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LTC 093-2013 Actuarial Valuation Reportsm MIAMI BEACH OFFICE OF THE CITY MANAGER NO. LTC # 093 -2013 LETTER TO COMMISSION TO: Mayor Matti Herrera Bower and Members of the City Commission FROM: Kathie G. Brooks, Interim City Managerc/ DATE: March 21, 2013 SUBJECT: Actuarial Valuation Reports for the City's Two Pension Plans, Miami Beach Employees Retirement Plan and the City Pension Fund for Firefighters and Police Officers in the City of Miami Beach The purpose of this Letter to the Commission (LTC) is to provide the Mayor and the City Commission with the City's Annual Required Contributions payable October 1, 2013, for both of the City's pension plans. The actuary for the City Pension Fund for Firefighters and Police Officers in the City of Miami Beach (Fire and Police Pension Plan), presented a draft FY2013/2014 Actuarial Valuation Report during the last Fire and Police Pension Board meeting. This report will be made available once approved by the Fire and Police Pension Board. Based on the draft valuation, the preliminary estimate for the City's Annual Required Contribution (ARC) towards the Fire and Police Pension Plan payable October 1, 2013 is $41.51 million, an increase of approximately $2.14 million from the current fiscal year. The FY2013/2014 Actuarial Valuation Report for the Miami Beach Employees' Retirement Plan was adopted during the March 12, 2013, Pension Board meeting (Attached). Based on the results of the valuation, the City's Annual Required Contribution (ARC) towards the Miami Beach Employees' Retirement Plan payable October 1, 2013 is $26.2 million, an increase of $4 million. Attached, please find a summary of valuation data for both of the City's pension plans for the past five years. Should you require additional information, please do not hesitate to contact Carla Gomez, Human Resources Assistant Director or myself. Thank you. KGB /CMG Attachments C'� N O '{ w b r �a n- ry � w T, iT. Z M rl City of Miami Beach Valuation Data for City's Pension Plans *Amount was reduced by $466,878 due to City overpayment in FY10/11 ** Police and Fire Estimated Projections as Valuation has not been adopted by the Board Police & Fire General Employees Valuation ARC Payable October 1 of Fiscal Year Actuarial Required City Contribution Projected Pensionable Payroll % of Payroll Unfunded Actuarial Accrued Liability (UAAL) Actuarial Required City Contribution Covered Payroll % of Payroll Unfunded Actuarial Accrued Liability (UAAL) 2008 2009 -2010 $23,283,269 $ 53,153,934 43.80 $176,368,132 $17,137,394 $68,009,550 25.20 $125,016,843 2009 2010 -2011 $35,243,726 $ 54,154,885 65.08 $266,792,988 $14,474,678 $70,097,549 20.65 $148,766,860 2010 2011 -2012 $36,175,910 $49,718,966 72.76 $291,931,506 *$17,583,191 $68,844,264 25.54 $176,796,453 2011 2012 -2013 $39,370,000 $49,186,724 80.041 $339,297,4481 21,222,051 $66,346,9041 31.991 $205,827,133 2012 ** 2013- 2014 ** $41,510,000 $46,313,650 89.62 $382,000,000 $26,212,015 $65,053,945 40.29 $215,987,733 *Amount was reduced by $466,878 due to City overpayment in FY10/11 ** Police and Fire Estimated Projections as Valuation has not been adopted by the Board G T)C Gabriel Roeder Smith Sc Company J Consultants & Actuaries CITY OF NHAMI BEACH EMPLOYEES' RETIREMENT PLAN ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, 2012 ANNUAL EMPLOYER CONTRIBUTION FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2014 RS Gabriel Roeder Smith & Company One East Broward Blvd. 954.527.1616 phone Consultants & Actuaries Suite 505 954.525.0083 fax Ft. Lauderdale, FL 33301 -1804 www.gabrielroeder.com March 11, 2013 Board of Trustees City of Miami Beach Employees' Retirement Plan Miami Beach, Florida Dear Board Members: The results of the October 1, 2012 Actuarial Valuation of the City of Miami Beach Employees' Retirement Plan are presented in this report. This report was prepared at the request of the Board and is intended for use by the Retirement Plan and those designated or approved by the Board. This report may be provided to parties other than the Retirement Plan only in its entirety and only with the permission of the Board. The purpose of the valuation is to measure the Plan's funding progress, to determine the employer contribution rate for the fiscal years ending September 30, 2014 and to determine the actuarial information for Governmental Accounting Standards Board (GASB) Statement No. 25. This report should not be relied on for any purpose other than the purpose described above. The findings in this report are based on data or other information through September 30, 2012. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. The valuation was based upon information furnished by the City concerning Plan benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We checked for internal and year -to -year consistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided by the City. This report was prepared using certain assumptions prescribed by the Board as described in Section B. The undersigned actuaries are members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. The signing actuaries are independent of the plan sponsor. This report has been prepared by actuaries who have substantial experience valuing public employee retirement systems. To the best of our knowledge the information contained in this report is accurate and fairly presents the actuarial position of the Retirement Plan 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 actuarial valuation and/or cost determination was prepared and completed by me or under my direct supervision, and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate. In my opinion, the techniques and assumptions used are reasonable, meet the requirements and intent of Part VII, Chapter 112, Florida Statutes, and are based on generally accepted actuarial principles and practices. There is no benefit or expense to be provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation. Respectfully submitted, GABRIEL, ROEDER, SMITH AND COMPANY By 3 Melissa R. Algayer MAAh, F &A Enrolled Actuary No. 11 -06467 t By y Z J fre mrose, MAAA l nrolled Actuary No. 11 -06599 Gabriel Roeder Smith & Company TABLE OF CONTENTS Section Title Page A Discussion of Valuation Results 1 B Valuation Results 1. Participant Data 7 2. Annual Required Contribution 8 3. Actuarial Value of Benefits and Assets 9 4. Calculation of Normal Cost 10 5. Liquidation of the Unfunded Accrued Liability 11 6. Actuarial Gains and Losses 14 7. History of Investment Returns and Salary Increases 15 8. Actual Compared to Expected Decrements among Active Employees 18 9. History of Contributions 19 10. Actuarial Assumptions and Cost Method 21 11. Glossary of Terms 26 C Pension Fund Information 1. Statement of Plan Assets at Market Value 29 2. Reconciliation of Plan Assets 30 3. Actuarial Value of Assets 32 4. Investment Rate of Return 33 D Financial Accounting Information 1. FASB No. 35 34 2. GASB No. 25 35 E Miscellaneous Information 1. Reconciliation of Membership Data 37 2. Age and Service Distribution 38 3. Inactive Member Distribution 39 F Summary of Plan Provisions 40 GRS SECTION A DISCUSSION OF VALUATION RESULTS GRS DISCUSSION OF VALUATION RESULTS Comparison of Required Employer Contributions A comparison of the required employer contribution developed in this and the last actuarial valuation is shown below. Increase (Decrease) 4,989,964 8.30 7.72 (1,292,959) (1,345,012) The contribution has been adjusted for interest on the basis that the employer contribution is made in a single payment on the first day of the fiscal year. The actual employer contribution for the year ending September 30, 2012 was $16,312,068 plus $1,271,123 of prepaid employer contributions for a total of $17,583,191. The minimum required contribution was $17,583,191. Revisions in Benefits There have been no revisions in benefits since the last valuation. Revisions in Actuarial Assumptions and Methods The investment return assumption was reduced from 8.15% last year to 8.00% this year. The Actuarial Standard of Practice (ASOP) with regard to the mortality assumption has recently been revised. ASOP No. 35 Disclosure Section 4.1.1 now states "The disclosure of the mortality assumption should contain sufficient detail to permit another qualified actuary to understand the provision made for future mortality improvement. If the actuary assumes zero mortality improvement after the measurement date, the actuary should state that no provision was made for future mortality improvement. " The mortality table used was the RP -2000 Combined Healthy Participant Mortality Tables for males and females projected to the year 2010 using Scale AA. There is no provision for future mortality improvements after 2010. We recommend that the mortality assumption be revised to include a margin for GRS Required City Contribution % of Non -DROP % of Total Non -DROP Total Amount Payroll Payroll Covered Payroll Covered Payroll For FYE 9/30/14 Based on 10/1/12 Valuation $ 26,212,015 40.29 % 37.56 % $ 65,053,945 $ 69,782,689 For FYE 9/30/13 Based on 10 /1 /11 Valuation 21,222,051 31.99 % 29.84 % $ 66,346,904 $ 71,127,701 Increase (Decrease) 4,989,964 8.30 7.72 (1,292,959) (1,345,012) The contribution has been adjusted for interest on the basis that the employer contribution is made in a single payment on the first day of the fiscal year. The actual employer contribution for the year ending September 30, 2012 was $16,312,068 plus $1,271,123 of prepaid employer contributions for a total of $17,583,191. The minimum required contribution was $17,583,191. Revisions in Benefits There have been no revisions in benefits since the last valuation. Revisions in Actuarial Assumptions and Methods The investment return assumption was reduced from 8.15% last year to 8.00% this year. The Actuarial Standard of Practice (ASOP) with regard to the mortality assumption has recently been revised. ASOP No. 35 Disclosure Section 4.1.1 now states "The disclosure of the mortality assumption should contain sufficient detail to permit another qualified actuary to understand the provision made for future mortality improvement. If the actuary assumes zero mortality improvement after the measurement date, the actuary should state that no provision was made for future mortality improvement. " The mortality table used was the RP -2000 Combined Healthy Participant Mortality Tables for males and females projected to the year 2010 using Scale AA. There is no provision for future mortality improvements after 2010. We recommend that the mortality assumption be revised to include a margin for GRS 2 mortality improvements after 2010. Detail on this assumption can be found in the Actuarial Assumptions and Cost Method section. Actuarial Experience There was a net actuarial loss of $23,859,099 for the year which means actual experience was less favorable than expected. The actuarial loss was primarily due to lower than expected recognized return on investments, and was partially offset by gains due to lower salary increases than expected. The return on the Actuarial Value of Assets was 2.1% and the return on the Market Value of Assets was 20.5 %. The actuarial loss translates into an increase in the employer contribution equal to 3.31% of non -DROP payroll. Funded Ratio The funded ratio this year is 66.1% compared to 70.7% last year. This year's ratio was 67.2% before the assumption change described above. The funded ratio is equal to the actuarial value of assets divided by the actuarial accrued (past service) liability. Analysis of Change in Employer Contribution The components of change in the required employer contribution as a percent of non -DROP payroll are as follows: Contribution rate last year 31.99 % Change in assumptions /methods 1.66 Payment on unfunded liability 3.38 Change in employer normal cost rate (0.19) Experience gain/loss 3.31 Adjustment due to prepaid contribution 0.12 Change in administrative expense 0.02 Contribution rate this year 40.29 % Asset Values It is important to keep in mind that under the asset smoothing method, the difference between actual and expected return is recognized over five years. As of September 30, 2012 the market value of assets exceeded the actuarial value by $2,071,601. Once all the gains and losses through September 30, 2012 are fully recognized in the actuarial asset values, the contribution rate will decrease by roughly 0.3% of non -DROP payroll unless there are further gains or losses. GRS � 3 If we were not using an asset smoothing method, the City contribution rate would have been 40.01% and the funded ratio would have been 66.4%. Proiections of Required Contributions and Funded Ratio The following three pages show the estimated City contributions and funded ratios over the next ten years, and a projection of the unfunded accrued liability and amortization payments over the next thirty years. The projections are based on these assumptions: • An 8.0% return on market value of assets for 2013 and for each year after. e Cash flow remains constant • No future gains or losses other than the recognition of prior investment experience 0 3% payroll growth The projections reflect the expiration of amortization bases. For example, for the 2013 valuation, there will be an increase in the amortization payments on the unfunded accrued liability in the amount of $1,142,872. In 2014, the amortization payments will increase by $1,194,337. In 2015, the amortization payments will increase by $502,225. In 2016, the amortization payments will decrease by $1,323,663. Conclusion The remainder of this Report includes detailed actuarial valuation results, financial information, miscellaneous information and statistics, and a summary of plan provisions. GRS 4 10 -Year Projection of Annual Required Contribution (ARC) Assumptions 8.0% return on Market Value of Assets No gains or losses other than recognition of prior investment experience Constant cash flow 3.0% payroll growth GRS Total ARC Current Assumptions Dollar Fiscal Year Amount Ending 9/30 (thousands) % of Payroll 2014 $ 26,212 40.29 2015 28,264 42.18 2016 29,454 42.68 2017 29,947 42.13 2018 27,761 37.91 2019 27,669 36.69 2020 27,573 35.50 2021 27,484 34.35 2022 27,378 33.22 2023 27,274 32.13 2024 27,163 31.07 Assumptions 8.0% return on Market Value of Assets No gains or losses other than recognition of prior investment experience Constant cash flow 3.0% payroll growth GRS L1 � 0 w a b b a 4 85.0 f 80.0 75.0 70.0 66, 65.0 60.0 55.0 r 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 ti ti ti City of Miami Beach Employees' Retirement Plan 10 -Year Projection of Funded Ratio � ~L7 ti o\ O ff` �Q1b 1� NZ, Valuation Date 796 81.1 0 O `11 O� 1o�tiV �d1� m I 30- Year Projection of Unfunded Actuarial Accrued Liability (UAL) and Amortization Payments 22.0 20.0 ' 18.0 16.0 C 0 :o E 14.0 C 12.0 �a CL C 0 10.0 0 A 8.0 C. 4.0 2.0 220.0 200.0 180.0 160.0 140.0 0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 0.0 ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti �Amor iatim Payment — * — UAL ski+ � � ti � gym+ - i �-- SECTION B VALUATION RESULTS GRS h PARTICIPANT DATA October 1, 2012 1 October 1, 2011 ACTIVE MEMBERS Number (Non -DROP) Covered Annual Non -DROP Payroll Average Annual Non -DROP Pay Total Covered Annual Payroll Average Total Annual Pay Average Age (Non -DROP) Average Past Service (Non -DROP) Average Age at Hire (Non -DROP) DROP PARTICIPANTS Number Annual Benefits Average Annual Benefit Average Age RETIREES & BENEFICIARIES Number Annual Benefits Average Annual Benefit Average Age DISABILITY RETIREES Number Annual Benefits Average Annual Benefit Average Age TERMINATED VESTED MEMBERS Number Annual Benefits Average Annual Benefit Average Age 1,049 $ 65,053,945 $ 62,015 $ 69,782,689 $ 63,209 45.1 9.8 35.3 55 $ 2,994,703 $ 54,449 59.3 1,002 $ 33,085,394 $ 33,019 71.1 43 $ 1,117,160 $ 25,980 65.6 63 $ 1,343,444 $ 21,325 45.9 1,072 $ 66,346,904 $ 61,891 $ 71,127,701 $ 62,834 44.8 9.6 35.2 60 3,038,978 50,650 59.1 972 $ 30,321,221 $ 31,195 71.3 43 $ 1,038,368 $ 24,148 66.3 68 $ 1,296,576 $ 19,067 46.5 GRS ANNUAL REQUERED CONTRIBUTION (ARC) A. Valuation Date October 1, 2012 October 1, 2012 October 1, 2011 AjlerAssumption Before Assumption Change Change B. ARC to Be Paid During Fiscal Year Ending 9/30/2014 9/30/2014 9/3012013 C. Assumed Date of Employer Contrib. 10/1/2013 10/1/2013 10/1/2012 D. Annual Payment to Amortize Unfunded Actuarial Liability $ 17,184,796 $ 16,555,575 $ 12,706,745 E. Employer Normal Cost 7,085,589 6,682,247 6,916,048 F. ARC if Paid on the Valuation Date: D +E 24,270,385 23,237,822 19,622,793 G. ARC Adjusted for Frequency of Payments 26,212,015 25,131,704 21,222,051 H. ARC as % of Covered Payroll - Non -DROP Payroll 40.29 % 38.63 % 31.99 % - Total Payroll 37.56 % 36.01 % 29.84 % I. Expected Covered Payroll - Non -DROP Payroll 65,053,945 65,053,945 66,346,904 - Total Payroll 69,782,689 69,782,689 71,127,701 GRS ACTUARIAL VALUE OF BENEFITS AND ASSETS Faluation Date October 1, 2012 October 1, 2012 October 1, 2011 After Assumption Before Assumption Change Change B. Actuarial Present Value of All Projected Benefits for 1. Active Members a. Service Retirement Benefits $ 264,825,342 $ 257,622,998 $ 269,719,201 b. Vesting Benefits 31,967,178 30,885,431 31,827,213 c. Disability Benefits 7,271,899 7 ,097,334 6,968,416 d. Preretirement Death Benefits 3,953,764 3,855,931 3,901,096 e. Return of Member Contributions 631,843 628,393 618,849 308,650,026 300,090,087 313,034,775 f. Total 2. Inactive Members a. Service Retirees & Beneficiaries 409,347,392 404,010,960 372,407,944 b. Disability Retirees 12,377,127 12,213,881 11,255,203 c. Terminated Vested Members 11,480,115 11,210,208 12,545,886 433,204,634 427,435,049 396,209,033 d. Total 3. Total for All Members 741,854,660 727,525,136 709,243,808 C. Actuarial Accrued (Past Service) Liability per GASB No. 25 637,363,774 627,203,174 602,577,503 D. Actuarial Value of Accumulated Plan Benefits per FASB No. 35 1. Based on Plan's Interest Rate 596,192,659 586,776,312 563,637,296 2. Based on FRS Interest Rate 612,487,510 612,487,510 588,546,798 E. Plan Assets 1. Market Value 423,447,642 423,447,642 362,764,920 2. Actuarial Value 421,376,041 421,376,041 425,781,050 F. Unfunded Actuarial Accrued Liability: GE2 215,987,733 205,827,133 176,796,453 G. Actuarial Present Value of Projected Covered Payroll 543,825,043 539,308,153 548,806,758 H. Actuarial Present Value of Projected Member Contributions 51,791,078 51,395,925 52,578,408 fGRS In CALCULATION OF EMPLOYER NORMAL COST I A Valuation Date October 1, 2012 After Assumption Change October 1, 2012 Before Assumption Change October 1, 2011 0 B. Normal Cost for 1. Service Retirement Benefits 2. Vesting Benefits 3. Disability Benefits 4. Preretirement Death Benefits 5. Return of Member Contributions 6. Total for Future Benefits 7. Assumed Amount for Administrative Expenses 8. Total Normal Cost % of Covered Payroll - Non -DROP Payroll - Total Payroll C. Expected Member Contribution % of Covered Payroll - Non -DROP Payroll - Total Payroll D. Employer Normal Cost: B8-C % of Covered Payroll - Non -DROP Payroll - Total Payroll $ 9,825,032 2,047,065 529,872 268,222 225,573 12,895,764 694,180 13,589,944 20.89 % 19.47 % 6,504,355 10.00 % 9.32 % 7,085,589 10.89 % 10.15 % $ 9,508,736 1,975,912 518,795 262,014 226,965 12,492,422 694,180 13,186,602 20.27 % 18.90 % 6,504,355 10.00 % 9.32 % 6,682,247 10.27 % 9.58 % 9,815,719 2,015,078 515,569 262,722 226,604 12,835,692 693,694 13,529,386 20.39 % 19.02 % 6,613,338 9.97 % 9.30 % 6,916,048 10.42 % 9.72 % GRS 11 LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY A. Derivation of the Current UAAL 1. Last Year's UAAL $ 176,796,453 2. Employer Normal Cost for Contribution Year 7,433,480 3. Last Year's Contributions a. Employer Contribution Paid During FYE 9/30/2012 16,312,068 b. Prepaid Contribution Applied to FYE 9/30/2012 466,878 c. Total 16,778,946 4. Interest at the Assumed Rate on: a. 1 and 2 for one year 15,014,740 b. 3 from dates paid 1,367,484 c. a - b 13,647,256 5. This Year's Expected UAAL Prior to Revision: 1 + 2 - 3 + 4c 181,098,243 6. Change in UAAL Due to Plan Amendments and/or Changes in Actuarial Assumptions 10,160,600 7. This Year's Expected UAAL After Revisions: 5 + 6 191,258,843 8. This Year's Actual UAAL After Revisions: 215,987,733 9. Adjustment for 2012 Prepaid Contribution* 869,791 10. This Year's Gain (Loss): 7 - 8 + 9 (23,859,099) 11. Gain (Loss) Due to Investments (25,503,240) 12. Gain (Loss) Due to Other Causes 1,644,141 An excess contribution of $804,245 was made during fiscal year ending 9/30/2011 that was used to offset the contribution requirement for the fiscal year ending 9/30/2012. Since this amount was already reflected in assets for the 10/1/2011 Valuation, an adjustment is required. Therefore, a charge base in the amount of $869,791 ($804,245 plus 8.15% interest) was created as of 10/1/2012. GRS 12 B. UAAL Amortization Period andPayments Original UAAL Current UAAL Amortization Date Period Years Payment Before Changes After Changes Established Source (Years) Amount Remaining Amount 10/1/98 (Gain) Loss 15 $ (9,492,383) 1 $ (1,142,872) $ (1,142,872) $ (1,142,872) 10/1/99 (Gain) Loss 15 (11,197,306) 2 (2,467,935) (1,282,283) (1,281,428) 10/1/99 Plan Chg. 15 761,013 2 167,731 87,149 87,091 10 /1 /00 (Gain) Loss 15 (1,184,364) 3 (361,679) (130,119) (129,948) 10 /1 /01 (Gain) Loss 15 4,182,294 4 1,563,571 437,958 437,106 10 /1 /01 Plan Chg. 15 8,482,719 4 3,171,302 888,286 886,557 10/1/02 (Gain) Loss 30 24,017,296 20 20,763,850 1,977,351 1,958,189 10/1/03 (Gain) Loss 30 16,972,622 21 16,343,016 1,526,028 1,510,704 10/1/04 (Gain) Loss 30 9,682,048 22 9,131,281 837,543 828,850 1011105 (Gain) Loss and Assum. Chg.* 30 9,377,578 23 8,608,071 776,841 768,527 10/1/06 (Gain) Loss 30 11,796,972 24 10,858,091 965,521 954,888 10/1/06 (Gain) Loss 30 34,747,408 24 31,981,987 2,843,896 2,812,578 10/1/07 (Gain) Loss 30 (14,036,710) 25 (13,079,347) (1,147,475) (1,134,497) 10/1/07 Assum. and Method Chg.** 30 (12,143,754) 25 (11,315,499) (992,730) (981,502) 10/1/08 (Gain) Loss 30 29,844,325 26 29,463,272 2,553,274 2,523,669 10/1/08 Assum. Chg 30 8,228,994 26 8,123,925 704,016 695,853 10/1/09 (Gain) Loss 30 28,291,986 27 27,828,306 2,384,639 2,356,339 10/1/09 Assum. Chg 30 8,975,372 27 8,828,274 756,505 747,527 10/1/09 Assum. Chg 30 (7,968,884) 27 (7,838,281) (671,671) (663,700) 10/1/09 Plan Chg. 30 (6,161,412) 27 (6,060,432) (519,325) (513,162) 10/1/09 * ** 6 (1,126,404) 3 (1,036,146) (372,767) (372,277) 10 /1 /10 (Gain) Loss 30 15,123,488 28 15,306,995 1,298,259 1,282,512 10/1/10 Assum. Chg 30 8,061,915 28 8,159,739 692,066 683,672 10 /1 /11 (Gain) Loss 30 22,163,141 29 22,422,914 1,883,978 1,860,656 10 /1 /11 Assum. Chg 30 1,658,668 29 1,678,109 140,995 139,250 10/1/12 * * ** 29 869,791 29 869,791 73,080 72,175 10/1/12 (Gain) Loss 30 23,859,099 30 23,859,099 1,987,432 1,962,354 10/1/12 Assum. Chg 30 10,160,600 30 10,160,600 N/A 835,685 215,987,733 16,555,575 213,946,112 17,184,796 * Loss of 7,060,041 plus assumption change of 2,317,537. * *Assumption change of 5,311,398 plus method change of (17,455,152). ** *Credit Base established to reflect receivables from Excess Plan * ** *Charge Base established to reflect excess contribution for fiscal year ending 9/30/11 that was included in assets. This base is established as of 10/1/12. GRS 191 C. Amortization Schedule The UAAL is being liquidated as a level dollar amount over the number of years remaining in the amortization period. The expected amortization schedule is as follows: Amortization Schedule Year Expected UAAL 2012 $ 215,987,733 2013 214,707,175 2014 212,089,868 2015 207,973,292 2016 202,984,986 2017 199,027,173 2022 173,950,748 2027 137,105,252 2032 82,967,131 2037 31,880,733 2042 - GRS ACTUARIAL GAINS AND LOSSES 14 The assumptions used to anticipate mortality, employment turnover, investment income, expenses, salary increases, and other factors have been based on long range trends and expectations. Actual experience can vary from these expectations. The variance is measured by the gain and loss for the period involved. If significant long term experience reveals consistent deviation from what has been expected and that deviation is expected to continue, the assumptions should be modified. Net actuarial gains in previous years are as follows: Year Ended Gain Loss 9/30/1990 $ (9,106,524) 9/30/1991 2,727,904 9/30/1992 4,954,823 9/30/1993 5,370,894 9/30/1994 (1,696,061) 9/30/1995 6,661,918 9/30/1996 7,568,621 9/30/1997 13,539,264 9/30/1998 6,894,790 9/30/1999 16,168,137 9/30/2000 6,540,306 9/30/2001 (6,572,791) 9/30/2002 (32,586,068) 9/30/2003 (18,414,901) 9/30/2004 (9,682,048) 9/30/2005 (7,060,041) 9/30/2006 (11,796,971) 9/30/2007 14,036,710 9/30/2008 (29,844,325) 9/30/2009 (28,291,986) 9/30/2010 (15,123,488) 9/30/2011 (22,163,141) 9/30/2012 23,859,099) GRS HISTORY OF INVESTMENT RETURNS AND SALARY INCREASES 15 The.fund earnings and salary increase assumptions have considerable impact on the cost of the Plan so it is important that they are consistent with the actual experience. The following table shows the actual fund earnings and salary increase rates compared to the assumed rates for the last several years: * Approximate rate ** Represents salary increases and investment return for the total group Note: Figures before 1992 were taken from Reports of Buck Consultants. The actual investment return rates shown above are based on the actuarial value of assets. The actual salary increase rates shown above are the increases received by those active members who were included in the actuarial valuation both at the beginning and the end of each period. The exhibits that follow illustrate the table above in graphic form. GRS General Plan Unclassified Plan Investment Return Salary Increases Investment Return Salary Increases Year Ending Actual Assumed Actual Assumed Actual Assumed Actual Assumed 9/30/1989 11.6 % 8.0 % 1.9 % 6.0 % 14.6 % 8.0 % 3.2 % 6.0 % 9/30/1990 7.3 8.5 7.5 6.0 (2.3) 8.0 12.3 6.0 9/30/1991 8.1 8.5 3.0 6.0 21.6 8.5 3.4 6.0 9/30/1992 13.7 8.5 2.0 * 6.0 5.8 9.0 2.4 6.0 9/30/1993 11.4 8.5 3.1 6.0 14.1 9.0 6.3 6.0 9/30/1994 6.8 8.5 3.9 6.0 4.8 9.0 6.0 6.0 9/30/1995 11.4 8.5 8.8 6.0 24.1 9.0 7.6 6.0 9/30/1996 15.3 8.5 4.2 6.0 13.9 9.0 8.6 6.0 9/30/1997 13.8 8.5 6.0 6.0 19.1 9.0 7.4 6.0 9/30/1998 12.5 8.5 5.0 6.0 4.3 9.0 4.1 6.0 9/30/1999 14.4 8.5 7.3 6.0 18.8 9.0 7.1 6.0 9/30/2000 10.7 8.5 6.7 6.0 16.5 9.0 6.7 6.0 9/30/2001 7.2 8.5 9.3 6.0 9.7 9.0 7.0 6.0 9/30/2002 0.3 8.5 8.9 6.0 1.7 9.0 9.2 6.0 9/30/2003 4.3 8.5 8.1 6.0 4.6 9.0 7.5 6.0 9/30/2004 4.1 8.5 3.1 6.0 9.7 9.0 5.7 6.0 9/30/2005 4.4 8.5 4.7 6.0 10.7 9.0 6.8 6.0 9/30/2006 7.7 8.5 11.9 6.0 10.2 8.75 7.9 6.0 9/30/2007 ** 12.0 8.75 (3.6) 6.0 NA NA NA NA 9/30/2008 ** 5.2 8.65 11.3 6.0 NA NA NA NA 9/30/2009 ** 1.1 8.50 4.8 6.0 NA NA NA NA 9/30/2010 * * 5.0 8.35 2.5 6.0 NA NA NA NA 9/30/2011 * * 1.1 8.25 0.8 6.8 NA NA NA NA 9/30/2012 * * 2.1 8.15 1.7 5.7 NA NA NA NA Averages 7.9 % - -- 5.1 % - -- 11.0 % - -- 6.6 % -- * Approximate rate ** Represents salary increases and investment return for the total group Note: Figures before 1992 were taken from Reports of Buck Consultants. The actual investment return rates shown above are based on the actuarial value of assets. The actual salary increase rates shown above are the increases received by those active members who were included in the actuarial valuation both at the beginning and the end of each period. The exhibits that follow illustrate the table above in graphic form. GRS I 16 I History of Investment Return Based on Actuarial Value of Assets — General Plan and Combined Plan after 2006 History of Salary Increases — General Plan and Combined Plan after 2006 20% 20% 20% 15% 15% 10% 10% 5% 5% 12% 8% 0% 8% 0% -5% -5% -10% -10% 9� 9� 9� Plan Year End 0% IN Actual --0 A..-d History of Salary Increases — General Plan and Combined Plan after 2006 20% 20% 16% 16% 12% 12% 8% 8% 4% 4% 0% 0% -4% -4% -8% -8% ,b Plan Year End Compared to Previous Year t Actual t As wned GRS 1 17 GRS History of Investment Return Based on Actuarial Value of Assets - Unclassified Plan 20% 30% 16% 30% 25% 16% 25% 20% 20% 8% 15% 1 A 15% 10 % 4% 10% 5 % 5% 0% -4% 0% -4 % 0% 5% 5% Plan Year End —�— Actual t A+sun> =d 17 GRS History of Salary Increases - Unclassified Plan 20% 20% 16% 16% 12% 12% 8% 8% 4% 4% 0% 0% -4% -4 % -8% -8% Plan Year End Compared to Previous Year — r Actual 0 A--d 17 GRS 18 Actual (A) Compared to Expected (E) Decrements Among Active Employees Number Added Service & Active During DROP Disability Terminations Members Vested Other Totals Year Year Retirement Retirement Death End of A I E A E A E A E A A A E Ended Year 9/30/2003 109 46 20 40 0 3 2 1 15 9 24 33 714 9/30/2004 65 54 24 37 2 3 1 1 18 9 27 35 725 9/30/2005 73 62 16 43 2 3 2 1 23 19 42 37 736 9/30/2006 * 357 75 40 40 0 3 1 1 21 13 34 37 1018 9/30/2007 149 106 40 86 2 3 1 2 17 46 63 49 1061 9/30/2008 182 85 29 92 1 3 1 2 24 30 54 61 1158 9/30/2009 78 29 55 123 2 3 1 2 12 12 24 64 1154 9/30/2010 35 72 31 114 0 3 1 2 10 30 40 69 1117 9/30/2011 37 82 27 38 3 1 3 2 9 40 49 43 1072 9/30/2012 60 83 41 46 2 1 1 2 16 23 39 39 1049 9/30/2013 45 1 2 38 10 Yr Totals ** 1145 694 323 659 14 26 14 16 165 231 396 467 * Includes 401a transfers ** Totals are through current Plan Year only r. C C GRS 19 RECENT HISTORY OF REQUIRED AND ACTUAL CONTRIB UTIONS End of Required Employer Actual Employer Expected Employee Valuation Year To Contribution Contribution Contribution Which Date Valuation % of Applies i Amount Payroll Amount % of Payroll 10/1/92 9/30/94 $ 3,004,556 13.59 % $ 3,004,556 2,210,760 10.00 % 10/1/93 9/30/95 2,809,509 13.32 2,809,509 2,109,411 10.00 10/1/94 9/30/96 4,151,807 18.92 4,151,807 2,194,453 10.00 10/1/95 9/30/97 3,982,477 16.97 3,982,477 2,346,131 10.00 10/1/96 9/30/98 3,091,359 12.29 3,091,359 2,514,836 10.00 10/1/97 9/30/99 1,293,920 4.99 1,293,920 2,593,998 10.00 10/1/98 9/30/00 666,897 2.66 666,897 2,507,033 10.00 10/1/99 9/30/01 - - - 2,541,861 10.00 10 /1 /00 9/30/02 - - - 2,588,940 10.00 10 /1 /01 9/30/03 - - - 2,766,409 10.00 10/1/02 9/30/04 2,476,702 8.16 2,476,702 3,035,064 10.00 10/1/03 9/30/05 5,082,595 14.74 5,082,595 3,448,863 10.00 10/1/04 9/30/06 5,500,329 15.89 5,500,329 3,461,920 10.00 10/1/05 9/30/07 12,234,519 * 23.11 13,053,231 4,550,013 * 8.59 10/1/06 9/30/08 13,911,545 24.24 13,911,545 4,901,855 8.54 10/1/07 9/30/09 12,863,823 21.57 12,863,823 4,987,739 8.36 10/1/08 9/30/10 17,137,394 25.20 17,137,394 5,627,519 8.27 10/1/09 9/30/11 14,474,678 20.65 14,474,678 7,146,837 10.20 10 /1 /10 9/30/12 17,583,191 25.54 17,583,191 ** 6,995,774 10.16 10/1/11 9/30/13 21,222,051 31.99 NA 6,613,338 9.97 10/1/12 9/30/14 26,212,015 40.29 NA 6,504,355 10.00 Average % of Payroll 15.91 % 9.72 % * From February 28, 2006 Actuarial Impact Statement. ** Reflects use of $1,271,123 prepaid contribution Non -DROP Payroll GRS Fill Recent History of Required and Actual Contributions Total $30,000 $25,000 _I $20,000 — 'O s~ $15,000 0 $10,000 $5,000 $0 ]moll, ..Bill oil eee eeeeq u o", eee- 4 0 - 0 0 a0 , eq0 1, .4 0, O N;, -10' IiO Fiscal Year End dRequired Contribution MActual Contribution GRS 21 ACTUARIAL ASSUMPTIONS AND COST METHOD Valuation Methods Actuarial Cost Method - Normal cost and the allocation of benefit values between service rendered before and after the valuation date were determined using an Individual Entry -Age Actuarial Cost Method having the following characteristics: (i) the annual normal cost for each individual active member, payable from the date of employment to the date of retirement, is sufficient to accumulate the value of the member's benefit at the time of retirement; (ii) each annual normal cost is a constant percentage of the member's year by year projected covered pay. Actuarial gains /(losses), as they occur, reduce (increase) the Unfunded Actuarial Accrued Liability. Financing of Unfunded Actuarial Accrued Liabilities - Unfunded Actuarial Accrued Liabilities (full funding credit if assets exceed liabilities) were amortized by level (principal & interest combined) dollar contributions over a reasonable period of future years. Actuarial Value of Assets - The Actuarial Value of Assets phase in the difference between the expected actuarial value and actual market value of assets at the rate of 20% per year. The Actuarial Value of Assets will be further adjusted to the extent necessary to fall within the corridor whose lower limit is 80% of the Market Value of plan assets and whose upper limit is 120% of the Market Value of plan assets. During periods when investment performance exceeds the assumed rate, Actuarial Value of Assets will tend to be less than Market Value. During periods when investment performance is less than assumed rate, Actuarial Value of Assets will tend to be greater than Market Value. Valuation Assumptions The actuarial assumptions used in the valuation are shown in this Section. Economic Assumptions The investment return rate assumed in the valuations is 8.00% per year, compounded annually (net after investment expenses). The Wage Inflation Rate assumed in this valuation was 4.00% per year. The Wage Inflation Rate is defined to be the portion of total pay increases for an individual that are due to macroeconomic forces including productivity, price inflation, and labor market conditions. The wage inflation rate does not include pay changes related to individual merit and seniority effects. The assumed real rate of return over wage inflation is defined to be the portion of total investment return that is more than the assumed wage inflation rate. Considering other economic assumptions, the 8.00% investment return rate translates to an assumed real rate of return over wage inflation of 4.00 %. Rates of salary increases used are in accordance with the following table. This assumption is used to project a member's current salary to the salaries upon which benefits will be based. GRS 22 Demographic Assumptions The mortality table was the RP -2000 Combined Healthy Participant Mortality Tables for males and females projected to the year 2010 using Scale AA. There is no provision for future mortality improvements after 2010. As noted in the Discussion of Valuation Results, we recommend that the mortality assumption be revised to include a margin for mortality improvements after 2010. Sample values of the current life expectancies are shown below. e This assumption is used to measure the probabilities of each benefit being made after retirement. For active members, the probabilities of dying before retirement were based upon the same mortality table as members dying after retirement (25% of deaths are assumed to be service - connected). Current Mortality Assumption Sample % Increase in Salary Future Life Years of Merit and Base Total Service Seniority (Economic) Increase 1 3.0% 4.0% 7.0% 2 2.9% 4.0% 6.9% 3 2.8% 4.0% 6.8% 4 2.7% 4.0% 6.7% 5 2.6% 4.0% 6.6% 6 2.5% 4.0% 6.5% 7 2.0% 4.0% 6.0% 8 1.9% 4.0% 5.9% 9 1.8% 4.0% 5.8% 10 1.7% 4.0% 5.7% 11 1.6% 4.0% 5.6% 12 1.5% 4.0% 5.5% 13 1.4% 4.0% 5.4% 14 1.3% 4.0% 5.3% 15 1.2% 4.0% 5.2% 16 1.1% 4.0% 5.1% 17 1.0% 4.0% 5.0% 18 0.9% 4.0% 4.9% 19 0.8% 4.0% 4.8% r 20 0.7% 4.0% 4.7% 21+ 0.5% 4.0% 4.5% Demographic Assumptions The mortality table was the RP -2000 Combined Healthy Participant Mortality Tables for males and females projected to the year 2010 using Scale AA. There is no provision for future mortality improvements after 2010. As noted in the Discussion of Valuation Results, we recommend that the mortality assumption be revised to include a margin for mortality improvements after 2010. Sample values of the current life expectancies are shown below. e This assumption is used to measure the probabilities of each benefit being made after retirement. For active members, the probabilities of dying before retirement were based upon the same mortality table as members dying after retirement (25% of deaths are assumed to be service - connected). Current Mortality Assumption Sample Probability of Future Life Attained Dying Next Year Expectancy (years) Ages Men Women Men Women 50 0.18 % 0.14 % 31.85 34.16 55 0.30 0.25 27.17 29.44 60 0.57 0.48 22.66 24.89 65 1.11 0.92 18.44 20.61 70 1.91 1.59 14.60 16.69 75 3.29 2.59 11.12 13.15 80 5.82 4.28 8.13 10.00 GRS 23 The rates of retirement used to measure the probability of eligible members retiring during the next year are shown in the table below. The rate of retirement is 5% for each year of eligibility for early retirement. GRS Normal Retirement Rates Assumed Rate of Years of Service Age Retirement 5 -9 50 -54 5.0 % 55 -59 5.0 60 -64 10.0 65 -69 20.0 70+ 100.0 10 -14 50 -54 5.0 55 -59 5.0 60 -64 10.0 65 -69 10.0 70+ 100.0 15 -19 50 -54 15.0 55 -59 15.0 60 -64 20.0 65 -69 25.0 70+ 100.0 20 -24 50 -54 25.0 55 -59 25.0 60 -64 35.0 65 -69 50.0 70+ 100.0 25 -29 50 -54 70.0 55 -59 40.0 60 -64 50.0 65 -69 50.0 70+ 100.0 30+ 50 -54 100.0 55 -59 100.0 60 -64 100.0 65 -69 100.0 70+ 100.0 The rate of retirement is 5% for each year of eligibility for early retirement. GRS 24 Rates of separation from active membership were as shown below (rates do not apply to members eligible to retire and do not include separation on account of death or disability). This assumption measures the probabilities of members remaining in employment. Sample Years of % of Active Members Ages Service Separating Within Next Year ALL 0 9.80 % 0.05 1 7.70 45 2 6.20 0.17 3 5.00 60 4 4.00 20 5 & Over 7.00 25 6.64 30 6.16 35 5.28 40 4.20 45 3.44 50 2.84 55 2.60 Rates of disability among active members are shown in the table below (50% of disabilities are assumed to be service connected). Sample % Becoming Disabled Ages Within Next Year 25 0.03 % 30 0.03 35 0.05 40 0.07 45 0.11 50 0.17 55 0.23 60 0.37 65 0.56 GRS Miscellaneous and Technical Assumptions 25 Administrative & Investment The investment return assumption is intended to be the return net of Expenses investment expenses. Annual administrative expenses are assumed to be the average of non - investment related expenses averaged over the last two years. Assumed administrative expenses are added to the Normal Cost. Benefit Service Service rounded to the nearest month is used to determine the amount of benefit payable. Decrement Operation Disability and mortality decrements operate during retirement eligibility. Decrement Timing Decrements of all types are assumed to occur at the beginning of the year. Eligibility Testing Eligibility for benefits is determined based upon the age nearest birthday and service nearest whole year on the date the decrement is assumed to occur. Forfeitures For vested separations from service, it is assumed that 0% of members separating will withdraw their contributions and forfeit an employer financed benefit. It was further assumed that the liability at termination is the greater of the vested deferred benefit (if any) or the member's accumulated contributions. Incidence of Contributions Employer contributions are assumed to be made in full on the first day of the fiscal year. Member contributions are assumed to be received continuously throughout the year based upon the computed percent of payroll shown in this report, and the actual payroll payable at the time contributions are made. Marriage Assumption 85% of males and 85% of females are assumed to be married for purposes of death -in- service benefits. Male spouses are assumed to be three years older than female spouses for active member valuation purposes. Normal Form of Benefit 50% joint and survivor annuity; life annuity for members hired after September 30, 2010. Pay Increase Timing Middle of fiscal year. This is equivalent to assuming that reported pays represent amounts paid to members during the year ended on the valuation date. Cost of Living Increase 2.5% per year for Tier A and Tier B members; 1.5% per year for Tier C members. Increases are assumed to begin 2.75 years after retirement / DROP for Tier A and Tier B members and 4 years after retirement / DROP for Tier C members. This assumption reflects the COLA delay for DROP members. Maximum Benefits Benefits calculated for valuation purposes are limited to the maximum allowable benefits under Section 415 of the Internal Revenue Code. GRS 26 GLOSSARY Actuarial Accrued Liability The difference between the Actuarial Present Value of Future Benefits, (AAL) and the Actuarial Present Value of Future Normal Costs. Actuarial Assumptions Assumptions about future plan experience that affect costs or liabilities, such as: mortality, withdrawal, disablement, and retirement; future increases in salary; future rates of investment earnings; future investment and administrative expenses; characteristics of members not specified in the data, such as marital status; characteristics of future members; future elections made by members; and other items. Actuarial Cost Method A procedure for allocating the Actuarial Present Value of Future Benefits between the Actuarial Present Value of Future Normal Costs and the Actuarial Accrued Liability. Actuarial Equivalent Of equal Actuarial Present Value, determined as of a given date and based on a given set of Actuarial Assumptions. Actuarial Present Value The amount of funds required to provide a payment or series of payments (APV) in the future. It is determined by discounting the future payments with an assumed interest rate and with the assumed probability each payment will be made. Actuarial Present Value of The Actuarial Present Value of amounts which are expected to be paid at Future Benefits (APVFB) various future times to active members, retired members, beneficiaries receiving benefits, and inactive, nonretired members entitled to either a 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. 25, such as the Funded Ratio and the Annual Required Contribution (ARC). 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 (ARC). GRS 27 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. Amortization Payment That portion of the plan contribution or ARC 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 The employer's periodic required contributions, expressed as a dollar Contribution (ARC) amount or a percentage of covered plan compensation, determined under GASB No. 25. The ARC consists of the Employer Normal Cost and Amortization Payment. 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 For plans that do not establish separate amortization bases (separate Amortization Period 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. On the other hand, losses are the result of unfavorable experience, i.e., actual results that produce Unfunded Actuarial Accrued Liabilities which are larger than projected. GRS 28 Funded Ratio The ratio of the Actuarial Value of Assets to the Actuarial Accrued Liability. GASB Governmental Accounting Standards Board. GASB No. 25 and These are the governmental accounting standards that set the accounting GASB No. 27 rules for public retirement systems and the employers that sponsor or contribute to them. Statement No. 27 sets the accounting rules for the employers that sponsor or contribute to public retirement systems, while Statement No. 25 sets the rules for the systems themselves. Normal Cost The annual cost assigned, under the Actuarial Cost Method, to the current plan year. Open Amortization Period An open amortization period is one which is used to determine the Amortization Payment but which does not change over time. In other words, if the initial period is set as 30 years, the same 30 -year period is used in determining the Amortization Period each year. In theory, if an Open Amortization Period is used to amortize the Unfunded Actuarial Accrued Liability, the UAAL will never completely disappear, but will become smaller each year, either as a dollar amount or in relation to covered payroll. Unfunded Actuarial Accrued The difference between the Actuarial Accrued Liability and Actuarial Liability Value of Assets. Valuation Date The date as of which the Actuarial Present Value of Future Benefits are determined. The benefits expected to be paid in the future are discounted to this date. C �� SECTION C PENSION FUND INFORMATION GRS 29 STATEMENT OF PLAN ASSETS AT MARKET VALUE September 30 Item 2012 2011 A. Cash and Cash Equivalents (Operating Cash) $ - $ B. Receivables 1. Member Contributions $ $ - 2. Employer Contributions - - 3. Investment Income and Other Receivables 677,079 6,690,355 4. Total Receivables $ 677,079 $ 6,690,355 C. Investments 9. Total Investments * Includes outstanding loan balances. 1. Short Term Investments $ 8,587,189 $ 11,420,963 2. Domestic Equities 220,807,764 184,999,731 3. International Equities 72,280,878 63,176,401 4. Domestic Fixed Income 119,997,247 106,295,271 5. International Fixed Income 543,630 250,000 6. Real Estate - - 7. Private Equity - - 8. ICMA Account (for DROP)* 6,215,544 5,522,157 9. Total Investments $ 428,432,252 $ 371,664,523 D. Liabilities 1. Benefits $ - 2. Prepaid Employer Contribution 3. Expenses (166,258) 4. Other (213,117) 5. Total Liabilities $ (379,375) E. Total Market Value of Assets Available for Benefits $ 428,729,956 F. Reserves 1. DROP Accounts* 2. Total Reserves G. Adjustments 1. Receivables from Excess Benefit Plan 2. Prepaid Contribution 3. Total Adjustments H. Market Value Net of Reserves and Adjustments I. Allocation of Investments 1. Short Term Investments 2. Domestic Equities 3. International Equities 4. Domestic Fixed Income 5. International Fixed Income 6. Real Estate 7. Private Equity 8. ICMA Account (for DROP) 9. Total Investments * Includes outstanding loan balances. ** Overpayment by the city for fiscal year ending 9/30/11. $ (6,215,544) $ (6,215,544) $ 933,230 $ 423,447,642 2.00% 51.54% 16.87% 28.01% 0.13% 0.00% 0.00% (144,286) (10,700,944) $ (10,845,230) $ 367,509,648 $ (5,522,157) $ (5,522,157) $ 1,244,307 (466,878) ** $ 777,429 $ 362,764,920 3.07% 49.77% 17.00% 28.60% 0.07% 0.00% 0.00% 1.49% 100.00% GRS 30 r RECONCILIATION OF PLAN ASSETS September 30 r Item 2012 2011 . A. Market Value of Assets at Beginning of Year $ 367,509,648 $ 381,385,702 B. Revenues and Expenditures 1. Contributions a. Employee Contributions $ 7,425,051 $ 7,278,327 b. Employer Contributions 16,312,068 14,474,678 1 C. Other - - d. Total $ 23,737,119 $ 21,753,005 r 2. Investment Income a. Interest, Dividends, and Other Income $ 5,095,280 $ 4,738,296 b. Net Realized and Unrealized Gains /(Losses)* 69,957,932 (7,308,679) C. Investment Expenses (907,577) (913,759) d. Net Investment Income $ 74,145,635 $ (3,484,142) 3. Benefits and Refunds a. Refunds $ (811,738) $ (722,830) b. Regular Monthly Benefits (32,210,101) (30,566,434) c. DROP Disbursements (2,934,154) (173,747) d. Other Payments (Transfers to Police & Fire Plan) e. Total $ (35,955,993) $ (31,463,011) , l 4. Administrative and Miscellaneous Expenses $ (706,453) $ (681,906) 5. Transfers $ - $ - C. Market Value of Assets at End of Year $ 428,729,956 $ 367,509,648 D. Reserves 1. DROP Accounts ** $ (6,215,544) $ (5,522,157) 2. Total Reserves $ (6,215,544) $ (5,522,157) E. Adjustments 1. Receivables from Excess Benefit Plan $ 933,230 $ 1,244,307 i 2. Prepaid Contribution - (466,878) 3. Total Adjustments $ 933,230 $ 777,429 F. Market Value Net of Reserves and Adjustments $ 423,447,642 $ 362,764,920 * We were not provided with the breakdown of this amount between realized gains /(losses) and unrealized__ gains /(losses). ** Includes outstanding loan balances. * ** Overpayment by the city for fiscal year ending 9/30/11. GRS 31 Reconciliation of DROP Accounts Value at Beginning of Year $ 5,522,157 Payments Credited to Accounts* 3,352,662 Investment Earnings Credited to Accounts 274,879 Withdrawals from Accounts (2,934,154) Value at End of Year 6,215,544 *Reflects change in outstanding loan balance. GRS C)l DEVELOPMENT OF ACTUARIAL VALUE OF ASSETS Valuation Date — September 30 2011 2012 2013 2014 2015 A Actuarial Value of Assets Beginning of Year $ 432,953,336 $ 430,525,778 $ - $ - $ B. Market Value End of Year 367,509,648 428,729,956 - - C. Market Value Beginning of Year 381,385,702 367,509,648 - - D. Non-Investment/Administrative Net Cash Flow (10,391,912) (12,925,327) - - E. Investment Income - - - El. Actual Market Total: B -C -D (3,484,142) 74,145,635 - - - E2. Assumed Rate of Return 8.25% 8.15% 8.00% 8.00% 8.00% E3. Assumed Amount of Return 35,289,984 34,561,144 - - - E4. Amount Subject to Phase -In: E1—E3 (38,774,126) 39,584,491 - - - F. Phase -In Recognition of Investment Income - - - Fl. Current Year: 0.20 x E4 (7,754,825) 7,916,898 - - - F2. First Prior Year 709,422 (7,754,825) 7,916,898 - - F3. Second Prior Year (7,750,361) 709,422 (7,754,825) 7,916,898 - F4. Third Prior Year (18,624,374) (7,750,361) 709,422 (7,754,825) 7,916,898 F5. Fourth Prior Year 2,685,676 (18,624,374) (7,750,361) 709,422 (7,754,825) F6. ASOP No. 44 Compliance Adjustment* 3,408,832 - - - - F7. Total Phase -Ins (27,325,630) (25,503,240) (6,878,866) 871,495 162,073 G. Actuarial Value of Assets End of Year GI. Preliminary Actuarial Value of Assets: $ 430,525,778 $ 426,658,355 $ - $ - $ - G2. Upper Corridor Limit: 120 % *B 441,011,578 514,475,947 - - - G3. Lower Corridor Limit: 80 % *B 294,007,718 342,983,965 - - - G4. Funding Value End of Year 430,525,778 426,658,355 - - - G5. Less: DROP Account Balances 5,522,157 6,215,544 - - - G6. Plus: Adjustments 1,244,307 933,230 G7. Less: Prepaid Contribution 466,878 - G8. Final Funding Value End of Year 425,781,050 421,376,041 - - - H. Difference between Market & Actuarial Value $ (63,016,130) $ 2,071,601 $ - $ - $ - I. Actuarial Rate of Return 1.06% ** 2.14% 0.00% 0.00% 0.00% J. Market Value Rate of Return - 0.93% 20.54% 0.00% 0.00% 0.00% K Ratio of Actuarial Value to Market Value 117.15% 99.52% 0.00% 0.00% 0.00% * Per ASOP No. 44, a one -time adjustment of $3,408,832 is required. ** Before adjustment for ASOP No. 44 w N 33 INVESTMENT RATE OF RETURN * Note: Effective 10/1/06, the former General and Unclassified Plans were merged and assets were combined. Investment returns after this date are for the total group. ** Combined Plan after 2006 GRS General Plan ** Unclassified Plan Actuarial Actuarial Market Value Market Value Year Ended Value Value 9/30/89 NA % 11.6 % 14.6 % 14.6 % 9/30/90 NA 7.3 (23) (2.3) 9/30/91 NA 8.1 21.6 21.6 9/30/92 12.2 13.7 5.8 5.8 9/30/93 14.6 11.4 14.6 14.1 9/30/94 1.4 6.8 5.3 4.8 9/30/95 20.0 11.4 25.9 24.1 9/30/96 9.8 15.3 22.7 13.9 9/30/97 23.0 13.8 35.2 19.1 9/30/98 8.4 12.5 (03) 4.3 9/30/99 13.1 14.4 19.1 18.8 9/30/00 10.8 10.7 11.5 16.5 9/30/01 (7.4) 7.2 (8.1) 9.7 9/30/02 (5.9) 0.3 (9.8) 1.7 9/30/03 17.4 4.3 16.9 4.6 9/30/04 11.4 4.1 13.0 9.7 9/30/05 12.8 4.4 13.8 10.7 9/30/06 7.4 * 7.7 7.5 * 10.2 9/30/07 15.3 12.0 NA NA 9/30/08 (13.6) 5.2 NA NA 9/30/09 (0.8) 1.1 NA NA 9/30/10 11.3 5.0 NA NA 9/30/11 (0.9) 1.1 NA NA 9/30/12 20.5 2.1 NA NA Average Returns: Last 5 Years 2.6 % 2.9 % NA % NA % Last 10 Years 7.6 % 4.7 % NA % NA % All Years 8.2 % 7.9 % 10.9 % 11.0 % * Note: Effective 10/1/06, the former General and Unclassified Plans were merged and assets were combined. Investment returns after this date are for the total group. ** Combined Plan after 2006 GRS SECTION D FINANCIAL ACCOUNTING INFORMATION GRS 34 FASB NO. 35 INFORMATION A. Valuation Date October 1, 2012 October 1, 2011 B. Actuarial Present Value of Accumulated Plan Benefits 1. Vested Benefits a. Members Currently Receiving Payments $ 421,724,519 $ 383,663,147 b. Terminated Vested Members 11,480,115 12,545,886 c. Other Members 156,713,222 161,655,997 589,917,856 d. Total 557,865,030 2. Non - Vested Benefits 6,274,803 5,772,266 3. Total Actuarial Present Value of Accumulated Plan Benefits: 1 d + 2 596,192,659 563,637,296 4. Accumulated Contributions of Active Members 61,073,761 60,662,311 C. Changes in the Actuarial Present Value of Accumulated Plan Benefits 1. Total Value at Beginning of Year 563,637,296 534,033,829 2. Increase (Decrease) During the Period Attributable to: a. Plan Amendment 0 0 b. Change in Actuarial Assumptions 9,416,347 5,939,085 c. Latest Member Data, Benefits Accumulated and Decrease in the Discount Period 59,513,517 55,127,393 d. Benefits Paid (36,374,501) (31,463,011) 32,555,363 29,603,467 e. Net Increase 3. Total Value at End of Period 596,192,659 563,637,296 D. Actuarial Present Value of Accumulated Plan Benefits Using FRS Interest Rate a, Vested 605,681,200 581,914,369 b. Non - Vested 6,806,310 6,632,429 612,487,510 588,546,798 c. Total E. Market Value of Assets 423,447,642 362,764,920 F. Funded Ratio Using FRS Interest Rate 69.1 % 61.6 % G. Actuarial Assumptions - See page entitled Actuarial Assumptions and Methods GRS �n SCHEDULE OF FUNDING PROGRESS (GASB Statement No. 25) Actuarial Valuation Date Actuarial Value of Assets (a) Actuarial Accrued Liability (AAL) - Entry Age (b) Unfunded AAL (UAAL) (b) - (a) Funded Ratio (a) / (b) Covered Payroll (c) UAAL As % of Covered Payroll (b - a) / c 10/1/1993 $ 185,721,855 $ 187,130,465 $ 1,408,610 99.2 % $ 21,094,111 6.7 % 10/1/1994 188,997,087 202,078,377 13,081,290 93.5 21,944,531 59.6 10/1/1995 208,877,297 213,844,465 4,967,168 97.7 23,461,309 21.2 10/1/1996 226,633,680 222,221,064 (4,412,616) 102.0 25,148,361 (17.5) 10/1/1997 251,171,973 232,871,332 (18,300,641) 107.9 25,939,981 (70.5) 10/1/1998 266,716,007 240,760,472 (25,955,535) 110.8 25,070,334 (103.5) 10/1/1999 305,344,213 263,462,059 (41,882,154) 115.9 25,418,614 (164.8) 10/1/2000 326,816,322 277,933,325 (48,882,997) 117.6 25,889,403 (188.8) 10/1/2001 336,024,366 292,748,088 (43,276,278) 114.8 27,664,085 (156.4) 10/1/2002 322,181,146 319,831,292 (2,349,854) 100.7 30,350,644 (7.7) 10/1/2003 320,053,468 338,904,200 18,850,732 94.4 34,488,630 54.7 10/1/2004 320,735,755 352,105,058 31,369,303 91.1 34,619,199 90.6 10/1/2005 325,727,087 368,096,409 42,369,322 88.5 36,680,110 115.5 10/1/2006 358,458,949 448,933,278 90,474,329 79.8 57,390,894 157.6 10/1/2007 412,824,235 478,067,829 65,243,594 86.4 59,632,425 109.4 10/1/2008 425,714,565 526,481,586 100,767,021 80.9 68,009,550 148.2 10/1/2009 420,520,122 545,536,965 125,016,843 77.1 70,097,549 178.3 10/1/2010 431,479,305 580,246,165 148,766,860 74.4 68,844,264 216.1 10/1/2011 425,781,050 602,577,503 176,796,453 70.7 66,346,904 266.5 10/1/2012 (b) 421,376,041 627,203,174 205,827,133 67.2 65,053,945 316.4 10/1/2012 (a) 421,376,041 1 637,363,774 215,987,733 66.1 65,053,945 332.0 (a) After Changes (b) Before Changes w till SCHEDULE OF EMPLOYER CONTRIBUTIONS (GASB Statement No. 25) Year Ended September 30 Annual Required Contribution Actual Contribution Percentage Contributed 1994 $ 3,004,556 $ 3,004,556 100.0 % 1995 2,809,509 2,809,509 100.0 1996 4,151,807 4,151,807 100.0 1997 3,982,477 3,982,477 100.0 1998 3,091,359 3,091,359 100.0 1999 1,293,920 1,293,920 100.0 2000 666,897 666,897 100.0 2001 0 0 NA 2002 0 0 NA 2003 0 0 NA 2004 2,476,702 2,476,702 100.0 2005 5,082,595 5,082,595 100.0 2006 5,500,329 5,500,329 100.0 2007 12,234,519 13,053,231 106.7 2008 13,911,545 13,911,545 100.0 2009 12,863,823 12,863,823 100.0 2010 17,137,394 17,137,394 100.0 2011 14,474,678 14,474,678 100.0 2012 17,583,191 17,583,191 100.0 GRS SECTION E MISCELLANEOUS INFORMATION GRS 37 RECONCILIATION OF MEMBERSHIP DATA From 10/1/11 From 10/1/10 To 10/1/12 To 10 /1 /11 A. Active Members 1. Number Included in Last Valuation 1,072 1,117 2. New Members Included in Current Valuation 60 37 3. Employment Terminations (35) (49) 4. Service Retirements (13) (12) 5. DROP Retirements (28) (15) 6. Disability Retirements (2) (3) 7. Deaths (1) (3) S. Other - Transfers Out and Data Adjustments (4) 0 9. Number Included in This Valuation 1,049 1,072 B. Terminated Vested Members 1. Number Included in Last Valuation 68 75 2. Additions from Active Members 16 8 3. Lump Sum Payments /Refund of Contributions (10) (5) 4. Payments Commenced (11) (9) 5. Deaths 0 0 6. Other - Data Adjustments 0 (1) 7. Number Included in This Valuation 63 68 C. DROP Plan Members 1. Number Included in Last Valuation 60 49 2. Additions from Active Members 28 15 3. Retirements (32) (4) 4. Deaths (1) 0 5. Other 0 0 6. Number Included in This Valuation 55 60 D. Service Retirees, Disability Retirees and Beneficiaries 1. Number Included in Last Valuation 1,015 1,021 2. Additions from Active Members 15 17 3. Additions from Terminated Vested Members 11 9 4. Additions from DROP Plan 33 4 5. Deaths Resulting in No Further Payments (30) (37) 6. Deaths Resulting in New Survivor Benefits 1 0 7. End of Certain Period - No Further Payments 0 0 S. Other 0 1 9. Number Included in This Valuation 1,045 1,015 GRS 38 MIAMI BEACH EMPLOYEES' RETIREMENT PLAN - ACTIVE MEMBERS ON OCTOBER 1, 2012 Age Years of Service Group 1 04 5 -9 10 -14 15 -19 20 -24 25 -29 30 & UP Totals 20-24 8 8 Total Pay 315,444 315,444 Avg Pay 39,431 39,431 25 -29 41 31 72 Total Pay 1,731,144 1,203,502 2,934,646 Avg Pay 42,223 38,823 40,759 30-34 44 59 9 112 Total Pay 2,037,301 2,794,671 452,603 5,284,575 Avg Pay 46,302 47,367 50,289 47,184 35 -39 35 59 27 6 127 Total Pay 1,766,394 3,074,098 1,741,978 307,580 6,890,050 Avg Pay 50,468 52,103 64,518 51,263 54,252 40 -44 37 56 45 25 2 165 Total Pay 2,016,184 3,110,985 2,841,591 1,835,234 141,623 9,945,617 Avg Pay 54,491 55,553 63,146 73,409 70,812 60,276 45-49 34 48 44 41 23 7 1 198 Total Pay 2,372,127 2,889,856 3,111,759 2,910,006 1,854,330 483,786 58,986 13,680,850 Avg Pay 69,768 60,205 70,722 70,976 80,623 69,112 58,986 69,095 50 -54 20 51 40 42 10 9 4 176 Total Pay 1,218,613 2,885,974 2,785,749 2,997,090 859,051 740,235 396,840 11,883,552 Avg Pay 60,931 56,588 69,644 71,359 85,905 82,248 99,210 67,520 55 -59 18 19 27 22 5 91 Total Pay 982,329 1,009,870 1,596,067 1,453,669 384,327 5,426,262 Avg Pay 54,574 53,151 59,114 66,076 76,865 59,629 60-64 8 25 14 21 1 69 Total Pay 653,782 1,739,751 923,785 1,682,187 63,466 5,062,971 Avg Pay 81,723 69,590 65,985 80,104 63,466 73,376 65 -99 3 9 6 8 3 2 31 Total Pay 246,909 479,847 345,142 485,151 171,852 110,911 1,839,812 Avg Pay 82,303 53,316 57,524 60,644 57,284 55,456 59,349 Total No. 248 357 212 165 43 19 5 1,049 Total Pay 13,340,227 19,188,554 13,798,674 11,670,917 3,411,183 1,398,398 455,826 63,263,779 Avg Pay 53,791 53,749 65,088 70,733 79,330 73,600 91,165 60,309 GRS 39 INACTIVE MEMBERS ON OCTOBER 1, 2012 Age Terminated Vested Annual No. Benefits No. Disabled Annual Benefits Retirees, Beneficiaries & DROP Annual No. Benefits Grand Total Annual No. Benefits Under 45 23 $ 489,869 1 $ 15,847 5 79,817 29 $ 585,533 45 -49 23 571,763 5 135,657 5 162,300 33 869,720 50 -54 17 281,812 7 239,288 85 4,233,473 109 4,754,573 55 -59 0 - 5 121,500 112 5,093,837 117 5,215,337 60 -64 0 - 4 96,683 182 7,937,185 186 8,033,868 65 -69 0 - 7 240,413 161 6,203,706 168 6,444,119 70 -74 0 - 1 33,079 127 3,759,671 128 3,792,750 75 -79 0 - 3 67,854 127 3,392,548 130 3,460,402 80 -84 0 - 3 45,720 113 2,631,053 116 2,676,773 85 -89 0 - 6 110,722 79 1,628,311 85 1,739,033 90 & Up 0 - 1 10,397 61 958,196 62 968,593 Total 63 $ 1 43 $1 1057 $ 36,080,097 1 $ 38,540,701 GRS SECTION F SUMMARY OF PLAN PROVISIONS GRS M SUMMARY OF PLAN PROVISIONS Effective Date September 30, 2010 under Ordinance No. 2010 -3693 and Ordinance No. 2010 -3706 Eligibility Each general employee who works more than 30 hours per week is eligible for membership on his date of employment Creditable Service Service credited under the predecessor system plus service after such date with respect to which member contributions are made. Tiers of Employees Tier C — All members hired on or after September 30, 2010 (October 27, 2010 for members of CWA) Tier B — Members of AFSCME hired on or after April 30, 1993; members classified as GSA or "Other" hired on or after August 1, 1993; members of CWA hired on or after February 21, 1994; and Unclassified members hired on or after October 18, 1992. Tier A — All other members Earnings For Tier B and C members, base pay including longevity, but excluding overtime, shift differential or extra compensation allowances. For Tier A members, actual salary or wages received. Earnings do not include lump sum payments of unused sick or vacation time. Overtime pay for Classified Tier A members is limited to 10% of regular pay. Final Average Monthly Earnings (FAME) One - twelfth of average annual Earnings during the two highest paid years of Creditable Service, not less than the average monthly earnings for the 12 months as of March 8, 2006 for Unclassified Tier A members Effective September 30, 2010 averaging period is five years except for members who are less than five years away from normal retirement eligibility. Members who are eligible for normal retirement within in two years or less as of September 30, 2010 will have average earnings of two years. Members who are eligible for normal retirement in within three years as of September 30, 2010 will have average earnings of three years. Members who are eligible for normal retirement within four years as of September 30, 2010 will have average earnings of four years. Normal Retirement Eligibility Age 50 and five years of Creditable Service for those in Tier A Age 55 and five years of Creditable Service for those in Tier B Age 55 with 30 years of service or age 62 with 5 years of service for those in Tier C GRS 41 Benefit 3% of FAME multiplied years of Creditable Service with the total not to exceed 80% of FAME. There is a 90% cap for certain Tier A members. 2.5% of FAME multiplied years of Creditable Service with the total not to exceed 80% of FAME for Tier C members. Form of Benefit 50% joint and survivor annuity payable only to the spouse or, if no spouse, to the surviving children until age 21; other options are also available. Spouse's benefits cease upon remarriage. Life annuity for Tier C members COLA 2.5% for Tier A and Tier B members; 1.5% for Tier C members Early Retirement Eligibility Tier B members of the General Plan whose total of age plus service is 75, not earlier than age 50 Tier C members whose total of age plus service is 75, not earlier than age 55 Benefit Accrued pension actuarially reduced for number of years by which Early Retirement Date precedes Normal Retirement Date. Form of Benefit 50% joint and survivor annuity payable only to the spouse or, if no spouse, to the surviving children until age 21; other options are also available. Spouse's benefits cease upon remarriage. Life annuity for Tier C members COLA 2.5% for Tier A and Tier B members; 1.5% for Tier C members Delayed Retirement Eligibility Any time after the Normal Retirement Date. Benefit Calculated in the same manner as the Normal Retirement Benefit but using the FAME and Creditable Service as of the actual retirement date. Form of Benefit 50% joint and survivor annuity payable only to the spouse or, if no spouse, to the surviving children until age 21; other options are also available. Spouse's benefits cease upon remarriage. Life annuity for Tier C members COLA 2.5% for Tier A and Tier B members; 1.5% for Tier C members Disability Benefits Eligibility A total and permanent disability which renders a member incapacitated for the further performance of duty. Five years of Creditable Service is also required unless the disability is service - connected. GRS 42 Benefit Ordinary Disability: Accrued retirement benefit, without reduction, with a minimum of 35% of FAME. Service - Connected Disability: Accrued retirement benefit without reduction, with a minimum of 65% of FAME; 75% of FAME minimum for General Tier A members. Such amounts are reduced by workers' compensation benefits and, in certain cases, earned income will be considered in offsetting the benefit. The period of disability shall be included in Creditable Service for purposes of computing normal retirement benefits when a disability retiree reaches normal retirement age. Form of Benefit 50% joint and survivor annuity payable only to the spouse or, if no spouse, to the surviving children until age 21; other options are also available. Spouse's benefits cease upon remarriage. Life annuity for Tier C members COLA 2.5% for Tier A and Tier B members; 1.5% for Tier C members Preretirement Death Benefits For a member who has at least three years of Creditable Service but who dies before commencement of retirement benefits, a monthly benefit is payable to the spouse or, if no spouse, to the children until age 21. The benefit is equal to 50% of the accrued normal retirement benefit without reduction with the result being a minimum of 30% of FAME and a maximum of 40% of FAME for General members. Termination Benefits Any member who terminates employment and does not request a refund of his own contributions and has completed at least five years of Creditable Service will be eligible to receive his accrued benefit upon reaching his normal retirement age. Contributions Tier A Members 12% of Earnings. Tier B and Tier C Members 10% of Earnings. Employees who have reached the applicable benefit accrual cap (90% for General Tier A employees and 80% for all others) but have not yet reached retirement age will continue to contribute to the pension Plan, but only on the amount by which pay increases after reaching the cap From the City The amount necessary to fund the Plan properly according to the Plan's actuary. GRS 43 Deferred Retirement Option Plan (DROP) Eligibility Members who are eligible for Normal Retirement Benefit The member's Credited Service and AFC are frozen upon entry into the DROP. The monthly retirement benefit as described under Normal Retirement is calculated based upon the frozen Credited Service and AFC. Maximum DROP Period Interest Credited Normal Form of Benefit COLA Changes Since Last Valuation 36 months for Tier A and Tier B members; 60 months for Tier C members The investment return is determined by the self - directed investments. Lump Sum None The have been no changes since the last valuation. GRS