HomeMy WebLinkAboutFinal Agenda PacketCITY OF RENTON
FIREMEN'S PENSION BOARD
Regular Meeting
7th Floor -Mayor's Conference Room
Thursday, May 16, 2013
2:00 P.M.
1. CALLTOORDER
2. APPROVAL OF MINUTES OF MARCH 28, 2013
3. CORRESPONDENCE
Certification for Fire Insurance Premium Distribution Purposes
4. MONTHLY STATEMENTS FOR MARCH 31 & APRIL 30, 2012
5. MONTHLY BILLS AND PENSION PAYMENTS
6. UNFINISHED BUSINESS
7. NEW BUSINESS
Pension Fund Actuarial Valuation as of December 31, 2012
8. ADJOURNMENT
MINUTES
FIREMEN'S PENSION BOARD
CITY OF RENTON
March 28, 2013
Denis Law, Mayor
Terri Briere, Council Finance Committee Chair
(Substitute: Don Persson, Council Finance Committee Vice -Chair)
Bonnie Walton, City Clerk
Ray Barilleaux, Fire Department Representative
Bruce Phillips, Fire Department Representative
Chuck Christensen, Fire Department Alternate
The regular meeting of the Firemen's Pension Board was called to order by Mayor Denis Law at
2:00 p.m. in the Mayor's Conference room, 7th floor of Renton City Hall. In attendance were
Board members Mayor Denis Law, Don Persson (substitute), Ray Barilleaux, Bruce Phillips, and
Bonnie Walton. Also present was Jill Masunaga, Finance Department Representative.
MINUTES APPROVAL
MOVED BY PHILLIPS, SECONDED BY BARILLEAUX, THE PENSION BOARD APPROVE THE MINUTES
OF THE JANUARY 17, 2013 MEETING. CARRIED.
MONTHLY STATEMENT
The financial reports for December 31, 2012, January 31, 2013, and February 28, 2013, were
reviewed. Total cash/investment balance as of February 28, 2013, was $4,522,384.12.
MONTHLY BILLS AND PENSION PAYMENTS
MOVED BY PHILLIPS, SECONDED BY BARILLEAUX, THE BOARD APPROVE THE PENSION/MEDICAL
PAYMENTS FOR FEBRUARY AND MARCH 2013 IN THE AMOUNTS OF $17,233.61 PER MONTH
TO BE PAID FROM THE FIREMEN'S PENSION FUND. CARRIED.
ADJOURNMENT
MOVED BY PERSSON, SECONDED BY PHILLIPS, THE MEETING OF THE FIREMEN'S PENSION
BOARD BE ADJOURNED. CARRIED. Time: 2:02 p.m.
Bonnie I. Walton, City Clerk
Member and Secretary, Firemen's Pension Board
Next Meeting: May 16, 2013
Denis Law
_ Mayor City of ; �Y
City Clerk- Bonnie I. Walton
May 8, 2013
Office of the State Treasurer
Attn: James Porter, Distribution Assistant
P.O. Box 40209
Olympia,-WA 98504-0209
Re:- May 2013 Fire Insurance Premium Distribution
Dear Mr. Porter:
The following information is provided in compliance with RCW 41:16.050 in order for
the City of Renton to receive the annual fire insurance premium tax:
There were 138 paid firemen employed in the City of Renton Fire Department as of
December 31, 2012.
Sincerely;
Bonnie 1. Walton
City Clerk
CERTIFICATION
I, Bonnie I: Walton, duly appointed and qualified City Clerk/Cable Manager of and for
the City of Renton, Washington, do hereby certify that the above-cited information is
true and correct as appearing on file in the records of the Renton Finance Department.
Signed and sealed this 8th day of May 2013.
Bonnie I. Walton, City Clerk
i
1055 South Grady Way • Renton; Washington 98057 • (425) 430-6510/ Fax (425) 430-6516 • rentonwa.gov - -
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CITY OF RENTON - FIREMEN'S PENSION FUND
CASH & INVESTMENT ACTIVITY REPORT
AS OF MARCH 31, 2013
Fireman's Pension Fund Comparison of Cash and Investment Activity
E3 2013 ®2012
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
BEGINNING CASH/INV BALANCE
$4,522,384.12
$4,556,003.05
$4,556,003
$4,330,485.52
$4,377,696.45
$4,377,696
RECEIPTS:
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.:::CURRM(7;-:` �PREVM0,3:5
CASH/State Investment Pool
$2,184,316.39
Fire Insurance Premium Tax
0.00
0.00
100,000
0.00
119,667.72
100,000
Investment Interest
391.33
1,239.62
200,000
587.31
285,038.37
200,000
DISBURSEMENTS:
Treasury Strips & Zero Coupon Bonds
2,217,524.06
2,217,524.06
2,406,901.08
2,406,901.08
Fire Pension
17,233.61
51,700.83
225,000
21,465.52
225,506.07
525,000
Fire Pension Medical
0.00
0.00
0
0.00
566.04
25,000
Office/Operating Supplies
0.00
0.00
475
0.00
327.38
475
Actuarial/Firemen's Pens
0.00
0.00
15,000
0.00
0.00
0
H:\FINANCE\FINPLAN\FIREPEN\1_Fire_Pension_2013.xls\Mar13 Page 1 04/24/2013
..
CUFREN,T„
PREVIOUS
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iASTYEAR^,
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CASH/State Investment Pool
$2,184,316.39
$2,201,515.27
$1,796,326.84
$1,817,769.07
INVESTMENTS:
Federal National Mortgage Assn
99,555.84
99,555.84
99,555.84
99,555.84
Treasury Strips & Zero Coupon Bonds
2,217,524.06
2,217,524.06
2,406,901.08
2,406,901.08
Interest Receivable
4,145.55
3,788.95
6,823.55
6,259.53
:TOTAL CAS, HJAND INVESTMENTS;.
;*
, �'?, ` ,x05,541.84,
$4,522,3 ='1,2`=;;
,$4;30,8, -31
$4,,VO,L ;5
The State Investment Pool interest
0.1789%
0.1650%
0.1367%
0.13941
H:\FINANCE\FINPLAN\FIREPEN\1_Fire_Pension_2013.xls\Mar13 Page 1 04/24/2013
CITY OF RENTON - FIREMEN'S PENSION FUND
CASH & INVESTMENT ACTIVITY REPORT
AS OF APRIL 30, 2013
Report will be distributed at the meeting on Thursday, May 16, 2013
H:\FINANCE\FINPLAN\FIREPEN\1_Fire_Pension_2013.xls\Apr draft Page 1 05/09/2013
FIREMEN'S PENSION BOARD
PENSION/MEDICAL PAYMENTS FOR APRIL, 2013
* Adjusted to reflect a 2.54% LEOFF cost of living increase effective April 1.
Prior Year Pension/Medical Payments:
Fatal Pension Payments for April, 2012 18,343.89
Fatal Medical Bills Reimbursed in April, 2012 0.00
Total Expenses: Medical/Pension 18,343.89
4 -SUMMARY 2013.XLS 03/29/2013
P@nsrbnkfm>
'MfJ�cal
w. :-?.Ptah-
ANKENY, Charlie (Captain)
-
-
BARILLEAUX, Ray (Battalion Chief)
-
-
BEATTEAY, Karlen (Widow)
$134.08
134.08
BERGMAN, Claudette (Widow)
$53.19
53.19
CHRISTENSON, Chuck (Firefighter)
$146.88
146.88
GEISSLER, Dick (Fire Chief)
-
-
GOODWIN, Kathryn Lorayne (Widow)
$946.20
946.20
HAWORTH, Constance (Widow)
$3,109.45
3,109.45
HURST, Gerald (Firefighter)
$461.64
461.64
JONES, Evelyn M. (Widow)
$150.19
150.19
LARSON, William (Firefighter)
-
-
LAVALLEY, Theodele (Captain)
$235.75
235.75
MATTHEW, James (Deputy Chief)
-
-
MC LAUGHLIN, JACK (Battalion Chief)
$871.81
871.81
NEWTON, Gary (Lieutenant)
$158.09
158.09
NICHOLS, Gerald (Battalion Chief)
$399.75
399.75
PARKS -AN DREASON, Arlene (Widow)
$116.20
116.20
PHILLIPS, Bruce H. (Deputy Chief)
$66.17
66.17
PRINGLE, Arthur (Captain)
$362.34
362.34
PRINGLE, S. Joan (Widow)
$2,671.37
2,671.37
RIGGLE, David E. (Firefighter D Step)
-
-
RUPPRECHT, Jim (Firefighter D Step)
$12.46
12.46
SMITH, Leroy (Firefighter)
$327.07
327.07
STROM, Doris (Widow)
$3,410.09
3,410.09
TODD, Franklin (Firefighter)
$391.16
391.16
TONDA, Lila Jean (Widow)
-
_
VACCA, Nick (Lieutenant)
$205.42
205.42
WALLS, Camille (Widow)
$37.78
37.78
WALLS, Mercedes (Widow)
-
-
WEISS, Cheryl (Widow)
$627.44
627.44
WILLIAMS, Alta (Widow)
-
-
WOOTEN, Marilyn E. (Widow)
$145.81
145.81
Total Expenses:;pensioriNledical:;:'
,14Q;3k
,;;;;' $0 00
y _ ;. $15,040 34
* Adjusted to reflect a 2.54% LEOFF cost of living increase effective April 1.
Prior Year Pension/Medical Payments:
Fatal Pension Payments for April, 2012 18,343.89
Fatal Medical Bills Reimbursed in April, 2012 0.00
Total Expenses: Medical/Pension 18,343.89
4 -SUMMARY 2013.XLS 03/29/2013
FIREMEN'S PENSION BOARD
PENSION/MEDICAL PAYMENTS FOR MAY, 2013
Rotip'ietit' ,''.<
a;Pensidri"Amc
d�cal
ANKENY, Charlie (Captain)
-
-
BARILLEAUX, Ray (Battalion Chief)
-
_
BEATTEAY, Karlen (Widow)
$134.08
134.08
BERGMAN, Claudette (Widow)
$53.19
53.19
CHRISTENSON, Chuck (Firefighter)
$146.88
146.88
GEISSLER, Dick (Fire Chief)
_
GOODWIN, Kathryn Lorayne (Widow)
$946.20
946.20
HAWORTH, Constance (Widow)
$3,109.45
3,109.45
HURST, Gerald (Firefighter)
$461.64
461.64
JONES, Evelyn M. (Widow)
$150.19
150.19
LARSON, William (Firefighter)
-
_
LAVALLEY, Theodele (Captain)
$235.75
235.75
MATTHEW, James (Deputy Chief)
-
_
MC LAUGHLIN, JACK (Battalion Chief)
$871.81
871.81
NEWTON, Gary (Lieutenant)
$158.09
158.09
NICHOLS, Gerald (Battalion Chief)
$399.75
399.75
PARKS-ANDREASON, Arlene (Widow)
$116.20
116.20
PHILLIPS, Bruce H. (Deputy Chief)
$66.17
66.17
PRINGLE, Arthur (Captain)
$362.34
362.34
PRINGLE, S. Joan (Widow)
$2,671.37
2,671.37
RIGGLE, David E. (Firefighter D Step)
-
-
RUPPRECHT, Jim (Firefighter D Step)
$12.46
12.46
SMITH, Leroy (Firefighter)
$327.07
327.07
STROM, Doris (Widow)
$3,410.09
3,410.09
TODD, Franklin (Firefighter)
$391.16
391.16
TONDA, Lila Jean (Widow) _
-
_
VACCA, Nick (Lieutenant)
$205.42
205.42
WALLS, Camille (Widow)
$37.78
37.78
WALLS, Mercedes (Widow)
-
_
WEISS, Cheryl (Widow)
$627.44
627.44
WILLIAMS, Alta (Widow)
-
-
WOOTEN, Marilyn E. (Widow)
$145.81
145.81
Total Expenses , Pensit t %Medical,
k&R 15'090;34
G 00
4 15;04U.F
Prior Year Pension/Medical Payments:
Total Pension Payments for May, 2012 17,491.98
Total Medical Bills Reimbursed in May, 2012 0.00
Total Expenses: Medical/Pension 17,491.98
4 -SUMMARY 2013.XLS 05/10/2013
GASB 67 and 68 Firefighters'
Pension Fund Valuation
Report as of December 31, 2012
April 1, 2013
ealtheaTe
JW
Actuaries
16519 107th Place NE
Bothell, Washington 98011
t: (425) 939-7444 f: (425) 939-0089
www. H ealthcareActuaries. cam
ealthcare
Md IfA �
C-UUarieS
Uh, Technobyy M P.idl Cosi-EfFeetive Con11&11,9
April 1, 2013
Iwen Wang, Finance Director
City of Renton
1055 South Grady Way
Renton, Washington 98057-3232
16519 107th Place NE I Bothell. VVA 98011
t (425) 939-74'41 f (425) 939-0089
W vaww.Hea!thcareActuaries.com
Re: GASB 67 and 68 Firefighters' Pension Fund Valuation Report as.of December 31, 2012
Dearlwen:
At your request, we completed an actuarial valuation of the Firefighters' Pension Fund as of December 31,
2012. This valuation is based on input from the City of Renton, as well as our understanding of GASB
Statement No. 67 "Financial Reporting for Pension Plans' and GASB Statement No. 68 "Accounting and
Financial Reporting for Pensions" (GASB 68).
As we understand it, the City adopted GASB 67 and 68 for the fiscal year ending December 31, 2012. In
addition, the City elected to perform full valuations every two years and projected valuations in between
the full valuations. This valuation represents a full valuation.
The liabilities are highly sensitive to the salary increase assumption. This assumption was changed from
3.75% to 3.00% this year, resulting in a decrease in the liability of 28.8%.
We greatly appreciate your business. If you have any questions, please feet free to call us at (425) 939-
7444.
Best Regards, �
6rSr,.c,.. tiJ%
Roger T. Burton, FSA, FCA, MAAA
Executive Summary
Overview
Accounting Summary
Accounting Information
Statement of Fiduciary Net Position Fiscal Year Ending 12/31/2012
Statement of Changes in Fiduciary Net PositionFor the Year Ended 12/31/2012
Statement of Changes in Fiduciary Net Position
Changes in the Net Pension Liability
Calculation of Expense Under GASB 68
FPF Cash Flow Projections
Projected Cash Flow Chart
Schedule of Changes in the City's Net Pension Liability and Related Ratios
Schedule of Contributions
Schedule of Investment Returns
Draft Notes to the Financial Statements
Basis of Valuation
Substantive Plan
Participant Summary
Actuarial Assumptions
Page i
Contents
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5
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10
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12
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14
17
19
20
Executive Summary
nni n
Overview
Purpose of the Report
Healthcare Actuaries prepared this report to meet employer financial accounting requirements under GASB
Statement No. 67 and 68 "Accounting and Financial Reporting for Pensions' (GASB 67 and 68), issued in
June 2012. This report includes information with respect to the obligation to provide ongoing pension
benefits for retired firefighters for the fiscal year ending December 31, 2012.
Changes Since the Prior Valuation
The salary increase assumption was changed from 3.75% to 3.00%
Impact of GASB 67 and 68
This report implements the changes of GASB 67 and 68. The previous report was prepared under GASB 25,
27, and 50. The new GASB standards substantially change the presentation of required disclosures.
Actuarial Certification
Our determinations reflect the provisions and methods prescribed by GASB 67 and 68. In preparing this
report, we relied on employee census, plan design, and plan assets provided directly or indirectly by the
plan sponsor. We based the results in this report on this information, along with the actuarial assumptions
and methods used. The plan sponsor, with the concurrence of its auditors, selected the actuarial
assumptions. In our opinion, the assumptions used represent reasonable expectations of anticipated plan
experience. We reviewed the census information for reasonableness, but we did not audit it.
Actuarial computations under GASB 67 and 68 fulfill plan and employer accounting and financial reporting
requirements. The calculations are on a basis consistent with our understanding of GASB 67 and 68.
Determinations for purposes other than meeting employer financial accounting requirements may be
significantly different from the results in our report. Accordingly, additional determinations may be
necessary for other purposes, such as judging benefit security at termination or the adequacy of funding
for an on-going plan.
The Board has the final decision regarding the appropriateness of the assumptions.
Healthcare Actuaries' work is prepared solely for the internal business use of the City of Renton. To the
extent that Healthcare Actuaries' work is not subject to disclosure under applicable public record laws, our
work may not be provided to third parties without Healthcare Actuaries' prior written consent.
No third party recipient of Healthcare Actuaries' work product should rely on Healthcare Actuaries' work
product. The third party reception should engage qualified professionals for advice appropriate to their own
needs.
There is no relationship between Healthcare Actuaries, its owner, subcontractors, or staff, and the City of
Renton beyond the contractual services that we perform for the City of Renton.
Page 1
Overview
On the basis of the foregoing, we hereby certify that, to the best of our knowledge and belief, the report is
complete and accurate and we prepared it in accordance with generally recognized and accepted actuarial
principles and practices which are consistent with the applicable "Actuarial Standards of Practice" and
"Actuarial Compliance Guidelines" as promulgated by the American Academy of Actuaries.
The undersigneds are members of the American Academy of Actuaries and meet the Qualification
Standards of the American Academy of Actuaries to render the actuarial opinion contained herein.
f�C,rl� /t �j % April 1, 2013
Nadine J Pileggi, ASA, EA, MAAA Date
Associate of the Society of Actuaries (ASA)
Member of the American Academy of Actuaries (MAAA)
Enrolled Actuary (EA)
April 1, 2013
Roger T. Burton, FSA, FCA, MAAA Date
Fellow of the Society of Actuaries (FSA)
Member of the American Academy of Actuaries (MAAA)
Fellow of the Conference of Consulting Actuaries (FCA)
Page 2
A summary of the key valuation results follows.
Accounting Summary
For Fiscal Year Ending
Funded Status
12/31/2012
Total Pension Liability
$ 2,787,814
Fiduciary Net Position
9,501,264
Net Pension Liability
$ (6,713,450)
Plan fiduciary net position as a percentage of the total pension liability
340.81%
Covered payroll
n/a
UAAL as a percentage of covered payroll
n/a
2012 Expense
$ (259,158)
2013 Expense
$ (254,801)
Page 3
Accounting Information
Statement of Fiduciary Net Position
Fiscal Year Ending 12/31/2012
Assets
Cash and deposits $
Securities lending cash collateral
Total cash
Receivables:
Contributions
Due from broker for investments sold
Investment income (interest on investments)
Other
Total receivables
Investments:
Domestic fixed income securities
Domestic equities
International equities
Real estate
Total Investments
Total Assets
Liabilities
Payables:
Investment management fees
Due to broker for investments purchased
Collateral payable for securities lending
Other
Total Liabitities
Net Position Restricted for Pensions 1 $
Page 4
2,235,765
2,235,765
3,105, 803
3,105,803
4,159, 696
4,159, 696
9,501,264
9,501,264
Statement of Changes in Fiduciary Net Position
For the Year Ended
12/31/2012
2012
Additions
Contributions:
Employer $
119,668
Member
Total contributions
119,668
Investment income:
Net appreciation in fair value of investments
7,095
Interest and dividends
282,735
Less investment expense, other than from securities lending
-
Net income from investing, other than from securities lending
289,830
Securities lending income
-
Less securities lending expense
Net income from securities lending
-
Net investment income
289,830
Other -
Total additions 409,498
Deductions
Benefit payments, including refund of member contributions 225,506
Administrative expense 893
Other -
Total deductions 226,399
Net increase in net position 183,099
Net Position Restricted for Pensions
Beginning of year 9,321,323
End of year $ 9,501,264
Page 5
Changes in the Net Pension Liability
The funded status of the Plan as of fiscal. year-end as well as other required disclosure information follows.
Balances at January 1, 2012
Changes for the year:
Service Cost
Interest
Differences between expected and actual
experience
Contributions - employer
Contributions - employee
Net investment income
Benefit payments, including refunds of employee
contributions
Administrative expense
Other changes
Net changes
Balances at December 31, 2012
s
Increase (Decrease)
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (a) -(b)
$ 2,901,760 $ 9,321,323 $ (6,419,563)
111,560 111.560
119,668 (119,668)
289,830 (289,830)
(225,506) (225,506)
(893) 893
(113,946) 183,099 (297,045)
$ 2,787,814 $ 9,504,422 $ (6,716,608)
Page 6
Calculation of Expense Under GASB 68
Expense 2013 2012
Service Cost $ - $
Interest (on liabilities) 107,206 111,560
Interest (on assets) (378,185) (370,718)
Differences between expected and actual experience* -
Differences between expected and actual earnings** 16,178
Total Expense 2013 $ (254,801) $ (259,158)
*As there are no active members, all differences between expected and actual demographic and economic experience
are recognized immediately. GASB 68 was adopted for the 2012 fiscal year, with liabilities measured as of December 31,
2012, therefore there are no differences in liability experience.
'*Amounts to include in expense are calculated as follows:
2012 Expected Earnings $ 370,718
2012 Actual Earnings 289,830
Difference 80,888
Straight -Line amortization over 5 years $ 16,178
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and actual experience $ - $
Changes of assumptions -
Net difference between projected and actual earnings on pension plan
investments 16,178
Total $ 16,178 $
Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be
recognized in pension expense as follows:
Year ended December 31:
2013
2014
2015
2016
2017
Page 7
$ 16,178
16,178
16,178
16,178
$ 16,178
FPF Cash Flow Projections
The following shows the FPF cash flow projections for the next twenty years.
Calendar
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032 $
Projected Pension
Payments
215,T24
217,998
219,662
220,192
219,642
218,020
215,230
211,157
205,762
199,088
191,215
182,207
172,372
161,743
150,512
138,884
127,095
115,320
103,701
92,402
Page 8
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Schedule of Changes in the City's Net Pension Liability and Related Ratios
GASB 68 requires a disclosure of the changes in Net Pension Liability for the last 10 fiscal years, or as many
years as are available
Total Pension Liability 2012
Service Cost $
Interest
Changes of benefit terms
Differences between expected and actual experience
Changes of assumptions
Benefit payments, included refunds of employee contributions
Net change in total pension liability
Total pension liability — beginning
Total pension liability — ending (a)
Plan Fiduciary Net Position
Contributions - employer
Contributions - employee
Net investment income
Benefit payments, including refunds of employee contributions
Administrative expense
Other
Net change in plan fiduciary net position
Plan fiduciary net position - beginning
Plan fiduciary net position — ending (b)
City's net pension,liability — ending (a) — (b)
Plan fiduciary net position as a percentage of the total pension liability
Covered -employee payroll
City's net pension liability as a percentage of covered -employee payroll
111,560
(225,506)
(113,946)
2,901,760
$ 2,787,814
$ 119,668
289,830
(225,506)
(893)
183,099
9,321,323
9,504,422
$ (6,716,608)
340.93%
n/a
Notes to schedule:
Changes of Assumptions. The expected salary increase was changed to 3.0% at January 1, 2012. This change
of assumption and experience differences decreased liabilities approximately $878,000. GASB 67 and 68
were adopted as of January 1, 2012, therefore liabilities were fresh -started at this date.
Page 10
Schedule of Contributions
GASB 68 requires a schedule of Contributions for the last 10 fiscal years, or as many years as are available.
2012
Statutorily determined contribution $ 119,668
Contributions in relation to the statutorily determined contribution 119,668
Contribution deficiency (excess)
Covered -employee payroll
Contributions as a percentage of covered -employee payroll
Notes to Schedule:
Contributions are a portion of State Fire Insurance Premiums.
Page 11
n/a
Schedule of Investment Returns
2012 2011
Annual money -weighted rate of return, net of investment expense 3.13% 8.30%
Ten-year schedule required. However, until a full 10 -year trend is compiled, information is presented for those years
where information is available.
Page 12
Draft Notes to the Financial Statements
A draft of the required notes to the City's financial statements, based on the requirements of GASB 67 and
68 and our understanding of the City's Firefighters Pension Plan, follows.
Notes to the Financial Statements
for the Year Ended December 31, 2012
Summary of Significant Accounting Policies
Method used to value investments . Investments are reported at fair value.
Plan Description
Plan Administration: The Firefighters' Pension Fund is administered by the City of Renton. The plan is a
single -employer defined benefit pension plan that provides pensions for firefighters that were hired prior to
1970.
The firefighters' pension board consists of the following five members, the chairperson of the fire
commissioners for said district who shall be chairperson of the board, the county auditor, county treasurer,
and in addition, two regularly employed or retired firefighters elected by secret ballot of the employed and
retired firefighters. Retired members who are subject to the jurisdiction of the pension board have both the
right to elect and the right to be elected under this section. The first members to be elected by the
firefighters shall be elected annually for a two-year term. The two firefighter elected members shall, in
turn, select a third eligible member who shall serve in the event of an absence of one of the regularly
elected members.
Plan Membership: Plan membership is limited to active members of the Firefighters' Pension Fund (FPF) as
of March 1, 1970. On that date, the Washington Law Enforcement Officers' and Firefighters' System (LEOFF)
was established. FPF is responsible for paying the pensions of those members retired prior to March 1, 1970
and for providing the "excess benefit", the excess of FEE formula benefits over the LEOFF benefits.
Therefore, the plan is closed to new members. At December 31, 2012, FPF membership consisted of the
following:
Inactive plan members retired prior to March t, 1970: 1
Inactive plan members retired March 1, 1970 or after: 31
Active Plan Members: 0
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F
Draft Notes to the Financial Statements
Benefits provided. All benefit terms are in statutes RCW 41.16, 41.18, and 41.26. FPF provides retirement,
disability, and death benefits. 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 taw for any firefighter, the excess benefits are paid from the FPF of the city employing the
member on March 1. 1970.
All members are retired and drawing benefits. Benefit terms provide for cost -of -living adjustments to each
member's retirement benefit. There are two types of increases: escalation by salary in proportion to current
salary of rank from which the firefighter retired or Increase proportionate to the increase in the Seattle -
area CPI, with the change compute annually. Regardless of the increase (or decrease) in the CPI, the
benefits are increased at least 2% each year. The former applies to firefighters who retired from service
after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after
1961. The tatter applies to all other types of monthly benefits.
Contributions. As long as the FPF 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. The amount the City
receives is 25% of all monies received by the State from taxes on fire insurance premiums. Contributions
can also come from taxes paid pursuant to the provisions of RCW 41.16.060. This statute 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.
Page 14
V
Draft Notes to the Financial Statements
Investments
Investment Policy. The pension fund holds laddered investments with annual maturities to meet cash-flow
requirements. The City is currently assessing options to deploy the growing cash balance.
Rate of Return. For the year ended December 31, 2012, the annual money -weighted rate of return on
pension plan investments, net of pension plan investment expense, was 3.13%. The money -weighted rate of
return expresses investment performance, net of investment expense, adjusted for the changing amount
actually invested.
Net Pension Liability of the City
The components of the net pension liability of the City at December 31, 2012 were as follows:
Total pension liability $ 2,787,814
Plan fiduciary net position 9,504,422
City's net pension liability $ (6,716,608)
Plan fiduciary net position as a percentage
of the total pension liability 340.93%
Page 15
Draft Notes to the Financial Statements
Actuarial Assumptions: The total pension liability was determined by an actuarial valuation as of
December 31, 2012, using the following actuarial assumptions, applied to all periods included in the
measurement:
Inflation
Salary increases
Investment rate of return
2.75%
3.00%
4.00%
Mortality rates were based on the RP -2000 Healthy Annuitant Mortality Table for Males or Females, as
--appropriate, with adjustments for mortality improvement based on 50% of Scale AA: -- —
The long-term expected rate of return on pension plan investments was determined using a building-block
method in which best estimate ranges of expected future real rates of return (expected returns, net of
pension plan investment expense and inflation) are developed. We used the weighted expected returns of
the City's portfolio of cash, US Treasuries (to be held to maturity), and receivables to develop the long-
term expected rate of return.
Discount rate. The discount rate used to measure the total pension liability was 4.0%. The projection of
cash flows used to determine the discount rate assumed City contributions were equal to revenue received
from Fire Insurance premiums and the amount received would increase at the inflation rate of 2.75%.
Based on this assumption, the pension plan's fiduciary net position was projected to be available to make
all projected future benefit payment of current plan members. Therefore, the long-term expected rate of
return on pension plan investments was applied to all periods of projected benefit payments to determine
the total pension liability.
Sensitivity of the net pension liability to changes in the discount rate. The following presents the net
pension liability of the City, calculated using the discount rate of 4.0%, as well as what the City's net
pension liability would be if it were calculated using a discount rate that is 1 -percentage -point lower,
3.0%, or.1-percentage point higher, 5.0%, than the current rate:
City's net pension liablity: 1% Decrease
$ 3,039,213
Current Discount
Rate
Page 16
2,787,814 $
1% Increase
2,569,559
Basis of Valuation
Substantive Plan
A summary of the substantive plan used as the basis of the valuation follows. This summary is a general
summary only.
GENERAL INFORMATION
Applicable Statutes RCW 41.16, 41.18, 41.26
Benefits Each firefighter in service on March 1, 1970 receives the great of the benefit
payable under LEOFF or FPF. Where benefits under the old law exceed those
under the new for any firefighter, the excess benefits are paid from the FPF of
the city employing the member on March 1, 1970.
Service Retirement Benefit
Member Eligibility: age 50 and 25 years of service (RCW 41.18.040) or Age 50 and five
years of service (RCW 41.26.090).
Amount of benefit: 50% of salary plus an additional 2% for each year of service
in excess of 25 years. Maximum benefit of 60% of salary (does not apply for
those retiring after July 1, 2006).
Survivor Eligibility: spouse or child
Amount of benefit: continuation of the firefighter's benefit. (If spouse — same,
plus additional 5% of salary per child. If no spouse — 30% of salary for first
child, 10% for each additional child. Maximum of 60% of salary).
Duty Disability Retirement Benefit
Member Eligibility: disabled after six-month waiting period.
Amount of benefit: determined the same as Service Retirement Benefit.
Recovery: restoration to service.
Survivor See Survivor's Benefit section under Service Retirement.
Non Duty Disability Retirement Benefit
Member Eligibility: disabled after 90 -day waiting period.
Amount of benefit: 50% of salary, or service retirement benefit, if greater.
Recovery: see Duty Disability Retirement.
Limitations: no benefits payable if firefighter employed elsewhere when
disabled.
Survivor Eligibility: spouse or child
Amount of benefit:
33% to widow or children only.
45.8% to widow and one child.
47.6% to widow and two children.
50.0% to widow and three children.
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Substantive Plan
Duty Death Benefit Eligibility: spouse or child
Amount of benefit: If spouse — 50% of salary plus an additional 5% of salary per
child; maximum benefit of 60% of salary. If no spouse — 50% of salary to
children.
Non Duty Death Benefit Eligibility: spouse or child
Amount of benefit: provisions the same as Survivor's Benefit under Non -Duty
Disability Retirement.
Special Provisions Under disability or death benefits, a surviving spouse may elect a lump -sum
payment of $5,000 in lieu of future monthly benefits.
Vesting Termination after 20 years of service (RCW 41.18.130) or five years of service
(RCW 41.26.090).
Deferred Benefit Commences: when a firefighter would have had 25 years of service (RCW
41.18.130) or age 50 (RCW 41.26.090).
Amount of benefit: 2% of salary for each year of service. Other provisions
apply, see statutes.
Death while vested prior to commencement of benefits: payment of
firefighter's deferred benefit to spouse or child.
Postretirement Increase
Type 1 Escalation by salary in proportion to current salary or rank from which the
firefighter retired.
Type 2 Annual increase proportionate to the increase in the Seattle -area CPI.
Minimum increase at least 2% each year.
Applicability Type 1 applies to firefighters who retired from service after 1969, their
survivors, and to firefighters who retired for duty disability (but not their
survivors) after 1961. Type 2 applies to all other types of 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 increase by the CPI.
Funeral Benefit $500 RCW 41.18.140, no provision under RCW 41.26.
Page 18
Participant Summary
January 1, 2013
Age and service determined as of the census date.
Monthly Pension Amounts as of December 31 2012
Paid by City Paid by LEOFF
$ 17,233 $ 120,695
Page 19
LEOFF Plan 1 Inactive Participants
Service
Disabled
Surviving
Age
Retirees
Retirees
Spouses
Total
< 65
0
0
0
0
65-69
1
2
2
5
70-74
0_. ,
4 _
1
.
75-79
3
2
7
12
80-84
1
2
2
5
85-89
1
1
2
4
90+
1
0
0
1
Total
7
11
14
32
Monthly Pension Amounts as of December 31 2012
Paid by City Paid by LEOFF
$ 17,233 $ 120,695
Page 19
Actuarial Assumptions
A summary of the actuarial assumptions used for this valuation follows. We considered the reasonableness
of each assumption independently based on its own merits, consistent with each other assumption, and
the combined impact of alt assumptions.
Assumption
Rates
Actuarial Cost Method
Asset Valuation Method
Entry Age
Fair Market Value
Measurement Date January 1, 2013
Discount Rate (or Selected the assumed discount rate of 4% based on the five-year average
Investment Return) investment yield on the investments expected to finance the payment of
benefits.
Cost of Living 2.75%, based on SSA OASDI 2012 report.
Salary Increases (for
calculated benefit increases
based on rank) 3.00%, based on City recommendation of future salary increases.
Healthy Mortality RP -2000 Combined Healthy Table projected to 2019 with 50% of Scale AA
set back one year for males and set forward one year for females.
Disabled Mortality
RP -2000 Combined Healthy Table projected to 2018 with 50% of Scale AA.
Turnover n/a
Disability n/a
Retirement n/a
Spouse Age Wives are assumed to be three years younger than husbands
Page 20