CITY OF TITUSVILLE GENERAL EMPLOYEES' PENSION PLAN

ACTUARIAL VALUATION

AS OF OCTOBER 1, 2021

CONTRIBUTIONS APPLICABLE TO THE PLAN/FISCAL YEAR ENDING SEPTEMBER 30, 2023

GASB 67/68 DISCLOSURE INFORMATION AS OF SEPTEMBER 30, 2021

February 14, 2022

Board of Trustees City of Titusville

General Employees’ Pension Board

Re:       City of Titusville General Employees' Pension Plan Dear Board:

We are pleased to present to the Board this report of the annual actuarial valuation of the City of Titusville General Employees' Pension Plan. Included are the related results for GASB Statements No. 67 and No. 68. The funding valuation was performed to determine whether the assets and contributions are sufficient to provide the prescribed benefits and to develop the appropriate funding requirements for the applicable plan year. The calculation of the liability for GASB results was performed for the purpose of satisfying the requirements of GASB Statements No. 67 and No. 68. Use of the results for other purposes may not be applicable and may produce significantly different results.

The valuations have been conducted in accordance with generally accepted actuarial principles and practices, including the applicable Actuarial Standards of Practice as issued by the Actuarial Standards Board, and reflect laws and regulations issued to date pursuant to the provisions of Chapter 112, Florida Statutes, as well as applicable federal laws and regulations. In our opinion, the assumptions used in the valuations, as adopted by the Board of Trustees, represent reasonable expectations of anticipated plan experience.

The funding percentages and unfunded accrued liability as measured based on the actuarial value of assets will differ from similar measures based on the market value of assets. These measures, as provided, are appropriate for determining the adequacy of future contributions, but may not be appropriate for the purpose of settling a portion or all of its liabilities. Future actuarial measurements may differ significantly from the current measurements presented in this report for a variety of reasons including: changes in applicable laws, changes in plan provisions, changes in assumptions, or plan experience differing from expectations. Due to the limited scope of the valuations, we did not perform an analysis of the potential range of such future measurements.

13420 Parker Commons Blvd., Suite 104 Fort Myers, FL 33912 · (239) 433-5500 · Fax (239) 481-0634 · www.foster-foster.com

In conducting the valuations, we have relied on personnel, plan design, and asset information supplied by the City of Titusville, financial reports prepared by the custodian bank, and the actuarial assumptions and methods described in the Actuarial Assumptions section of this report. While we cannot verify the accuracy of all this information, the supplied information was reviewed for consistency and reasonableness. As a result of this review, we have no reason to doubt the substantial accuracy of the information and believe that it has produced appropriate results. This information, along with any adjustments or modifications, is summarized in various sections of this report.

Additionally, we used third-party software to model (calculate) the underlying liabilities and costs. These results are reviewed in the aggregate and for individual sample lives. The output from the software is either used directly or input into internally developed models that apply the funding and accounting rules to generate the results. All internally developed models are reviewed as part of the valuation process. As a result of this review, we believe that the models have produced reasonable results. We do not believe there are any material inconsistencies among assumptions or unreasonable output produced due to the aggregation of assumptions.

The total pension liability, net pension liability, and certain sensitivity information shown in this report are based on an actuarial valuation performed as of October 1, 2020. The total pension liability was rolled-forward from the valuation date to the plan’s fiscal year ending September 30, 2021 using generally accepted actuarial principles. It is our opinion that the assumptions used for this purpose are internally consistent, reasonable, and comply with the requirements under GASB No. 67 and No. 68.

The undersigned are familiar with the immediate and long-term aspects of pension valuations, and meet the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions contained herein. All of the sections of this report are considered an integral part of the actuarial opinions.

To our knowledge, no associate of Foster & Foster, Inc. working on valuations of the program has any direct financial interest or indirect material interest in the City of Titusville, nor does anyone at Foster & Foster, Inc. act as a member of the Board of Trustees of the General Employees' Pension Plan. Thus, there is no relationship existing that might affect our capacity to prepare and certify this actuarial report.

If there are any questions, concerns, or comments about any of the items contained in this report, please contact us at 239-433-5500.

Respectfully submitted, Foster & Foster, Inc.

By:                             /S/                                   Douglas H. Lozen, EA, MAAA Enrolled Actuary #20-7778

By:                           /S/                                     Tyler A. Koftan, EA, MAAA

Enrolled Actuary #20-8685

DHL/lke Enclosures

 TABLE OF CONTENTS

1. Introduction

   1. Summary of Report – Pg. 6

   2. Changes Since Prior Valuation – Pg. 7

   3. Comparative Summary of Principal Valuation Results – Pg. 8

2. Valuation Information

   1. Reconciliation of Unfunded Actuarial Accrued Liabilities – Pg. 14

   2. Detailed Actuarial (Gain)/Loss) Analysis – Pg. 15

   3. History of Funding Progress – Pg. 16

   4. Actuarial Assumptions and Methods – Pg. 17

   5. Glossary – Pg. 21

   6. Discussion of Risk – Pg. 25

3. Trust Fund – Pg. 28

4. Member Statistics

   1. Statistical Data – Pg. 35

   2. Age and Service Distribution – Pg. 36

   3. Valuation Participant Reconciliation – Pg. 37

5. Summary of Current Plan – Pg. 38

6. Governmental Accounting Standards Board Statements No. 67 and No. 86 Disclosure Information – Pg. 42
   

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SUMMARY OF REPORT 

The regular annual actuarial valuation of the City of Titusville General Employees' Pension Plan, performed as of October 1, 2021, has been completed and the results are presented in this Report. The contribution amounts set forth herein are applicable to the plan/fiscal year ending September 30, 2023.

The contribution requirements, compared with those set forth in the October 1, 2020 actuarial valuation report, are as follows:

As you can see, the Minimum Required Contribution shows an increase when compared to the results determined in the October 1, 2020 actuarial valuation report. The increase is attributable to a Board- approved change of assumptions. The increase was offset in part by decreases caused by favorable experience and faster-than-expected amortization of the Unfunded Actuarial Accrued Liability (UAAL) due to the City’s contribution policy.

Plan experience was favorable overall on the basis of the plan's actuarial assumptions. The primary source of actuarial gain was an investment return of 9.41% (Actuarial Asset Basis) which exceeded the 7.50% assumption. This gain was offset in part by a loss associated with inactive mortality experience.

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CHANGES SINCE PRIOR VALUATION 

Plan Changes

There have been no changes in benefits since the prior valuation.

Actuarial Assumption/Method Changes

Since the prior valuation, the assumed rate of investment return was reduced from 7.50% to 7.25%, net of investment-related expenses.

There were no method changes since the prior valuation.

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COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS

 A. Particpant Data

 B. Assets

 C. Liabilities

Note 1: The asset values and liabilities include accumulated DROP Plan Balances as of 9/30/2021 and 9/30/2020.

Note 2: Contributions developed as of 10/1/2021 displayed above have been adjusted to account for assumed salary increase and interest components.

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COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS

C. Liabilities (Continued)

Note 1: The asset values and liabilities include accumulated DROP Plan Balances as of 9/30/2021 and 9/30/2020.

Note 2: Contributions developed as of 10/1/2021 displayed above have been adjusted to account for assumed salary increase and interest components.

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COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS

D. Actuarial Present Value of Accrued Benefits

Note 1: The asset values and liabilities include accumulated DROP Plan Balances as of 9/30/2021 and 9/30/2020.

Note 2: Contributions developed as of 10/1/2021 displayed above have been adjusted to account for assumed salary increase and interest components.

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COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS

E. Pension Cost

 F. Past Contributions

 G. Net Actuarial (Gain)/Loss

Note 1: The asset values and liabilities include accumulated DROP Plan Balances as of 9/30/2021 and 9/30/2020.

Note 2: Contributions developed as of 10/1/2021 displayed above have been adjusted to account for assumed salary increase and interest components.

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COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS

H. Schedule Illustrating the Amortization of the Total Unfunded Actuarial Liability as of:

 I.(i) 5 Year Comparison of Actual and Assumed Salary Increases

I.(ii) 5 Year Comparison of Investment Return on Market Value and Actuarial Value

I.(iii) Average Annual Payroll Growth

1. Payroll as of 10/1/2021 = $14,162,321 (Payroll as of 10/1/2011 = $9,795,424)
2. Total Increase = 44.58%
3. Number of Years = 10.00
4. Average Annual Rate = 3.76%

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STATEMENT BY ENROLLED ACTUARY

 This actuarial valuation was prepared and completed by me or under my direct supervision, and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate, and in my opinion, the techniques and assumptions used are reasonable and meet the requirements and intent of Part VII, Chapter 112, Florida Statutes. There is no benefit or expense to be provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation.

              /S/                   

Douglas H. Lozen, EA, MAAA Enrolled Actuary #20-7778

Please let us know when the report is approved by the Board and unless otherwise directed we will provide a copy of the report to the following office to comply with Chapter 112 Florida Statutes:

Mr. Keith Brinkman Bureau of Local Retirement Systems Post Office Box 9000

Tallahassee, FL 32315-9000

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RECONCILIATION OF UNFUNDED ACTUARIAL ACCRUED LIABILITIES

1. Unfunded Actuarial Accrued Liability as of October 1, 2020 = $3,659,924
2. Sponsor Normal Cost developed as of October 1, 2020 = 699,396
3. Expected administrative expenses for the year ended September 30, 2021 = 111,093
4. Expected interest on (1), (2) and (3) = 331,115
5. Sponsor contributions to the System during the year ended September 30, 2021 = 1,678,995
6. Expected interest on (5) = 62,962
7. Expected Unfunded Actuarial Accrued Liability as of September 30, 2021 (1)+(2)+(3)+(4)-(5)-(6) = 3,059,571
8. Change to UAAL due to Assumption Change = 1,664,941
9. Change to UAAL due to Actuarial (Gain)/Loss = (1,056,589)
10. Unfunded Actuarial Accrued Liability as of October 1, 2021 = 3,667,923

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DETAILED ACTUARIAL (GAIN)/LOSS ANALYSIS

(1) Unfunded Actuarial Accrued Liability (UAAL) as of October 1, 2020 = $3,659,924

(2) Expected UAAL as of October 1, 2021 = 3,059,571

(3) Summary of Actuarial (Gain)/Loss, by component:

(4) Actual UAAL as of October 1, 2021 = $3,667,923

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HISTORY OF FUNDING PROGRESS

[Bar graph depicting the changes in funded ratios based on Actuarial Value of Assets divided by the EAN Actuarial Accrued Liability, with the x-axis representing the years 2012 through 2021, and the y-axis representing the percentages 0.00% through 100.00%. 2012 = approximately 69%; 2013 = approximately 73%; 2014 = approximately 80%; 2015 = approximately 85%; 2016 = approximately 86%; 2017 = approximately 91%; 2018 = approximately 91%; 2019 = approximately 94%; 2020 = approximately 95%; 2021 = approximately 95%.]

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ACTUARIAL ASSUMPTIONS AND METHODS

Mortality Rate

Healthy Active Lives:

Female: PubG.H-2010 for Employees.

Male: PubG.H-2010 (Below Median) for Employees, set back one year.

Healthy Retiree Lives:

Female: PubG.H-2010 for Healthy Retirees.

Male: PubG.H-2010 (Below Median) for Healthy Retirees, set back one year.

Beneficiary Lives:

Female: PubG.H-2010 (Below Median) for Healthy Retirees.

Male: PubG.H-2010 for Healthy Retirees, set back one year.

Disabled Lives:

PubG.H-2010 for Disabled Retirees, set forward three years.

All rates are projected generationally with Mortality Improvement Scale MP-2018. We feel this assumption sufficiently accommodates future mortality improvements.

The previously described mortality assumption rates were mandated by Chapter 2015-157, Laws of Florida. This law mandates the use of the assumptions used in either of the two most recent valuations of the Florida Retirement System (FRS). The above rates are those outlined in Milliman’s July 1, 2021 FRS valuation report for non-special-risk employees, with appropriate adjustments made based on plan demographics.

Interest Rate

7.25% (prior year 7.50%) per year compounded annually, net of investment related expenses. This is supported by the target asset allocation of the trust and the expected long-term return by asset class.

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ACTUARIAL ASSUMPTIONS AND METHODS

Salary Increases

See table later in this section. This is based on the experience study dated August 20, 2018.

 For Members eligible for Normal Retirement as of August 26, 2013:

 Projected salary at retirement is increased 25% to account for non-regular compensation.

For Members not eligible for Normal Retirement as of August 26, 2013 with at least 10 years of service as of that date:

The projected frozen benefit as of August 26, 2013 includes a 25% load for the final year included in the averaging period.

For Members with less than 10 years of service as of August 26, 2013:

No load is assumed.

Payroll Growth

0.00% for purposes of amortizing the Unfunded Actuarial Accrued Liability. This assumption cannot exceed the ten-year average payroll growth, in compliance with Part VII of Chapter 112, Florida Statutes.

Administrative Expenses

$101,713 annually, based on the average of actual expenses incurred in the prior two fiscal years.

Amortization Method

New UAAL amortization bases are amortized over 15 years.

Retirement Age

See table later in this section. This assumption is based on the experience study dated August 20, 2018.

Early Retirement

See table later in this section. This assumption is based on the experience study dated August 20, 2018.

Disability Rate

See table later in this section (1202 times 50%). This assumption is based on the experience study dated August 20, 2018.

Termination Rate

See table later in this section. This assumption is based on the experience study dated August 20, 2018.

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ACTUARIAL ASSUMPTIONS AND METHODS

Asset Valuation Method

Each year, the prior Actuarial Value of Assets is brought forward utilizing the historical geometric 4-year average Market Value return. It is possible that over time this technique will produce an insignificant bias above or below Market Value.

Funding Method

Entry Age Normal Actuarial Cost Method. The following loads are applied for determination of the Sponsor funding requirement:

Interest – a half year, based on the current 7.25% (prior year 7.50%) assumption.

 Salary – a full year based on the current 5.24% assumption.

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Assumption Tables 

Percentage Terminating During the Year

Percentage Becoming Disabled During the Year

Salary Scale

Percentage Retiring During the Year (at least 10 years of service as of August 26, 2013) (Note 1)

Percentage Retiring During the Year (less than 10 years of service as of August 26, 2013) (Note 2)

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GLOSSARY

Actuarial Value of Assets is the asset value used in the valuation to determine contribution requirements. It represents the plan’s Market Value of Assets (see below), with adjustments according to the plan’s Actuarial Asset Method. These adjustments produce a “smoothed” value that is likely to be less volatile from year to year than the Market Value of Assets.

Entry Age Normal Cost Method - Under this method, the normal cost is the sum of the individual normal costs for all active participants. For an active participant, the normal cost is the participant’s normal cost accrual rate, multiplied by the participant’s current compensation.

1. The normal cost accrual rate equals:
   1. the present value of future benefits for the participant, determined as of the participant’s entry age, divided by
   2. the present value of the compensation expected to be paid to the participant for each year of the participant’s anticipated future service, determined as of the participant’s entry age.
2. In calculating the present value of future compensation, the salary scale is applied both retrospectively and prospectively to estimate compensation in years prior to and subsequent to the valuation year based on the compensation used for the valuation.
3. The accrued liability is the sum of the individual accrued liabilities for all participants and beneficiaries. A participant’s accrued liability equals the present value, at the participant’s attained age, of future benefits less the present value at the participant’s attained age of the individual normal costs payable in the future. A beneficiary’s accrued liability equals the present value, at the beneficiary’s attained age, of future benefits. The unfunded accrued liability equals the total accrued liability less the actuarial value of assets.
4. Under this method, the entry age used for each active participant is the participant’s age at the time he or she would have commenced participation if the plan had always been in existence under current terms, or the age as of which he or she first earns service credits for purposes of benefit accrual under the current terms of the plan.

Market Value of Assets is the fair market value of plan assets as of the valuation date. This amount may be adjusted to produce an Actuarial Value of Assets for plan funding purposes.

Normal (Current Year's) Cost is the current year's cost for benefits yet to be funded. Under the Entry Age Normal cost method, it is determined for each participant as the present value of future benefits, determined as of the Member’s entry age, amortized as a level percentage of compensation over the anticipated number of years of participation, determined as of the entry age.

Present Value of Benefits is the single sum value on the valuation date of all future benefits to be paid to current plan participants.

Total Annual Payroll is the projected annual rate of pay for the fiscal year beginning on the valuation date of all covered Members.

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GLOSSARY

Total Required Contribution is equal to the Normal Cost plus an amount sufficient to amortize the Unfunded Accrued Liability over no more than 30 years. The required amount is adjusted for interest according to the timing of contributions during the year.

Unfunded Actuarial Accrued Liability (UAAL) is the difference between the actuarial accrued liability (described above) and the Actuarial Value of Assets. Under the Entry Age Normal Actuarial Cost Method, an actuarial gain or loss, based on actual versus expected UAAL, is determined in conjunction with each valuation of the plan.

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SPECIAL ACTUARIAL ACCOUNT ACTIVITY

10/1/2020 to 10/1/2021

Growth Assuming 7.50% Return

(1) 10/1/2020 Beginning Balance = 77,812,800

Note 1: Excludes Member Service Buyback

(2) 09/30/2021 Ending Balance = 85,424,456

(3) 09/30/2021 Actuarial Assets = 67,950,413

(4) Excess Earnings (3) - (2) = (17,474,043)

(5) 09/30/2021 Actuarial Gain (Loss) = 1,056,589

Share Account Allocation (per Ordinance #25-1999): Lesser of: [(4) or (5)] x 50% = (8,737,022)

Share Account Activity

10/1/2020 Account Balance = (138,012,258)

Interest at 7.50% = (10,350,919)

10/1/2021 Addition = (8,737,022)

10/1/2021 Benefits "Purchase" = 0

10/1/2021 Account Balance = (157,100,199)

10/1/2021 Adjusted Actuarial Assets

(6) Actuarial Assets (3), above = 67,950,413

(7) 10/1/2021 Account Balance = (157,100,199)

Adjusted Actuarial Assets, Lesser of: (6) or [(6) - (7)] = 67,950,413

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SPECIAL ACTUARIAL ACCOUN

History of Benefit "Purchases" and Actuarial Gains and Losses

Notes:

1. AIS dated 01/25/93 (revised 09/14/93)
2. AIS dated 12/08/93
3. AIS dated 06/28/96
4. AIS dated 01/27/97
5. AIS dated 01/26/98
6. AIS dated 08/26/99
7. AIS dated 05/04/00
8. AIS dated 02/23/01
9. AIS dated 01/06/17

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DISCUSSION OF RISK

ASOP No. 51, Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and Determining Pension Plan Contributions, states that the actuary should identify risks that, in the actuary’s professional judgment, may reasonably be anticipated to significantly affect the plan’s future financial condition.

Throughout this report, actuarial results are determined using various actuarial assumptions. These results are based on the premise that all future plan experience will align with the plan’s actuarial

assumptions; however, there is no guarantee that actual plan experience will align with the plan’s assumptions. It is possible that actual plan experience will differ from anticipated experience in an unfavorable manner that will negatively impact the plan’s funded position.

Below are examples of ways in which plan experience can deviate from assumptions and the potential impact of that deviation. Typically, this results in an actuarial gain or loss representing the current-year financial impact on the plan’s unfunded liability of the experience differing from assumptions; this gain or loss is amortized over a period of time determined by the plan’s amortization method. When assumptions are selected that adequately reflect plan experience, gains and losses typically offset one another in the long term, resulting in a relatively low impact on the plan’s contribution requirements associated with plan experience. When assumptions are too optimistic, losses can accumulate over time and the plan’s amortization payment could potentially grow to an unmanageable level.

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DISCUSSION OF RISK

Impact of Plan Maturity on Risk

For newer pension plans, most of the participants and associated liabilities are related to active members who have not yet reached retirement age. As pension plans continue in operation and active members reach retirement ages, liabilities begin to shift from being primarily related to active members to being shared amongst active and retired members. Plan maturity is a measure of the extent to which this shift has occurred. It is important to understand that plan maturity can have an impact on risk tolerance and the overall risk characteristics of the plan. For example, closed plans with a large amount of retired liability do not have as long of a time horizon to recover from losses (such as losses on investments due to lower than expected investment returns) as plans where the majority of the liability is attributable to active members. For this reason, less tolerance for investment risk may be warranted for highly mature closed plans with a substantial inactive liability. Similarly, mature closed plans paying substantial retirement benefits resulting in a small positive or net negative cash flow can be more sensitive to near term investment volatility, particularly if the size of the fund is shrinking, which can result in less assets being available for investment in the market.

To assist with determining the maturity of the plan, we have provided some relevant metrics in the table following titled “Plan Maturity Measures and Other Risk Metrics”. Highlights of this information are discussed below:

It is important to note that the actuary has identified the risks in this section as the most significant risks based on the characteristics of the plan and the nature of the project, however, it is not an exhaustive list of potential risks that could be considered. Additional advanced modeling, as well as the identification of additional risks, can be provided at the request of the audience addressed on page 2 of this report.

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PLAN MATURITY MEASURES AND OTHER RISK METRICS

Note 1: Excludes terminated participants awaiting a refund of member contributions.

Note 2: Determined as total contributions minus benefit payments and administrative expenses.

 
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STATEMENT OF FIDUCIARY NET POSITION

SEPTEMBER 30, 2021

ASSETS

LIABILITIES

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STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FOR THE YEAR ENDED SEPTEMBER 30, 2021

Market Value Basis

Additions

Total Additions = 16,175,268.25

Deductions

Total Deductions = 4,713,709.92

Net Increase in Net Position = 11,461,558.33

Note 1: Investment related expenses include investment advisory, custodial and performance monitoring fees.

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ACTUARIAL ASSET VALUATION

SEPTEMBER 30, 2021

Actuarial Assets for funding purposes are developed by increasing the Actuarial Assets used in the most recent actuarial valuation of the Fund by the average annual market value rate of return (net of investment related expenses) for the past four years. Actuarial Assets shall not be less than 80% nor greater than 120% of Market Value of Assets.

Details of the derivation are set forth as follows:

Annualized Rate of Return for prior four (4) years: = 9.41%

• (A) 10/1/2020 Actuarial Assets = $64,349,326.72
• (I) Net Investment Income:
  • 1. Interest Dividends = 1,260,916.27
  • 2. Realized Gain (Loss) = 6,053,355.98
  • 3. Unrealized Gain (Loss) = 7,059,445.06
  • 4. Change on Actuarial Value = (8,190,472.18)
  • 5. Investment Related Expenses = (226,017.32)
  • Total = 5,957,227.81
• (B) 10/1/2021 Actuarial Assets = $67,950,412.87

Actuarial Rate of Return = 2I/(A+B-I): 9.41%

10/01/2021 Limited Actuarial Assets: $67,950,412.87

10/01/2021 Market Value of Assets: $73,155,075.62

Actuarial Gain (Loss) due to Investment Return (Actuarial Asset Basis) = $1,209,171.64

Note 1: Market Value Basis, net of investment related expenses.

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 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FOR THE YEAR ENDED SEPTEMBER 30, 2021

Actuarial Asset Basis

REVENUES

EXPENDITURES

Change in Net Assets for the Year = 3,271,086.15

Net Assets Beginning of the Year = 64,679,326.72

Net Assets End of the Year (Note 2) = 67,950,412.87

Note 1: Investment related expenses include investment advisory, custodial and performance monitoring fees.

Note 2: Net Assets may be limited for actuarial consideration.

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DEFERRED RETIREMENT OPTION PLAN ACTIVITY

October 1, 2020 to September 30, 2021

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CITY CONTRIBUTIONS IN EXCESS OF MINIMUM REQUIREMENT

FOR THE FISCAL YEAR ENDED (FYE) SEPTEMBER 30, 2021

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HISTORY OF ASSET VALUES AND INVESTMENT RETURNS

 [A line graph depicting the History of Asset Values (Market Value vs. Actuarial Value), with the horizontal axis representing the years 2012 through 2021; and the vertical axis representing the value in $10million increments starting at 0.

The Actuarial Value of Assets (green line) values are: 2012 = approximately 40 million; 2013 = approximately 43 million; 2014 = approximately 46 million; 2015 - approximately 50 million; 2016 = approximately 52 million; 2017 = approximately 56 million; 2018 = approximately 59 million; 2019 = 62 million; 2020 = 65 million; and 2021 = 68 million.

The Market Value of Assets (blue line) values are: 012 = approximately 41 million; 2013 = approximately 48 million; 2014 = approximately 51 million; 2015 - approximately 50 million; 2016 = approximately 52 million; 2017 = approximately 59 million; 2018 = approximately 61 million; 2019 = 61 million; 2020 = 60.5 million; and 2021 = 72 million.]

[A bar graph depicting the History of Investment Returns (Market Value vs. Actuarial Value), with horizontal axis representing the years 2012 through 2021; and the vertical axis representing the percentages in increments of 5%, starting at -5.00%.

The Return on Actuarial Value of Assets (green bar) values are: 2012 = approximately 5%; 2013 = approximately 11%; 2014 = approximately 15%; 2015 = approximately 13%; 2016 = approximately 9%; 2017 = approximately 8%; 2018 = approximately 7%; 2019 = 8%; 2020 = 4%; and 2021 = 8%.

The Return on Market Value of Assets (blue bar) values are: 2012 = approximately 20%; 2013 = approximately 15%; 2014 = approximately 13%; 2015 = NO DATA; 2016 = approximately 11%; 2017 = approximately 13%; 2018 = approximately 8%; 2019 = 3%; 2020 = 4%; and 2021 = 23%.  

The Assumed Returns (purple bar) values are: 2012 = NO DATA; 2013 = approximately 8%; 2014 = approximately 7%; 2015 = approximately 7%; 2016 = approximately 7%; 2017 = approximately 7%; 2018 = approximately 7%; 2019 = 7%; 2020 = 7%; and 2021 = 7%. ]

 City of Titusville General Employees' Pension Plan                                            FOSTER & FOSTER Pg. 34

STATISTICAL DATA

Activities

Service Retirees

DROP Retirees

Beneficiaries

Disability Retirees

Terminated Vested

Note 1: Members entitled to both a deferred annuity and a refund are counted only once in this category.

Note 2: The Average Current Age and Average Annual Benefit exclude participants awaiting a refund of contributions.

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AGE AND SERVICE DISTRIBUTION

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VALUATION PARTICIPANT RECONCILIATION

1. Active lives
   1. Number in prior valuation 10/1/2020 = 300
   2. Terminations
      1. Vested (partial or full) with deferred annuity = (7)
      2. Vested in refund of member contributions only = (26)
      3. Refund of member contributions or full lump sum distribution received = (7)
   3. Deaths
      1. Beneficiary receiving benefits = 0
      2. No future benefits payable = 0
   4. Disabled = 0
   5. Retired = (2)
   6. DROP = (3)
   7. Continuing participants = 255
   8. New entrants = 47
   9. Total active life participants in valuation = 302
2. Non-Active lives (including beneficiaries receiving benefits)

Note 1: Members entitled to both a deferred annuity and a refund are included in both categories. 

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SUMMARY OF CURRENT PLAN

(Through Ordinance 41-2019)

Original Effective Date 

December 30, 1966.

Credited Service           

Years and fractional parts of years of service with the City as a General Employee. City Manager, City Attorney or Assistant City Attorney may opt out within the first year of employment.

Salary   

Prior to August 26, 2013 (and for Members eligible for Retirement as of that date):

Total compensation reportable on Form W-2, plus all tax deferred, tax sheltered, and tax exempt items of income. Expense reimbursements or payments of expense allowances are excluded.

For the calculation of the frozen accrued benefit as of August 26, 2013:

Salary shall include any payments of accrued leave that would have been included in Salary if the Member retired prior to August 26, 2013. However, the accrued leave balance shall be reduced by the amount of vacation or sick leave used subsequent to August 26, 2013 and the frozen accrued benefit shall be adjusted accordingly.

On and After August 26, 2013:

Base pay, excluding overtime and all other forms of compensation.

Average Final Compensation     

For computing benefits based on Credited Service on and after August 26, 2013:

Average of Salary during the five highest years of the last ten, but in no event less than the highest three- year average of the effective date.

For computing the frozen benefit or for Members eligible for Retirement or who terminate employment prior to August 26, 2013:

The Average Final Compensation is the average of the five highest years of the last ten years as of August 26, 2013.

For Members eligible for Normal Retirement as of August 26, 2013:

The average of the highest 5 years of Salary of the last 10 years.

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SUMMARY OF CURRENT PLAN

(Through Ordinance 41-2019)

Normal Retirement

For the frozen accrued benefit for all Members and for all benefits for Members with at least 10 Years of Service as of August 26, 2013:

Date: First of the month coinciding with or following the earlier of: 1) age 58 and the completion of

7.50 years of Credited Service, or 2) the completion of 28 years of Credited Service, regardless of age.

Benefit: 2.482% of Average Final Compensation as of August 26, 2013 times Credited Service through August 26, 2013 (Members who are eligible for Normal Retirement as of August 26, 2013 continue to accrue benefits under the old benefit structure).

Form of Benefit: Life Annuity (options available).

For the benefits accrued on and after August 26, 2013:

Date: First of the month coinciding with or following the earlier of: 1) age 58 and the completion of

7.50 years of Credited Service, or 2) the completion of 28 years of Credited Service, regardless of age.

Benefit: 2.00% of Average Final Compensation times Credited Service on and after August 26, 2013.

Form of Benefit: Life Annuity (options available).

For the benefits accrued on and after August 26, 2013 for Members with less than 10 Years of Service as of that date:

Date: First of the month coinciding with or following the earlier of: 1) age 62 and the completion of 10 years of Credited Service, or 2) the completion of 30 years of Credited Service, regardless of age.

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SUMMARY OF CURRENT PLAN

(Through Ordinance 41-2019)

Early Retirement 

For the frozen accrued benefit for all Members and for all benefits for Members with at least 10 Years of Service as of August 26, 2013:

Date: Later of age 48 and the completion of 7.50 years of Credited Service.

Benefit: Same as for Normal Retirement but reduced 3.00% for each year that Early Retirement precedes Normal Retirement.

For benefits accrued on and after August 26, 2013 for Members with less than 10 Years of service as of that date:

Date: Later of age 52 and the completion of 10 years of Credited Service.

Benefit: Same as for Normal Retirement but actuarially reduced for Early Retirement.

Vesting

 Schedule: 0% for less than 10 years, 100% after 10 years.

Members are 100% vested in their frozen accrued benefit as of August 26, 2013.

Benefit: Vested accrued benefit (determined as for Normal Retirement) paid beginning at the otherwise Normal Retirement Date.

Disability

Eligibility: Total and permanent (as determined by the Board) after completion of 10 years of Credited Service.

Benefit: Accrued Benefit (determined as for Normal Retirement).

Form of Benefit: Paid until earlier of death, recovery, Normal Retirement Date, or election by Member to receive Early Retirement benefit.

Maximum: Total of Plan, Workers Compensation, and Social Security benefits shall not exceed 100% of Average Final Compensation.

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SUMMARY OF CURRENT PLAN

(Through Ordinance 41-2019)

Death Benefits

Prior to Vesting

None.

Vested

Beneficiary receives a monthly benefit which is the actuarial equivalent of 50% of the Member's accrued benefit at the date of death.

Post-Retirement

According to option selected, if any.

Contributions

Members

2.50% of Salary.

City

Remaining amount necessary to pay the Normal Cost and fund the accrued, past service liability over 30 years.

Board of Trustees

Three full-time General Employees of the System elected by the membership, one General Employee appointed by the Board and confirmed by the City Manager, one citizen selected by the Board and appointed by the City Council as a ministerial duty.

Deferred Retirement Option Plan

Eligibility

The original DROP is closed to any new participants after August 26, 2013. A subsequent program “DROP II” is available to participants effective November 26, 2019.

Participation

Not more than 60 months.

Rate of Return

The Account is credited with the actual net rate of investment return (total return net of investment management fees, brokerage commissions and transaction costs) minus 2% after each fiscal year end. The annual return is subject to a minimum of 0% and a maximum equal to the current valuation investment return assumption as adopted by the Board.

Form of Distribution

Cash lump sum (options available) payable at termination of employment.

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STATEMENT OF FIDUCIARY NET POSITION

SEPTEMBER 30, 2021

ASSETS

TOTAL ASSETS = 73,155,572

LIABILITIES

NET POSITION RESTRICTED FOR PENSIONS = 73,155,076

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STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FOR THE YEAR ENDED SEPTEMBER 30, 2021

Market Value Basis

Additions

Total Additions = 16,175,269

Deductions

Total Deductions = 4,713,710

Net Increase in Net Position = 11,461,559

Note 1: Investment related expenses include investment advisory, custodial and performance monitoring fees.

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NOTES TO THE FINANCIAL STATEMENTS

(For the Year Ended September 30, 2021)

Plan Administration

The Plan is a single-employer defined benefit pension plan administered by the Plan's Board of Trustees comprised of: three full-time General Employees of the System elected by the Membership, one General Employee appointed by the Board and confirmed by the City Manager, one citizen selected by the Board and appointed by the City Council as a ministerial duty.

Plan Membership as of October 1, 2020:

Benefits Provided

The Plan provides retirement, termination, disability and death benefits.
A summary of the benefit provisions can be found in the October 1, 2020 Actuarial Valuation Report for the City of Titusville General Employees' Pension Plan prepared by Foster & Foster Actuaries and Consultants.

Contributions

Members: 2.50% of Salary.

City: Remaining amount necessary tp pay the Normal Cost and fund the accrued, past service liability over 30 years.

Invested Policy:

The following was the Board's adopted asset allocation policy as of September 30, 2021:

Concentrations:

The Plan did not hold investments in any one organization that represent 5 percent or more of the Pension Plan's Fiduciary Net Position.

Rate of Return:

For the year ended September 30, 2021, the annual money-weighted rate of return on Pension Plan investments, net of Pension Plan investment expense, was 23.39 percent.

The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.

Deferred Retirement Option Program

Eligibility: The original DROP is closed to any new participants after August 26, 2013. A subsequent program “DROP II” is available to participants effective November 26, 2019.

Rate of Return: The Account is credited with the actual net rate of investment return (total return net of investment management fees, brokerage commissions and transaction costs) minus 2% after each fiscal year end. The annual return is subject to a minimum of 0% and a maximum equal to the current valuation investment return assumption as adopted by the Board.

Participation: Not more than 60 months.

The DROP balance as September 30, 2021 is $421,486. 

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NET PENSION LIABILITY OF THE SPONSOR

 The components of the Net Pension Liability of the Sponsor on September 30, 2021 were as follows:

Actuarial Assumptions:

The Total Pension Liability was determined by an actuarial valuation as of October 1, 2020 updated to September 30, 2021 using the following actuarial assumptions:

Inflation = 2.5%

Salary Increases = Service based

Discount Rate = 7.25%

Investment Rate of Return = 7.25%

Mortality Rate Healthy Active Lives:

Female:

PubG.H-2010 for Employees.

Male:

PubG.H-2010 (Below Median) for Employees, set back one year.

Mortality Rate Healthy Retiree Lives:

Female:

PubG.H-2010 for Healthy Retirees.

Male:

PubG.H-2010 (Below Median) for Healthy Retirees, set back one year.

Mortality Rate Beneficiary Lives:

Female:

PubG.H-2010 (Below Median) for Healthy Retirees. 

Male:

PubG.H-2010 for Healthy Retirees, set back one year.

Mortality Rate Disabled Lives:

PubG.H-2010 for Disabled Retirees, set forward three years.

All rates are projected generationally with Mortality Improvement Scale MP-2018. We feel this assumption sufficiently accommodates future mortality improvements.

The previously described mortality assumption rates were mandated by Chapter 2015-157, Laws of Florida. This law mandates the use of the assumptions used in either of the two most recent valuations of the Florida Retirement System (FRS). The above rates are those outlined in Milliman’s July 1, 2020 FRS valuation report for non-special-risk employees, with appropriate adjustments made based on plan demographics.

The most recent actuarial experience study used to review the other significant assumptions was dated August 20, 2018.

The Long-Term Expected Rate of Return on Pension Plan investments can be 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 expenses and inflation) are developed for each major asset class.

For 2021 the inflation rate assumption of the investment advisor was 2.50%.

These ranges are combined to produce the Long-Term Expected Rate of Return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. 

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Best estimates of arithmetic real rates of return for each major asset class included in the Pension Plan's target asset allocation as of September 30, 2021 are summarized in the following table:

(Note 1) Source: AndCo Consulting

Discount Rate:

The Discount Rate used to measure the Total Pension Liability was 7.25 percent.

The projection of cash flows used to determine the Discount Rate assumed that Plan Member contributions will be made at the current contribution rate and that Sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the Member rate. Based on those assumptions, the Pension Plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments 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.

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SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS

Last 2 Fiscal Years

Total Pension Liability

Plan Fiduciary Net Position

Notes to Schedule:

Changes of Assumptions:

For measurement date 09/30/2021, the investment rate of return was lowered from 7.50% to 7.25% per year, net of investment related expenses.

For measurement date 09/30/2020, as mandated by Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed to the rates used in Milliman’s July 1, 2019 FRS valuation report for non-special-risk employees, with appropriate adjustments made based on plan demographics.

Additionally, the assumed investment rate of return was reduced from 7.75% to 7.50%, net of investment related expenses.

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SCHEDULE OF CONTRIBUTIONS

Last 2 Fiscal Years

Notes to Schedule:

Valuation Date: 10/01/2019

Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported.

Methods and assumptions used to determine contribution rates can be found in the October 1, 2019 Actuarial Valuation for the City of Titusville General Employees' Pension Plan prepared by Foster & Foster Actuaries and Consultants.

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SCHEDULE OF INVESTMENT RETURNS

Last 2 Fiscal Years

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NOTES TO THE FINANCIAL STATEMENTS

(For the Year Ended September 30, 2021)

Plan Administration

The Plan is a single-employer defined benefit pension plan administered by the Plan's Board of Trustees comprised of: three full-time General Employees of the System elected by the Membership, one General Employee appointed by the Board and confirmed by the City Manager, one citizen selected by the Board and appointed by the City Council as a ministerial duty.

Each person employed by the City as a full-time General Employee becomes a member of the Plan as a condition of his employment. All General Employees are therefore eligible for all plan benefits, as provided for in the plan document and by applicable law, except that the City Manager, City Attorney or Asst. City Attorney may notify the Board and the City, within the first 12 months of his employment as City Manager, City Attorney or Asst. City Attorney, of his election to not be a member of the system. In the event of such election, he shall be barred from future membership in the system.

Plan Membership as of October 1, 2020:

Benefits Provided

The Plan provides retirement, termination, disability and death benefits.
A summary of the benefit provisions can be found in the October 1, 2020 Actuarial Valuation Report for the City of Titusville General Employees' Pension Plan prepared by Foster & Foster Actuaries and Consultants.

Contributions

Members: 2.50% of Salary.

City: Remaining amount necessary tp pay the Normal Cost and fund the accrued, past service liability over 30 years.

Net Pension Liability

The measurement date is September 30, 2021.

The measurement period for the pension expense was October 1, 2020 to September 30, 2021.

The reporting period is October 1, 2020 through September 30, 2021.

The Sponsor's Net Pension Liability was measured as of September 30, 2021.

The Total Pension Liability used to calculate the Net Pension Liability was determined as of that date.

Actuarial Assumptions:

The Total Pension Liability was determined by an actuarial valuation as of October 1, 2020 updated to September 30, 2021 using the following actuarial assumptions:

Inflation = 2.50%

Salary Increases = Service based

Discount Rate = 7.25%

Investment Rate of Return = 7.25%

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Mortality Rate Healthy Active Lives:

Female:

PubG.H-2010 for Employees.

Male:

PubG.H-2010 (Below Median) for Employees, set back one year.

Mortality Rate Healthy Retiree Lives:

Female:

PubG.H-2010 for Healthy Retirees.

Male:

PubG.H-2010 (Below Median) for Healthy Retirees, set back one year.

Mortality Rate Beneficiary Lives:

Female:

PubG.H-2010 (Below Median) for Healthy Retirees. 

Male:

PubG.H-2010 for Healthy Retirees, set back one year.

Mortality Rate Disabled Lives:

PubG.H-2010 for Disabled Retirees, set forward three years.

All rates are projected generationally with Mortality Improvement Scale MP-2018. We feel this assumption sufficiently accommodates future mortality improvements.

The previously described mortality assumption rates were mandated by Chapter 2015-157, Laws of Florida. This law mandates the use of the assumptions used in either of the two most recent valuations of the Florida Retirement System (FRS). The above rates are those outlined in Milliman’s July 1, 2020 FRS valuation report for non-special-risk employees, with appropriate adjustments made based on plan demographics.

The most recent actuarial experience study used to review the other significant assumptions was dated August 20, 2018.

The Long-Term Expected Rate of Return on Pension Plan investments can be 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 expenses and inflation) are developed for each major asset class.

For 2021 the inflation rate assumption of the investment advisor was 2.50%.

These ranges are combined to produce the Long-Term Expected Rate of Return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.

Best estimates of arithmetic real rates of return for each major asset class included in the Pension Plan's target asset allocation as of September 30, 2021 are summarized in the following table:

(Note 1) Source: AndCo Consulting

Discount Rate:

The Discount Rate used to measure the Total Pension Liability was 7.25 percent.

The projection of cash flows used to determine the Discount Rate assumed that Plan Member contributions will be made at the current contribution rate and that Sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the Member rate. Based on those assumptions, the Pension Plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments 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.

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CHANGES IN NET PENSION LIABILITY

Changes for a Year:

Sensitivity of the Net Pension Liability to changes in the Discount Rate.

Pension Plan Fiduciary Net Position.

Detailed information about the pension Plan's Fiduciary Net Position is available in a separately issued Plan financial report.

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PENSION EXPENSE AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS

For the year ended September 30, 2021, the Sponsor will recognize a Pension Expense of $699,471.

On September 30, 2021, the Sponsor reported Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions from the following sources:

Amounts reported as Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions will be recognized in Pension Expense as follows:

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SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS

Last 2 Fiscal Years

Total Pension Liability

Plan Fiduciary Net Position

Notes to Schedule:

Changes of Assumptions:

For measurement date 09/30/2021, the investment rate of return was lowered from 7.50% to 7.25% per year, net of investment related expenses.

For measurement date 09/30/2020, as mandated by Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed to the rates used in Milliman’s July 1, 2019 FRS valuation report for non-special-risk employees, with appropriate adjustments made based on plan demographics.

Additionally, the assumed investment rate of return was reduced from 7.75% to 7.50%, net of investment related expenses.

 
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SCHEDULE OF CONTRIBUTIONS

Last 2 Fiscal Years

Notes to Schedule:

Valuation Date: 10/01/2019

Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported.

Methods and assumptions used to determine contribution rates can be found in the October 1, 2019 Actuarial Valuation for the City of Titusville General Employees' Pension Plan prepared by Foster & Foster Actuaries and Consultants.

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EXPENSE DEVELOPMENT AND AMORTIZATION SCHEDULES

The following information is not required to be disclosed but is provided for informational purposes.

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COMPONENTS OF PENSION EXPENSE

FISCAL YEAR SEPTEMBER 30, 2021

Total Pension Liability

Plan Fiduciary Net Position

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AMORTIZATION SCHEDULE - INVESTMENTS

Increase (Decrease) in Pension Experience Arising from the Recognition of the Differences Between Projected and Actual Earnings on Pension Plan Investments

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AMORTIZATION SCHEDULE - CHANGES OF ASSUMPTIONS

Increase (Decrease) in Pension Expense Arising from the Recognition of the Effects of Changes of Assumptions

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AMORTIZATION SCHEDULE - EXPERIENCE

Increase (Decrease) in Pension Experience Arising from the Recognition of the Differences Between Projected and Actual Earnings on Pension Plan Investments

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