary Net Position Contributions - Employer Contributions - State Contributions - Employee Net Investment Income Benefit Payments, including Refunds of Employee Contributions Administrative Expense Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) Net Pension Liability - Ending (a) - (b) Plan Fiduciary Net Position as a percentage of the Total Pension Liability Covered Employee Payroll* Net Pension Liability as a percentage of Covered Employee Payroll Notes to Schedule: 09/30/2015 403,611 979,259 22,218 (4,316) (240,633) 686,918 (496,363) 1,350,694 12,547,129 $ 13,897,823 09/30/2014 09/30/2013 396,146 367,653 914,243 853,018 24,386 - (452,892) 881,883 11,665,246 $ 12,547,129 (465,435) 755,236 10,910,010 $ 11,665,246 311,750 401,103 396,603 145,700 147,868 145,961 161,270 160,494 154,683 (50,627) 951,910 1,029,818 (496,363) (452,892) (465,435) (40,945) (27,814) (32,153) 30,785 1,180,669 1,229,477 11,253,241 10,072,572 8,843,095 $ 11,284,026 $ 11,253,241 $ 10,072,572 $ 2,613,797 $ 1,293,888 $ 1,592,674 81.19% 89.69% 86.35% $ 2,154,612 $ 2,106,767 $ 2,003,398 121.31% 61.42% 79.50% Changes of benefit terms: For the Fiscal year 2015, amounts reported as changes of benefit terms were resulted from a limitation on overtime and lump sum payments of unused sick and annual leave time for inclusion in pensionable earnings and has been implemented as follows: • For Credited Service after July 1, 2011, annual overtime shall not exceed 300 hours. Additionally, payment for unused sick and annual leave time shall not be considered pensionable for hours accrued after July 1, 2011. • Payment for overtime and unused sick and annual leave time at the time of termination shall not exceed the amounts in place on July 1, 2011. Changes of assumptions: For the Fiscal year 2015, amounts reported as changes of assumptions were resulted from lowering the investment return assumption from 7.75% to 7.30%. *For the Fiscal years 2013 and 2014, the Covered Employee Payroll figures were based on Pensionable Salary. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 140 C WO. OW SCHEDULE OF CONTRIBUTIONS Last 10 Fiscal Years 09/30/2015 09/30/2014 09/30/2013 Actuarially Determined Contribution 435,232 524,585 506,860 Contributions in relation to the Actuarially Determined Contributions 435,232 524,585 520,085 Contribution Deficiency (Excess) $ - $ - $ (13,225) Covered Employee Payroll* $ 2,154,612 $ 2,106,767 $ 2,003,398 Contributions as a percentage of Covered Employee Payroll 20.20% 24.90% 25.96% *For the Fiscal years 2013 and 2014, the Covered Employee Payroll figures were based on Pensionable Salary. Notes to Schedule Valuation Date: 10/01/2013 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Funding Method: Frozen Initial Liability Cost Method. Amortization Method: Level Percentage of Pay, Closed. Remaining Amortization Period: 27 Years (as of 10/01/2013). Mortality: RP-2000 Table with no projection. Based on a study of over 650 public safety funds, this table reflects a 10% margin for future mortality improvements. (Disabled lives set forward 5 years). Interest Rate: 7.75% per year compounded annually, net of investment related expenses. Inflation: 3.0% per year. Retirement Age: Earlier of 1) age 55 and 10 years of credited service, or 2) age 52 and 25 years of credited service, regardless of age. Also, any member who has reached Normal Retirement is assumed to continue employment for one additional year. Early Retirement: Commencing at the assumed Early Retirement Age (50), members are assumed to retire with an immediate subsidized benefit at the rate of 5% per year. Disability Rates: Age based rates with increasing probability of disablement at higher ages. A sample of rates are shown below: Age Assumption 30 0.12% 40 0.21 % 50 0.54% 60 2.70% Additionally, it is assumed that 75% of disablements and active Member deaths are service related. Termination Rates: Credited Service Assumption First 2 Years 14.00% Years 3-9 5.70% Years 10-14 2.80% 15 Years and Greater 0.00% City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 141 CiitWC IT-1 Salary Increases: Final Salary Load: Payroll Growth: Actuarial Asset Method: Credited Service Assumption First Year 16.00% Years 2-14 7.40% 15 Years and Greater 3.80% The projected salary at retirement is increased 20% to account for lump sum payments. 3% for amortization of all UAAL bases. Market Value, net of investment -related expenses. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 142 C WO. OW FINAL COMPONENTS OF PENSION EXPENSE FISCAL YEAR SEPTEMBER 30, 2015 Beginning balance Employer Contributions made after September 30, 2014 Total Pension Liability Factors: Service Cost Interest Change in Excess State Money Changes in benefit terms Differences between Expected and Actual Experience with regard to economic or demographic assumptions Current year amortization of experience difference Change in assumptions about future economic or demographic factors or other inputs Current year amortization of change in assumptions Benefit Payments Net change Plan Fiduciary Net Position: Contributions - Employer Contributions - State Contributions - Employee Net Investment Income Difference between projected and actual earnings on Pension Plan investments Current year amortization Benefit Payments Administrative Expenses Net change Ending Balance Net Pension Deferred Deferred Pension Liability Inflows Outflows Expense $ 1,592,674 $ - $ 401,103 $ - - - 311,750 - 396,146 - - 396,146 914,243 - - 914,243 24,386 - - 24,386 (452,892) - - (452,892) 881,883 - 311,750 881,883 401,103 - (401,103) - 147,868 - - (147,868) 160,494 - - (160,494) 789,489 - - (789,489) 162,421 162,421 - - - (32,484) (32,484) (452,892) - - 452,892 (27,814) - - 27,814 1,180,669 129,937 (401,103) (649,629) $ 1,293,888 $ 129,937 $ 311,750 $ 232,254 City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 143 C WO. OW PRELIMINARY COMPONENTS OF PENSION EXPENSE FISCAL YEAR SEPTEMBER 30, 2016 Net Pension Deferred Deferred Pension Liability Inflows Outflows Expense Beginning balance $ 1,293,888 $ 129,937 $ 311,750 $ - Employer Contributions made after September 30, 2015 - - TBD* - Total Pension Liability Factors: Service Cost 403,611 - - 403,611 Interest 979,259 - - 979,259 Change in Excess State Money 22,218 - - 22,218 Changes in benefit terms (4,316) - - (4,316) Differences between Expected and Actual Experience with regard to economic or demographic assumptions (240,633) 240,633 - - Current year amortization of experience difference (34,377) - (34,377) Change in assumptions about future economic or 686,918 - 686,918 - Current year amortization of change in assumptions - (98,132) 98,132 Benefit Payments (496,363) - - (496,363) Net change 1,350,694 206,256 588,786 968,164 Plan Fiduciary Net Position: Contributions - Employer 311,750 - (311,750) - Contributions - State 145,700 - - (145,700) Contributions - Employee 161,270 - - (161,270) Net Investment Income 875,281 - - (875,281) Difference between projected and actual earnings on (925,908) - 925,908 - Current year amortization - (32,485) (185,181) 152,696 Benefit Payments (496,363) - - 496,363 Administrative Expenses (40,945) - - 40,945 Net change 30,785 (32,485) 428,977 (492,247) Ending Balance $ 2,613,797 $ 303,708 TBD $ 475,917 * Employer Contributions subsequent to the measurement date made after September 30, 2015 but made on or before September 30, 2016 needs to be added. City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 144