The URL can be used to link to this page

Home My WebLink AboutFinal Agenda Packet yew ,‘Iwe CITY OF RENTON FIREMEN'S PENSION BOARD Regular Meeting 7th Floor-Mayor's Conference Room Thursday, September 15, 2005 2:30 P.M. 1. CALL TO ORDER 2. APPROVAL OF MINUTES OF AUGUST 18, 2005 3. CORRESPONDENCE 4. MONTHLY STATEMENT TO AUGUST 31, 2005 5. MONTHLY BILLS AND PENSION PAYMENTS 6. UNFINISHED BUSINESS 7. NEW BUSINESS ACTUARIAL VALUATION REPORT OF JANUARY 1, 2005 8. ADJOURNMENT `burr Noe MINUTES FIREMEN'S PENSION BOARD CITY OF RENTON August 18, 2005 Kathy Keolker-Wheeler, Mayor Don Persson, Council Finance Committee Chair Bonnie Walton, City Clerk Ray Barilleaux, Fire Department Representative William Henry, Fire Department Representative William Larson, Fire Department Alternate The regular meeting of the Firemen's Pension Board was called to order by Chairman Kathy Keolker- Wheeler at 2:30 p.m. in the Mayor's conference room, 7th floor of Renton City Hall. In attendance were Board members Kathy Keolker-Wheeler, Don Persson, Ray Barilleaux, Bill Henry and Bonnie Walton; and Jill Masunaga, Finance Department Representative. MINUTES APPROVAL MOVED BY BARILLEAUX, SECONDED BY HENRY, THE PENSION BOARD APPROVE THE MINUTES OF THE JULY 21, 2005, MEETING. CARRIED. MONTHLY STATEMENT The financial report as of July 31, 2005, was reviewed. Total cash/investment balance was $4,813,495.63. MONTHLY BILLS AND PENSION PAYMENTS MOVED BY BARILLEAUX, SECONDED BY HENRY, THE BOARD APPROVE THE PENSION/MEDICAL PAYMENTS FOR AUGUST 2005, IN THE TOTAL AMOUNT OF $33,231.08. CARRIED. ADJOURNMENT MOVED BY BARILLEAUX, SECONDED BY HENRY, THE MEETING OF THE FIREMEN'S PENSION BOARD BE ADJOURNED. CARRIED. Time: 2:40 p.m. Bonnie I. Walton, City Clerk Member and Secretary, Firemen's Pension Board r ... ..r► CITY OF RENTON - FIREMEN'S PENSION FUND CASH & INVESTMENT ACTIVITY REPORT AS OF AUGUST 31, 2005 Fireman's Pension Fund Comparison of Cash and Investment Activity 6 ■2005 ❑2004 5t A 0 4 00_03E2 1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CURRENT 2005 2005 LAST YEAR 2004 2004 ACTIVITY: MONTH YTD BUDGET CURR MO YTD ADJ BUDGET BEGINNING CASH/INV BALANCE $4,813,495.63 $4,976,122.73 $4,976,123 $4,988,836.62 $5,133,315.47 $5,133,315.47 RECEIPTS: Property Taxes 0.00 0.00 $0 0.00 0.00 $0 Fire Insurance Premium Tax 0.00 72,403.73 $60,000 0.00 70,249.69 $40,000 Investment Interest 1,277.39 7,097.35 $100,000 358.70 9,373.68 $110,000 DISBURSEMENTS: Fire Pension 33,012.44 269,651.78 $400,000 30,932.24 250,665.76 $375,000 Office/Operating Supplies 213.55 400.00 $400 69.21 69.21 $400 Actuarial/Firemen's Pens 7,075.00 7,075.00 $5,000 0.00 0.00 $0 Reimb General/Clerical&Acct 575.00 4.600.00 $6,900 558.00 4,468.00 $6,700 ENDING CASH/INV BALANCE $4,773,897.03 $4,773,897.03 $4,723,823 $4,957,635.87 $4,957,735.87 $4,901,215 CURRENT PREVIOUS LAST YEAR LAST YEAR ACTIVITY: MONTH MONTH CURR MO PREV MO CASH $122,522.94 $162,121.54 $49,104.79 $30,305.54 INVESTMENTS CD's&State Investment Pool 454,767.46 454,767.46 479,767.46 529,767.46 Snohomish County Housing Authority 0.00 0.00 0.00 0.00 Federal National Mortgage Assn 99,555.84 99,555.84 99,555.84 99,555.84 Treasury Strips&Zero Coupon Bonds 4,097,050.79 4,097,050.79 4,329,307.78 4,329,307.78 Corporate Bonds 0.00 0.00 0.00 0.00 Convertable Bonds 0.00 0.00 0.00 0.00 Mutual Funds 0.00 0.00 0.00 0.00 TOTAL CASH AND INVESTMENTS $4,773,897.03 $4,813,495.63 $4,957,735.87 $4,988,936.62, The State Investment Pool interest 3.4850% 3.2135% 1.3073% 1.1543% H:\FINANCE\FINPLAN\FIREPEN\1_Fire_Pension_2005.xls\Aug05 Page 1 9/8/2005 Name Niue FIREMEN'S PENSION BOARD PENSION/MEDICAL PAYMENTS FOR SEPTEMBER, 2005 Recipient Pension Amt Medicals Total ANKENY, Charlie (Captain) $136.47 136.47 ASHURST, James (Assistant Chief) $4,045.50 - 4,045.50 BANASKY, George (Captain) $1,066.36 1,066.36 BARILLEAUX, Ray (Battalion Chief) - - BEATTEAY, Karlen (Widow) $214.62 214.62 BERGMAN, Claudette (Widow) $147.07 147.07 CHRISTENSON, Chuck(Firefighter) $303.50 303.50 CONNELL, Robert(Captain) $666.15 666.15 GEISSLER, Dick(Fire Chief) - - GOODWIN, Charles(Captain) $3,670.50 - 3,670.50 GOODWIN, Donald (Firefighter) $896.72 896.72 HAWORTH, Constance (Widow) $2,521.49 2,521.49 HAWORTH, Jack(Firefighter) $2,768.50 - 2,768.50 HENRY, Teresa A. (Widow) $287.80 287.80 HENRY, William, Jr. (Captain) $1,178.98 1,178.98 HURST, Gerald (Firefighter) $572.30 572.30 JONES, Gerald D. (Firefighter) $231.25 231.25 LARSON, William (Firefighter) - - LAVALLEY, Theodele (Captain) $330.83 330.83 MATTHEW, James (Deputy Chief) - - MC LAUGHLIN, JACK(Battalion Chief) $732.60 732.60 NEWTON, Gary (Lieutenant) $253.38 253.38 NEWTON, Roger(Firefighter) - - NICHOLS, Gerald (Battalion Chief) $348.06 348.06 PARKS-ANDREASON, Arlene (Widow) $307.26 307.26 PARKS, John (Firefighter) $2,873.50 251.01 3,124.51 PHILLIPS, Bruce H. (Deputy Chief) $84.41 84.41 PRINGLE, Arthur(Captain) $434.48 434.48 PRINGLE, S. Joan (Widow) $2,166.25 2,166.25 RIGGLE, David E. (Firefighter D Step) $85.84 85.84 RUPPRECHT, Jim (Firefighter D Step) $115.99 115.99 SMITH, Leroy (Firefighter) $367.79 367.79 STROM, Karl (Firefighter) $2,768.50 - 2,768.50 TODD, Franklin (Firefighter) $419.44 419.44 TONDA, Ernie (Captain) $30.26 30.26 VACCA, Nick(Lieutenant) $285.53 285.53 WALLS, Kenneth (Firefighter D Step) $140.65 140.65 WALLS, Mercedes (Widow) - - WALSH, David (Firefighter) $936.93 936.93 WALSH, Patrick(Captain) $868.71 868.71 WEISS, Larry (Battalion Chief) $534.64 534.64 WILLIAMS, Alta (Widow) - - WOOTEN, Marilyn E. (Widow) $220.18 220.18 Total Expenses: Pension/Medical 33,012.44 251.01 33,263.45 Prior Year Pension/Medical Payments: Total Pension Payments for September, 2004 30,932.24 Total Medical Bills Reimbursed in September, 2004 1,098.69 Total Expenses: Medical/Pension 32,030.93 4_SUMMARY 2005.XLS 9/8/2005 *le Ne FIREMEN'S PENSION BOARD MEDICAL BILLS TO BE REIMBURSED IN SEPTEMBER, 2005 PAYMENT Page Name Pharmacy/Medical Facility Amount of Bill James Ashurst 0.00 Charles Goodwin 0.00 Jack Haworth 0.00 2 John Parks Olympic Drug 115.02 2 John Parks Olympic Drug 103.62 2 John Parks Olympic Drug 23.22 2 John Parks Olympic Drug 9.15 251.01 Karl Strom 0.00 TOTAL 251.01 3_2005 FP Medical.XLS 9/8/2005 *me SENDCLAIMTO: '"Ie City of Renton Finance Dept.- Fire Pension 1055 South Grady Way Renton, WA 98055 V<cY Oy n YP- 41\r° CITY OF RENTON FIREMEN'S PENSION BOARD Pharmacy/Medical Claim Reimbursement Request 1) DATE -+ ' • ') 00 2) DISABILITY RETIREE'S NAME(print) \i6 h-n 4. , P rkc 3) ADDRESS 1(3(3C-,_ 14 ✓0•% 109 L V> C''- We ie63a- rI 4) DISABILITY AT TIME OF RETIREMENTcs7-O7J(<4l --r l Vl X 4,..5wc-e) Hia1`r�d/ ttoYrtial /r� " ers j a'►d 4 X/ -r' �a1�1 c 5) DESCRIPTION OF CLAIM: (Supporting documentation must be attached.) (Note: Medical coverage is limited to current treatment of the retiree's disability as determined at the time of retirement. (RCW 41.18) Submit only claims that relate to item#4.) 1-1 'ldr0_ rYlP -Per , 8ma. k ernd 4Aztf77 p'rob/r'ni$ 6) TOTAL AMOUNT OF CLAIM 4,-, C./ a I 7) I certify that I have not been and will not be compensated by any other organization, insurance carrier or Medicare for the above-mentioned claim for reimbursement ether than the City of Renton. I further certify that the above statements are complete and accurate to the best of my knowledge, and that all claims submitted are related to my disability as determined at the time of my ret' ment from the Renton Fire Department. Signature: 4'k ' .A....4-0A) Note: Supporting documentation must be attached. FA6ce l Net 'oar' $115.02 Value atthe smiling'O, Value at the smiting'O' 42±0iYMPIC DRUG es 12iW4415tlehaAFevtlerJ.,sLoansiewWa,dW9832 nm ArMh.(360)43-33sa6ae0M1 _ 4 24NM4IG15thaAfreveatl.,iwLobFiew,WO9U862 amaMMP .(36b0)42 -336Ee0 RX#C 519571 DR. RICHARDS RX#C 519574 DR.RICHARDS ACCEPTED 7/19/05 DS ACCEPTED 7/19/05 DS PARKS, JOHN - PARKS, JOHN 1111 fel X1111N x1111 111111111 1111IIIllll l 1 ft 1111T11111111Eillimiffill AMBIEN 10MG TABS#### ALPRAZOLAM 0.5MG TAB QTY#30 NDC#00024-5421-50 WINTH QTY#120 NDC#00781-1077-05 GENEV 2 REFILLS UNTIL: 1/15/06 2 REFILLS UNTIL: 1/15/06 PRICE: $115.02 PRICE: $23.22 II II IIIII1II 111111 11IIIIII 1 II IIS I�.IIII VIII a I 1101100I1111I1111M11 III 111111 III II Ill/ II RECEIPT RECEIPT Value atthe smiling V' Value at the smiting'O' 12t°'yPIC DRUG 1ato YMPIC DRUG w244r+c15thorAvega.,r=viewme,W9986g2 oMMh.(36b9)4F3-3360 423-3360 1244r+c15thaAvend.,mL. gvo-iew,WaAm86n2�oMMuh.(360 423-3360 RX# 519555 DR.RICHARDS RX# 523700 DR.RICHARDS ACCEPTED 7/19/05 DS ACCEPTED 8/4/05 U01 PARKS, JOHN PARKS, JOHN 1Ii1 �liI 11111��I ��1�I�1I ��f�11111111111�I IMMIMMill1ibillikilln REMERON SOLTAB 45MG LACTULOSE SOL 10G/15ML QTY#30 NDC#00052-0110-30 ORGAN QTY#120 NDC#60432-0037-32 MORT 2 REFILLS UNTIL: 7/19/06 11 REFILLS UNTIL: 8/4/06 PRICE: $103.62 PRICE: $9.15 11111111101111 ill 1 III 1011111 II 111110111110010111111111NIII MITI 11111101 III III loll IRECEIPT I RECEIPT PiVeri v rr ACTUARIAL VALUATION of Firefighters' Pension Fund City of Renton January 1, 2005 me Prepared by as Daniel R. Wade, FSA, EA, MAAA Fellow, Society of Actuaries Member, American Academy of Actuaries and Karen I. Steffen, FSA, EA, MAAA Fellow, Society of Actuaries Member, American Academy of Actuaries Ala Jal Jai (XX> Milliman �w A MILLIMAN GLOBAL FIRM 000 Milliman Consultants and Actuaries 1301 Fifth Avenue,Suite 3800 Seattle,WA 98101-2605 ell Tel +1 206 624.7940 Fax +1 206 340 1380 www.milliman.com dill August 8, 2005 �., Firefighters' Pension Board City of Renton 200 Mill Avenue South Renton, WA 98055 Re: 2005 Valuation Report �I. Dear Members of the Board: mil As requested, we have performed an actuarial valuation of the City's Firefighters' Pension Fund as of January 1, 2005. The major findings of the valuation are contained in this report. This report reflects the benefit provisions in effect as of the valuation date. In preparing this report, we relied, without audit, on information (some oral and some in writing) supplied by the City. We would like to express our appreciation to the City's staff who gave substantial assistance in supplying the data on which this report is based. This information includes, but is not limited to, statutory provisions, employee data and financial information. In our examination of these data, we have found them to be reasonably consistent and comparable with data used for other purposes. Since the valuation results 41111 are dependent on the integrity of the data supplied, the results can be expected to differ if the underlying data is incomplete or missing. If any of this information is inaccurate or incomplete, our work may need to be revised. On the basis of the foregoing, we hereby certify that, to the best of our knowledge and belief, this report is complete and accurate and has been prepared in accordance with generally recognized and accepted actuarial principles and practices which are consistent with the principles prescribed by the Actuarial Standards Board (ASB) and the Code of Professional Conduct and Qualification Standards for Public Statements of Actuarial Opinion of the American Academy of Actuaries. We further certify that all costs, liabilities, rates of interest, and other factors for the Fund have been determined on the basis of actuarial assumptions and methods which are individually reasonable (taking into account the experience of the Fund and reasonable expectations); and which, in combination, offer our best estimate of anticipated experience affecting the Fund. Nevertheless, the emerging costs will vary from those presented in this report to the extent that actual experience differs from that projected by the actuarial assumptions. fgh0001.doc-1 OFFICES IN PRINCIPAL CITIES WORLDWIDE imp 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Firefighters' Pension Fund 4111 00 City of Renton August 8, 2005 Page Two gal Actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the Fund. Actuarial computations under Governmental Accounting Standards Board (GASB) Statements No. 25 and 27 are for purposes of fulfilling financial accounting requirements. The computations prepared for these two purposes may differ as disclosed in our report. The calculations in the enclosed report have been made on a basis consistent with our understanding of the Fund's funding requirements and goals, and of GASB Statements No. 25 and 27. Determinations for purposes other than meeting these requirements may be significantly different from the results contained in this report. Accordingly, additional determinations may be needed for other purposes. This report has been prepared for the internal use of and is only to be relied upon by the Fund and its auditors. No portion of this report may be disclosed to any other party without Milliman's prior written consent. In the event such consent is given, the report must be sos provided in its entirety, unless prior written consent from Milliman is obtained. We are members of the American Academy of Actuaries and members of the Society of Actuaries. Both meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. We respectfully submit the following report, and we look forward to discussing it with you. Sincerely, sts VOA,4 • Daniel R. Wade, FSA, EA, MAAA Karen I. Steffen, FSA, EA, MAAA Consulting Actuary Consulting Actuary DRW/KIS/nlo 41111 oar fgh0001.doc-2 OFFICES IN PRINCIPAL CITIES WORLDWIDE 14 0003 FQH 10/14 003.FQH.10.2005.1 /DRW/KIS/nlo .rr Actuarial Valuation of Firefighters' Pension Fund 4 City of Renton January 1, 2005 Table of Contents Page SECTION 1 Scope of the Report 1 SECTION 2 Conclusions and Recommendations 2 SECTION 3 Cost of Pension Benefits 4 TABLE 1 Actuarial Present Value of All Future Pension Benefits Not Provided by LEOFF System 7 TABLE 2 Derivation of Contributions Required for Pension Benefits 8 SECTION 4 Actuarial Information for Accounting Purposes 9 TABLE 3 GASB Statement No. 27 Annual Pension Cost and Net Pension Obligation ...11 TABLE 4 GASB Statements No. 25 and No. 27 Schedule of Funding Progress 12 TABLE 5 GASB Statement No. 25 Schedule of Employer Contributions 13 TABLE 6 GASB Statement No. 27 Three-Year Trend Information 14 TABLE 7 GASB Statement No. 27 Annual Development of Pension Cost 15 SECTION 5 Supplemental Information 16 TABLE 8 Projection of Future Excess Pension Benefits 17 APPENDIX A Actuarial Procedures and Assumptions 19 TABLE A-1 Summary of Valuation Assumptions 22 TABLE A-2 Service Retirement Annual Rates 23 TABLE A-3 Disability Annual Rates 24 TABLE A-4 Mortality Annual Rates 25 TABLE A-5 Actuarial Assumptions Display for Required Supplementary Information 26 4011 APPENDIX B Provisions of Governing Law 27 APPENDIX C Valuation Data 33 TABLE C-1 Firefighters Disabled in Line of Duty Before March 1, 1970 34 TABLE C-2 Survivors of Firefighters Retired Before March 1, 1970 34 TABLE C-3 Firefighters Retired for Service Since March 1, 1970 35 �,. TABLE C-4 Firefighters Disabled in Line of Duty Since March 1, 1970 35 TABLE C-5 Survivors of Firefighters Retired Since March 1, 1970 36 This work product was prepared solely for the City of Renton. It may not be appropriate to use for Mi 11 i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. fgh0001.doc Ant 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of 40 Firefighters' Pension Fund City of Renton January 1, 2005 SECTION 1 Scope of the Report AIM This report presents the results of an actuarial valuation of the City's Firefighters' Pension Fund (FPF). Particular attention is given to the cost of providing the "excess benefit", a benefit under FPF available to active members as of March 1, 1970. On that date, the Washington Law Enforcement Officers' and Firefighters' System (LEOFF) was established. Under the terms of governing law, active members of the City's FPF on that date are entitled to payment from the FPF of the excess of benefits calculated under the FPF law over those calculated under the LEOFF law. The City's FPF also pays the entire pensions of those members retired prior to March 1, 1970 and their survivors. The employer costs given in the report are those that are the responsibility of the City. They ,., exclude those costs payable under the LEOFF system. The following section of this report gives the conclusions and recommendations resulting ,,, from the valuation of the City's FPF. Section 3 gives a brief description of the implications of the method employed in carrying out the valuation. It also contains a presentation of the computations discussed in Section 2. Section 4 gives the disclosure required by the Fund under Statement No. 25 of the Governmental Accounting Standards Board (GASB) and information for complying with Statement No. 27 for the employer's reporting purposes. Section 5 shows the projected cash payments the City will be required to pay for its pension obligations of the FPF. 40. There are three appendices attached to the report. The actuarial assumptions used in the valuation are summarized in Appendix A. Appendix B gives a summary of the benefit AIN provisions of both FPF and LEOFF, as interpreted for the purposes of this study. Appendix C contains tables showing the distribution of retirees with their monthly pension by age. aW afD arlf This work product was prepared solely for the City of Renton. It may not be appropriate to use for Mi 11 i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 1 who receive this work. fgh0001.doc airy 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 SECTION 2 Conclusions and Recommendations The City's obligations under the Firefighters' Pension Fund are limited to the benefits provided to firefighters retired prior to March 1, 1970, plus payments of excess retirement benefits to active members as of that date. To meet these obligations, the City may contribute annually to the Fund the amount raised by levying all or part of a tax of up to $0.45 (only $0.225 of which can be in excess of the property tax limit pursuant to RCW 84.52.043) per$1,000 of true and fair market value, the maximum provided by law for maintaining the Fund. Contributions also include donations and income from the state fire insurance premium collection. As of January 1, 2005, the actuarial present value of future excess pension benefits to be provided by the City is $6,254,086. Note that this number is slightly smaller than previously reported. This is due to a correction made during our review process. Because the total assets of the Fund exceed the present value of future excess pension benefits, no further contributions for pension benefits are recommended at this time. By law, firefighters' medical and long-term care benefits may be paid either from the City's general revenues or from its Firefighters' Pension Fund. Since the Fund is larger than the value of the expected FPF pension benefits, a portion of the excess could be used to pay these benefits. If medical and long-term care benefits or other nonpension expenses are to be paid from the FPF, we recommend they be limited to $240,000 per year over the next 10 41" years. As of January 1, 2003, the actuarial present value of excess pension benefits was determined to be $6,472,000. Due to the passage of time, the expected value as of January 1, 2005 based upon our 2003 valuation was $6,461,000. The total present value was 3% lower than expected for reasons summarized in the following chart: Reason Liability Increase(Decrease) as a percentage Demographic Experience 5% Changes in Benefit Amounts compared to expectations _ -1% Changes in Economic Assumptions -5% Changes in Mortality Assumptions -2% Total -3% Since our last valuation, both the economic and demographic assumptions have changed. The demographic assumptions were updated to reflect the latest experience study for the Law Enforcement Officers' and Firefighters' Retirement System prepared by the Office of the State Actuary and resulted in a 2% decrease in liabilities. This work product was prepared solely for the City of Renton. It may not be appropriate to use for • M i l l i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 2 who receive this work. fgh0001.doc i®rl1 14 0003 FON 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo arr Based upon our discussion with Michael Wilson, we used a 5.50% assumption for the investment return, a 4% assumption for wage growth, and a 3% assumption for inflation in our January 1, 2005 valuation. We used 6%, 5%, and 4%, respectively for these three assumptions in our January 1, 2003 valuation. The lower assumptions better reflect current market conditions. As the above chart indicates, these changes resulted in a 5% decrease in the liabilities because the investment return assumption was decreased by only 50 basis A" points, while the other assumptions were decreased by 100 basis points. 41111 AO mo "°' This work product was prepared solely for the City of Renton. It may not be appropriate to use for Mill i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 3 who receive this work. fgh0001.doc 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo .. Under LEOFF, the benefit is adjusted after retirement in proportion to the change in the Consumer Price Index (CPI). Under FPF, most adjustments are based on the change in .l salary for the active firefighters in the rank the members held at retirement. Wages have nearly always increased more rapidly than prices. The pattern is illustrated by the following table: am Geometric Average Increase in National Average CPI for Previous Period of Years -. Period Ending 10 years 20 years 50 years 77 years 2004 2.4% 3.0% 4.0% 3.2% 1994 3.6% 5.4% 4.4% 401 1984 7.3% 6.3% 4.2% 1974 5.2% 3.4% 1964 1.6% 2.9% 1954 4.2% 3.5% 400 1944 2.9% - Geometric Average Increase in National Average Wages for Previous Period of Years Period Ending 10 years 20 years 50 years 77 years as 2004 4.0% 4.0% 4.9% 4.6% 1994 3.9% 5.6% 5.0% 1984 7.2% 6.5% 6.2% s" 1974 5.8% 4.8% 1964 3.8% 4.1% 1954 4.5% 7.0% Ar 1944 9.6% Geometric Average Increase in National Average Wages Minus Geometric Average Increase in National Average CPI for Previous Period of Years w. Period Ending 10 years 20 years 50 years 77 years 2004 1.5% 1.0% 0.9% 1.4% 1994 0.4% 0.1% 0.7% ,i„ 1984 -0.1% 0.2% 2.0% 1974 0.6% 1.4% 1964 2.2% 1.3% 1954 0.3% 3.5% M` 1944 6.8% The wage information is based on statistics from the Social Security System back to 1951 i"II and the Total Private Nonagricultural Wages prior to 1951. The CPI figures are based on the national Consumer Price Index, U.S. City Average and All Urban Consumers. Over all years considered, wages have increased 1.4% faster than CPI. For the past 20 years, ma wages have grown at a rate of 1.0% higher than CPI. air This work product was prepared solely for the City of Renton. It may not be appropriate to use for 000 M illi m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 5 who receive this work. fgh0001.doc ! 14 0003 FQH 10/14.003.FQH.102005.1 /DRW/KIS/nlo ter. err In addition to historical data, we reviewed current economic forecasts to find an economic forecast with a time frame suited to our purposes. We looked at the expected increase in the CPI used by the Office of the Chief Actuary for the Social Security Administration. In the 2004 Trustees Report, the ultimate projected annual increase in the CPI under the intermediate cost assumptions was 2.8%. The reasonable range was stated as 1.8% to 3.8%. The ultimate projected annual growth rate in the U.S. earnings was 3.9% for the intermediate assumptions, with a range of 3.4% to 4.4%. For this valuation, we assume wages increase 4.0% per year and CPI increases will be 3.0%, reflecting both historical data and economic forecasts. The actuarial assumptions are monitored for reasonableness and periodic changes are made when appropriate. ,. Table 1 presents an analysis of the actuarial present value of future pension benefits to be paid by the FPF. The entire pension benefit of members retiring before the establishment of the LEOFF System is paid by the City. The City's actuarial accrued liability for members retiring after establishment of LEOFF is only for excess pension benefits, which can be substantial. Table 2 develops the Fund's actuarial deficiency for pension benefits, which is zero. As long as the Firefighters' Pension Fund provides for benefits to covered members, the City will be eligible to receive a share of the State's distribution of the fire insurance premium taxes. We have assumed the fire insurance premium taxes increase at the same rate as prices, 3.0% per year. We have assumed only fire insurance premiums received prior to January 1, 2015 are applied to fund the reserves for pension benefits. Premium income received after that date are assumed to be used for other purposes, such as payment of medical benefits. aom All medical benefits are assumed to be paid as incurred from the City's general fund, and no pre-funding of these obligations is required. The medical benefit obligations are not included in the GASB disclosures reported in Section 4. GASB No. 26, "Financial Reporting for Postemployment Healthcare Plans Administered by Defined Benefit Pension Plans", permits the City to provide historical trend information about the funded status of these benefits, but disclosure is not required. GASB Statement No. 45, "Accounting and Financial Reporting by Employers for Postretirement Benefits Other than Pensions" will require 'm• additional disclosure in future years. The majority of obligations for active members are paid under the City's insurance program. However, the City has the obligation to provide these benefits, either through an insurance program or otherwise. Aim mu This work product was prepared solely for the City of Renton. It may not be appropriate to use for 000 M i I I i ma n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 6 who receive this work. tgh0001.doc air 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of Firefighters' Pension Fund City of Renton °o January 1, 2005 411 SECTION 3 Cost of Pension Benefits Income from the Firefighters' Pension Fund comes from the following sources, as described in R.C.W.41.16.050: so 1. Bequests, fees, gifts, emoluments, or donations. 2. Forty-five percent of all monies received by the state from taxes on fire insurance premiums, prior to January 1, 2000. Twenty-five percent after January 1, 2000. so 3. Taxes paid pursuant to the provisions of R.C.W.41.16.060 (see below). 4. Interest on the investments of the Fund. oaf 5. Contributions by firefighters as provided herein. The provisions referred to in item (3) require that each municipality levy up to $0.45 (only $0.225 of which can be in excess of the property tax limit pursuant to RCW 84.52.043) per $1,000 of assessed valuation, based on reports by a qualified actuary, to maintain the Fund. At the time that the Law Enforcement Officers' and Firefighters' (LEOFF) System was installed, the state assumed the major portion of the obligation to provide future retirement benefits for members still in active service at the date of the inception of LEOFF, March 1, 1970. Each of the cities maintaining a Firefighters' Pension Fund (FPF) retained the responsibility for all benefits payable to members (or to their survivors) who retired prior to that date. In addition, each city retained the responsibility for a portion of the benefits or payable to members who were active on that date. These members are entitled to benefits under either the FPF formula or the LEOFF formula, whichever is greater. If the FPF benefit is greater, the City's FPF must meet the cost of the excess of the FPF benefit over the LEOFF benefit. Upon the establishment of LEOFF, the total pension liability of each FPF was expected to decrease rapidly from year to year because of the closed, diminishing nature of the group of au retirees and survivors. However, the excess pension benefits paid by each city's FPF have generally been much larger than anticipated. This is largely due to the way postretirement adjustments to benefits are calculated. .r so This work product was prepared solely for the City of Renton. It may not be appropriate to use for 11 M i l l i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 4 who receive this work. fgh0001.doc 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo a■ Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 TABLE 1 Actuarial Present Value of All Future Pension Benefits Not Provided by LEOFF an System Active Members Hired Prior to March 1, 1970: Retirement Benefits $ 0 Disability Benefits 0 Death Benefits 0 ar Separation Benefits 0 $ 0 rr Retirees and survivors: Retirements prior to March 1,1970 $ 1,018,000 Retirements since March 1,1970 5,236,000 6,254,000 Total Present Value of Future Benefits $ 6,254,000 alli ar ar ar aii ar This work product was prepared solely for the City of Renton. It may not be appropriate to use for �$ M 1111 ma n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 7 who receive this work. fgh0001.doc arY 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 TABLE 2 Derivation of Contributions Required for Pension Benefits MIN A. Actuarial present value of all future pension benefits not provided by the LEOFF System (Table 1): For active members $ 0 For retirees and survivors 6,254,000 6,254,000 err B. Assets of the Fund Market Value Cash $ 25,000 Investments 7,752,000 Other Assets 0 $ 7,777,000 Less liabilities 0 $ 7,777,000 C. Present value of future fire insurance premiums to be allocated to the Fund through 2014* 637,000 D. Total Assets [B+C]: 8,414,000 41111 E. Actuarial deficiency: Actuarial present value of amount to be funded from City appropriations, beginning in 2005 [A-D, not less than zero]: $ 0 * Based on amount of total fire insurance premium taxes allocated to the Fund in plan year 2004. The alll. fire insurance premium is assumed to be payable to the City for ten years from the valuation date. .rr all This work product was prepared solely for the City of Renton. It may not be appropriate to use for Mi I I i ma n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 8 who receive this work. fgh0001.doc arr 14 0003 FQH 10/14.003.FQH.10.2005.1 1 DRW/KIS/nlo ANN Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 SECTION 4 Actuarial Information for Accounting Purposes GASB reporting standards are required for defined benefit pension plans reporting and disclosures (Statement No. 25). The City has adopted the reporting standards. The requirements for Statement No. 25 include certain supplementary information to the financial statements. These include: (1) A Schedule of Funding Progress, and (2) A Schedule of Employer Contributions. The Schedule of Funding Progress compares the amount of Unfunded Actuarial Accrued Liability (UAAL) from year to year, and measures the progress of the employer's contributions in reducing this amount. The required Schedule of Employer Contributions compares the employer contributions required based on the actuarial required contribution, or ARC, with those employer contributions actually made. GASB Statement No. 27 is required for pension accounting by state and local governmental employers. The disclosures include the measurement of an Annual Pension Cost (APC). For the Fund, the APC is equal to the employer's Annual Required Contributions (ARC), as actuarially determined by the funding methods and assumptions for pension benefits used for GASB purposes. If the City is required to make a contribution (APC) and does not make „p,,, a contribution equal to the ARC, then a Net Pension Obligation (NPO) account would be established and the APC would reflect adjustments made to the NPO account, as well as the ARC. As of December 31, 2004, the City has a negative NPO as a result of the City paying more than its APC on a cumulative basis. This results in a net asset. It is our understanding that this asset should be recorded in the government-wide statement of net assets. For GASB purposes, the ARC must be calculated based on certain parameters required for disclosure purposes. We have used the Entry Age Normal Cost Method, one of the "i' acceptable actuarial funding methods under these parameters. Under this method the projected benefits are allocated on a level basis as a percentage of salary over the earnings of each individual between entry age and assumed exit age. The amount allocated to each year is called the Normal Cost and the portion of the Actuarial Present Value of all benefits not provided for by future Normal Cost payments is called the Actuarial Accrued Liability. Since all members have already retired, the amount of the Normal Cost is zero. The ,g,, Unfunded Actuarial Accrued Liability (UAAL) is the Actuarial Accrued Liability minus the actuarial value of the Fund's assets. This work product was prepared solely for the City of Renton. It may not be appropriate to use for 11 M i I I i ma n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 9 who receive this work. fgh0001.doc rr 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo For GASB reporting purposes, Table 3 presents the annual Normal Cost and the ARC as of the valuation date, assuming the UAAL is amortized as a level dollar amount over a closed 30-year period beginning January 1, 2000 (note at January 1, 2000, the UAAL was nr amortized over 30 years; at January 1, 2002, over 28 years, etc.). The estimated NPO at the end of the period December 31, 2005 is based on an assumed employer contribution as described in the footnote. Actual employer contributions will be different and the determination of the NPO at the end of the year should be re-determined based on the so actual amounts received by the Fund. The UAAL and the percentage funded by assets are shown in Table 4, the Schedule of Funding Progress. Amounts shown in Table 5, the Schedule of Employer Contributions and in Table 6, the Three-Year Trend information should also be updated to reflect actual employer contributions, including amounts received from the fire insurance premiums. AM After the first year, the redetermination of the NPO for future years, as shown in Table 7, Annual Development of Pension Cost will require the use of an amortization factor. We can assist the City in this determination at the end of the year. Annual redeterminations of the NPO are required by GASB No. 27, but only biennial actuarial valuations are needed to determine the ARC. am se This work product was prepared solely for the City of Renton. It may not be appropriate to use for MUnman other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 10 who receive this work. fgh0001.doc Aws 14 0003 FON 101 14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of Firefighters' Pension Fund City of Renton toe January 1, 2005 TABLE 3 GASB Statement No. 27 Annual Pension Cost and Net Pension Obligation Fiscal Year Ending +a+ 12/31/2003 12/31/2004 12/31/2005 Annual required contribution(ARC) 1.Annual Normal Cost(BOY) $ 0 $ 0 $ 0 2.Amortization of URAL(BOY) (194,038) (194,038) (107,622) 3. Interest to EOY (11,642) (11,642) (5,919) 4.ARC at EOY[(1)+(2)+(3)],not to be less than zero in years prior to 2004. $ 0 $ (205,680) $ (113,541) ere 5. Interest on NPO $ (7,086) $ (10,790) $ (24,553) 6.Adjustment to ARC (8,433) (13,047) (31,545) 7.Annual pension cost[(APC)] [(4)+(5)-(6)] $ 1,347 $ (203,423) $ (106,549) 8. Employer Contributions** 63,088 63,151 72,000 * 9. Change in NPO[(7)-(8)] (61,741) (266,574) (178,549) * 10. NPO at BOY[(11)prior year] $ (118,095) $ (179,836) $ (446,410) gar 11. NPO at EOY[(9)+(10)] $ (179,836) $ (446,410) $ (624,959)* *Assumed amounts will be replaced at year end with actual amounts. **Employer contributions for pensions are total contributions net of disbursements from the fund for medical benefits permitted by RWC reM 41.26.150 and administrative expenses. rr dr ow ow er er r This work product was prepared solely for the City of Renton. It may not be appropriate to use for 000 M i l l i ma n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 11 who receive this work. fgh0001.doc 118 14 0003 FQH 10/14.003 FQH.10.2005.1 /DRW/KIS/nlo $ I I I I I I I I t I I I I I I I t 1 Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 TABLE 4 GASB Statements No. 25 and No. 27 Schedule of Funding Progress (rounded to thousands) Actuarial Accrued Unfunded Actuarial UAAL As A Actuarial Value Liabilities Entry Accrued Liabilities Covered Percentage of Valuation Date of Assets Age (UAAL) Funded Ratio Payroll Covered Payroll January 1, 1997 $ 5,238 $ 6,444 $ 1,206 81 % $ 260 464 % January 1, 2001 7,067 6,780 (287) 104 0 N/A January 1, 2003 9,189 6,472 (2,717) 142 0 N/A January 1,2005 7,777 6,254 * (1,523) * 124 0 N/A *A $29 decrease in the actuarial accrued liabilities was made after the City's financial report was published and before the valuation was released. e M i l l i ma n This work product was prepared solely for the City of Renton. It may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes 12 no duty or liability to other parties who receive this work. fgh0001.doc 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo III a a a I I I I I I I I I li I I 1 I Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 TABLE 5 GASB Statement No. 25 Schedule of Employer Contributions Annual Required Percentage of Employer Fire Insurance Total Employer Contribution ARC Fiscal Year Ending Contributions** Premiums Contributions (ARC)*** Contributed December 31, 1997 $ 161,000 $ 69,305 $ 230,305 $ 99,516 231 % December 31, 1998 0 61,775 61,775 99,516 62 December 31, 1999 0 75,340 75,340 99,516 76 December 31, 2000 0 44,582 44,582 99,516 45 December 31, 2001 0 50,703 50,703 0 N/A December 31, 2002 0 55,730 55,730 0 N/A December 31, 2003 0 63,088 63,088 0 N/A December 31, 2004 (7,099) 70,250 63,151 (205,680) N/A December 31, 2005 0 * 72,000 * 72,000 * (113,541) N/A * * Assumed amounts will be replaced at year end with actual amounts. ** Employer Contributions are actual contributions to the fund, net of any medical, long-term care or administrative expenses paid from the fund. *** The ARC is documented as 0 for negative amounts prior to 2004. 000 M i I I i m a n This work product was prepared solely for the City of Renton. It may not be appropriate to use for other purposes. Milkman does not intend to benefit and assumes 13 no duty or liability to other parties who receive this work. fgh0001.doc 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 TABLE 6 GASB Statement No. 27 Three-Year Trend Information Contribution as a Annual Percentage of Net Pension Fiscal Year Ending Pension Cost(APC) APC Obligation (NPO) December 31, 2003 $ 1,347 4,684 % $ (179,836) December 31, 2004 (203,423) N/A (446,410) "u December 31, 2005 (106,549) N/A * (624,959) * *Assumed amounts will be replaced at year end with actual amounts. �I. Miff air its • riff riff alr Wal This work product was prepared solely for the City of Renton. It may not be appropriate to use for 11 Milliman other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 14 who receive this work. fgh0001.doc ror 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo • ■ III I I I I I I I I I k f Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 TABLE 7 GASB Statement No. 27 Annual Development of Pension Cost Fiscal Year ARC Annual Pension Total Employer Amort.of Ending at EOY" Interest on NPO ARC Adjustment Cost(APC) Contributions Change in NPO NPO Balance (Gain)/Loss Amort.Factor" (Gain)/Loss Ending Balance (2)= (3)= [prior yr(7)] [prior yr(7)] (4)= (7)=(6)+ (10)= (1) x int.rate /(9) (1)+(2)-(3) (5) (6)=(4)-(5) [prior yr(7)] (8)=0)-(5) (9) [prior yr(11)]/(9) (11)=f7) 12/31/1997 $ 99,516 $ 0 $ 0 $ 99,516 $ 230,305 $ (130,789) $ (130,789) $ (130,789) 13.2777 $ 0 $ (130,789) 12/31/1998 99,516 (9,155) (9,850) 100,211 61,775 38,436 (92,353) 37,741 13.2777 (9,850) (92,353) 12/31/1999 99,516 (6,465) (6,956) 100,007 75,340 24,667 (67,686) 24,176 13.2777 (6,956) (67,686) 12/31/2000 99,516 (4,738) (5,098) 99,876 44,582 55,294 (12,392) 54,934 13.2777 (5,098) (12,392) 12/31/2001 0 (867) (943) 76 50,703 (50,627) (63,019) (50,703) 13.1371 (943) (63,019) 12/31/2002 0 (3,781) (4,435) 654 55,730 (55,076) (118,095) (55,730) 14.2105 (4,435) (118,095) 12/31/2003 0 (7,086) (8,433) 1,347 63,088 (61,741) (179,836) (63,088) 14.0032 (8,433) (179,836) 12/31/2004 (205,680) (10,790) (13,047) (203,423) 63,151 (266,574) (446,410) (268,831) 13.7834 (13,047) (446,410) 12/31/2005 (113,541) (24,553) (31,545) (106,549) 72,000 "" (178,549)"" (624,959)'" (185,541)"" 14.1517 (31,545) (624,959)"" *The ARC was constrained to be nonnegative for reporting years prior to 12/31/2004. ""Assumed amounts will be replaced at year end with actual amounts. """Based on a 30-year closed amortization as of January 1,2000. 000 Milli m a n This work product was prepared solely for the City of Renton. It may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes 15 no duty or liability to other parties who receive this work. fgh0001.doc 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 SECTION 5 Supplemental Information Al. Cash-Flow Projections The following table illustrates the projected excess annual pension payments for currently active and retired members eligible for retirement benefits under FPF. The table is based on the actuarial assumptions stated in Appendix A. The page following the chart graphically illustrates the projected cash flow payments. 41, r is or This work product was prepared solely for the City of Renton. It may not be appropriate to use for 000 M i I I i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 16 who receive this work. fgh0001.doc '� 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo dee Actuarial Valuation of "' Firefighters' Pension Fund City of Renton January 1, 2005 ANN TABLE 8 Projection of Future Excess Pension Benefits NIN Current Retired Total Year Ending Active Members and Estimated ++- December 31 Members Survivors Payouts 2005 $ 0 $ 414,000 $ 414,000 2006 0 445,000 445,000 N` 2007 0 460,000 460,000 2008 0 471,000 471,000 2009 0 478,000 478,000 Ns 2010 0 481,000 481,000 2011 0 481,000 481,000 2012 0 478,000 478,000 NI 2013 0 473,000 473,000 2014 0 466,000 466,000 2015 0 458,000 458,000 NI 2016 0 448,000 448,000 2017 0 436,000 436,000 2018 0 424,000 424,000 w 2019 0 411,000 411,000 2020 0 398,000 398,000 2021 0 383,000 383,000 is 2022 0 369,000 369,000 2023 0 355,000 355,000 2024 0 340,000 340,000 IY I s 1 1 This work product was prepared solely for the City of Renton. It may not be appropriate to use for 000 M illi ma n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 17 who receive this work. fgh0001.doc i 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo • Table 8 • (continued) Expected Future Benefit Payments $600,000 ■ $500,000 $400,000 .: $300,000 r $200,000 ✓ $100,000 2005 2015 2025 2035 2045 2055 ■ Pension Benefits • • • • S This work product was prepared solely for the City of Renton. It may not be appropriate to use for (XX) M i I I i ma n other purposes Milliman does not intend to benefit and assumes no duty or liability to other parties 18 who receive this work. fgh0001.doc rir 14 0003 FQH 10/14.003.FQH.10 2005.1 /DRW/KIS/nlo Actuarial Valuation of • Firefighters' Pension Fund City of Renton January 1, 2005 .,1 APPENDIX A Actuarial Procedures and Assumptions The actuarial procedures and assumptions used in this valuation are described in this appendix. Note that since all active members have retired, some of these ail assumptions such as termination rates are not app ience of the The actuarial assumptions are intended to es turnoveh assumptionsrwere based on theers ro of the City's Firefighters' Pension Fund. and 1995-2000 Experience Study for the Law Enforcement Officers' ns iFiret geter s R etire ent System prepared by the Office of the State Actuary. from that expected under these assumptions will result in corresponding changes in the estimated costs of the System's benefits. en wig Since our last valuation, both the economic onswere updated to reflect the latest experience changed. The demographic assumptions ters' Retirement ys study for the Law Enforcement Officers' and ictcfuhrent market condsonts,'therassumptoris by the Office of the State Actuary. To better refe mi for salary increases and the consumer price index were dropped 100 basis points and the investment earnings assumption was dropped 50 basis points. .. Table A-1 gives a brief summary of the assumptions.Tables at stof mortlity, retirement, and other terminations of employment are illustrated central Where numerical rates are provided in the tables,lthesegeneral are symbol I`ml''y The underlying rates of decrement, referred to in actuarial notation by theory involved is described more fully in Jordan, Life Contingencies, Society of Actuaries (Second Edition, 1967), page 273. Actuarial Cost Method r. We are using the Entry Age Normal Cost Method. This funding method meets the parameters required for GASB disclosure purposes. Records and Dataion The data regarding active members, retirees, survivors al purposestwithoutd in this valuation were supplied by the City and are accefor valuation mg audit. Replacement of Terminated Members new members are permitted. The City's FPF is a closed group. No This work product was prepared solely for the City of Renton. It may not be appropriate to use for (XX) Milliman other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 19 who receive this work. fgh0001.doc err 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo VIM Appendix A (continued) aft Valuation of Assets (where applicable) All assets are carried on a market value basis. GASB No. 27 Amortization Period The UAAL is amortized over a closed 30-year period as of January 1, 2000 and an open 30- year period prior to January 1, 2000. r.� Investment Earnings The future investment earnings of the assets of the City's FPF are assumed to accrue at an annual rate of 5.5%. Future Salaries Salaries are assumed to increase at the rate of 4.0% per annum. This assumption is for future inflation increases only. Since the members have at least 20 years of service, no additional increase is assumed for merit increases. mit Postretirement Benefit Increases Certain benefits increase at the same rate as the salaries for active members of the same rank the retiree had attained at retirement. These salaries were assumed to increase at the rate of 4.0% per annum. 1" Other benefits increase at the same rate as the Consumer Price Index increases (CPI). The CPI was assumed to increase at the rate of 3.0% per annum. Service Retirement All members who attain, or who have attained, age 65 in active service are assumed to retire immediately. Other members eligible for service retirement are assumed to retire at the rates shown in Table A-2. Disability The rates of disability used in this valuation are illustrated in Table A-3. "" Mortality The mortality rates used in this valuation are illustrated in Table A-4. Contributing Members and The mortality rates are based on the RP 2000 Mortality Members Retired from Service: Table for Males (Combined Healthy). Disabled Members: The mortality rates are based on the RP 2000 Mortality Table for Males (Combined Healthy), with ages set forward two years and a .005 minimum. Spouses: The mortality rates are based on the RP 2000 Mortality Table for Females (Combined Healthy). ar This work product was prepared solely for the City of Renton. It may not be appropriate to use for $$ M i 11 i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 20 who receive this work. fgh0001.doc .orr 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nio ar Appendix A (continued) Other Terminations of Employment y. The rate of assumed future withdrawal from active service for reasons other than death, disability, or retirement is 0.7% per year for all ages. Vesting Terminating members may forfeit a vested right to a deferred benefit if they withdraw their accumulated contributions. For the purposes of the valuation, it is assumed that no such forfeitures will occur. Family Composition All active members are assumed to be married, with no children, when they retire. Marital status of retirees was supplied by the City. Wives are assumed to be three years younger than their husbands. Surviving spouses are assumed not to remarry. Fire Insurance Premiums Future fire insurance premium tax revenues are assumed to increase at the rate of 3.0% per year and are assumed to cease 10 years from the valuation date. 41111 err MO am rr This work product was prepared solely for the City of Renton. It may not be appropriate to use for M i I I i ma n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 21 who receive this work. fgh0001.doc rr 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 A• TABLE A-1 Summary of Valuation Assumptions Arg I. Economic assumptions A. Salary increases (inflation only) 4.0% so B. Investment earnings 5.5% C. Growth in membership 0.0% D. Postretirement benefit increases 1. Related to salaries 4.0% 2. Related to Consumer Price Index 3.0% 41111 II. Noneconomic assumptions A. Service retirement Table A-2 B. Disability Table A-3 C. Mortality Table A-4 si 1. Active and service- RP 2000 Mortality Table for Males retired members (Combined Healthy). .. 2. Disabled members RP 2000 Mortality Table for Males (Combined Healthy), with ages set forward two years and a .005 minimum. 4111 3. Spouses RP 2000 Mortality Table for Females (Combined Healthy). D. Other Terminations of 0.7% per year prior to age 50, when Employment retirement is assumed. .r Ado This work product was prepared solely for the City of Renton. It may not be appropriate to use for 11 M i I I i ma n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 22 who receive this work. fgh0001.doc r 14 0003 FQH 10/14.003.FQH.10.2005.1 I DRW/KIS/nlo 111111111111116. .r Actuarial Valuation of �• Firefighters' Pension Fund City of Renton ' January 1, 2005 TABLE A-2 Service Retirement Annual Rates .r Age Rate 50 9% 51 7 52 8 53 8 54 10 55 16 56 16 57 16 58 23 59 23 41. 60 23 61 28 62 28 63 28 64 40 65 * Immediate retirement is assumed for every person who attains age 65. vas ars This work product was prepared solely for the City of Renton. It may not be appropriate to use for mailman other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 23 who receive this work. fgh0001.doc s 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 TABLE A-3 Disability Annual Rates Age Rate 30 0.8% 35 1.5 40 2.3 �.' 45 4.2 50 7.3 4'" 55 10.3 60 12.2 am 410 411/ This work product was prepared solely for the City of Renton. It may not be appropriate to use for ,$ M i I I i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 24 who receive this work. fgh0001.doc air 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of All Firefighters' Pension Fund City of Renton . January 1, 2005 TABLE A-4 Mortality Ai Annual Rates il. Contributing Members Ali and Members Retired Disabled Age From Service Members Spouses A„ 30 .044% .500% .026% 35 .077 .500 .048 40 .108 .500 .071 45 .151 .500 .112 Affis 50 .214 .500 .168 55 .362 .500 .272 '" 60 .675 0.876 .506 65 1.274 1.608 .971 70 2.221 2.728 1.674 Ai 75 3.783 4.691 2.811 80 6.437 8.049 4.588 Al 85 11.076 13.604 7.745 411111 al .. AO Ali M. This work product was prepared solely for the City of Renton. It may not be appropriate to use for • M Oman other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 25 who receive this work. fgh0001.doc w 14 0003 FQH 101 14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 TABLE A-5 Actuarial Assumptions Display for Required Supplementary Information • Valuation Date January 1, 2005 • Actuarial Cost Method Entry Age Normal • Amortization Method 30-year, closed as of January 1, 2000 Remaining Amortization Period 25 years • Asset Valuation method Fair value • Actuarial assumptions: Investment Rate of Return 5.5% r, Projected Salary Increases 4.0% Inflation 3.0% • Cost-of-living adjustments Based upon salary increase assumption for FPF benefits, inflation assumption for • LEOFF benefits. ✓ W ✓ ✓ • This work product was prepared solely for the City of Renton. It may not be appropriate to use for 000 M 1111 ma n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 26 who receive this work. fgh0001.doc • 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo 9r1 Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 APPENDIX B Provisions of Governing Law All actuarial calculations are based on our understanding of RCW 41.16 and 41.18, the statutes establishing the Firefighters' Pension Fund, and RCW 41.26, the statute establishing the Washington Law Enforcement Officers' and Firefighters' Retirement System. Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under the Washington Law Enforcement Officers' and Firefighters' Retirement System and the benefits available under the provisions of prior law. Where benefits under the old law exceed those under the new for any firefighter, the excess benefits are paid from the Firefighters' Pension Fund of the city employing him on March 1, 1970. dw The benefit provisions of the Firefighters' Pension Fund are summarized briefly below for reference purposes. This summary does not attempt to cover all of the detailed provisions of the laws. For comparative purposes, the bracketed statements describe the corresponding LEOFF rr law. Definitions Salary: Basic salary attached to rank of firefighter at time of retirement. [Same if he had the rank for at least 12 months; otherwise, the highest 24-month average from the last ten years of service.] .>r Spouse: Unremarried surviving spouse who was married to a disabled firefighter at time of disability or to a retired firefighter for five years prior to retirement. [Same, except marriage to retired firefighter for one year prior to retirement qualifies.] Child: Firefighter's unmarried child under age 18. [Firefighter's unmarried child under age 18 or up to age 22 while attending an educational institution accredited or approved by the state of Washington.] • r r This work product was prepared solely for the City of Renton. It may not be appropriate to use for 000 M i I I i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 27 who receive this work. fgh0001.doc 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Appendix B (continued) Service Retirement Benefit Member's Benefit: Eligibility Age 50 and 25 years of service. [Age 50 and five years of service.] Amount of 50% of salary plus an additional 2% for each year of service in excess benefit of 25 years. Maximum benefit of 60% of salary. [2% of salary for each year of service if 20 or more years; 11/2% of salary for each year of service if at least ten but less than 20 years of service; 1% of salary for each year of service if at least five but less than ten years of service. Maximum benefit of 60% of salary.] Survivor's Benefit: Eligibility Spouse or child. [Same.] Amount of Continuation of firefighter's benefit. [If spouse - same plus additional Ali benefit 5% of salary per child. If no spouse - 30% of salary for first child, 10% for each additional child. Maximum benefit in either case - 60% of salary.] .. Duty Disability Retirement Benefit Member's Benefit: Eligibility Disabled after six-month waiting period, during which time salary is payable from the Fund. [Same, except salary is payable by City during the waiting period.] N o Amount of Determined same as Service Retirement Benefit. [50% of salary plus benefit an additional 5% for each child; maximum benefit of 60% of salary.] Recovery Restoration to service. [Upon recovery before age 50, restoration to from disability service with full credit for service while disabled. Upon recovery after age 50, benefit continues as the greater of service retirement benefit or current benefit.] Survivor's Benefit: See Survivor's Benefit section under Service Retirement. rr i This work product was prepared solely for the City of Renton. It may not be appropriate to use for 11 M i I I i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 28 who receive this work. fgh0001.doc 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Appendix B (continued) Non-Duty Disability Retirement Benefit Member's Benefit: Eligibility Disabled after 90-day waiting period, during which time salary is payable from the Fund. [Disabled after six-month waiting period, during which time salary is payable by the City.] 'I Amount of 50% of salary. [50% of salary plus an additional 5% for each child; benefit maximum benefit of 60% of salary.] Ras Recovery See section under Duty Disability Retirement. from disability Limitations No benefits payable if firefighter employed elsewhere when disabled. [All benefits are reduced by workers' compensation, Social Security, or insurance provided by another employer. Allowance cannot exceed difference between wage from current gainful employment and salary currently attached to rank held at retirement.] Survivor's Benefit: Eligibility Spouse or child. [Same.] ee Amount of Percentage of salary, as follows: benefit 33.3% to widow only 45.8% to widow and one child 47.6% to widow and two children 50.0% to widow and three children 33.3% to children only [Determined same as under Service Retirement Survivor's Benefit.] we me This work product was prepared solely for the City of Renton. It may not be appropriate to use for liM i I I i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 29 who receive this work. fgh0001.doc mit 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Appendix B (continued) Duty Death Benefit Eligibility Spouse or child. [Same.] • Amount of If spouse - 50% of salary plus an additional 5% of salary per child; aim benefit maximum benefit 60% of salary. If no spouse - 50% of salary to children. [If spouse - same. If no spouse - 30% of salary for first child; 10% for each additional child. Maximum benefit in either case ara of 60% of salary.] Non-Duty Death Benefit Provisions same as Survivor's Benefit under Non-Duty Disability Retirement. [Provisions same as Survivor's Benefit under Duty Death Retirement.] Special Provisions 00 Under disability or death benefits, a surviving spouse may elect a lump-sum payment of $5,000 in lieu of future monthly benefits. [If firefighter's contributions are not exhausted by payments to survivors, the balance goes to the firefighter's legal heirs. Applies to service, disability and death benefits.] Vesting Eligibility Termination after 20 years of service. [Termination after five years of service.] Deferred Benefit Commences When firefighter would have had 25 years of service. [Age 50.] Amount of 2% of salary for each year of service. [Same, if at least 20 years of benefit service; 1.5% of salary for each year of service if at least ten but less us than 20 years of service; 1% of salary for each year of service if at least five but less than ten years of service.] This work product was prepared solely for the City of Renton. It may not be appropriate to use for 11 M i l l i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 30 who receive this work. fgh0001.doc 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Appendix B (continued) Death while vested prior to commencement of benefits: Payment of firefighter's deferred benefit to his spouse or child. wie [a. Firefighter with 20 or more years of service: If spouse -firefighter's deferred benefit plus an additional 5% of salary per child. If no spouse - 30% of salary for first child, 10% Ai for each additional child. Maximum benefit in either case -60% of salary. b. Firefighter with less than 20 years of service: Payment to spouse or estate of accumulated contributions less any payments made to firefighter.] Withdrawal Eligibility Termination with no other benefit. [Same.] Benefit Return of accumulated contributions less any benefit paid. [Same.] Postretirement Increase 'mo Type 1. Escalation by salary in proportion to current salary of rank from which firefighter retired. 2. Increase proportionate to the increase in the Seattle-area Consumer Price Index, with change computed annually. Regardless of the increase (or decrease) in the CPI, the +� benefits are increased at least 2% each year. [Increase or decrease proportionate to the increase or decrease in the Seattle-area Consumer Price Index, with change computed annually. No benefit may decrease below original amount.] mv Applicability Escalation Type 1 applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability after 1961. The second type applies to all other types of monthly benefits. [All monthly benefits.] Minimum Benefit After April 25, 1973, a minimum benefit of$300 per month to all retired firefighters and their survivors. This minimum is increased by the Consumer Price Index. [No provision.] ON ON This work product was prepared solely for the City of Renton. It may not be appropriate to use for • M i 11 i ma n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 31 who receive this work. fgh0001.doc 14 0003 FON 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Appendix B (continued) Funeral Benefit $500 to defray funeral expenses. [No provision.] Medical Benefits For any active firefighter hired prior to March 1, 1970—medical, hospital, and nursing care as long as a disability exists. For any retired firefighter hired prior to March 1, 1970— "'I medical, hospital, and nursing care at the discretion of the Retirement Board. Members retired prior to 1961 for reasons other than duty disability are not eligible for medical benefits during retirement. [For any active or retired LEOFF I member, the necessary hospital, medical, and nursing care expenses not payable by workers' compensation, Social Security, etc. The employer may pay for such benefits for firefighters from its FPF.] Both FPF and LEOFF I medical benefits are liabilities of the City but were not evaluated for this actuarial valuation report. a This work product was prepared solely for the City of Renton. It may not be appropriate to use for 1 Milliman other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 32 who receive this work. fgh0001.doc 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 APPENDIX C Valuation Data This valuation is based on the membership of the City's FPF as of January 1, 2005. It is our understanding that, as of the valuation date, the only liabilities for future benefits to present or retired firefighters or their survivors are those allocable to the persons included in is Tables C-1 through C-5. These tables present the distributions of retirees and surviving spouses of retirees receiving service and disability retirement pensions. Shown in the tables is the number receiving benefits and the monthly benefits received. Summary of Membership Data Active Members Retired Members and Survivors Monthly Pensions Annual Average Annual Number Salaries Salaries Number Paid by City Paid by LEOFF 0 $0.00 $0.00 43 $34,570.22 $119,250.63 ■ • • ■ • • This work product was prepared solely for the City of Renton. It may not be appropriate to use for 11 IVI i I I i m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 33 who receive this work. fgh0001.doc 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 me TABLE C-1 Firefighters Disabled in Line of Duty Before March 1, 1970 me Age Number Monthly Pension 85 - 89 2 $7,716.00 Totals 2 $7,716.00 TABLE C-2 Survivors of Firefighters Retired Before March 1, 1970 Age Number Monthly Pension 65 - 69 1 $2,123.77 Totals 1 $2,123.77 r This work product was prepared solely for the City of Renton. It may not be appropriate to use for !1 M Unman other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 34 who receive this work. fgh0001.doc 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo w Actuarial Valuation of W. Firefighters' Pension Fund City of Renton w' January 1, 2005 TABLE C-3 w Firefighters Retired for Service Since March 1, 1970 ri Monthly Pension Age Number Paid by City Paid by LEOFF ii` 60-64 2 $8.37 $8,876.28 65 -69 2 0.92 9,291.27 70 -74 1 406.02 3,691.48 • 75 -79 2 159.11 9,753.43 80-84 3 1,333.84 9,781.16 • Totals 10 $1,908.26 $41,393.62 • TABLE C-4 Firefighters Disabled in Line of Duty Since March 1, 1970 w Monthly Pension Age Number Paid by City Paid by LEOFF WI 60 -64 7 $2,537.43 $21,572.00 65 -69 3 873.69 9,745.81 70-74 3 1,135.65 8,124.35 NW 75 -79 5 7,812.04 8,735.46 80-84 5 6,555.37 11,371.83 w Totals 23 $18,914.18 $59,549.45 • W O WI W. This work product was prepared solely for the City of Renton. It may not be appropriate to use for 000 M 1111 m a n other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 35 who receive this work. fgh0001.doc am 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo grr Actuarial Valuation of Firefighters' Pension Fund City of Renton January 1, 2005 TABLE C-5 Survivors of Firefighters Retired Since March 1, 1970 Monthly Pension Age Number Paid by City Paid by LEOFF .ir 65-69 3 $699.31 $7,480.69 70 -74 2 2,828.10 3,107.67 75-79 0 0.00 0.00 80-84 2 380.60 7,719.20 .r Totals 7 $3,908.01 $18,307.56 .r► +r. .r NO This work product was prepared solely for the City of Renton. It may not be appropriate to use for 000 Mailman other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties 36 who receive this work. fgh0001.doc ani 14 0003 FQH 10/14.003.FQH.10.2005.1 /DRW/KIS/nlo