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2018 Actuarial Valuation April 29, 2019 Board of Trustees City of Okeechobee Firefighters’ Retirement System c/o Mr. Scott Baur Resource Centers, LLC 4360 Northlake Blvd Suite 206 Palm Beach Gardens, FL 33410 Re: City of Okeechobee Firefighters’ Retirement System October 1, 2018 Actuarial Valuation Report Dear Scott: As requested, we are pleased to enclose twelve (12) copies of the October 1, 2018 Actuarial Valuation Report for the City of Okeechobee Firefighters’ Retirement System. Upon Board approval of the Actuarial Valuation Report, we will upload an electronic copy of the Actuarial Valuation Report along with the required disclosure information to the State portal as required by the State. We appreciate the opportunity to have performed this important assignment on behalf of the Board and look forward to presenting the key results at the May 6th Board Meeting. If you should have any questions concerning the above, please do not hesitate to contact us. Sincerest regards, Lawrence F. Wilson, A.S.A. Senior Consultant and Actuary Enclosures CITY OF OKEECHOBEE FIREFIGHTERS’ RETIREMENT SYSTEM ACTUARIAL VALUATION AS OF OCTOBER 1, 2018 This Valuation Determines the Annual Contribution for the System Year October 1, 2018 through September 30, 2019 with City contribution to be Paid in Fiscal Year October 1, 2019 through September 30, 2020 April 29, 2019 City of Okeechobee Firefighters’ Retirement System TABLE OF CONTENTS Page Commentary 1 I. Summary of Retirement System Costs ............................................................................................. 8 II. Comparison of Cost Data of Current and Prior Valuations ............................................................. 10 III. Characteristics of Participants in Actuarial Valuation .................................................................... 11 IV. Statement of Assets ........................................................................................................................ 12 V. Reconciliation of System Assets ..................................................................................................... 13 VI. Development of Smoothed Value of Assets ................................................................................... 15 VII. Funding Standard Account for System Year ................................................................................... 16 VIII. Actuarial Gain / (Loss) for System Year .......................................................................................... 17 IX. Accounting Disclosure Exhibit ........................................................................................................ 18 X. Outline of Principal Provisions of the Retirement System ............................................................. 27 XI. Actuarial Assumptions and Actuarial Cost Methods Used ............................................................. 31 XII. Distribution of System Participants by Attained Age Groups and Service Groups ......................... 34 XIII. Statistics for Participants Entitled to Deferred Benefits and Participants Receiving Benefits .......................................................................................................................................... 35 XIV. Reconciliation of Participant Data .................................................................................................. 36 XV. Projected Retirement Benefits ....................................................................................................... 37 XVI. Summary of Transaction Information ............................................................................................. 38 XVII. Recent Compensation, Termination and Investment Return Experience ...................................... 39 XVII. Employer Contribution Information ............................................................................................... 40 XIX. State Required Exhibit .................................................................................................................... 41 XX. Glossary .......................................................................................................................................... 45 April 29, 2019 Board of Trustees City of Okeechobee Firefighters’ Retirement System c/o Mr. Scott Baur Resource Centers, LLC 4360 Northlake Blvd., Suite 206 Palm Beach Gardens, FL 33410 Dear Board Members: October 1, 2018 Actuarial Valuation We are pleased to present our October 1, 2018 Actuarial Valuation report for the City of Okeechobee Firefighters’ Retirement System (System). The purpose of our report is to indicate appropriate contribution levels, comment on the actuarial stability of the System and to satisfy State requirements. The Pension Board has retained Gabriel, Roeder, Smith & Company (GRS) to prepare an annual actuarial valuation under Section 3-4 of the System. Our report consists of this commentary, detailed Tables I through XVIII, the State Required Exhibit on Table XIX and definitions of technical terms on Table XX. The Tables contain basic System cost figures plus significant details on the benefits, liabilities and experience of the System. We suggest you thoroughly review the Report at your convenience and contact us with any questions that may arise. Pension System Costs Our Actuarial Valuation develops the required minimum Pension System payment under the Florida Protection of Public Employee Retirement Benefits Act and Firefighters’ Retirement Chapter 175. The minimum payment consists of payment of annual normal costs including expenses. The minimum payment for System Year ending September 30, 2019 is $183,016 (35.7%). The figure in parentheses is the System cost expressed as a percentage of projected covered annual payroll for fiscal year beginning October 1, 2019 ($512,885). This total cost is to be met by Member, City and State contributions. We anticipate Members will contribute $25,644 (5.0%) and the State will contribute $52,793 (10.3%). The resulting minimum required City contribution to be paid in fiscal year ending September 30, 2020 (paid quarterly) is $104,579 (20.4%). The City contribution must be increased if State contributions are less than $52,793. State money is allocated based upon mutual consent to follow the default provisions of F.S., 175.351. Board of Trustees April 29, 2019 Page Two The System has a credit balance in the amount of $30,391 as of September 30, 2018 which the City may apply to offset City contributions. Changes in Actuarial Assumptions, Methods and System Benefits System provisions remain unchanged from our October 1, 2017 Actuarial Valuation. System benefits are summarized on Table X. The actuarial assumptions and methods remain unchanged from the October 1, 2017 Actuarial Valuation. The actuarial assumptions and methods are outlined on Table XI. Comparison of October 1, 2017 and October 1, 2018 Valuation Results Table II of our report provides information of a comparative nature. The left columns of the Table indicate the costs as calculated for October 1, 2017. The right columns indicate the costs as calculated for October 1, 2018. Comparing the left and right columns of Table II shows the effect of System experience during the year. The number of active participants and covered payroll increased by approximately 9% and 3%, respectively. Total System membership increased by approximately 6%. Total normal cost increased both as a dollar amount and as a percentage of covered payroll. The net City minimum funding requirement increased both as a dollar amount and as a percentage of covered payroll. Fund assets exceed the value of vested accrued benefits, resulting in a Vested Benefit Security Ratio (VBSR) of 136.0%. This is a decrease from 136.9% as of the October 1, 2017 Actuarial Valuation. The VBSR is measured on a market value of assets basis. System Experience Table VIII indicates the System experienced an actuarial gain of $77,189. This suggests actual overall System experience was more favorable than expected. Table XVII (salary, turnover and investment yield) provides figures on recent System experience. The salary experience indicates actual salary increases averaged approximately 3.9% for fiscal year ended September 30, 2018. The assumed salary increase was 7.0%. Salary experience was generally a source of actuarial gain. Three, five and ten-year average annual salary increases are 2.4%, 3.5% and 2.7%, respectively. Three, five and ten-year assumed average annual salary increases are all 7.0%. Employee turnover this year was approximately 580% of the assumed turnover and was generally an additional source of actuarial gain. Smoothed investment return of 6.5% was less than the assumed 7.0% investment return. Smoothed Board of Trustees April 29, 2019 Page Three investment return was an offsetting source of actuarial loss. Three, five and ten-year average smoothed investment returns are 6.6%, 7.0% and 5.2%, respectively. One, three, five and ten-year average annual investment returns are 7.8%, 8.9%, 7.2% and 6.6%, respectively on a market value basis. Member Census and Financial Data The Board submitted the Member census data as of October 1, 2018 used for this Actuarial Valuation to us. This information contains name, Social Security number, date of birth, date of hire, actual salary paid for the previous year and member contributions. Dates of termination and retirement are provided where applicable. The Board updated information on inactive participants including retirees, beneficiaries and vested terminees. We received financial information concerning System assets as of September 30, 2018 from the Board. We do not audit the Member census data and asset information that is provided to us; however, we perform certain reasonableness checks. The Board is responsible for the accuracy of the data. Risks Associated with Measuring the Accrued Liability and Actuarially Determined Contribution The determination of the accrued liability and the actuarially determined contribution requires the use of assumptions regarding future economic and demographic experience. Risk measures, as illustrated in this report, are intended to aid in the understanding of the effects of future experience differing from the assumptions used in the course of the actuarial valuation. Risk measures may also help with illustrating the potential volatility in the accrued liability and the actuarially determined contribution that result from the differences between actual experience and the actuarial assumptions. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: System experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions due to changing conditions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period, or additional cost or contribution requirements based on the System’s funded status); and changes in System provisions or applicable law. The scope of an actuarial valuation does not include an analysis of the potential range of such future measurements. Examples of risk that may reasonably be anticipated to significantly affect the system’s future financial condition include: 1. Investment risk – actual investment returns may differ from expected returns; 2. Asset / Liability mismatch – changes in asset values may not match changes in liabilities, Board of Trustees April 29, 2019 Page Four thereby altering the gap between the accrued liability and assets and consequently altering the funded status and the actuarially determined contribution requirements; 3. Contribution risk – actual contributions may differ from expected future contributions. For example, actual contributions may not be made in accordance with the System’s funding policy or material changes may occur in the anticipated number of covered employees, covered payroll or other relevant contribution base; 4. Salary and Payroll risk – actual salaries and total payroll may differ from expected, resulting in actual future accrued liability and the actuarially determined contributions differing from expected; 5. Longevity risk – members may live longer or shorter than expected and receive pensions for a period of time other than assumed; 6. Other demographic risks – members may terminate, retire or become disabled at times or with benefits other than assumed resulting in actual future accrued liability and the actuarially determined contributions differing from expected. The effects of certain trends in experience can generally be anticipated. For example if the investment return since the most recent actuarial valuation is less (or more) than the assumed rate, the actuarially determined contribution can be expected to increase (or decrease). Likewise if longevity is improving (or worsening), increases (or decreases) in the actuarially determined contribution can be anticipated. The actuarially determined contribution rate shown on page one may be considered as a minimum contribution rate that complies with the Board’s funding policy. The timely receipt of the actuarially determined contributions is critical to support the financial health of the System. Users of this report should be aware that contributions made at the actuarially determined rate do not necessarily guarantee benefit security. System Maturity Measures Risks facing a pension system evolve over time. A young system with virtually no investments and paying few benefits may experience little investment risk. An older system with a large number of members in pay status and a significant trust may be much more exposed to investment risk. Generally accepted system maturity measures include the following: Board of Trustees April 29, 2019 Page Five 2017 2018 Ratio of the market value of assets to payroll 7.87 8.28 Ratio of actuarial accrued liability to payroll (Accounting) 7.32 7.42 Ratio of actives to retirees and beneficiaries 2.20 2.40 Ratio of net cash flow to market value of assets 0.5% 0.2% Duration of the actuarial accrued liability (Accounting) 12.99 12.52 Ratio of Market Value of Assets to Payroll The relationship between assets and payroll is a useful indicator of the potential volatility of the actuarially determined contributions. For example, if the market value of assets is 2.0 times the payroll, a return on assets 5% different than assumed would equal 10% of payroll. A higher (lower) or increasing (decreasing) level of this maturity measure generally indicates a higher (lower) or increasing (decreasing) volatility in the actuarially determined contributions as a percentage of payroll. Ratio of Actuarial Accrued Liability to Payroll (Accounting) The relationship between actuarial accrued liability and payroll is a useful indicator of the potential volatility of the accounting disclosure and expense for a fully funded system. A funding policy that targets a funded ratio of 100% is expected to result in the ratio of assets to payroll and the ratio of liability to payroll converging over time. The ratio of liability to payroll may also be used as a measure of sensitivity of the liability itself. For example, if the actuarial accrued liability is 2.5 times payroll, a change in liability 2% other than assumed would equal 5% of payroll. A higher (lower) or increasing (decreasing) level of this maturity measure generally indicates a higher (lower) or increasing (decreasing) volatility in liability (and also the accounting disclosure and expense) as a percentage of payroll. Ratio of Actives to Retirees and Beneficiaries A young system with many active members and few retirees will have a high ratio of active to retirees. A mature open system may have close to the same number of actives to retirees resulting in a ratio near 1.0. A super-mature or closed system may have significantly more retirees than actives resulting in a ratio below 1.0. Board of Trustees April 29, 2019 Page Six Ratio of Net Cash Flow to Market Value of Assets A positive net cash flow means contributions exceed benefits and expenses. A negative cash flow means existing funds are being used to make payments. A certain amount of negative net cash flow is generally expected to occur when benefits are prefunded through a qualified trust. Large negative net cash flows as a percent of assets may indicate a super-mature system or a need for additional contributions. Duration of Actuarial Accrued Liability (Accounting) The duration of the actuarial accrued liability may be used to approximate the sensitivity to a 1% change in the assumed rate of return. For example, a duration of 10 indicates the liability would increase approximately 10% if the assumed rate of return were lowered 1%. Additional Risk Assessment Additional risk assessment is outside the scope of the annual actuarial valuation. Additional assessment may include scenario tests, sensitivity tests, stochastic modeling, stress tests and a comparison of the present value of accrued benefits at low-risk discount rates with the actuarial accrued liability. Summary In our opinion the benefits provided for under the current System will be sufficiently funded through the payment of the amount as indicated in this and future Actuarial Valuation reports. We will continue to update you on the future payment requirements for the System through our actuarial reports. These reports will also continue to monitor emerging experience of the System. The actuarial assumptions used in this Actuarial Valuation are as adopted by the Board of Trustees. The mortality assumptions are prescribed by statute. Each assumption represents an estimate of future System experience. We recommend the Board authorize an Experience Study to assure actuarial assumptions are aligned with System experience and future expectations. The Unfunded Actuarial Accrued Liability (UAAL) may not be appropriate for assessing the sufficiency of System assets to meet the estimated cost of settling benefit obligations. The UAAL would be different if it reflected the market value of assets rather than the actuarial value of assets. If all actuarial assumptions are met and if all future minimum required contributions are paid, System assets will be sufficient to pay all System benefits and future contributions are expected to remain relatively stable as a percent of payroll. System minimum required contributions are determined in Board of Trustees April 29, 2019 Page Seven compliance with the requirements of the Florida Protection of Public Employee Retirement Benefits Act and Firefighters’ Retirement Chapter 175 with normal cost determined as a level percent of covered payroll. The Unfunded Actuarial Present Value of Vested Accrued Benefits and the corresponding Vested Benefit Security Ratio may be appropriate for assessing the sufficiency of System assets to meet the estimated cost of settling benefit obligations but may not be appropriate for assessing the need for or the amount of future contributions. The GASB Net Pension Liability and System Fiduciary Net Position as a Percentage of Total Pension Liability may not be appropriate for assessing the sufficiency of System assets to meet the estimated cost of settling benefit obligations but may be appropriate for assessing the need for or the amount of future contributions. This report should not be relied on for any purpose other than the purpose described in the primary communication. Determinations of the financial results associated with the benefits described in this report in a manner other than the intended purpose may produce significantly different results. 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 System as of the valuation date. All calculations have been made in conformity with generally accepted actuarial principles and practices, with the Actuarial Standards of Practice issued by the Actuarial Standards Board and with applicable statutes. This report may be provided to parties other than the Board only in its entirety and only with the permission of an approved representative of the Board. The signing actuaries are independent of the System sponsor. The undersigned 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 in this report. We are available to respond to any questions with regards to matters covered in this report. Very truly yours, Lawrence F. Wilson, E.A., A.S.A. Senior Consultant and Actuary Shelly L. Jones, A.S.A., M.A.A.A., E.A., F.C.A. Senior Analyst and Actuary City of Okeechobee Firefighters' Retirement System 8 Table I Cost % of Data Payroll A.Participant Data Summary (Table III) 1.Active employees 12 N/A 2.Terminated vested 1 N/A 3.Receiving benefits (including DROPs)5 N/A 4.Annual payroll of active employees 512,885$ 100.0% B.Total Actuarial Present Value of Future Benefits 1.Age retirement benefits active employees 3,197,176$ 623.4% 2.Termination benefits active employees 167,910 32.7% 3.Death benefits active employees 13,565 2.6% 4.Disability benefits active employees 96,391 18.8% 5.Retired or terminated vested participants receiving benefits including DROPs 1,476,399 287.9% 6.Terminated vested participants entitled to future benefits 100,122 19.5% 7.Deceased participants whose beneficiaries are receiving benefits 315,222 61.5% 8.Disabled participants receiving benefits 0 0.0% 9.Miscellaneous liability (refunds in process)8,399 1.6% 10.Reserve for excess State Funds 0 0.0% 11.Share Plan liability 2,496 0.5% 12.Total Actuarial Present Value of Future Benefits 5,377,680$ 1048.5% C.Net Smoothed Value of Assets (Table VI)4,146,331$ 808.4% D.Present Value of Future Normal Costs (B. - C.)1,231,349$ 240.1% E.Present Value of Future Salaries 5,747,525$ 1120.6% F.Normal Cost Accrual Rate (D. / E.)21.424%N/A G.Normal Cost (A.4. x F)109,880$ 21.4% Summary of Retirement System Costs as of October 1, 2018 City of Okeechobee Firefighters' Retirement System 9 Table I (Cont'd) Cost % of Data Payroll H.Minimum Required Contribution 1.Normal cost 109,880$ 21.4% 2.Estimated administrative expenses 59,878 11.7% 3.Interest adjustment 13,258 2.6% 4.Total minimum required contribution 183,016$ 35.7% I.Contribution Sources 1.Expected City 104,579$ 20.4% 2.Expected State 52,793 10.3% 3.Expected Member 25,644 5.0% 4.Total required contribution 183,016$ 35.7% J.Actuarial Gain / (Loss) (Table VIII)77,189$ 15.1% K.Actuarial Present Value of Vested Accrued Benefits 1.Retired, terminated vested, beneficiaries and disabled receiving benefits including DROPs 1,791,621$ 349.3% 2.Terminated vested participants entitled to future benefits and miscellaneous 108,521 21.2% 3.Active participants entitled to future benefits 1,221,859 238.2% 4.Share Plan liability / excess State Funds 2,496 0.5% 5.Total actuarial present value of vested accrued benefits 3,124,497$ 609.2% L.Net Market Value of Assets (Table IV)4,248,914$ 828.4% M.Unfunded Actuarial Present Value of Vested Accrued Benefits (K. - L., not less than zero)0$ 0.0% N.Vested Benefit Security Ratio (L. ÷ K.)136.0%N/A Summary of Retirement System Costs as of October 1, 2018 City of Okeechobee Firefighters' Retirement System 10 Cost % of Annual Cost % of Annual Data Compensation Data Compensation A.Participants 1.Active employees 11 N/A 12 N/A 2.Terminated vested 1 N/A 1 N/A 3.Receiving benefits (including DROPs) 5 N/A 5 N/A 4.Annual payroll of active employees 499,626$ 100.0%512,885$ 100.0% B.Present Value of Future Benefits 1 5,051,174$ 1011.0%5,377,680$ 1048.5% C.Total Normal Costs (including expenses) 1.Aggregate Cost Method 148,683$ 29.8%169,758$ 33.1% 2.Entry Age Normal (EAN) 2 171,758$ 34.4%205,734$ 40.1% D.Total Actuarial Accrued Liability (EAN) 1,2 3,658,428$ 732.2%3,806,990$ 742.3% E.Smoothed Value of Assets 1 3,881,778$ 776.9%4,146,331$ 808.4% F.Unfunded Actuarial Accrued Liability 1,2 (223,350)$ (44.7%)(339,341)$ (66.2%) G.Net City Cost 88,554$ 17.7%104,579$ 20.4% H.Actuarial Gain / (Loss)155,579$ 31.1%77,189$ 15.1% I.Unfunded Actuarial Present Value of Vested Accrued Benefits 0$ 0.0%0$ 0.0% J.Vested Benefit Security Ratio 1 136.9%N/A 136.0%N/A 1 Includes Share Plan Accounts 2 For purposes of GASB Statement Numbers 67 and 68 only Table II October 1, 2017 October 1, 2018 Comparison of Cost Data of October 1, 2017 and October 1, 2018 Valuations City of Okeechobee Firefighters' Retirement System 11 Table III A.Active System Participants Summary 1.Active participants fully vested 7 2.Active participants partially vested 0 3.Active participants non-vested 5 4.Total active participants 12 5.Annual rate of pay of active participants 512,885$ B. Retired and Terminated Vested Participant Summary 1.Retired or terminated vested participants receiving benefits including DROP participants 4 2.Terminated vested participants entitled to future benefits 1 3.Deceased participants whose beneficiaries are receiving benefits 1 4.Disabled participants receiving benefits 0 C. Projected Annual Retirement Benefits 1.Retired or terminated vested receiving benefits including DROP participants 122,266$ 2.Terminated vested entitled to future benefits 8,322 3.Beneficiaries of deceased participants receiving benefits 30,917 4.Disabled participants receiving benefits 0 Actuarial Valuation as of October 1, 2018 Characteristics of Participants in City of Okeechobee Firefighters' Retirement System 12 Table IV Market Value A.Cash and cash equivalents 38,970$ B.General Investments 1.U.S. Government obligations 0 2.Corporate bonds 0 3.Mutual Funds - Fixed Income 1,465,249 4.Mutual Funds - Equity 2,688,828 5.Common stock 0 6.Accrued income 2,763 C.Receivables 1.Employee contribution 1,847 2.State contribution 52,793 3.City Contribution 42,495 D.Payables 1.Investment expense 5,248 2.Administrative expense 8,392 E.Total System Assets (A + B + C - D)4,279,305 F.Credit Balance 30,391 G.Net System Assets (E - F)4,248,914$ Statement of System Assets as of October 1, 2018 City of Okeechobee Firefighters' Retirement System 13 Table V A.Total Market Value of Assets as of October 1, 2017 3,961,903$ 1.Audit Adjustment 2 2.Market Value as of October 1, 2017 3,961,905$ B.Receipts During Period 1.Contributions a.Employee 23,446$ b.City 115,253 c.State 52,793 d.Total 191,492$ 2.Investment Income a.Interest, dividends and other 130,189$ b.Investment expenses (21,000) c.Net investment income 109,189$ 3.Realized gains / (losses)9,661 4.Unrealized gains / (losses)190,068 5.Total receipts during period 500,410$ C.Disbursements During Period 1.Pension payments 107,105$ 2.DROP distributions 0 3.Share Plan distributions 0 4.Contribution refunds 16,027 5.Administrative expenses 59,878 6.Total disbursements during period 183,010$ D.Total Market Value of Assets as of September 30, 2018 4,279,305$ E.Credit Balance as of September 30, 2018 30,391$ F.Net Market Value of Assets as of September 30, 2018 (D - E)4,248,914$ Reconciliation of System Assets City of Okeechobee Firefighters' Retirement System 14 Table V (Cont'd) G.Share Plan 1.Balance as of October 1, 2017 7,660$ 2.Adjustment (3,395) 3.Increase from State funds received 0 4.Investment credits 285 5.Administrative fees (2,054) 6.Distributions 0 7.Balance as of September 30, 2018 2,496$ H.Reconciliation of DROP Account Balances 1.DROP account balances as of October 1, 2017 0$ 2.Adjustment 15,563 3.Benefit credits 46,079 4.Investment gains / (losses)2,618 5.Administrative expenses 0 6.DROP account distributions 0 7.DROP account balances as of September 30, 2018 64,260$ Reconciliation of System Assets City of Okeechobee Firefighters' Retirement System 15 Table VI 2017 2018 2019 2020 2021 A.Preliminary total smoothed value from prior year 3,639,342$ 3,911,994$ 4,176,722$ 1.Post Valuation Adjustment to Audit (6,375) 0 2.Smoothed value from prior year 3,632,967$ 3,911,994$ B.Market value beginning of year 3,542,832 3,961,903 4,279,305 C.Market value end of year 3,961,903 4,279,305 D.Net non-investment cash flow 21,179 8,482 E.Investment return 1.Total market value return: C. - A.1. - B. - D.404,267 308,920 2.Amount for immediate recognition (7.0%)255,049 274,136 3.Amount for phased-in recognition: E.1. - E.2.149,218 34,784 F.Phased-in recognition of investment return: 1.Current year: 25% of E.3.37,305 8,696 2.First prior year 1,890 37,305 8,696 3.Second prior year (65,781) 1,890 37,305 8,696 4.Third prior year 29,385 (65,781) 1,887 37,303 8,696 5.Total phased-in recognition of investment return 2,799 (17,890) 47,888 45,999 8,696 G.Total smoothed value end of year 1.Preliminary total smoothed value end of year: A. + D. + E.2. + F.5.3,911,994 4,176,722 2.Upper corridor limit: 120% of C.4,754,284 5,135,166 3.Lower corridor limit: 80% of C.3,169,522 3,423,444 4.Total smoothed value end of year: G.1., not more than G.2., nor less than G.3.3,911,994 4,176,722 H.Difference between total market value and total smoothed value 49,909 102,583 I.Smoothed value rate of return 7.1%6.5% J.Market value rate of return 11.4%7.8% K.Credit balance 30,216 30,391 L.Net smoothed value of assets 3,881,778 4,146,331 M.Net market value of assets 3,931,687 4,248,914 Development of Smoothed Value of Assets as of September 30 City of Okeechobee Firefighters' Retirement System 16 Table VII A.Charges to the Funding Standard Account 1.Prior year funding deficiency 0$ 2.City / State normal cost 167,871 3.Total employer charges 167,871$ B.Credits to the Funding Standard Account 1.Prior year credit balance 30,216$ 2.State contribution 52,793 3.City contribution 115,253 4.Total credits 198,262$ C.Credit Balance / (Funding Deficiency) (B.4. - A.3.)30,391$ Funding Standard Account for System Year Ended September 30, 2018 City of Okeechobee Firefighters' Retirement System 17 Table VIII A.Derivation of Actuarial Gain / (Loss) 1.Present value of future payroll 5,747,525$ 2.Normal cost for benefits as a percentage of payroll (a)Prior valuation 22.767% (b)Current valuation 21.424% (c)Difference (a) - (b)1.343% 3.Actuarial gain / (loss): (1. x 2.c)77,189$ B.Approximate Portion of Gain / (Loss) due to Investments 1.Smoothed actuarial of net assets previous year 3,874,118$ 2.Net contributions during period 191,317 3.Benefits and administrative expenses during period 183,010 4.Expected net appreciation dueing period 271,479 5.Expected net smoothed value of assets current year: (1. + 2. - 3. + 4.)4,153,904$ 6.Actual smoothed value of net assets current year 4,143,835$ 7.Approximate gain / (loss) due to investments: (6. - 5.)(10,069)$ C.Approximate Portion of Gain / (Loss) due to Liabilities: A. - B.87,258$ * net of Share Plan Actuarial Gain / (Loss) for System Year Ended September 30, 2018 * City of Okeechobee Firefighters' Retirement System 18 Table IX 10/01/2017 10/01/2018 I.Number of System Members a.Receiving benefits including DROPs 5 5 b.Terminated due deferred benefits 1 1 c.Active System members 11 12 d.Total 17 18 II.Financial Accounting Standards Board Allocation As of October 1, 2018 A.Statement of Accumulated System Benefits 1.Actuarial present value of accumulated vested System benefits a.Participants currently receiving benefits including DROP participants 1,744,046$ 1,791,621$ b.Other participants (including reserve for Share Plan liability)1,128,110 1,332,876 c.Total 2,872,156$ 3,124,497$ 2.Actuarial present value of accumulated non-vested System benefits 107,515$ 58,730$ 3.Total actuarial present value of accumulated System benefits 2,979,671$ 3,183,227$ B.Statement of Change in Accumulated System Benefits 1.Actuarial present value of accumulated System benefits as of October 1, 2017 2,979,671$ 2.Increase (decrease) during year attributable to: a.System amendment 0$ b.Change in actuarial assumptions 0 c.Benefits paid including refunds and DROP distributions (123,132) d.Other, including benefits accumulated, increase for interest due to decrease in the discount period 326,688 e.Net increase 203,556$ 3.Actuarial present value of accumulated System benefits as of October 1, 2018 3,183,227$ C.Significant Matters Affecting Calculations 1.Assumed rate of return used in determining actuarial present values 7.00% 2.Change in System provisions None. 3.Change in actuarial assumptions None. Accounting Disclosure Exhibit City of Okeechobee Firefighters' Retirement System 19 Table IX (Cont'd) III.Net Pension Liability and Related Ratios (GASB Statement Numbers 67 & 68) Projected Measurement date 9/30/2014 9/30/2015 9/30/2016 9/30/2017 9/30/2018 9/30/2019 * A.Total Pension Liability (TPL) Service Cost 130,539$ 144,773$ 156,107$ 156,989$ 136,825$ 145,856$ Interest 196,106 213,154 235,684 255,218 257,407 272,801 Benefit Changes 0 0 0 0 0 0 Difference Between Actual and Expected Experience (741) (19,771) 56,393 (91,659) (162,443) (132,568) Assumption Changes 0 49,797 0 (13,449) 0 0 Benefit Payments, including Refunds of Member Contributions (142,060) (96,939) (102,590) (127,009) (123,132) (111,381) Other 0 0 3,256 0 19,828 0 Net Change in Total Pension Liability 183,844$ 291,014$ 348,850$ 180,090$ 128,485$ 174,708$ Total Pension Liability (TPL) - (beginning of year)2,807,275 2,991,119 3,282,133 3,630,983 3,811,073 3,939,558 Total Pension Liability (TPL) - (end of year)2,991,119$ 3,282,133$ 3,630,983$ 3,811,073$ 3,939,558$ 4,114,266$ B.System Fiduciary Net Position Contributions - City and State 135,293$ 145,525$ 147,598$ 157,712$ 168,046$ 139,143$ Contributions - Member 23,854 26,324 27,433 25,409 23,446 25,644 Net Investment Income 318,708 (44,021) 246,381 404,267 308,920 299,325 Benefit Payments, including Refunds of Member Contributions (142,060) (96,939) (102,590) (127,009) (123,132) (111,381) Administrative Expenses (16,233) (27,132) (31,639) (34,933) (59,878) (59,878) Other 0 0 (1,766) (6,375) 0 0 Net Change in System Fiduciary Net Position 319,562$ 3,757$ 285,417$ 419,071$ 317,402$ 292,853$ System Fiduciary Net Position - (beginning of year)2,934,096 3,253,658 3,257,415 3,542,832 3,961,903 4,279,305 System Fiduciary Net Position - (end of year)3,253,658$ 3,257,415$ 3,542,832$ 3,961,903$ 4,279,305$ 4,572,158$ C.Net Pension Liability (NPL) - (end of year): (A) - (B)(262,539)$ 24,718$ 88,151$ (150,830)$ (339,747)$ (457,892)$ D.System Fiduciary Net Position as a Percentage of TPL: (B) / (A)108.78 %99.25 %97.57 %103.96 %108.62 %111.13 % E.Covered Employee Payroll **477,080$ 526,480$ 548,660$ 508,180$ 468,920$ 512,885$ F.NPL as a Percentage of Covered Employee Payroll: (C) / (E) (55.03)%4.69 %16.07 %(29.68)%(72.45)%(89.28)% G.Notes to Schedule: 10/1/2013 10/1/2014 10/1/2015 10/1/2016 10/1/2017 10/1/2018 9/30/2015 9/30/2016 9/30/2017 9/30/2018 9/30/2019 9/30/2020 *Projected - actual amounts will be available after fiscal year end **Reported payroll used to determine contribution as provided under GASB Statement Number 82. See Table IX, Item V. for benefit and assumption changes during the years. Accounting Disclosure Exhibit Update procedures used to roll forward TPL excluding DROP and Share account balances, if any, to the measurement dates - actual DROP and Share account balances, if any, as of measurement dates Valuation Date Reporting Date (GASB Statement Number 68) City of Okeechobee Firefighters' Retirement System 20 Table IX (Cont'd) IV.Schedule of Employer Contributions (GASB Statement Numbers 67 & 68) Actuarially Contribution Actual Contribution Fiscal Year Determined Actual Deficiency Covered as a % of End 9/30 Contribution Contribution 1 (Excess)Payroll 2 Covered Payroll 2009 63,564$ 71,270$ (7,706)$ 459,952$ 15.50% 2010 80,594 81,687 (1,093) 461,752 17.69% 2011 97,629 97,912 (283) 457,776 21.39% 2012 98,023 95,844 2,179 429,008 22.34% 2013 103,915 111,976 (8,061) 473,939 23.63% 2014 122,212 135,293 (13,081) 477,080 28.36% 2015 138,914 145,525 (6,611) 526,480 27.64% 2016 143,632 147,598 (3,966) 548,660 26.90% 2017 170,269 157,712 12,557 508,180 31.03% 2018 167,871 168,046 (175) 468,920 35.84% 2019 3 139,143 139,143 0 512,885 27.13% 1 2 Reported payroll used to determine contribution as provided under GASB Statement Number 82. 3 Projected - actual amounts will be available after fiscal year end Accounting Disclosure Exhibit Includes State contributions in excess of the amount allowable to be used as an offset to the City's contribution requirement. City of Okeechobee Firefighters' Retirement System 21 Table IX (Cont'd) V.Notes to Schedule of Contributions (GASB Statement Numbers 67 & 68) Valuation Date: Methods and Assumptions Used to Determine Contribution Rates for Fiscal Year Ended September 30, 2019: Actuarial Cost Method Amortization Method Amortization Period Asset Valuation Method Inflation Salary Increases Investment Rate of Return 7.0% Retirement Age Mortality Cost of Living Adjustment Other Information: 0.5% every odd year 4-year smoothed market value For healthy participants post employment,RP 2000 Annuitant Mortality Tables, with 90%Blue Collar Adjustment /10%White Collar Adjustment for males and 100%White Collar Adjustment for females. Fully generational mortality improvements projected to each future decrement date with Scale BB. Accounting Disclosure Exhibit Actuarially determined contributions are calculated as of October 1st -two years prior the fiscal year end in which contributions are paid. Aggregate N/A For disabled male participants,60% RP-2000 Disabled Male Mortality Table setback four years /40% RP-2000 Annuitant Male Mortality Table with White Collar Adjustment with no setback,without projected mortality improvements. For disabled female participants,60% RP-2000 Disabled Female Mortality Table setforward two years /40% RP-2000 Annuitant Female Mortality Table with White Collar Adjustment with no setback,without projected mortality improvements. 100% when first eligible for Normal Retirement or DROP entry. For healthy participants during employment,RP 2000 Combined Healthy Participant Mortality Tables, with 90%Blue Collar Adjustment /10%White Collar Adjustment for males and 100%White Collar Adjustment for females. Fully generational mortality improvements projected to each future decrement date with Scale BB. N/A 2.5% 7.0% Benefit Changes Assumption Changes None 2016 -Mortality assumptions were updated;2014 -Mortality assumptions were updated. City of Okeechobee Firefighters' Retirement System 22 Table IX (Cont'd) VI.Discount Rate (GASB Statement Numbers 67 & 68) VII.Sensitivity of the NPL to the Discount Rate Assumption (GASB Statement Numbers 67 & 68) Current 1% Decrease Discount Rate 1% Increase Discount Rate 6.0%7.0%8.0% NPL 164,936$ (339,747)$ (758,833)$ Current 1% Decrease Discount Rate 1% Increase Discount Rate 6.0%7.0%8.0% NPL 50,210$ (457,892)$ (880,450)$ * Projected - actual amounts will be available after fiscal year end Accounting Disclosure Exhibit A discount rate of 7.0%was used to measure the TPL.This discount rate was based on the expected rate of return on System investments of 7.0%.The projection of cash flows used to determine this discount rate assumed member contributions will be made at the current member contribution rate and employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member contribution rate.Based on these assumptions, the System's fiduciary net position was projected to be available to make all projected future expected benefit payments of current System members. Therefore,the long-term expected rate of return on System investments was applied to all periods of projected benefit payments to determine the TPL. Measurement date: September 30, 2019 * Measurement date: September 30, 2018 City of Okeechobee Firefighters' Retirement System 23 Table IX (Cont'd) VIII. Pension Expense for Fiscal Year Ending September 30, 2019 139,252$ Deferred Outflows of Resources Deferred Inflows of Resources 34,421$ 217,899$ Changes of assumptions or other inputs 25,205 9,765 0 70,593 Total 59,626$ 298,257$ $ 86,350 Year Ending 30-Sep Amount 2020 (10,952)$ 2021 (65,642) 2022 (62,240) 2023 (30,999) 2024 (30,277) Thereafter (38,521) Accounting Disclosure Exhibit Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - Reporting Date (GASB Statement Number 68) Summary of Outstanding Deferred Inflows and Outflows of Resources as of September 30, 2019 Differences between actual and expected experience on liabilities Net difference between projected and actual earnings on pension System investments Summary of Deferred Outflows and Inflows of Resources that will be Recognized in Pension Expense in Future Years. Projected Deferred Outflows for City Contributions to Be Recognized in Pension Expense for Fiscal Year Ending September 30, 2020 City of Okeechobee Firefighters' Retirement System 24 Table IX (Cont'd) The following information is not required to be disclosed but is provided for informational purposes. IX.Components of Pension Expense (GASB Statement Number 68) Projected Measurement Date 9/30/2014 9/30/2015 9/30/2016 9/30/2017 9/30/2018 9/30/2019 * Service Cost 130,539$ 144,773$ 156,107$ 156,989$ 136,825$ 145,856$ Interest on Total Pension Liability 196,106 213,154 235,684 255,218 257,407 272,801 Current-Period Benefit Changes 0 0 0 0 0 0 (23,854) (26,324) (27,433) (25,409) (23,446) (25,644) Projected Earnings on System Investments (205,417) (229,428) (229,385) (248,516) (277,630) (299,325) Administrative Expenses 16,233 27,132 31,639 34,933 59,878 59,878 Other Changes in System Fiduciary Net Position 0 0 1,766 6,375 0 0 Other Changes in Total Pension Liability 0 0 3,256 0 19,828 0 (93) 3,614 10,938 (3,460) (24,834) (40,806) (22,658) 32,032 28,633 (2,517) (8,776) 13,882 Total Pension Expense 90,856$ 164,953$ 211,205$ 173,613$ 139,252$ 126,642$ * Projected - actual amounts will be available after measurement date Contributions - Member Recognition of Beginning Deferred Outflows / (Inflows) due to Liabilities Recognition of Beginning Deferred Outflows / (Inflows) due to Assets Accounting Disclosure Exhibit City of Okeechobee Firefighters' Retirement System 25 Table IX (Cont'd) The following information is not required to be disclosed but is provided for informational purposes. X.Recognition of Deferred Outflows and (Inflows) due to Liabilities - Measurement Date (GASB Statement Number 68) Recognition of Deferred Outflows due to Differences Between Actual and Expected Experience on Liabilities Established Initial Balance Initial Recognition Period Remaining Recognition Period as of 9/30/2018 Recognition Amount for FYE 2018 Balance as of 9/30/2018 2013 / 2014 0$ 8.0 3.0 0$ 0$ 2014 / 2015 0 8.1 4.1 0 0 2015 / 2016 56,393 7.7 4.7 7,324 34,421 2016 / 2017 0 7.3 5.3 0 0 2017 / 2018 0 7.6 6.6 0 0 TOTAL 7,324$ 34,421$ Recognition of Deferred (Inflows) due to Differences Between Actual and Expected Experience on Liabilities Established Initial Balance Initial Recognition Period Remaining Recognition Period as of 9/30/2018 Recognition Amount for FYE 2018 Balance as of 9/30/2018 2013 / 2014 (741)$ 8.0 3.0 (93)$ (276)$ 2014 / 2015 (19,771) 8.1 4.1 (2,441) (10,007) 2015 / 2016 0 7.7 4.7 0 0 2016 / 2017 (91,659) 7.3 5.3 (12,556) (66,547) 2017 / 2018 (162,443) 7.6 6.6 (21,374) (141,069) TOTAL (36,464)$ (217,899)$ Recognition of Deferred Outflows due to Changes of Assumptions or Other Inputs Established Initial Balance Initial Recognition Period Remaining Recognition Period as of 9/30/2018 Recognition Amount for FYE 2018 Balance as of 9/30/2018 2013 / 2014 0$ 8.0 3.0 0$ 0$ 2014 / 2015 49,797 8.1 4.1 6,148 25,205 2015 / 2016 0 7.7 4.7 0 0 2016 / 2017 0 7.3 5.3 0 0 2017 / 2018 0 7.6 6.6 0 0 TOTAL 6,148$ 25,205$ Accounting Disclosure Exhibit City of Okeechobee Firefighters' Retirement System 26 Table IX (Cont'd) The following information is not required to be disclosed but is provided for informational purposes. X. Recognition of Deferred (Inflows) due to Changes of Assumptions or Other Inputs Established Initial Balance Initial Recognition Period Remaining Recognition Period as of 9/30/2018 Recognition Amount for FYE 2018 Balance as of 9/30/2018 2013 / 2014 0$ 8.0 3.0 0$ 0$ 2014 / 2015 0 8.1 4.1 0 0 2015 / 2016 0 7.7 4.7 0 0 2016 / 2017 (13,449) 7.3 5.3 (1,842) (9,765) 2017 / 2018 0 7.6 6.6 0 0 TOTAL (1,842)$ (9,765)$ XI.Recognition of Deferred Outflows and (Inflows) due to Assets - Measurement Date (GASB Statement Number 68) Established Initial Balance Initial Recognition Period Remaining Recognition Period as of 9/30/2018 Recognition Amount for FYE 2018 Balance as of 9/30/2018 2013 / 2014 (113,291)$ 5 0 (22,659)$ 0$ 2014 / 2015 273,449 5 1 54,690 54,689 2015 / 2016 (16,996) 5 2 (3,399) (6,799) 2016 / 2017 (155,751) 5 3 (31,150) (93,451) 2017 / 2018 (31,290) 5 4 (6,258) (25,032) TOTAL (8,776)$ (70,593)$ Recognition of Deferred Outflows / (Inflows) due to Difference Between Projected and Actual Earnings on Pension System Investments Accounting Disclosure Exhibit Recognition of Deferred Outflows and (Inflows) Due to Liabilities - Measurement Date (GASB Statement Number 68) (cont'd) City of Okeechobee Firefighters' Retirement System 27 Table X A.Effective Date: B.Eligibility: C.Contributions: 5.0% of Salary. Premium Tax Revenue. City:Balance required to maintain System on sound actuarial basis. D.Credited Service: E.Salary: F.Average Final Compensation: G.Normal Retirement: 1.Eligibility: Earlier of: (a)Attainment of age 55 with completion of 10 years of Credited Service. (b)Completion of 25 years of Credited Service. 2.Benefit: 3.0% times AFC times Credited Service. Outline of Principal Provisions of the Retirement System January 1, 1972. Most recently amended by Ordinance No. 1133 adopted February 2, 2016. All actively employed full time Firefighters of the City are eligible on date of employment;Participation is mandatory. Average Final Compensation (AFC)is determined by the average basic salary over the highest 5 years of the last 10. Employee: State: Basic compensation including tax deferred, tax sheltered and tax exempt income which would otherwise be included in base income,derived from elective employee payroll deductions or salary reductions. Service is measured as the total number of years and completed months of continuous service as a Member.No service is credited for any periods of employment for which the Member received a refund of employee contributions. City of Okeechobee Firefighters' Retirement System 28 Table X (Cont'd) H.Early Retirement: 1.Eligibility: 2.Benefit: I.Delayed Retirement: J.Disability Retirement: 1.Service Incurred: 2.Non-Service Incurred: a.Eligibility: b.Benefit:The greatest of: (iii) 25% of AFC K.Pre-Retirement Death Benefit: a. b. c. In the event a vested Member's spouse is the sole beneficiary,the beneficiary shall be entitled to the accrued normal or early retirement benefit payable at the deceased Member's early or normal retirement age less the value of any benefits paid above. Not Vested: Vested but Not Eligible for Early or Normal Retirement: Eligible for Early or Normal Retirement: Refund of accumulated contributions. Greater of (a) accrued benefit, determined as though the deceased had retired immediately preceding date of death and elected the 10 year certain and life form of payment or (b) 50% of present value of vested accrued benefit. Greater of (a)50%of the present value of vested accrued benefit or (b) refund of accumulated contributions. (i) Accrued benefit (ii) 2% of AFC times Credited Service Outline of Principal Provisions of the Retirement System Attainment of age 50 with completion of 10 years of Credited Service. Benefit accrued to date of retirement,reduced by 3%for each year early retirement date precedes age 55. Computed the same as set forth under Normal Retirement,based upon AFC and Credited Service as of delayed retirement date. Accrued benefit, but not less than 42% of AFC. 5 or more years of Credited Service; totally and permanently disabled. City of Okeechobee Firefighters' Retirement System 29 Table X (Cont'd) L.Termination Benefits: 1.Eligibility: 2.Benefit: M.Normal Form of Retirement Income: N.Optional Forms of Retirement Income: O.Deferred Retirement Option Program (DROP) 1.Eligibility: 2.Benefit: Retirement benefits are transferred to a hypothetical DROP account within the pension fund. Interest is credited or debited based upon either the quarterly rate of return earned by the Fund or a monthly 6.5%fixed rate of return,as elected by the Member. Members may elect to change their interest crediting election once during the DROP period. The period of participation in the DROP is limited to no more than 60 months. The benefit is paid as a lump sum upon actual termination of employment. 100%vesting upon the completion of 10 years of credited service.Employees who have not completed 10 years of credited service at date of termination of employment shall only be entitled to the return of their accumulated contributions with 3.0% interest. Accrued benefit based upon credited service and AFC as of date of termination, payable at age 55. Monthly benefit payable for ten (10) years certain and life thereafter. Outline of Principal Provisions of the Retirement System In lieu of electing the normal form of payment, the optional forms of payment available are the Single Life Annuity option and the 50%, 66 2/3%, 75%and 100%Joint and Contingent options.A Social Security option is available for Members retiring prior to being eligible for Social Security retirement benefits. A 20% Partial Lump Sum is available for Members who do not participate in the DROP. Member must be eligible for Normal Retirement. City of Okeechobee Firefighters' Retirement System 30 Table X (Cont'd) P.Cost of Living Adjustment (COLA) Q.Changes Since Previous Valuation Beginning October 1, 1999 and October 1 of every odd-numbered year thereafter,monthly benefits of all retirees (service, disability,DROP),beneficiaries and vested terminated participants who have been in the DROP or in pay status for at least one year on the adjustment date will be increased by 0.5%. Outline of Principal Provisions of the Retirement System None. City of Okeechobee Firefighters' Retirement System 31 Table XI A.Mortality Sample Ages (2018)Men Women Men Women 55 29.84 33.57 29.33 33.34 60 24.96 28.54 24.76 28.44 62 23.09 26.58 22.97 26.52 Sample Ages (2038)Men Women Men Women 55 32.06 35.41 31.57 35.21 60 27.21 30.38 27.03 30.30 62 25.34 28.40 25.23 28.35 B.Interest to be Earned by Fund C.Allowances for Expenses or Contingencies Expectancy (Years)Expectancy (Years) Actuarial Assumptions and Actuarial Cost Methods Used in the Valuation For healthy participants during employment,RP 2000 Combined Healthy Participant Mortality Tables,with 90%Blue Collar Adjustment /10%White Collar Adjustment for males and 100%White Collar Adjustment for females. Fully generational mortality improvements projected to each future decrement date with Scale BB. For healthy participants post employment,RP 2000 Annuitant Mortality Tables,with 90%Blue Collar Adjustment /10%White Collar Adjustment for males and 100%White Collar Adjustment for females. Fully generational mortality improvements projected to each future decrement date with Scale BB. For disabled male participants,60% RP-2000 Disabled Male Mortality Table setback four years /40% RP-2000 Annuitant Male Mortality Table with White Collar Adjustment with no setback, without projected mortality improvements. For disabled female participants,60% RP-2000 Disabled Female Mortality Table setforward two years /40% RP-2000 Annuitant Female Mortality Table with White Collar Adjustment with no setback, without projected mortality improvements. Pre-retirement Post-retirement Future Life Future Life 7.0% (net of investment expenses), compounded annually - includes inflation at 2.5%. Actual administrative expenses incurred during the prior System year. Pre-retirement Post-retirement Future Life Future Life Expectancy (Years)Expectancy (Years) City of Okeechobee Firefighters' Retirement System 32 Table XI (Cont'd) D.Salary Increase Factors E.Disability Rates Disability Rates Per 100 Employees 0.14 0.18 0.30 1.00 F.Employee Withdrawal Rates G.Rates of Retirement Age 20 30 40 50 Actuarial Assumptions and Actuarial Cost Methods Current salary is assumed to increase at a rate of 7.0% - includes wage inflation of 3.5%. Disability rates for males and for females were used in accordance with the following illustrative example. Used in the Valuation Age 20 30 Withdrawal rates for males and for females were used in accordance with the following illustrative example. Withdrawal Rate 6.0% 5.0% All active members on the valuation date are assumed to have a minimum of one year of future service. 2.6% 100% at normal retirement age. 40 50 60 0.8% 0.2% City of Okeechobee Firefighters' Retirement System 33 Table XI (Cont'd) H.Cost Method Normal Retirement, Termination, Disability, and Death Benefits: Aggregate I.Asset Valuation Method J.Changes Since Previous Valuation None Actuarial Assumptions and Actuarial Cost Methods Used in the Valuation Under this method the excess of the Actuarial Present Value of Projected Benefits of the group included in the valuation,over the sum of the Smoothed Value of Assets is allocated as a level percentage of earnings of the group between the valuation date and the assumed retirement age.This allocation is performed for the group as a whole,not as a sum of individual allocations. The portion of this Actuarial Present Value allocated to a specific year is called the Normal Cost. Under this method, actuarial gains (losses) reduce (increase) future Normal Costs. The method used for determining the smoothed value of assets phases in the deviation between the expected and actual return on assets at the rate of 25%per year.The smoothed value of assets will be further adjusted to the extent necessary to fall within the corridor whose lower limit is 80% of the fair market value of System assets and whose upper limit is 120% of the fair market value of System assets. City of Okeechobee Firefighters' Retirement System 34 Table XII Attained Age Group 0-4 5-9 10-14 15-19 20-24 25-29 30 & Over Total Under 25 1 ------1 25-29 1 ------1 30-34 2 1 -----3 35-39 --1 1 ---2 40-44 --2 ----2 45-49 --1 ----1 50-54 ----1 --1 55-59 ----1 --1 60-64 -------- 65 & Over -------- TOTAL 4 1 4 1 2 --12 10/01/2017 10/01/2018 Average Attained Age 38.2 years 37.8 years Average Hire Age 27.4 years 27.9 years Average Pay 42,449$ 42,740$ Percent Female 0.0%0.0% and Service Groups as of October 1, 2018 ---------------------------------------------COMPLETED YEARS OF SERVICE--------------------------------------------- Distribution by Attained Age Groups City of Okeechobee Firefighters' Retirement System 35 Table XIII A.Entitled to Deferred Benefits Current Age Total Average Group Count Annual Benefit Annual Benefit Less than 40 --$ -$ 40 - 44 -- - 45 - 49 -- - 50 - 54 1 8,322 8,322 55 - 59 -- - 60 - 64 -- - 65 & Over -- - TOTAL 1 8,322$ 8,322 B.Receiving Benefits (including DROPs) Current Age Total Average Group Count Annual Benefit Annual Benefit Less than 50 --$ -$ 50 - 54 -- - 55 - 59 2 55,683 27,842 60 - 64 -- - 65 - 69 2 65,941 32,971 70 - 74 -- - 75 - 79 1 31,559 31,559 80 - 84 -- - 85 - 89 -- - 90 & Over -- - TOTAL 5 153,183$ 30,637$ Statistics for Participants Entitled to Deferred Benefits and Participants Receiving Benefits City of Okeechobee Firefighters' Retirement System 36 Table XIV A.Active Participants 1.Active participants previous year 11 2.Retired during year 0 3.Entered DROP 0 4.Died during year 0 5.Disabled during year 0 6.Terminated during year (2) 7.New active participants 3 8.Re-instated during year 0 9.Active participants current year 12 B.Participants Receiving Benefits 1.Participants receiving benefits previous year 4 2.New retired participants 0 3.Former DROPs now receiving benefits 0 4.New terminated vested receiving benefits 0 5.New disabled receiving benefits 0 6.New beneficiaries receiving benefits 0 7.Died or ceased payment during year 0 8.Retired or terminated vested receiving benefits current year 4 C.DROP Participants 1.DROP participants previous year 1 2.Died during year 0 3.Became disabled during year 0 4.Employment terminated and retired during year 0 5.Entered DROP during year 0 6.DROP participants current year 1 D.Terminated Vested Participants Entitled to Future Benefits 1.Terminated vested entitled previous year 1 2.Died during year 0 3.Commenced receiving benefits during year 0 4.New terminated vested 0 5.Terminated vested paid lump sum 0 6.Terminated vested entitled current year 1 Reconciliation of Member Data City of Okeechobee Firefighters' Retirement System 37 Table XV Projected Total Fiscal Year Annual Payout 2019 157,460$ 2020 200,915$ 2021 241,624$ 2022 241,603$ 2023 241,423$ 2024 241,104$ 2025 240,703$ 2026 240,062$ 2027 239,288$ 2028 237,870$ Projected Retirement Benefits The above projected payout of System benefits during the next ten years is based on assumptions involving all decrements.The actual payouts may differ from the above estimates depending upon the death,salary and retirement experience of the System. However,since the projected payment is recomputed each valuation date, there is an automatic correction to the extent that actual experience varies from expected experience. City of Okeechobee Firefighters' Retirement System 38 Table XVI Valuation Benefits Administrative Employee Net City Total State Smoothed Date Paid 1 Expenses Contributions Contributions 2 Contributions Value 2 10/01/2018 123,132$ 59,878$ 23,446$ 115,078$ 52,793$ 4,146,331$ 10/01/2017 127,009 34,933 25,409 107,123 50,589 3,881,778 10/01/2016 102,590 31,639 27,433 97,709 49,889 3,577,993 10/01/2015 96,939 27,132 26,324 92,863 52,662 3,335,746 10/01/2014 142,060 16,233 23,854 82,058 63,598 3,062,097 10/01/2013 180,562 22,297 21,821 55,917 49,175 2,795,908 10/01/2012 31,091 18,925 21,837 54,525 58,861 2,595,508 10/01/2011 37,895 15,102 21,511 49,188 48,724 2,428,618 10/01/2010 30,936 14,773 21,940 26,076 54,518 2,416,595 10/01/2009 30,782 16,232 22,837 5,755 65,515 2,330,746 10/01/2008 33,518 15,418 23,074 16,014 66,073 2,255,117 10/01/2007 48,684 16,430 22,538 26,775 58,160 2,123,157 10/01/2006 32,362 15,142 20,244 26,004 51,372 1,908,512 10/01/2005 39,469 18,467 19,819 600 50,262 1,717,461 10/01/2004 10,694 15,920 20,499 600 46,239 1,627,792 10/01/2003 17,515 10,127 18,685 600 53,447 1,600,422 10/01/2002 0 8,477 17,721 600 54,807 1,481,268 1 2 Net of Credit Balance, if any,effective for the October 1, 2018 Actuarial Valuation.Net of Credit Balance,DROP account balances, Share Plan account balances and excess State Funds reserves, if any, prior to October 1, 2018 Actuarial Valuation. Summary of Transaction Information Includes DROP distributions and refunds. City of Okeechobee Firefighters' Retirement System 39 Table XVII Termination Valuation % Increase Assumed Ratio of Actual Market Smoothed Date (Decrease)Increase to Expected Value Value Assumed 10/01/2018 3.9%7.0%5.8 7.8%6.5%7.0% 10/01/2017 2.8%7.0%N/A 11.4%7.1%7.0% 10/01/2016 0.5%7.0%N/A 7.6%6.1%7.0% 10/01/2015 7.7%7.0%N/A (1.4%)7.6%7.0% 10/01/2014 2.7%7.0%N/A 11.0%7.9%7.0% 10/01/2013 1.8%7.0%N/A 7.3%7.2%7.0% 10/01/2012 2.4%7.0%N/A 16.7%5.6%7.0% 10/01/2011 (0.5%)7.0%N/A (2.8%)(0.8%)7.0% 10/01/2010 1.7%7.0%N/A 9.9%2.6%7.0% 10/01/2009 4.2%7.0%N/A 0.2%2.1%7.0% Last 3 Years 2.4%7.0%N/A 8.9%6.6%7.0% Last 5 Years 3.5%7.0%N/A 7.2%7.0%7.0% Last 10 Years 2.7%7.0%N/A 6.6%5.2%7.0% 1 Computed as 2I/(A+B-I), where A is beginning value, B is ending value and I is investment return. Compensation Recent Compensation, Termination and Investment Return Experience Investment Return 1 City of Okeechobee Firefighters' Retirement System 40 Table XVIII Contribution Minimum Required Actual City Actual State Actual Employer Valuation Fiscal Employer Contributions Contributions Contributions Date Year End Contributions Made Made Made 10/01/2018 09/30/2020 157,372$ TBD TBD TBD 10/01/2017 09/30/2019 139,143$ TBD TBD TBD 10/01/2016 09/30/2018 167,871$ 115,253$ 52,793$ 168,046$ 10/01/2015 09/30/2017 170,269$ 107,123$ 50,589$ 157,712$ 10/01/2014 09/30/2016 143,632$ 97,709$ 49,889$ 147,598$ 10/01/2013 09/30/2015 138,914$ 92,863$ 52,662$ 145,525$ 10/01/2012 09/30/2014 122,212$ 82,058$ 63,598$ 145,656$ 10/01/2011 09/30/2013 103,915$ 55,917$ 49,175$ 105,092$ 10/01/2010 09/30/2012 98,023$ 54,525$ 58,861$ 113,386$ 10/01/2009 09/30/2011 97,629$ 49,188$ 48,724$ 97,912$ 10/01/2008 09/30/2010 80,594$ 26,076$ 54,518$ 80,594$ 10/01/2007 09/30/2009 63,564$ 5,755$ 65,515$ 71,270$ 10/01/2006 09/30/2008 66,094$ 16,014$ 66,073$ 82,087$ 10/01/2005 09/30/2007 74,862$ 26,775$ 58,160$ 84,935$ 10/01/2004 09/30/2006 71,730$ 26,004$ 51,372$ 77,376$ 10/01/2003 09/30/2005 44,999$ 600$ 50,262$ 50,862$ 10/01/2002 09/30/2004 42,056$ 600$ 46,239$ 46,839$ Employer Contribution Information City of Okeechobee Firefighters' Retirement System 41 Table XIX 10/01/2017 10/01/2018 A.Participant Data 1.Active participants 11 12 2.Retired participants and beneficiaries receiving benefits (including DROPs)5 5 3.Disabled participants receiving benefits 0 0 4.Terminated vested participants 1 1 5.Annual payroll of active participants 499,626$ 512,885$ 6.Annual benefits payable to those currently receiving benefits including DROPs 157,292$ 153,183$ B.Value of Assets 1.Net Smoothed Value of Assets *3,881,778$ 4,146,331$ 2.Net Market Value of Assets *3,931,687$ 4,248,914$ C.Liabilities 1.Actuarial present value of future expected benefit payments for active members a.Retirement benefits 2,937,292$ 3,197,176$ b.Vesting benefits 168,962 167,910 c.Death benefits 12,116 13,565 d.Disability benefits 87,706 96,391 e.Total 3,206,076$ 3,475,042$ 2.Actuarial present value of future expected benefit payments for terminated vested members 93,392$ 100,122$ 3.Actuarial present value of future expected benefit payments for members currently receiving benefits a.Service retired including DROP participants 1,420,899$ 1,476,399$ b.Disability retired 0 0 c.Beneficiaries 323,147 315,222 d.Miscellaneous (refunds in process)0 8,399 e.Total 1,744,046$ 1,800,020$ *Includes Share Plan Account in October 1, 2017 values State Required Exhibit Actuarial Valuation as of October 1, 2018 City of Okeechobee Firefighters' Retirement System 42 Table XIX (Cont'd) 10/01/2017 10/01/2018 4.Reserve for Share Plan liability 7,660$ 2,496$ 5.Total actuarial present value of future expected benefit payments 5,051,174$ 5,377,680$ 6.Actuarial accrued liabilities (Entry Age Normal) *3,658,428$ 3,806,990$ 7.Unfunded actuarial accrued liabilities (Entry Age Normal)(223,350)$ (339,341)$ D.Statement of Accumulated System Benefits 1.Actuarial present value of accumulated vested benefits a.Participants currently receiving benefits including DROP participants 1,744,046$ 1,791,621$ b.Other participants (including reserve for Share Plan liability)1,128,110 1,332,876 c.Total 2,872,156$ 3,124,497$ 2.Actuarial present value of accumulated non- vested System benefits 107,515$ 58,730$ 3.Total actuarial present value of accumulated System benefits 2,979,671$ 3,183,227$ E.Statement of Change in Accumulated System Benefits 1.Actuarial present value of accumulated System benefits as of October 1, 2017 2,979,671$ 2.Increase (decrease) during year attributable to: a.System amendment 0$ b.Change in actuarial assumptions 0 c.Benefits paid including refunds and DROP benefits (123,132) d.Other, including benefits accumulated and increase for interest due to decrease in the discount period 326,688 e.Net increase 203,556$ 3.Actuarial present value of accumulated System benefits as of October 1, 2018 3,183,227$ *Includes Share Plan Account in October 1, 2017 values Actuarial Valuation as of October 1, 2018 State Required Exhibit City of Okeechobee Firefighters' Retirement System 43 Table XIX (Cont'd) 10/01/2017 10/01/2018 F.Pension Cost 1.Total normal cost 113,750$ 109,880$ 2.Estimated expenses 34,933 59,878 3.Interest adjustment 17,190 13,258 4.Total required contribution 165,873$ 183,016$ 5.Item 4 as a percentage of payroll 33.2%35.7% 6.Estimated employee contributions 26,730$ 25,644$ 7.Item 6 as a percentage of payroll 5.0%5.0% 8.Estimated State contributions 50,589$ 52,793$ 9.Item 8 as a percentage of payroll 10.1%10.3% 10.Net amount payable by City 88,554$ 104,579$ 11.Item 10 as a percentage of payroll 17.7%20.4% G.Past Contributions 1.Total contribution required (previous valuation)191,317$ 165,873$ 2.Actual contributions made: a.Employees 23,446$ N/A b.State (net)52,793 N/A c.City (net)115,078 N/A d.Total 191,317$ N/A H.Net Actuarial Gain (Loss)155,579$ 77,189$ I.Disclosure of Following Items: 1.Actuarial present value of future salaries - attained age 5,136,315$ 5,747,525$ 2.Actuarial present value of future employee contributions - attained age 256,816$ 287,376$ 3.Actuarial present value of future contributions from other sources N/A N/A 4.Amount of active members' accumulated contributions 260,901$ 275,819$ 5.Actuarial present value of future salaries and future benefits at entry age N/A N/A 6.Actuarial present value of future employee contributions at entry age N/A N/A Actuarial Valuation as of October 1, 2018 State Required Exhibit City of Okeechobee Firefighters' Retirement System 44 Table XIX (Cont'd) Enrollment Number: 17-02802 Dated:April 29, 2019 Lawrence F. Wilson, A.S.A. State Required Exhibit This actuarial valuation and/or cost determination was prepared and completed by me or under my direct supervision, and I acknowledge responsibility for the results.To the best of my knowledge,the results are complete and accurate,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 System and /or paid from the System's assets for which liabilities or current costs have not been established or other wise provided for in the valuation.All known events or trends which may require material increase in System costs or required contribution rates have been taken into account in the valuation. City of Okeechobee Firefighters' Retirement System 45 Table XX Glossary Actuarial Accrued Liability.The difference between the Actuarial Present Value of Future Benefits,and the Actuarial Present Value of Future Normal Costs. Actuarial Assumptions.Assumptions about future plan experience that affect costs or liabilities,such as: mortality, withdrawal,disablement, and retirement;future increases in salary;future rates of investment earnings;future investment and administrative expenses;characteristics of members not specified in the data, such as marital status; characteristics of future members; future elections made by members and other items. Actuarial Cost Method.Actuarial Cost Method A procedure for allocating the Actuarial Present Value of Future Benefits between the Actuarial Present Value of Future Normal Costs and the Actuarial Accrued Liability. Actuarial Equivalent.Of equal Actuarial Present Value,determined as of a given date and based on a given set of Actuarial Assumptions. Actuarial Present Value of Future Benefits.The Actuarial Present Value of amounts which are expected to be paid at various future times to active members,retired members,beneficiaries receiving benefits and inactive, non-retired members entitled to either a refund or a future retirement benefit. Expressed another way, it is the value that would have to be invested on the valuation date so that the amount invested plus investment earnings would provide sufficient assets to pay all projected benefits and expenses when due. Actuarial Valuation.The determination, as of a valuation date,of the Normal Cost, Actuarial Accrued Liability, Actuarial Value of Assets,and related Actuarial Present Values for a plan.An Actuarial Valuation for a governmental retirement system typically also includes calculations of items needed for compliance with GASB No. 67. Actuarial Value of Assets.The value of the assets as of a given date,used by the actuary for valuation purposes. This may be the market or fair value of plan assets or a smoothed value in order to reduce the year- to-year volatility of calculated results, such as the funded ratio and the actuarially required contribution. Amortization Method. A method for determining the Amortization Payment.The most common methods used are level dollar and level percentage of payroll.Under the Level Dollar method, the Amortization Payment is one of a stream of payments,all equal, whose Actuarial Present Value is equal to the UAAL.Under the Level Percentage of Pay method, the Amortization Payment is one of a stream of increasing payments, whose Actuarial Present Value is equal to the UAAL.Under the Level Percentage of Pay method, the stream of payments increases at the rate at which total covered payroll of all active members is assumed to increase. City of Okeechobee Firefighters' Retirement System 46 Table XX (Cont'd) Glossary Amortization Payment.That portion of the plan contribution which is designed to pay interest on and to amortize the Unfunded Actuarial Accrued Liability. Amortization Period. The period used in calculating the Amortization Payment. Annual Required Contribution.The employer’s periodic required contributions,expressed as a dollar amount or a percentage of covered plan compensation. The annual required contribution consists of the Employer Normal Cost and Amortization Payment plus interest adjustment. Closed Amortization Period.A specific number of years that is reduced by one each year,and declines to zero with the passage of time.For example if the amortization period is initially set at 30 years, it is 29 years at the end of one year, 28 years at the end of two years, etc. Employer Normal Cost.The portion of the Normal Cost to be paid by the employer.This is equal to the Normal Cost less expected member contributions. Equivalent Single Amortization Period.For plans that do not establish separate amortization bases (separate components of the UAAL),this is the same as the Amortization Period.For plans that do establish separate amortization bases,this is the period over which the UAAL would be amortized if all amortization bases were combined upon the current UAAL payment. Experience Gain/Loss. A measure of the difference between actual experience and that expected based upon a set of Actuarial Assumptions, during the period between two actuarial valuations.To the extent that actual experience differs from that assumed, Unfunded Actuarial Accrued Liabilities emerge which may be larger or smaller than projected.Gains are due to favorable experience,e.g.,the assets earn more than projected,salaries do not increase as fast as assumed,members retire later than assumed, etc.Favorable experience means actual results produce actuarial liabilities not as large as projected by the actuarial assumptions.Losses are the result of unfavorable experience,i.e.,actual results that produce Unfunded Actuarial Accrued Liabilities which are larger than projected. Funded Ratio. The ratio of the Actuarial Value of Assets to the Actuarial Accrued Liability. GASB. Governmental Accounting Standards Board. City of Okeechobee Firefighters' Retirement System 47 Table XX (Cont'd) Glossary GASB No.67 and GASB No.68.These are the governmental accounting standards that set the accounting rules for public retirement plans and the employers that sponsor or contribute to them. Statement No.67 sets the accounting rules for the plans themselves,while Statement No.68 sets the accounting rules for the employers that sponsor or contribute to public retirement plans. Normal Cost. The annual cost assigned, under the Actuarial Cost Method, to the current plan year. Open Amortization Period.An open amortization period is one which is used to determine the Amortization Payment but which does not change over time.In other words,if the initial period is set as 30 years,the same 30-year period is used in determining the Amortization Period each year.In theory, if an Open Amortization Period is used to amortize the Unfunded Actuarial Accrued Liability,the UAAL will never completely disappear,but will become smaller each year,either as a dollar amount or in relation to covered payroll. Unfunded Actuarial Accrued Liability.The difference between the Actuarial Accrued Liability and Actuarial Value of Assets. Valuation Date.The date as of which the Actuarial Present Value of Future Benefits are determined. The benefits expected to be paid in the future are discounted to this date.