AgdaPkt 2005-01-24 - Laserfiche WebLink

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NOTE 9 - EMPLOYEE BENEFITS (CONTINUED) Since the City consistently applied the employer contribution rates, as determined by PERS, the City's annual pension cost equaled the City's actuarially required contribution for the fiscal year ended June 30, 2004. All qualified permanent and probationary employees are eligible to participate in PERS. A credited service year is one year of full time employment. In accordance with the memorandums of understanding with the various employee groups, the City may contribute a portion of the employee contribution. This contribution varies from group to group. These benefit provisions and all other requirements are established by state statute and City ordinance. Contributions necessary to fund PERS on an actuarial basis are determined by PERS and its Board of Administration. Police and fire safety employees are covered under the "3% at 50" formula. Under this retirement plan, an employee's retirement earnings at age 50 is calculated by multiplying 3% by the employee's years of service. This percentage factor increases with the employee's age upon retirement. Miscellaneous employees are covered under the "2% at 55" formula. Under this retirement plan, an employee's retirement earnings, at age 55, are calculated by multiplying 2% by the employee's years of service. An employee with five years of service is eligible to retire at age 50 at a reduced pension amount. The pension amount increases with age and length of service. PERS determines contribution requirements using a modification of the Entry Age Normal Method. Under this method, the City's total normal benefit cost for each employee from date of hire to date of retirement is expressed as a level percentage of the related total payroll cost. Normal benefit cost under this method is the level amount the employer must pay annually to fund an employee's projected retirement benefit. This level percentage of payroll method is used to amortize any unfunded actuarial liabilities. PERS uses the market-related value method of valuing the plan's assets. An investment rate of return of 7.75% is assumed, including inflation at 3.00%. Annual salary increases are assumed to vary by duration of service. The City's unfunded actuarial accrued liability is being amortized as a level percentage of payroll on a closed basis. The remaining amortization periods for the City's plans are as follows: Public Safety Miscellaneous June 30, 2018 June 30, 2021 F or the 2003 PERS Annual Valuation Report, the police and fire safety plans were combined into one plan. Therefore, some of the PERS data reflects only two plans, whereas rate-based information will continue to be reflected for three plans until the PERS employer rates converge for the police and fire public safety plans in fiscal year 2005/06. The plans' actuarial value (which differs from market value) and funding progress over the three most recently available years is set forth below at their actuarial valuation date of June 30, 2003 : Required SuQPlementary Information Public Safety Plan: Actuarial Unfunded Unfunded (Overfunded) Valuation Value of Entry Age (Over fun de d) Funded Annual Liability as Date Assets Accrued Liability Ratio Covered % of Payroll 2001 113~499~ 785 1 07 ~026~ 166 (6~473~619) 106.0% 13~765~481 (47.03%) 2002 1 06~881 ~561 128~863~873 21 ~982~312 82.9% 14~678~219 149.8% 2003 108~113~746 13 8~666~834 30~553~088 78.0% 15~602~299 195.8% 45