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CITY OF LA PORTE, TEXAS <br />NOTES TO THE FINANCIAL STATEMENTS (continued) <br />Note 8 - Employee Retirement System (continued) <br />Texas Municipal Retirement System (continued) <br />Contributions and Annual Pension Cost (continued) <br />The City contributes to the TMRS plan at an actuarially determined rate. Both the employees and the City <br />make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary <br />purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and <br />the calendar year when the rate goes into effect. The annual pension cost and net pension obligation <br />(asset) for the current year is calculated as follows: <br />2012 <br />Annual Required Contribution (ARC) <br />$3,624,410 <br />Interest on net pension obligation (NPO) <br /> 173,583 <br />Adjustment to ARC <br />(139,265) <br />Annual Pension Cost (APC) <br />3,658,728 <br />Contributions <br />(3,388,213) <br />Change in NPO <br /> 270,515 <br />NPO, beginning of the year <br />2,314,444 <br />NPO, ending of the year <br />$2,584,959 <br /> Percentage of APC contributed <br />92.6% <br />Actuarial Cost MethodProjected Unit Credit <br />Amortization MethodLevel Percent of Payroll <br />Remaining Amortization Period27.1 Years - Closed Period <br />Asset Valuation Method10-year Smoothed Market <br />Actuarial Assumptions: <br />Investment Rate of Return7.0% <br />Projected Salary IncreasesVaries by age and service <br />Includes Inflation At3.0% <br />Cost-of-Living Adjustments2.1% <br />Funded Status <br />The funded status of the Plan as of December 31, 2011 <br />The schedule of funding progress, presented as required supplementary information following the <br />notes to the financial statements, presents multi-year trend information about whether the actuarial <br />value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liability. <br />44 <br /> <br />