GRS- Supplemental AV 10-2017 300OT4Gise R CoRetirem
nsultientng
July 19, 2018
P: 954.527.1616 I F: 954.525.0083 I www.grsconsulting.com
Board of Trustees, City of Okeechobee Firefighters Retirement System
c/o Mr. Scott Baur
The Resource Centers, LLC
4360 Northlake Blvd., Suite 206
Palm Beach Gardens, FL 33410
Re: City of Okeechobee Firefighters' Retirement System
Supplemental Actuarial Valuation as of October 1, 2017
Dear Scott:
As requested, we have prepared the enclosed Supplemental Actuarial Valuation Report (SAVR) to measure
the cost of including up to 300 hours of annual overtime in pensionable earnings on a prospective
basis. For purposes of this Report, we used pensionable earnings including overtime for fiscal year ending
September 30, 2017 provided by the Plan Administrator to estimate future pensionable earnings.
If a decision is made to amend the ordinance to reflect this change, an Actuarial Impact Statement will need
to be prepared and sent to the Division of Retirement prior to second reading of the ordinance.
Summary of Findings
The proposed change would affect the cost of the Retirement System as follows:
Assuming the total amount of State Revenue is the same as the $50,589 amount for fiscal year ending
2017, the Required City Contribution for the first year (i.e., fiscal year ending September 30, 2019)
would increase from $88,554 (17.72% of covered payroll) to $135,053 (23.24% of payroll).
r The Actuarial Accrued Liability (based on the Entry Age Normal funding method) would increase by
$241,305.
The funded ratio (Actuarial Value of Assets divided by Actuarial Accrued Liability) would decrease by
6.58% (from 106.12% to 99.54%).
Other Cost Considerations
The increase in the Required City Contribution is for the first year only, and assumes all of the actuarial
assumptions are met. Future increases in the Required City Contribution may be higher if there are
changes in assumptions, methods, or demographics.
The figures above are based on the assumption that the total amount of State Revenue for fiscal year
ending September 30, 2019 remains the same as the $50,589 amount received for fiscal year ending
September 30, 2017. If the actual State Revenue falls below this amount, the City may need to increase
its contribution by the difference.
The City has a $30,216 prepaid contribution as of October 1, 2017 which can be used to offset the
required contribution for fiscal year ending September 30, 2018 and/or fiscal year ending September
30, 2019.
One East Broward Blvd. I Suite 505 I Ft. Lauderdale, FL 33301
Board of Trustees, City of Okeechobee Firefighters' Retirement System
July 19, 2018
Page 2
Actuarial Disclosures
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.
This report is intended to describe the financial effect of the proposed plan change. No statement in this
report is intended to be interpreted as a recommendation in favor of the change, or in opposition to the
change. This report should not be relied on for any purpose other than the purpose described above.
Determinations of financial results associated with benefits described in this report for purposes other than
described herein may be significantly different. GRS is not responsible for unauthorized use of this report.
The calculations in this report are based on census data and financial information furnished by the Plan
Administrator for the October 1, 2017 Actuarial Valuation. We reviewed this information for year-to-year
consistency, but did not audit the data.
The date of the valuation was October 1, 2017. This means that the results of this supplemental valuation
indicate what the October 1, 2017 valuation would have shown if the proposed benefit change had been in
effect on that date. Supplemental valuations do not predict the result of future actuarial valuations. Rather,
supplemental valuations give an indication of the cost of the benefit change only without comment on the
complete end result of future valuations.
If you have reason to believe that the assumptions that were used are unreasonable, that the plan
provisions are incorrectly described, that important plan provisions relevant to this proposal are not
described, or that conditions have changed since the calculations were made, you should contact the
author of this report prior to relying on information in this report.
Melissa Moskovitz and Nicolas Lahaye 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 undersigned 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 Plan as of the valuation date. All calculations have been made in
conformity with generally accepted actuarial principles and practices, the Actuarial Standards of Practice
issued by the Actuarial Standards Board, and with applicable statutes.
This supplemental actuarial valuation and/or cost determination was prepared and completed by us or
under our direct supervision, and we acknowledge responsibility for the results. To the best of our
knowledge, the results are complete and accurate. In our opinion, the techniques and assumptions used
are reasonable, meet the requirements and intent of Part VII, Chapter 112, Florida Statutes, and are based
on generally accepted actuarial principles and practices. There is no benefit or expense to be provided by
116.•R C Retirement
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Board of Trustees, City of Okeechobee Firefighters' Retirement System
July 19, 2018
Page 3
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.
If there are any questions, or if we can be of further assistance, please contact us.
Respectfully submitted,
Gabriel, Roeder, Smith & Company
440 bil/10_ �. 1110V(61 Lrit
Melissa R. Moskovitz, EA, MAAA b Nicolas Lahaye, FSA, EA, MAAA
Consultant & Actuary Consultant & Actuary
WAtikko
CieRetirement
Consulting
City of Okeechobee Firefighters' Retirement System
Supplemental Actuarial Valuation — October 1, 2017
Description of Amendments
Currently, the Plan does not include overtime in pensionable wages. The proposed Plan change would
allow up to 300 hours of annual overtime to be included in pensionable wages on a prospective basis. For
purposes of this Report, we used pensionable earnings including overtime for fiscal year ending September
30, 2017 provided by the Plan Administrator to estimate future pensionable earnings.
Funding Implications of Amendments
An actuarial cost estimate is attached.
Assuming the total amount of State Revenue is the same as the $50,589 amount for fiscal year ending
2017, the Required City Contribution for the first year (i.e., fiscal year ending September 30, 2019)
would increase from $88,554 (17.72% of covered payroll) to $135,053 (23.24% of payroll).
The Actuarial Accrued Liability (based on the Entry Age Normal funding method) would increase by
$241,305.
The funded ratio (Actuarial Value of Assets divided by Actuarial Accrued Liability) would decrease by
6.58% (from 106.12% to 99.54%).
Other Cost Considerations
The increase in the Required City Contribution is for the first year only, and assumes all of the actuarial
assumptions are met. Future increases in the Required City Contribution may be higher if there are
changes in assumptions, methods, or demographics.
The figures above are based on the assumption that the total amount of State Revenue for fiscal year
ending September 30, 2019 remains the same as the $50,589 amount received for fiscal year ending
September 30, 2017. If the actual State Revenue falls below this amount, the City may need to increase
its contribution by the difference.
The City has a $30,216 prepaid contribution as of October 1, 2017 which can be used to offset the
required contribution for fiscal year ending September 30, 2018 and/or fiscal year ending September
30, 2019.
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City of Okeechobee Firefighters' Retirement System 4
Supplemental Actuarial Valuation as of October 1, 2017
Plan
SUPPLEMENTAL ACTUARIAL VALUATION REPORT
City of Okeechobee Firefighters' Retirement System
Valuation Date
October 1, 2017
Date of Report
July 19, 2018
Report Requested by
Board of Trustees
Prepared by
Melissa R. Moskovitz, EA, MAAA, Consultant & Actuary
Group Valued
All active and inactive members.
Plan Provisions Affected
Pensionable Earnings
Benefit Provision Before Amendment: The Plan does not include overtime in pensionable earnings.
Benefit Provision After Amendment: Pensionable earnings include up to 300 hours of annual
overtime on a prospective basis. For purposes of this Report, we used pensionable earnings
including overtime for fiscal year ending September 30, 2017 provided by the Plan Administrator to
estimate future pensionable earnings.
Actuarial Assumptions and Methods
Assumptions and methods are the same as the most recent Actuarial Valuation Report as of
October 1, 2017, dated March 22, 2018.
Some of the key assumptions/methods from the most recent Actuarial Valuation are:
Investment Return — 7.0% per year
Salary increase — 7.0% per year
Cost Method — Aggregate
Amortization Period for Any Change in Actuarial Accrued Liability
N/A
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City of Okeechobee Firefighters' Retirement System 5
Supplemental Actuarial Valuation as of October 1, 2017
Summary of Data Used in Report
See attached pages; same as data used for the October 1, 2017 Actuarial Valuation Report, except
that up to 300 hours of overtime is included in pensionable earnings for fiscal year ending
September 30, 2017.
Actuarial Impact of Proposal(s)
See attached pages.
Special Risks Involved With the Proposal That the Plan Has Not Been Exposed to Previously
None
Other Cost Considerations
✓ The increase in the Required City Contribution is for the first year only, and assumes all of the actuarial
assumptions are met. Future increases in the Required City Contribution may be higher if there are
changes in assumptions, methods, or demographics.
✓ The figures above are based on the assumption that the total amount of State Revenue for fiscal year
ending September 30, 2019 remains the same as the $50,589 amount received for fiscal year ending
September 30, 2017. If the actual State Revenue falls below this amount, the City may need to increase
its contribution by the difference.
✓ The City has a $30,216 prepaid contribution as of October 1, 2017 which can be used to offset the
required contribution for fiscal year ending September 30, 2018 and/or fiscal year ending September
30, 2019.
CooR S Retinsultingrumant
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City of Okeechobee Firefighters' Retirement System 6
Supplemental Actuarial Valuation as of October 1, 2017
COMPARATIVE SUMMARY OF VALUATION RESULTS AS OF OCTOBER 1, 2017
After Proposed
Valuation Change
Covered Group Change
A. Number of Participants
Active Members
11
11
0
Retirees, Disabilities, Beneficiaries
and Vested Terminations
6
6
0
Total Covered Annual Payroll
$ 581,230
$ 499,626
$ 81,604
Long Range Cost
B. Actuarial Present Value (APV) of
Projected Benefits
$ 5,512,181
$ 5,043,514
$ 468,667
C. Valuation Assets
3,874,118
3,874,118
0
D. APV of Prospective Contributions: (8) - (C)
1,638,063
1,169,396
468,667
Current Cost
E. Total Normal Cost (for current year)
For Benefits
159,344
113,750
45,594
For Administrative Expense
34,933
34,933
0
Total Normal Cost
194,277
148,683
45,594
Increase with Salary Scale
11,154
7,963
3,191
Increase with Interest
2,445
2,445
0
Total
207,876
159,091
48,785
F. Fiscal Year End to which Contributions Apply
2019
2019
G. Total Required Contributions if paid
quarterly during the fiscal year in (F)
216,738
165,873
50,865
As % of Payroll
37.29%
33.20%
4.09%
H. Expected Member Contributions in fiscal year (F)
31,096
26,730
4,366
As % of Payroll
5.35%
5.35%
0.00%
I. Total Required City and State Contributions
if paid quarterly during the fiscal year in (F)
185,642
139,143
46,499
As % of Payroll
31.94%
27.85%
4.09%
J. Expected State Premium Tax Refund'
50,589
50,589
0
As % of Payroll
8.70%
10.13%
(1.43)%
K. Remaining Required from City
135,053
88,554
46,499
As % of Payroll
23.24%
17.72%
5.52%
'Reflects actual State money received In August 2017 and October 2017 as an estimate of the amount
which will be received for fiscal year ending September 30, 2019.
40, RS Con umontg
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City of Okeechobee Firefighters' Retirement System 7
Supplemental Actuarial Valuation as of October 1, 2017
DERIVATION OF NORMAL COST
AS OF OCTOBER 1, 2017
After Proposed Valuation Change
Change
A. Actuarial Present Value (APV)
of Projected Benefits
1. Active Members
Service Retirement Benefits
Vesting Benefits
Disability Benefits
Preretirement Death Benefits
Return of Contributions
Total
2. Inactive Members
Service Retirees
Disability Retirees
Beneficiaries Receiving Benefits
Terminated Vested Members
Total
3. Grand Total
B. Valuation Assets
C. APV of Projected Normal Costs
1. APV of Projected Member Contributions
2. APV of Projected Employer Normal Costs
3. APV of Projected Normal Costs: (A) -(B)
D. APV of Projected Covered Payroll
E. Normal Cost Rate: (C3) / (D)
F. Annual Payroll of Active Members
G. Normal Cost for Benefits: (E) x (F)
H. Normal Cost for Administrative Expense
I. Total Normal Cost: (G) + (H)
$ 3,365,461 $ 2,937,292 $ 428,169
183,129 158,904 24,225
101,288 87,706 13,582
13,979 12,116 1,863
10,886 10,058 828
3,674,743 3,206,076 468,667
1,420,899 1,420,899 0
0 0 0
323,147 323,147 0
93,392 93,392 0
1,837,438 1,837,438 0
5,512,181 5,043,514 468,667
3,874,118 3,874,118 0
298,751
1,339,312
1,638,063
5,975,012
27.415%
581,230
159,344
34,933
194,277
256,816
912,580
1,169,396
5,136,315
22.767%
499,626
113,750
34,933
148,683
41,935
426,732
468,667
838,697
4.648%
81,604
45,594
0
45,594
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City of Okeechobee Firefighters' Retirement System 8
Supplemental Actuarial Valuation as of October 1, 2017
STATISTICAL DATA AS OF OCTOBER 1, 2017
After Proposed
Change
Valuation
Change
Active Partipants
Number
11
11
0
Total Annual Earnings
$ 543,206
$ 466,940
$ 76,266
Average Annual Earnings
49,382
42,449
6,933
Averages
Current Age
38.2
38.2
0
Age at Employment
27.4
27.4
0
Past Service
10.8
10.8
0
Service at Age 55
27.6
27.6
0
DROP
Number
1
1
0
Total Annual Pension
$ 50,187
50,187
0
Average Monthly Benefit
4,182
4,182
0
Average Current Age
54.2
54.2
0
Retirees and Beneficiaries
Number
4
4
0
Total Annual Pension
$ 107,105
$ 107,105
$ 0
Average Monthly Benefit
2,231
2,231
0
Average Age, Retirees Only
66.0
66.0
0
Disability Retirees
Number
0
0
0
Terminated Members with Vested Benefits
Number
1
1
0
Total Annual Pensions
$ 8,318
$ 8,318
$ 0
Average Monthly Benefit
693
693
0
Average Current Age
53.4
53.4
0
411, RS R.cimultir.m.ntng
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City of Okeechobee Firefighters' Retirement System 9
Supplemental Actuarial Valuation as of October 1, 2017