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<br />CITY OF LA PORTE, TEXAS
<br />Notes to the Financial Statements
<br />September 30,2008
<br />
<br />6. Pension Benefits - Continued
<br />
<br />The Plan provisions are adopted by the governing body of the City, within the options available in the state
<br />statutes governing the TMRS and within the actuarial constraints also in the statutes.
<br />
<br />The contribution rate for employees is 7 percent and the City's matching ratio is currently 2 to 1, both as
<br />adopted by the governing body of the City. Under the state law goveming TMRS, the actuary annually
<br />determines the City's contribution rate. This rate consists of the normal cost contribution rate and the prior
<br />service contribution rate, both of which are calculated to be a level percentage of payroll from year to year.
<br />The normal cost contribution rate financing the currently accruing monetary credits is due to the City's
<br />matching percentage, which is the obligation of the City as of an employee's retirement date, not at the time
<br />the employee's contributions are made. The normal cost contribution rate is the actuarially determined
<br />percent of payroll necessary to satisfy the obligation of the City to each employee at the time his/her
<br />retirement becomes effective. The prior service contribution rate amortizes the unfounded (over funded)
<br />actuarial liability (asset) over the remainder of the plan's 25-year amortization period. The unit credit
<br />actuarial cost method is used for determining the City contribution rate. Since the City needs to know its
<br />contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial
<br />valuation that is the basis for the rate and the calendar year when the rate goes into effect. (i. e. December
<br />31, 2006, valuation is effective for rates beginning January 2008).
<br />
<br />Assumptions and Schedule of Actuarial Liabilities and Funding Progress
<br />
<br />Actuarial Cost method
<br />Amortization Method
<br />Remaining amortization
<br />Asset Valuation Method
<br />
<br />Projected Unit Credit
<br />Level Percent of payroll
<br />30 Years-closed Period
<br />Amortized Cost
<br />
<br />Investment Rate of Return
<br />Projected Salary Increases
<br />Includes Inflation at
<br />Cost of Living Adjustments
<br />Payroll Growth Assumptions
<br />
<br />7.0%
<br />Varies by age and service
<br />3.0%
<br />2.1 % (3% CPI)
<br />3.0%
<br />
<br />Actuarial Accrued Liabilities
<br />Percentage Funded
<br />Unfunded (Overfunded) Actuarial
<br />Accrued Liability (UAAL)
<br />Annual Covered Payroll
<br />UAAL as a Percentage of Covered Payroll
<br />
<br />53,388,381 58,587,551 69,582,807
<br />80.5% 80.3% 70.6%
<br />10,386,612 11,521,794 20,474,255
<br />15,137,017 14,879,306 15,611,200
<br />68.6% 77.4% 131.2%
<br />
<br />Net Pension Obligation (NPO) at the Beginning
<br />of Period
<br />Annual Pension Cost:
<br />Annual Required Contribution (ARC)
<br />Interest on NPO
<br />Adjustment to the ARC
<br />
<br />2,004,777
<br />
<br />1,952,908
<br />
<br />2,033,168
<br />
<br />2,004,777
<br />2,004,777
<br />
<br />1,952,908
<br />1,952,908
<br />
<br />2,033,168
<br />2,033,168
<br />
<br />Contributions Made (100%)
<br />Increase in NPO
<br />
<br />NPO at the End of Period
<br />
<br />$
<br />
<br />$
<br />
<br />$
<br />
<br />65
<br />
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