02-14-11 Regular Meeting of Fiscal Affairs Committee

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CITY OF LA PORTE, TEXAS Notes to the Financial Statements September 30, 2010 6. Pension Benefits — Continued Plan Description The Fire Fighters' Pension Commission is the administrator of the Texas Statewide Emergency Services Personnel Retirement Fund, a cost sharing multiple employer pension system established and administered by the State of Texas to provide pension benefits for emergency services personnel who serve without monetary remuneration. The Texas Statewide Emergency Services Personnel Retirement Fund is considered a component unit of the State of Texas financial reporting entity and is included in the State's financial reports as a pension trust fund. At August 31, 2008 there were 186 member departments participating in the pension system. The following table summarizes the pension system membership as of August 31, 2008: Retirees and beneficiaries currently receiving benefits 1,939 Terminated members entitled to benefits but not yet receiving those 1,975 Current active members (vested and non - vested) 4,340 The pension system was created by Senate Bill 411, 65 Legislature, Regular Session (1977). The 79 Legislature, Regular Session (2005), recodified the provisions and gave the TESRS Board of Trustees authority to establish vesting requirements, contributions levels, benefit formulas, and eligibility requirements by board rule. The benefit provisions include retirement benefits as well as death and disability benefits. Member are 505 vested after the tenth year of service, with the vesting percent increasing 10% for each of the next five years of service so that a member becomes 100% vested with 15 years of service. 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, 65 Legislative, Regular Session (1977) and were amended by board rule in 2006. No contributions are required by individual members of participating departments. The goveming 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 Contributions 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, 2008, total contributions (dues and prior service) of $2,439,339 were paid into TESRS by the political subdivision and served by the member volunteer emergency services personnel. In addition, the state appropriated $8,800,000 for the fiscal year ending August 31, 2008. Total contributions made were greater than the contributions required by the state statute and were greater than the contributions based on the August 31, 2006 actuarial valuation. 67