Boards & Commissions Supporting Documents - 05/23/2006 - Board of Trustees•
I'1'EN 10,1a
AGENDA ITEM
Regular Board of Trustees Meeting
of
May 23, 2006
SUBJECT: Police and Firefighters' Pension Fund Actuarial Studies
FROM: Darrell Langlois W.
BUDGET SOURCE/BUDGET IMPACT: Various Accounts in the Police and Fire
Departments
RECOMMENDED MOTION: I move that 1) The Village Board accept the attached
actuarial reports of the Police Pension Fund and Firefighters' Pension Fund and 2) The
Village Board approve a Village contribution of 18.59% of payroll for police officers and
23.68% for firefighters retroactive to January 1, 2006.
Background/History:
An actuarial study of the Police Pension Fund and Firefighters' Pension Fund is performed
annually in order to monitor the funding progress of the two funds as well as determining the
Village's contribution for the coming year. Since it is in both the Village's interest and the two
pension fund's interest that these studies be performed, 50% of the cost of each study is paid for
by the Village and 50% is paid for by the respective pension fund. The studies presented were
once again performed by Timothy W. Sharpe, Actuary.
The actuarial study process begins with the Finance Department providing the actuary with
participant salary, contribution, and service credit data. From there, the actuary calculates
various scenarios based on prior actuarial assumptions as well as what the impact would be for
various changes in actuarial assumptions. The actuary then attends a meeting with each
respective Pension Board where the preliminary results and various changes in actuarial
assumptions are discussed. Based on the direction given at the meeting, the actuarial studies are
then completed and a funding request is forwarded to the Village Board (ultimately responsible
for funding the pension programs). For 2006, the process was a little different in that the Police
Pension Fund requested a change in the the interest rate assumption from 7.5% to 7.25 %. Due to
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Village of Oak Brook
Pension Fund Trend Information
Trailing 12
Unfunded
Accrued
Month
Village
Liability
Total
% of
Assset Value
Liability
% Funded
Return
Normal Cost
Amortization
Contribution
Payroll
Police Pension Fund
1/1/2006
24,752,561
28,683,431
863%
473%
370,090
184,677
554,767
1859%
1/1/2005
24,157,442
27,106, 938
891%
804%
358,478
137,643
496,121
1766%
1/1/2004
22,790,550
25,499,316
894%
11 81%
348,213
121,593
469,806
1646%
1/1/2003
20, 521, 085
23, 581, 098
87.0%
185%
336,064
133,260
469,324
1715%
1/1/2002
20,496,069
21,849,564
938%
143%
298,121
57,603
355,724
1360%
1/1/2001
20,448,157
20,140,332
1015%
5.96%
262,036
(21,476)
240,560
1149%
1/1/2000
19,542,081
18,564,949
1053%
545%
271,589
(68,172)
203,417
1007%
1/1/1999
18,904,148
17,216,822
1098%
1085%
276,211
(117,720)
158,491
784%
Firefighters' Pension Fund
1/1/2006
20,053,194
26,016,602
771%
555%
297,359
280,302
577,661
2368%
1/1/2005
19,395,277
24,131,120
804%
829%
272,616
219,982
492,598
2143%
1/1/2004
18,254,770
22,439,963
813%
1454%
281,168
189,051
470,219
2180%
1/1/2003
16,240,617
20,878,039
77.8%
-516%
312,335
201,821
514,156
2313%
1/1/2002
17,487,247
19,819,493
88.2%
-1.04%
320,936
99,257
420,193
1960%
1/1/2001
18,050,631
18,772,810
962%
071%
305,115
30,084
335,199
1776%
1/1/2000
18,203,402
18,051,091
1008%
768%
285,660
(10,626)
275,034
1653%
1/1/1999
17,364,674
15,659,293
1109%
997%
243,227
(118,980)
124,247
873%
the significance of this potential change, the single issue of whether or not to change the interest
rate assumption was discussed by the Village Board at the meeting on April 11, 2006. At this
meeting, the Village Board elected to leave the interest rate unchanged at 7.5 %. Thus, the
studies of both the Police and Firefighters' Pension Fund were completed using an interest rate
assumption of 7.5 %. The following is a brief summary of the two reports:
Police Pension Fund
As the actuarial report indicates, the Police Pension Fund was 86.3% funded as of December 31,
2005, a decrease of 2.77% from the funded percentage in 2004. The primary cause of the
decrease in the funded percentage is that for 2005 the Fund's investment return was 4.73 %,
which is 2.80°X0 below the actuarially assumed rate of 7.50 %. Although the investment return for
2005 was below the assumed rate, the trailing three year investment return has averaged 8.20 %,
which is over the assmumed rate of 7.50 %. For 2006, the actuary recommends a Village
contribution of 18.59% of payroll, an increase of 0.93% of payroll from 2005.
The recommended Village contribution of 18.59% of payroll for 2006 is slightly over the
17.75% of payroll used in preparation of the 2005 Budget; however, offsets will likely be
available in other accounts within in the Police Department to offset the potential variance. To
date in 2006 the Village has continued to contribute to the Police Pension Fund at the 2005 rate
of 17.66 %. The past practice has been that the contribution rate is made retroactive to January 1.
Accordingly, if the contribution rate of 18.59% is approved, a retroactive payment of $9,480.99
will be made to the Police Pension Fund.
Firefighters' Pension Fund
The actuarial report indicates that the Firefighters' Pension Fund was 77.1 % funded as of
December 31, 2005, a decrease of 3.30% from the funded percentage in 2004. The cause of
approximately 0.66% of the decrease in the funded percentage is that during the year two
firefighters took advantage of a 2004 legislative change that now allows portability of service
credit between downstate pension funds. The remainder of the decrease in the funded percentage
was due to the Fund's investment return of 5.55% being 1.95% below the actuarially assumed
rate of 7.50 %. Although the investment return for 2005 was below the assumed rate, the trailing
three year investment return has averaged 9.46 %, which is over the assmumed rate of 7.50 %.
For 2006, the actuary recommends a Village contribution of 23.68% of payroll, an increase of
2.25% of payroll from 2005.
The recommended Village contribution of 23.68% of payroll for 2006 is over the 21.50% of
payroll used in preparation of the 2006 Budget; however, offsets will likely be available in other
accounts within in the Fire Department to offset the potential variance. To date in 2006 the
Village has continued to contribute to the Firefighters' Pension Fund at the 2005 rate of 21.43 %.
The past practice has been that the contribution rate is made retroactive to January 1.
Accordingly, if the contribution rate of 23.68% is approved, a retroactive payment of $18,463.89
will be made to the Firefighters' Pension Fund.
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Trend Information
To faciliate additional analysis, attached to this memorandum is trend data on both pension funds
for the last eight years. As you can see, from year to year the actuarial results can vary greatly.
The two biggest reasons for the variations have been State - mandated benefit enhancements and
the volatile investment markets. Also, when comparing investment returns between the two
funds it should be noted that in general the Firefighters' Pension Fund has had a greater
percentage of their assets in equity investments when compared to the Police Pension Fund.
Thus, when the equity markets have performed well the Firefighters' Pension Fund has had better
performance, and when the equity markets have performed poorly (more frequently in this eight
year period) the Police Pension Fund had better performance.
Recommendation:
I recommend that the Village Board accept the actuarial studies of the Police Pension Fund and
Firefighters' Pension Fund and authorize a Village contribution of 18.59% of payroll for Police
and 23.68% of payroll for Firefighters retroactive to January 1, 2006.
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VILLAGE OF OAK BROOK
OAK BROOK POLICE PENSION FUND
Actuarial Valuation Report
For the Year
Beginning January 1, 2006
And Ending December 31, 2006
Timothy W. Sharpe, Actuary, Geneva, IL (630) 262 -0600
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TABLE OF CONTENTS
Page
Introduction
3
Summary of Results
4
Actuarial Valuation of Assets
6
Asset Changes During Prior Year
7
Normal Cost
8
Accrued Liability
9
Tax Levy Requirement
10
Summary of Plan Participants
11
Duration
12
Projected Pension Payments
12
Summary of Plan Provisions
13
Actuarial Method
14
Actuarial Assumptions
15
GASB Statements No. 25 & 27 Disclosure
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i INTRODUCTION
Police -sworn personnel of the Village of Oak Brook are covered by the Police Pension Plan that
is a defined- benefit, single- employer pension plan. The purpose of this report is to disclose the
Tax Levy Requirement and GASB Statements No. 25 & 27 financial information and related
actuarial information for the year beginning January 1, 2006, and ending December 31, 2006.
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The valuation results reported herein are based on plan provisions in effect as of January 1, 2006,
the employee data furnished by the Village, the financial data provided by the Fund's trustee and
the actuarial methods and assumptions described later in this report. I hereby certify that this
report is complete and accurate and fairly presents the actuarial position of the Fund as of
December 31, 2005, in accordance with generally accepted actuarial principles and procedures.
' In my opinion, the assumptions used are reasonably related to the experience of the Plan and to
reasonable expectations.
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Respectfully submitted,
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Timothy W. Sharpe, EA, MAAA
Enrolled Actuary No. 05 -4384
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SUMMARY OF RESULTS
There were no changes with respect to Plan Provisions, Actuarial Methods or Actuarial
Assumptions from the prior year.
There were no unexpected changes with respect to the participants included in this actuarial
valuation (0 new members, 0 terminations, 0 retirements, 0 incidents of disability, annual payroll
increase 6.3 %, average salary increased 6.3 %).
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There were no unexpected changes with respect to the Fund's investments from the prior year
(annual investment return 4.68 %).
The Village's Tax Levy Requirement has increased from $496,121 last year to $554,767 this year
(11.8 %). The increase in the Tax Levy is due to the increase in salaries and the investment return
was less than expected. The Percent Funded has decreased from 89.1% last year to 86.3% this
year.
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SUMMARY OF RESULTS (Continued)
Tax Levy Requirement $
Tax Levy as a Percentage of Payroll
For Year Ending
December 31
2006 2005
5541767 $ 4969121
18.59% 17.66%
TAX LEVY REQUIREMENT
as of December 31
$600
$500
$400
ca
$300
0
- $200
$100
$0
-5-
® 2006
❑ 2005
as of
January 1
2006
2005
Village Normal Cost
3705090
358,478
Anticipated Employee Contributions
2819021
264,452
Accrued Liability
28316835431
277106,938
Actuarial Value of Assets
24,7523561
249157,442
Unfunded Accrued Liability /(Surplus)
3,930,870
2,949,496
Amortization of Unfunded
1845677
1375643
Accrued Liability /(Surplus)
Percent Funded
86.3%
89.1%
Annual Payroll
$ 259845609 $
2,808,631
TAX LEVY REQUIREMENT
as of December 31
$600
$500
$400
ca
$300
0
- $200
$100
$0
-5-
® 2006
❑ 2005
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ACTUARIAL VALUATION OF ASSETS
He
as of
January 1
2006
2005
Cash and Equivalents
$ 357,778 $
368,815
Certificates of Deposit
98,193
1001,154
Government Securities
13,869,557
14,083,032
Mutual Funds
10,293,243
9,482,425
Interest Receivable
1371,230
126,332
Miscellaneous Receivable /(Payable)
(3,44M
(3,3 16
Actuarial Value of Assets
$ 24.752.561 $
240157,442
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ASSET CHANGES DURING PRIOR YEAR
Trust Balance as of January 1, 2005
Contributions
Village
Employee
Total
Payments
Benefit Payments
Expenses
Total
Investment Income
Trust Balance as of January 1, 2006
Approximate Annual Rate of Return
497,650
279,258
1,248,695
63,961
$ 2411157,442
776,908
1,312,656
1,130,867
$ 24.752,561
4.73%
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NORMAL COST
The Normal Cost is the actuarial present value of the portion of the projected benefits that are
expected to accrue during the year based upon the actuarial valuation method and actuarial
assumptions employed in the valuation.
as of
January 1
2006 2005
Total Normal Cost $ 6519111 $ 622,930
Anticipated Employee Contributions 281,021 264,452
,
Village Normal Cost 370090 358,478
Normal Cost Payroll $ 21,98409 $ 2,808,631
Village Normal Cost Rate 12.40% 12.76%
Total Normal Cost Rate 21.82% 22.18%
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NORMAL COST
r As Of January 1, 2006
568%
® Anticipated Employee Contributions
Village Normal Cost
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432%
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ACCRUED LIABILITY
The Accrued Liability is the actuarial present value of the portion of the projected benefits that
has been accrued as of the valuation date based upon the actuarial valuation method and actuarial
assumptions employed in the valuation. The Unfunded Accrued Liability is the excess of the
Accrued Liability over the Actuarial Value of Assets.
Accrued Liability
Active Employees
Children Annuities
Disability Annuities
Retirement Annuities
Surviving Spouse Annuities
Terminated Vested Annuities
Total Annuities
Total Accrued Liability
Actuarial Value of Assets
Unfunded Accrued Liability /(Surplus)
Percent Funded
ACCRUED LIABILITY
As Of January 1, 2006
$35
$30
$25
o $20
$15
$10
$5
$0
as of
January 1
2006 2005
$ 12,393,296 $ 101,86507
91
0
1,509,448
14,589,155
191,532
0
16,290,135
28,683,431
24.752.561
3.930.870
86.3%
$
® Total Accrued Liability
Actuarial Value of Assets
® Unfunded Accrued Liability /(Surplus)
0
1,483,881
14,562,354
195,006
0
16,241,241
27,106,938
24,15 7,442
2:949.496
89.1%
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TAX LEVY REQUIREMENT
The Tax Levy Requirement is determined as the annual contribution necessary to fund the
normal cost, plus the amount to amortize the unfunded accrued liability as a level percentage of
payroll over a forty (40) year period which commenced in 1993.
For Year Ending
December 31
2006 2005
Village Normal Cost as of Beginning of Year $ 3705090 $ 358478
Amortization of Unfunded
Accrued Liability /(Surplus)
Tax Levy Requirement as of End of Year
Annual Payroll
Tax Levy Requirement
as a Percentage of Payroll
184,677
554 767
$ 259841609
18.59%
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137,643
496.121
$ 2,808,631
17.66%
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SUMMARY OF PLAN PARTICIPANTS
The actuarial valuation of the Plan is based upon the employee data furnished by the Village.
The information provided for Active participants included:
Name
Sex
Date of Birth
Date of Hire
Compensation
Employee Contributions
The information provided for Inactive participants included:
Name
Sex
Date of Birth
Date of Pension Commencement
Monthly Pension Benefit
Form of Payment
Membership 2006 2006 2005 2005
Current Employees
Vested 25 22
Nonvested 17 20
Total 42 42
Inactive Participants
Children
Disabled Employees
Retired Employees
Surviving Spouses
Terminated Vesteds
Total
Annual Payroll
Annual Benefits
0$ 0
4 84,776
23 1,143,684
1 19,476
0 0
1*247,93 6
$ 21,984,609
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Annual Benefits
0$ 0
4 84,776
23 1,112,687
1 19,476
0 0
28 1 2 62
$ 2085631
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SUMMARY OF PLAN PARTICIPANTS (Continued)
Aae and Service Distribution
Service
0 -4
5 -9
10 -14 15 -19 20 -24 25 -29
30+ Total
Salary
Age
20 -24
1
1
50,386
25 -29
6
2
8
59,554
30 -34
3
5
8
63,038
35 -39
1
2
2 3
8
70,987
40 -44
2 6
8
715553
45 -49
1
1 1
3
81,567
50 -54
1 1 3
5
67,419
55 -59
0
60+
1 1
82,496
Total 11 10 4 11 2 3 1 42 67,517
Salary 57,091 66,344 73,535 72,878 81,303 67,799 82,496
Average Age: 37.8 Average Service: 11.7
DURATION (years) Active Members: 17.1 Retired Members: 9.3 All Members: 12.7
PROJECTED PENSION PAYMENTS
2006 2007 2008 2009 2010
$1,474,145 $114517,288 $15548,777 $13562,144 $19567,634
PROJECTED PENSION PAYMENTS
2006 -2010
$2,000
$1,500
c
$1,000
0
r
$500
$0
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2006
® 2007
® 2008
❑ 2009
® 2010
SUMMARY OF PLAN PROVISIONS
The Plan Provisions have not been changed from the prior year.
The Village of Oak Brook Police Pension Fund was created and is administered as prescribed by
"Article 3. Police Pension Fund - Municipalities 500,000 and Under" of the Illinois Pension
Code (Illinois Compiled Statutes, 1992, Chapter 40). A brief summary of the plan provisions is
provided below.
Employees attaining the age of (50) or more with (20) or more years of creditable service are
entitled to receive an annual retirement benefit of (2.5 %) of final salary for each year of service
up to (30) years, to a maximum of (75 %) of such salary.
Employees with at least (8) years but less than (20) years of credited service may retire at or after
age (60) and receive a reduced benefit of (2.5 %) of final salary for each year of service.
Surviving spouses receive the greater of (50 %) of final salary or the employee's retirement
benefit.
Employees disabled in the line of duty receive (65 %) of final salary.
The monthly pension of a covered employee who retired with (20) or more years of service after
January 1, 1977, shall be increased annually, following the first anniversary date of retirement
and be paid upon reaching the age of at least (55) years, by (3 %) of the originally granted
pension. Beginning with increases granted on or after July 1, 1993, the second and subsequent
automatic annual increases shall be calculated as (3 %) of the amount of the pension payable at
A
the time of the increase.
Employees are required to contribute (9.91 %) of their base salary to the Police Pension Plan. If
M an employee leaves covered employment with less than (20) years of service, accumulated
employee contributions may be refunded without accumulated interest.
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ACTUARIAL METHODS
The Actuarial Methods used for determining the Tax Levy and GASB Statements No. 25 & 27
financial disclosure have not been changed from the prior year. The Actuarial Method employed
for this valuation is as follows:
Entry Age Normal Cost Method
Under the Entry Age Normal Cost Method the Normal Cost for each participant is computed as
the level percentage of pay which, if paid from the earliest age the participant is eligible to enter
the plan until retirement or termination, will accumulate with interest to sufficiently fund all
benefits under the plan. The Normal Cost for the plan is determined as the sum of the Normal
Costs for all active participants.
The Accrued Liability is the theoretical amount that would have accumulated had annual
contributions equal to the Normal Cost been paid. The Unfunded Accrued Liability is the excess
of the Accrued Liability over the plan's assets. Experience gains or losses adjust the Unfunded
Accrued Liability.
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ACTUARIAL ASSUMPTIONS
The Actuarial Assumptions used
for determining the Tax Levy Requirement and GASB
Statements No. 25 & 27 Disclosure Information are the same and have not been changed from
the prior year. The Actuarial Assumptions employed for this valuation are as follows:
Valuation Date
January 1, 2006
Asset Valuation Method
Market Value
Investment Return
7.50%
Salary Scale
5.25%
Mortality
1984 Unisex Pensioners Mortality Table
Withdrawal
Graduated Rates
Disability
Graduated Rates
Retirement
Graduated Rates (100% by Age 62)
Marital Status
85% Married, Spouse Same Age
Plan Expenses
None
Sample
Annual Rates Per 100 Participants
Age Mortalily Withdrawal Disabilily Retirement
20
0.13 11.00 0.05
30
0.11 4.16 0.26
40
0.21 1.19 0.71
50
0.56 1.59 20.00
60
1.43 83.33
62
1.59 100.00
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GASB STATEMENTS N0.25 & 27 DISCLOSURE INFORMATION
The Governmental Accounting Standards Board (GASB) issued Statements No. 25 & 27 that
established generally accepted accounting principles for the annual financial statements for
defined benefit pension plans. The required information is as follows:
Membership in the plan consisted of the following as of.
Retirees and beneficiaries
receiving benefits
Terminated plan members entitled
to but not yet receiving benefits
Active vested plan members
Active nonvested plan members
Total
Number of participating employers
December 31, 2005 December 31, 2004
28 28
SCHEDULE OF FUNDING PROGRESS
0 0
25
22
17
20
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UAAL as a
SU'II
Actuarial
Actuarial Accrued
Unfunded
Percentage
Actuarial
Value of
Liability (AAL)
AAL
Funded
Covered
of Covered
Valuation
Assets
-Entry Age
(UAAL)
Ratio
Payroll
Payroll
Date
Lal
021
(b-aa)
(a/b)
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12/31/03
22,790,550
25,499,316
2,708,766
89.4%
2,854,299
94.9%
12/31 /04
24,157,442
27,106,938
2,949,496
89.1%
2,808,631
105.0%
12/31/05
24,752,561
28,683,431
3,930,870
86.3%
2,984,609
131.7%
SU'II
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GA c SB STATEMENTS NO. 27 DISCLOSURE INFORMATION (Continued)
ANNUAL PENSION COST AND NET PENSION OBLIGATION
Annual required contribution
Interest on net pension obligation
Adjustment to annual required contribution
Annual pension cost
Contributions made
Increase (decrease) in net pension obligation
Net pension obligation beginning of year
Net pension obligation end of year
THREE -YEAR TREND INFORMATION
December 31, 2005 December 31, 2004
497,650
449,652
0
0
0
0
497,650
449,652
497,650
449,652
0
0
0
0
0
0
Fiscal
Annual
Percentage
Net
Year
Pension
of APC
Pension
Ending
Cost (APC)
Contributed
Obli ation
12/31/03
483,197
100.0%
0
12/31/04
4491652
100.0%
0
12/31/05
4971650
100.0%
0
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GASB STATEMENTS NO. 25 & 27 DISCLOSURE INFORMATION (Continued)
FUNDING POLICY AND ANNUAL PENSION COST
Contribution rates:
Village 16.67% 16.01%
Plan members 9.91% Same
Annual pension cost 497,650 449,652
Contributions made
Actuarial valuation date
Actuarial cost method
Amortization period
Remaining amortization period
Asset valuation method
Actuarial assumptions:
Investment rate of return*
Projected salary increases*
*Includes inflation at
Cost -of- living adjustments
497,650 449,652
12/31/2005 12/31/2004
Entry age
Same
Level percentage of pay, closed
Same
29 years
30 years
Market
Same
7.50% Same
5.25% Same
3.00% Same
3.00% per year Same
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VILLAGE OF OAK BROOK
OAK BROOK FIREFIGHTERS PENSION FUND
Actuarial Valuation Report
7
For the Year
Beginning January 1, 2006
And Ending December 31, 2006
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Timothy W Sharpe, Actuary, Geneva, IL (630) 262 -0600
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TABLE OF CONTENTS
Introduction
Summary of Results
Actuarial Valuation of Assets
Asset Changes During Prior Year
Normal Cost
Accrued Liability
Tax Levy Requirement
Summary of Plan Participants
Duration
Projected Pension Payments
Summary of Plan Provisions
Actuarial Methods
Actuarial Assumptions
GASB Statements No. 25 & 27 Disclosure
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INTRODUCTION
Fire -sworn personnel of the Village of Oak Brook are covered by the Firefighters Pension Plan
that is a defined - benefit, single- employer pension plan. The purpose of this report is to disclose
the Tax Levy Requirement and GASB Statements No. 25 & 27 financial information and related
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actuarial information for the year beginning January 1, 2006, and ending December 31, 2006.
The valuation results reported herein are based on plan provisions in effect as of January 1, 2006,
the employee data furnished by the Village, the financial data provided by the Fund's trustee and
the actuarial methods and assumptions described later in this report. I hereby certify that this
report is complete and accurate and fairly presents the actuarial position of the Fund as of
December 31, 2005, in accordance with generally accepted actuarial principles and procedures.
In my opinion, the assumptions used are reasonably related to the experience of the Plan and to
reasonable expectations.
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Respectfully submitted,
f
Timothy W. Sharpe, EA, MAAA
Enrolled Actuary No. 05 -4384
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Date
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SUMMARY OF RESULTS
There were no changes with respect to Plan Provisions, Actuarial Methods, or Actuarial
Assumptions from the prior year.
There were no unexpected changes with respect to the participants included in this actuarial
valuation (3 new members, 0 terminations, 2 retirements, 0 incidents of disability, annual payroll
increase 6.1 %, average salary increase 7.5 %).
1 There were no unexpected changes with respect to the Fund's investments from the prior year
(annual investment return 5.45 %).
The Village's Tax Levy Requirement has increased from $492,598 last year to $577,661 this year
(17.3 %). The increase in the Tax Levy is due to the increase in salaries, the investment return
was less than expected, and there were two service transfers during the year. The Percent Funded
has decreased from 80.4% last year to 77.1 % this year.
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SUMN4ARY OF RESULTS (Continued)
Accrued Liability /(Surplus)
Percent Funded 77.1% 80.4%
Annual Payroll $ 25439,899 $ 25298,601
TAX LEVY REQUIREMENT
as of December 31
$700
$600
$500
m $400
o $300
s
F' $200
$100
$0
-5-
2006
❑ 2005
For Year Ending
December 31
2006
2005
Tax Levy Requirement
$ 5777661 $
492,598
Tax Levy as a Percentage of Payroll
23.68%
21.43%
as of
January 1
2006
2005
Village Normal Cost
297,359
2725616
Anticipated Employee Contributions
219,185
206,492
Accrued Liability
26501602
2471311P120
Actuarial Value of Assets
20,053,194
19,395,277
Unfunded Accrued Liability /(Surplus)
5,963,408
411735,843
Amortization of Unfunded
280,302
219,982
Accrued Liability /(Surplus)
Percent Funded 77.1% 80.4%
Annual Payroll $ 25439,899 $ 25298,601
TAX LEVY REQUIREMENT
as of December 31
$700
$600
$500
m $400
o $300
s
F' $200
$100
$0
-5-
2006
❑ 2005
ACTUARIAL VALUATION OF ASSETS
Cash and Equivalents
Government Securities
Mutual Funds
Interest Receivable
Miscellaneous Receivable /(Payable)
Actuarial Value of Assets
as of
January 1
2006
2005
$ 540,343
$ 5471P746
9,952,771
9,430,095
9,463,206
9,331,550
99,172
87,940
(2,29K
(2,054)
$ 20;05-13,1_24
$ 1 3 5 277
��
® Cash and Equivalents
Government Securities
❑ Mutual Funds
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ASSET CHANGES DURING PRIOR YEAR
Trust Balance as of January 1, 2005
Contributions
Village
Employee
Total
Payments
Benefit Payments
Expenses
Total
Investment Income
Trust Balance as of January 1, 2006
Approximate Annual Rate of Return
490,244
231,399
1,084,486
45,298
ASSET CHANGES DURING PRIOR YEAR
$25
$20
c $15
0
$10
$5
CA
-7-
$ 19,395,277
721,643
1,129,784
1,066,058
$ 20,053,194
5.55%
® Trust Balance as of January 1, 2005
Contributions
® Payments
❑ Investment Income
® Trust Balance as of January 1, 2006
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' ACCRUED LIABILITY
The Accrued Liability is the actuarial present value of the portion of the projected benefits that
has been accrued as of the valuation date based upon the actuarial valuation method and actuarial
assumptions employed in the valuation. The Unfunded Accrued Liability is the excess of the
Accrued Liability over the Actuarial Value of Assets.
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Accrued Liability
Active Employees
Children Annuities
Disability Annuities
Retirement Annuities
Surviving Spouse Annuities
Terminated Vested Annuities
Total Annuities
Total Accrued Liability
Actuarial Value of Assets
Unfunded Accrued Liability /(Surplus)
Percent Funded
ACCRUED LIABILITY
As Of January 1, 2006
$30
$25
U) $20
$15
$10
$5
$0
as of
January 1
2006 2005
$ 10,971,613 $ 10,8705398
14,263 9,599
631270,749 65247,951
71673,500 703,172
0 0
1,086,477 0
15,044,989 13,260,722
261,016,602 243311P120
20,053,194 19,395,277
$ 5,963,40a $ 1735.84a
77.1% 80.4%
In
® Total Accrued Liability
Actuarial Value of Assets
® Unfunded Accrued Liability/(Surplus)
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TAX LEVY REQUIREMENT
The Tax Levy Requirement is determined as the annual contribution necessary to fund the
normal cost, plus the amount to amortize the unfunded accrued liability as a level percentage of
payroll over a forty (40) year period which commenced in 1993.
For Year Ending
December 31
2006 2005
Village Normal Cost as of Beginning of Year $ 297,359 $ 272,616
Amortization of Unfunded 280,302
Accrued Liability /(Surplus)
Tax Levy Requirement as of End of Year 577.661
Annual Payroll $ 2,439,899
Tax Levy Requirement 23.68%
as a Percentage of Payroll
-10-
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219,982
492 5 8
2,298,601
21.43%
SUMMARY OF PLAN PARTICIPANTS
The actuarial valuation of the Plan is based
upon the employee data furnished by the Village.
The information provided for Active participants
included:
Name
Sex
Date of Birth
Date of Hire
Compensation
Employee Contributions
The information provided for Inactive participants included:
6 Name
Sex
Date of Birth
Date of Pension Commencement
Monthly Pension Benefit
1 Form of Payment
Membership 2006
2006
2005
2005
Current Employees
Vested 19
19
Nonvested 15
14
Total 34
33
Inactive Participants
Annual Benefits
Annual Benefits
Children 9 $
25434
7 $
100
Disabled Employees 14
468,708
14
463,642
Retired Employees 14
639,793
13
574,072
Surviving Spouses 0
a
0
0
0
Terminated Vesteds 1
67,308
0
0
Total 38
10178243
34
1,039,394
Annual Payroll $
25439,899
$
252985601
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SUMMARY OF PLAN PARTICIPANTS (Continued)
Age and Service Distribution
Service 0 -4
5 -9 10 -14 15 -19
20 -24
25 -29
30+
Total
Salary
Age
25 -29 3
2
5
56,082
30 -34 3
3
6
565729
35 -39 1
1 3
5
65,956
40 -44
2 2
4
655739
45 -49
1
2
1
4
803408
50 -54
1
5
6
71,749
55 -59
4
4
88,138
0
Total Z
8 7 0
2
6
4
3
Salary 49,894
64,922 709720
841,636
72,115
885P138
Average Age: 41.2
Average Service:
13.5
DURATION (years)
Active Members: 14.3 Retired Members:
9.4 All Members:
11.5
PROJECTED PENSION PAYMENTS
2006
2007
2008
2009
2010
$1,606,286
$107,550 $1,678,957
$1,690,473
$1,846,503
PROJECTED PENSION PAYMENTS
2006 -2010
$2,000
$1,500
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$1,000
0
~ $500
$0
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2006
82007
§2008
❑ 2009
02010
SUMMARY OF PLAN PROVISIONS
The Plan Provisions have been changed from the prior year increasing the surviving spouse
benefit and increasing the Employees contribution rate.
The Village of Oak Brook Firefighters Pension Fund was created and is administered as
prescribed by "Article 4. Firefighters' Pension Fund - Municipalities 500,000 and Under" of the
Illinois Pension Code (Illinois Compiled Statutes, 1992, Chapter 40). A brief summary of the
plan provisions is provided below.
Employees attaining the age of (50) or more with (20) or more years of creditable service are
entitled to receive an annual retirement benefit of one -half of the salary attached to the rank held
on the last day of service. The pension shall be increased by (1/12) of (2.5 %) of such monthly
salary for each additional month of service over (20) years up to (30) years, to a maximum of
(75 %) of such monthly salary.
Employees with at least (10) years but less than (20) years of credited service may retire at or
after age (60) and receive a reduced benefit ranging from (15 %) of final salary for (10) years of
service to (45.6 %) for 19 years of service.
Surviving spouses receive (100 %) of final salary for fatalities resulting from an act of duty, or
otherwise the greater of (54 %) of final salary or the monthly retirement pension that the
deceased firefighter was receiving at the time of death. Surviving children receive (12 %) of final
salary. The maximum family survivor benefit is (75 %) of final salary.
Employees disabled in the line of duty receive (65 %) of final salary.
The monthly pension of a covered employee who retired with (20) or more years of service after
January 1, 1977, shall be increased annually, following the first anniversary date of retirement
and be paid upon reaching the age of at least (55) years, by (3 %) of the amount of the pension
payable at the time of the increase.
Employees are required to contribute (9.455 %) of their base salary to the Firefighters' Pension
Plan. If an employee leaves covered employment with less than twenty (20) years of service,
accumulated employee contributions may be refunded without accumulated interest.
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ACTUARIAL METHODS
The Actuarial Methods used for determining the Tax Levy and GASB Statements No. 25 & 27
financial disclosure have not been changed from the prior year. The Actuarial Method employed
for this valuation is as follows:
Enta Age Normal Cost Method
j Under the Entry Age Normal Cost Method the Normal Cost for each participant is computed as
the level percentage of pay which, if paid from the earliest age the participant is eligible to enter
the plan until retirement or termination, will accumulate with interest to sufficiently fund all
benefits under the plan. The Normal Cost for the plan is determined as the greater of a) the sum
of the Normal Costs for all active participants, and b) 17.5% of the total payroll of all active
participants.
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' The Accrued Liability is the theoretical amount that would have accumulated had annual
contributions equal to the Normal Cost been paid. The Unfunded Accrued Liability is the excess
a of the Accrued Liability over the plan's assets. Experience gains or losses adjust the Unfunded
Accrued Liability.
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ACTUARIAL ASSUMPTIONS
The Actuarial Assumptions used for determining the Tax Levy Requirement and GASB
Statements No. 25 & 27 Disclosure Information are the same and have not been changed from
the prior year. The Actuarial Assumptions employed for this valuation are as follows:
Valuation Date January 1, 2006
Asset Valuation Method Market Value
Investment Return 7.50%
Salary Scale 5.25%
Mortality 1984 Unisex Pensioners Mortality Table
Withdrawal Graduated Rates
Disability Graduated Rates
Retirement Graduated Rates (100% by Age 69)
Marital Status 85% Married, Spouse Same Age
Plan Expenses
None
Sample Annual Rates Per 100 Participants
Age
Mortalily
Withdrawal
Disability
Retirement
20
0.13
3.97
0.02
30
0.11
1.46
0.25
40
0.21
0.42
0.65
50
0.56
1.66
19.18
60
1.43
27.77
69
3.21
100.00
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GASB STATEMENTS NO. 25 & 27 DISCLOSURE INFORMATION
The Governmental Accounting Standards Board (GASB) issued Statements No. 25 & 27 that
established generally accepted accounting principles for the annual financial statements for
defined benefit pension plans. The required information is as follows:
Membership in the plan consisted of the following as of
{ December 31, 2005 December 31, 2004
Retirees and beneficiaries 37 34
receiving benefits
Terminated plan members entitled 1 0
to but not yet receiving benefits
Active vested plan members 19 19
y Active nonvested plan members 15 14
Total 72
Number of participating employers 1 1
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SCHEDULE OF FUNDING PROGRESS
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Actuarial
Actuarial Accrued
Unfunded
Percentage
Actuarial
Value of
Liability (AAL)
AAL
Funded
Covered
of Covered
Valuation
Assets
-Entry Age
(UAAL)
Ratio
Payroll
Payroll
4
= Date
�
�
a)
�
�
((b _)/c)
12/31/03
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18,254,770
22,439,963
451855193
81.3%
211561811
194.0%
12/31/04
19,395,277
2451313120
4,735,843
80.4%
21,2985601
206.0%
12/31/05
F
205053,194
26,0165602
5,963,408
77.1%
2,439,899
244.4%
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GASB STATEMENTS NO. 25 & 27 DISCLOSURE INFORMATION (Continued)
ANNUAL PENSION COST AND NET PENSION OBLIGATION
Annual required contribution
Interest on net pension obligation
Adjustment to annual required contribution
Annual pension cost
Contributions made
Increase (decrease) in net pension obligation
Net pension obligation beginning of year
Net pension obligation end of year
THREE -YEAR TREND INFORMATION
December 31, 2005 December 31, 2004
490,244
490,612
0
0
0
0_
490,244
490,612
490,244
490,612
0
0
0
0
0
0_
Fiscal
Annual
Percentage
Net
Year
Pension
of APC
Pension
Ending
Cost (MC)
Contributed
Obligation
12/31/03
481,887
100.0%
0
12/31/04
490,612
100.0%
0
12/31/05
490,244
100.0%
0
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GASB STATEMENTS NO. 25 & 27 DISCLOSURE INFORMATION (Continued)
FUNDING POLICY AND ANNUAL PENSION COST
Contribution rates:
Village 20.093% 21.344%
Plan members 9.455% Same
Annual pension cost
Contributions made
Actuarial valuation date
Actuarial cost method
Amortization period
Remaining amortization period
Asset valuation method
Actuarial assumptions:
Investment rate of return*
Projected salary increases*
*Includes inflation at
Cost -of- living adjustments
490,244 4905612
490,244 4905612
12/31/2005 12/31/2004
Entry age
Level percentage of pay, closed
28 years
Market
7.50%
5.25%
3.00%
3.00% per year
-18-
Same
Same
29 years
Same
Same
Same
Same
Same