03-11-13 Fiscal Affairs Committee

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CITY OF LA PORTE, TEXAS NOTES TO THE FINANCIAL STATEMENTS (continued) Note 8 - Employee Retirement System (continued) Texas Statewide Emergency Services Personnel Retirement Fund (continued) Summary of Significant Accounting Policies and Plan Asset Matters (continued) Upon reaching age 55, each vested member may retire and receive a monthly pension equal to his vested percentage multiplied by six times the governing body’s average monthly contribution over the member’s years of qualified service. For years of service in excess of 15 years, this monthly benefit is increased at the rate of 6.2 % compounded annually. On and off-duty death benefits and on-duty disability benefits are dependent on whether or not the member was engaged in the performance of duties at the time of death or disability. Death benefits include a lump sum amount and continuing monthly payments to a member’s surviving spouse and dependent children. Funding Policy Contribution provisions were established by S.B. 411, 65th Legislative, Regular Session (1977) and were amended by board rule in 2006. No contributions are required by individual members of participating departments. The governing bodies of participating department members are required to contribute at least the minimum prescribed amount per month for each active member. Additional contributions may be made by a governing body to pay for granting credit for service before the department began participating in TESRS (prior service). The State may also be required to make annual contributions up to a limited amount to make TESRS actuarially sound. Annual Required Contribution The contribution requirement per active emergency services personnel member per month is not actually determined. Rather, the minimum contribution provisions were set by board rule. For the fiscal year ending August 31, 2010, total contributions (dues and prior service) of $2,875,103 were paid into TESRS by the political subdivision and served by the member volunteer emergency services personnel. The state did not appropriate any maximum state contribution for fiscal years ending August 31, 2010 and 2011. Total contributions made were equal to the contribution required by the state statute and equal to the contributions required based on the August 31, 2008 actuarial valuation. The purpose of the biennial actuarial valuations is to test the adequacy of the contribution arrangement and determine if they are adequate to fund the benefits that are promised. The actuarial valuation as of August 31, 2010 revealed the adequacy of the expected contributions (dues and prior service contributions) together with the actual state appropriations for the fiscal year ending August 31, 2010 ($502,941 to help pay for the Systems administrative expense) and with the assumed continuation of legislative appropriations of (1) the maximum state contribution amount in future years for the System to have a 30 year amortization period, and (2) approximately $500,000 each year to help pay for part of the System’s administrative expenses. Expected contributions for the fiscal year ending August 31, 2011 are less than the contributions required because of the lag time between an actuarial valuation that shows the need for maximum state contribution amounts and the appropriations process. The City’s annual contributions for fiscal year ending September 30, 2012, 2011 and 2010 were $27,216, $27,264, and $24,528 respectively. 46