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Police Actuarial Valuation Report 2007VILLAGE OF OAK BR00K OAK BR00K POLICE PENSION FUND Actuarial Valuation Report For the Year Beginning January l, 2007 And Ending December 31,2007 Timothy W. Sharpe, Actuary, Geneva, IL (630) 262-0600 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 Method Actuarial Assumptions GASB Statements No. 25 &27 Disclosure 6 7 8 9 l0 l1 t2 t2 l3 l4 l5 t6 } 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 E actuarial information for the year beginning January 1,2007, and ending December 31,2007. The valuation results reported herein are based on plan provisions in effect as of January 1,2007, the employee data fumished by the Village, the financial data provided by the Fund's trustee andb the actuarial methods and assumptions described later in this report. I hereby certifu that this report is complete and accurate and fairly presents the actuarial position of the Fund as of December 31,2006, 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. \, Respectfully submitted, > Timothy W. Sharpe, EA, MAAA Enrolled Actuary No. 05-4384 E z/q /t D"t" -3- S 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 (l new member, 0 terminations, 1 retirement, 0 incidents of disability, annual payroll increase 6.00 , average salary increased 6.7%). There were no unexpected changes with respect to the Fund's investments from the prior year (annual investment return 8.97%). The Village's Tax Levy Requirement has increased from $554,7671ast year to $585,989 this year (5.6%). The increase in the Tax Levy is due to the increase in salaries and was offset due to the investment return was greater than expected. The Percent Funded has decreased slightly from 86.3% last year to 86.2%othis year. -4- ヽ ヽ SUMMARY OF RESULTS(Continued) Tax Levy Requirement Tax Levy as a Percentage of Payroll Village Normal Cost Anticipated Employee Contributions Accrued Liability Actuarial Value of Assets Unfunded Accrued Liability(Surplus) Amortization of Unfunded Accrued Liability(Surplus) Percent Funded Annual Payroll For Year Ending Decernber 31 2007 585,989 $ 18.53% as of January l 2007 383,403 297,804 30,625,818 26,414,388 4,211,430 202,586 2006 554,767 18.59% 2006 370,090 281,021 28,683,431 24,752,561 3,930,870 184,677 86.2% 3,162,857 86.3% 2,984,609 TAX LEVY REQUIREMENT s700 $600 o iSooE E tloo p roo* t2oo $100 $0 I zoozI zoos -5-$ ヽ ヽ ‐ ACTUARIAL VALUATION OF ASSETS Cash and Equivalents Certificates of Deposit Government Securities Mutual Funds Interest Receivable Mi scellaneous Receivable/(Payable) Actuarial Value of Assets SUMMARY OF ASSETS as of January I 2007 437,493 98,594 14,070,488 11,689,969 122,479 (4.635) 26.414.388 2006 357,778 98,193 13,869,557 10,293,243 137,230 (3.440) 24.752_561 I Castr and Equivalents ! Certificates of Deposit ! Govemment Socurities l- Mutual Funds -6‐ ASSET CHANGES DURING PRIOR YEAR Trust Balance as of January 1,2006 Contributions Village Employee Total Payments Benefit Payments Expenses Total Investment Income Trust Balance as of January 1,2007 Approximate Annual Rate of Return S30 S25 φ S20 皇S15 巨 S10 35 30 549,750 329.926 1,296,184 114,418 ASSET CHANGES DURING PR10R YEAR 24,752,561 879,676 1,410,602 2、192,753 26.414.388 8.95% I Trust Balance a3 of January 1, 2006 I contributlons ! Payments E lnvestment lncome ! trust Balance aa of January l, 2007 ‐7- _ NORNIIAL COST The Nonnal Costis the actuarial present value ofthe portion ofthc praccted bencflts that are _ expected to accruc during the year based upon thc actuarial valuation rnethod and actuarial assllmptiOns cmploycd in the valuation. as of January l _ 2007 2006 Total Nollllal COSt $681,207 $ 651,111 Anticipatcd Employee Contributions 297.804 281.021 Village No■11lal COSt 383.403 370.090 ~ Nollllal COSt Payroll $ 3,162,857 $ 2,984,609 - Village Nollllal COSt Rate 12.12% 12.40% _ Total Nollllal COSt Ratc 21.54% 21.82% NORMAL COST 563% -8- 437% I Anticipated Employee Contributions ! Vittage Normal Cost 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. as of January 1 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 LiAB:LITY S35 S30 925 S20 S15 S10 S5 30 2007 13,675,2560 1,538,265 15,224,331 187,9660 16,950,562 30,625,818 26、414、388 4^211_430 86.2% ! totat Accrued Liability I Actuarial value of Assets I Unfunded Accrued Liabilityr(Surplus) 2006 12,393,2960 1,509,448 14,589,155 191,5320 16,290,135 28,683,431 24.752.561 3_930_870 86.3% -9- _ TAX LEVY ttQUIREMENT The Tax Levy Requirement is detellllined as the annual contribution necessary to ind the ― nollllal cost,plus the amountto amortize the unfunded accrued liability as a level percentage of payroll over a forty(40)ycar period which commenced in 1993. ― For Year Ending December 31 2007 2006 Vinage Nollllal COSt as ofBegiming ofYear $ 383,403 $ 370,090 Amortization ofUnfunded 202.586 184、677 Accrued Liability/(Surplus) Tax Levy Requirement as ofEnd ofYear 585.989 554.767 Annual Payron $ 3,162,857 $ 2,984,609 Tax Levy Requirement 18.53% 18.590/0 as a Pcrcentage of Payroll TAX LEVY REQU:REMENT 3460/o ! vitlage Normal cost I Amortization of UAU(SI -10- 654% 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 Current Employees Vested Nonvested Total 2007 2007 2006 2006 _ Inactive Participants Amual Bencflts Amual Beneflts Children O $ 0 0 $ 0 _ E)isabled Employees 4 84,776 4 84,776 Retired Employees 24 1,212,410 23 1,143,684 Surviving Spouses l 19,476 1 19,476~ Terminated Vesteds Ω Ω Ω Ω Total 里 1-316_662 墾 1^247_936 Annual Payroll $ 3,162,857 $ 2,984,609 -11- SUMMARY OF PLAN PARTICIPANTS(Continued) Scrvlce Age 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ Age and Service Distribution O-4 5-9 10…14 15-19 20-24 25-291431263122163 30+ Total Salary 1 49,161 6 61,825 10 66,482 7 74,582 8 75,243 4 88,419 5 70,6240 1 1 89,348 ⊥ 量2 71.550 89,348 Tota1 2 二 重 型 Salary 59,321 68,857 78,084 77,867 ■ 70,814 Average Age: 38.2 Average Service: 12.2 DURATION(yearS) Act市 e Membcrs: 17.O Retircd Members: 9.2 All Members: 12.7 PROJECTED PENSION PAYNIIENTS 2007 $1,562,385 2008 $1,593,998 $1,607,181 PROJECTED PENSiON PAYMENTS 2010 Sl,612,366 2011 $1,767,985 I zooz I zooa ! zoosi 2olo I zott -12-3 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 maximumof (75%o) 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 l,lg77, 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 the time of the increase. Employees are required to contribute (9.9loh) of their base salary to the Police Pension Plan. If an employee leaves covered employment with less than (20) years of service, accumulated employee contributions may be refunded without accumulated interest. -13- 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. -T4- _ ACTUARIAL ASSUMPTIONS Thc Actuarial Assumptions used for detellllining the Tax Levy Requirement and GASB _ Statements No.25&27 Disclosure lnforrnation are the sallne and have not been changed from the prior year. The Actuarial Assumptions employed for this valuation are as fbllows: ― Valuation Date January l,2007 Asset Valuationヽ 4ethod Market Valuc lnvestinent Returl1 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 850/O NIlarricd,Spousc Salne Age Plan Expenses None ~ Samole Allnual Rates Per 100 Participants 墨 MO■alitV Withdrawal Disabilitv 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 -15- 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. 2006 December 31. 2005 Retirees and beneficiaries 29 28 receiving benefits Terminated plan members entitled 0 0 to but not yet receiving benefits _ Active vested plan members 27 25 Active nonvested plan members 15 17 Total lJ. 79 Number of participating employers 1 I SCHEDULE OF FLTNDING PROGRESS UAAL asa Actuarial Actuarial Accrued Unfunded Percentage Actuarial Value of Liability(AAL) AAL Fllndcd Covered of Covcred Valuation Assets ―Entry Agc (UAAL) Ratio Payroll Pa)Toll Dtte 0 0 (b―a)(a/b) O Gb―a)/C｀ 12/31/04 24,157,442 27,106,938 2,949,496 89.10/0 2,808,631 105.0% 12/31/05 24,752,561 28,683,431 3,930,870 86.30/0 2,984,609 131.7% 12/31/06 26,414,388 30,625,818 4,211,430 86.20/0 3,162,857 133.2% -16- GASB STATEMENTS NO.25&27 DISCLOSUM INFORNIATION(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 INFORNIATION December 31.2006 549,75000 549,750 549.75000 Ω December 31.2005 497,65000 497,650 497.65000 Ω Fiscal Ycar Ending 12/31/04 12/31/05 12/31/06 Annual Penslon Cost(APC) 449,652 497,650 549,750 Percentage of APC Contributed 100.0% 100.0% 100.0% Net Pension Obligation 0 0 0 -17… GASB STATEMENTS NO.25&27 DISCLOSURE INFORNIATION(Continued) FⅧDING POLICY AND ANNUAL PENSION COST Contribution rates: Village Plan members 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 adj ustments 17.38% 9。91% 549,750 549,750 12/31/2006 Entry age Level percentage ofpay,closed 28 years Market 7.50% 5.25% 3.00% 3.00%pcr year 16.67% Same 497,650 497,650 12/31/2005 Same Same 29 years Same Same Salne Salne Salne -18-