city of kissimmee municipal firefighters' retirement plan actuarial valuation as of october 1, 2017

64 Pages·2017·2.13 MB·English

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CITY OF KISSIMMEE MUNICIPAL
FIREFIGHTERS’ RETIREMENT PLAN
ACTUARIAL VALUATION
AS OF OCTOBER 1, 2017
CONTRIBUTIONS APPLICABLE TO THE PLAN
YEAR ENDED SEPTEMBER 30, 2018, AND THE
CITY'S FISCAL YEAR ENDED SEPTEMBER 30, 2019
February 2, 2018
Board of Trustees
City of Kissimmee
Municipal Firefighters’ Retirement Plan
101 North Church Street
Kissimmee, FL 34741-5013
Re: City of Kissimmee
Municipal Firefighters’ Retirement Plan
Dear Board:
We are pleased to present to the Board this report of the annual actuarial valuation of the City of
Kissimmee Municipal Firefighters’ Retirement Plan. Included are the related results for GASB
Statements No. 67 and No. 68. The funding 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. The calculation of the liability for GASB results was
performed for the purpose of satisfying the requirements of GASB Statements No. 67 and No. 68. Use of
the results for other purposes may not be applicable and may produce significantly different results.
The valuations have 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
175, 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 valuations, we have relied on personnel, plan design, and asset information supplied by
the City of Kissimmee, financial reports prepared by the 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 · [phone] · Fax [phone] · www.foster-foster.com
The total pension liability, net pension liability, and certain sensitivity information shown in this report
are based on an actuarial valuation performed as of October 1, 2016. The total pension liability was
rolled-forward from the valuation date to the plan’s fiscal year ending September 30, 2017 using
generally accepted actuarial principles. It is our opinion that the assumptions used for this purpose are
internally consistent, reasonable, and comply with the requirements under GASB No. 67 and No. 68.

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 Kissimmee, nor does anyone at Foster &
Foster, Inc. act as a member of the Board of Trustees of the City of Kissimmee Municipal Firefighters’
Retirement Plan. 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.

By:
Douglas H. Lozen, EA, MAAA
Enrolled Actuary #17-7778

DHL/lke
Enclosures
TABLE OF CONTENTS

Section Title Page

I Introduction

a. Summary of Report 5

b. Contribution Impact of Annual Changes 7

c. Changes Since Prior Valuation 8

d. Comparative Summary of Principal Valuation Results 9

II Valuation Information

a. Reconciliation of Unfunded Actuarial Accrued Liabilities 15

b. Detailed Actuarial (Gain)/Loss Analysis 17

c. Actuarial Assumptions and Methods 18

d. Valuation Notes 21

e. Partial History of Premium Tax Refunds 22

III Trust Fund 23

IV Member Statistics

a. Statistical Data 30

b. Age and Service Distribution 31

c. Valuation Participant Reconciliation 32

V Summary of Plan Provisions 33

VI Governmental Accounting Standards Board Statements 37
Disclosure Information

City of Kissimmee Municipal Firefighters' Retirement Plan FOSTER & FOSTER | 4
SUMMARY OF REPORT

The regular annual actuarial valuation of the City of Kissimmee Municipal Firefighters’ Retirement Plan,
performed as of October 1, 2017, has been completed and the results are presented in this Report. The
results of this valuation are applicable to the Plan year ending September 30, 2018, and the City's fiscal
year ending September 30, 2019. The sponsor (City and State) contributions have been adjusted with
interest to reflect a lump sum deposit on December 31, 2018.

The contribution requirements, compared with those developed in the October 1, 2016 valuation, are as
follows:

Valuation Date 10/1/2017 10/1/2016
Applicable Plan Year End 9/30/2018 9/30/2017

Total Required Contribution
% of Total Annual Payroll 40.77% 43.98%

Member Contributions (Est.)
% of Total Annual Payroll 1.91% 1.69%

City and State Required Contribution
% of Total Annual Payroll 38.86% 42.29%

State Contribution (est.) ¹ 369,909 369,909
% of Total Annual Payroll 6.57% 6.57%

Balance from City
% of Total Annual Payroll 32.29% 35.72%

¹ Amount received in calendar 2017. Per Ordinance 2868, the City may use up to $853,025 in State
Contributions for determining its minimum funding requirements. For budgeting purposes, the required
Sponsor Contribution (City and State) is 38.86% of Pensionable Earnings for the plan year ending
September 30, 2018. The precise City requirement for the year is this amount, less actual State
Contributions (up to the maximum $853,025). Additionally, there is a $22,397.06 City shortfall for the
fiscal year ended September 30, 2017. This additional deposit is required prior to submission of the
Annual Report on March 15, 2018.

Experience since the prior valuation was less favorable than expected, relative to the Plan’s actuarial
assumptions. The primary sources of unfavorable experience included a 7.21% investment return
(Actuarial Asset Basis), falling short of the 7.95% assumption, average increases in Pensionable
City of Kissimmee Municipal Firefighters' Retirement Plan FOSTER & FOSTER | 5
Compensation that significantly exceeded the assumption, unfavorable retirement experience, and no
retiree mortality. These losses were partially offset by favorable turnover experience.
Additionally, this valuation reflects changes to the assumptions for investment return and mortality.

In spite of the net unfavorable experience, the City’s expected funding obligation decreased slightly due
to a larger expected increase in valuation payroll. The increase in payroll resulted in a decrease in the
UAAL amortization payment, when expressed as a percentage of payroll.

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 any pending questions concerning its contents.

Respectfully submitted,

FOSTER & FOSTER, Inc.

By:
Douglas H. Lozen, EA, MAAA

By:
Christine M. O’Neal, FSA, EA, MAAA

City of Kissimmee Municipal Firefighters' Retirement Plan FOSTER & FOSTER | 6
CONTRIBUTION IMPACT OF ANNUAL CHANGES
(1) Contribution Determined as of October 1, 2016 34.50%
(2) Summary of Contribution Impact by component:
Change in State Contribution Percentage 1.2%
Change in Normal Cost Rate -0.5%
Change in Administrative Expense Percentage -0.2%
Payroll Change Effect on UAAL Amortization -6.6%
Investment Return (Actuarial Asset Basis) 0.8%
Salary Increases 3.4%
Active Decrements 0.6%
Inactive Mortality 0.4%
Assumption Changes 0.4%
Change in Expected Member Contribution Rate -0.2%
Greater than Expected Decrease in UAAL -1.2%
Other -0.2%
Total Change in Contribution -2.21%
(3) Contribution Determined as of October 1, 2017 32.29%
City of Kissimmee Municipal Firefighters' Retirement Plan FOSTER & FOSTER | 7
Changes Since Prior Valuation
Plan Changes
There were no changes in benefits since the last valuation.
Actuarial Assumption/Method Changes
• The investment return assumption has been reduced from 7.95% to 7.90% (net of fees). This
assumption will be reduced annually by 5 basis points until it reaches an ultimate rate of 7.75%
with the October 1, 2020 actuarial valuation.
• Pursuant to the provisions of Chapter 2015-157, Laws of Florida, the mortality assumption
reflects a change from the rates utilized by the Florida Retirement System in the July 1, 2015
valuation to those utilized in the July 1, 2016 valuation.
City of Kissimmee Municipal Firefighters' Retirement Plan FOSTER & FOSTER | 8
COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS
New Assump Old Assump
10/1/2017 10/1/2017 10/1/2016
A.Participant Data
Actives 89 89 78
Service Retirees 53 54 48
DROP Retirees 12 12 14
Beneficiaries 4 4 4
Disability Retirees 7 7 7
Terminated Vested 24 24 21
Total 189 190 172
Total Annual Payroll $5,739,576 $5,739,576 $4,509,608
Payroll Under Assumed Ret. Age 5,628,516 5,628,516 4,328,956
Annual Rate of Payments to:
Service Retirees 2,004,258 2,802,383 1,782,812
DROP Retirees 798,125 798,125 909,605
Beneficiaries 48,789 48,789 48,789
Disability Retirees 161,148 161,148 161,148
Terminated Vested 107,339 107,339 48,460
B.Assets
Actuarial Value (AVA) ¹ 40,148,218 40,148,218 38,609,974
Market Value (MVA) ¹ 39,432,565 39,432,565 36,924,712
C.Liabilities
Present Value of Benefits
Actives
Retirement Benefits 16,394,984 15,881,992 13,696,860
Disability Benefits 1,894,745 1,845,438 1,433,928
Death Benefits 308,487 699,902 557,170
Vested Benefits 190,386 185,901 160,020
Refund of Contributions 136,117 135,386 91,316
Service Retirees 22,424,960 22,323,425 19,830,089
DROP Retirees ¹ 13,249,117 13,200,411 15,194,844
Beneficiaries 602,541 599,391 601,670
Disability Retirees 1,556,219 1,549,818 1,568,111
Terminated Vested 626,100 620,842 288,819
Share Plan Balances ¹ 614,270 614,270 554,646
Total 57,997,926 57,656,776 53,977,473
City of Kissimmee Municipal Firefighters' Retirement Plan FOSTER & FOSTER | 9
New Assump Old Assump
C. Liabilities - (Continued) 10/1/2017 10/1/2017 10/1/2016
Present Value of Future Salaries 46,993,816 46,411,624 35,291,907
Present Value of Future
Member Contributions 897,582 464,116 597,864
Normal Cost (Retirement) 680,692 653,853 518,922
Normal Cost (Disability) 138,831 136,119 106,801
Normal Cost (Death) 20,826 47,182 37,596
Normal Cost (Vesting) 16,996 16,601 13,362
Normal Cost (Refunds) 23,331 23,287 16,057
Total Normal Cost 880,676 877,042 692,738
Present Value of Future
Normal Costs 6,964,316 6,854,985 5,317,617
Accrued Liability (Retirement) 10,982,097 10,755,031 9,684,471
Accrued Liability (Disability) 741,388 730,087 587,638
Accrued Liability (Death) 132,052 305,071 251,818
Accrued Liability (Vesting) 86,955 85,557 86,716
Accrued Liability (Refunds) 17,911 17,888 11,034
Accrued Liability (Inactives) ¹ 38,458,937 38,293,887 37,483,533
Share Plan Balances ¹ 614,270 614,270 554,646
Total Actuarial Accrued Liability (EAN AL) 51,033,610 50,801,791 48,659,856
Unfunded Actuarial Accrued
Liability (UAAL) 10,885,392 10,653,573 10,049,882
Funded Ratio (AVA / EAN AL) 78.7% 79.0% 79.3%
City of Kissimmee Municipal Firefighters' Retirement Plan FOSTER & FOSTER | 10