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Police Actuarial Valuation Report 2008VILLAGE OF OAK BR00K OAK BR00K POLICE PENS10N FUND Actuarial Valuation Report For the Year Beginning January 1, 2008 And Ending December 31,2008 Timothy W. Sharpe, Actuary, Geneva, IL (630) 262-0600 TABLE OF CttNTENTS 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 Page 3 4 6 7 8 9 l0 11 t2 l2 13 t4 l5 r6 INTRODUCTION Police-swom 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 l, 2008, and ending December 31, 2008. The valuation results reported herein are based on plan provisions in effect as of January l, 2008, the employee data fumished 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 certifu that this report is complete and accurate and fairly presents the actuarial position of the Fund as of December 31,2007, 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. 08-4384 '/ /rZ x Date -3… > SUMMARY OF RESULTS There were no changes with respect to Plan Provisions, Actuarial Methods or Actuarial b Assumptions from the prior year. There were no unexpected changes with respect to the participants included in this actuarial valuation (2 new members, 2 terminations, 1 retirement, I incident of disability, annual payrollL increase 0.6yo,average salary increased 6.4%). There were no unexpected changes with respect to the Fund's investments from the prior year - (annual investment return 7.87%). > The Village's Tax Levy Requirement has increased from $585,989 last year to $591,493 this year (1.0%). The increase in the Tax Levy is due to the increase in the annual payroll. The Percent Funded has increased slightly from86.2Yo last year to 86.6Yo this year. In a recent study of - nearby municipalities, the average Percent Funded was 70.8%. -4- ヽ SUMMARY OF uSULTS(Continued) Tax Levy Requirement Tax Levy as a Percentage ofPayroll 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 December 31 2008 591,493 $ 18。60% as of January l 2008 373,739 299,445 32,129,429 27,827,838 4,301,591 217,754 2007 585,989 18.530/0 2007 383,403 297,804 30,625,818 26,414,388 4,211,430 202,586 TAX LEVY REQU!REMENT as of December 31 86.6% 3,180,282 $ |120081]2007 86.2% 3,162,857 -5- ACTUARIAL VALUATION OF ASSETS Cash and Equivalents Certificates of Deposit Govemment Securities Mutual Funds Interest Receivable Miscellaneous Receivable/(Payable) Actuarial Value of Assets 2008 293,636 99,767 15,628,866 11,592,095 220,852 (7.378) 27_827_838 o4o/o ! caan and Equivalents I Certificate! of Deposit ! Govemment Securitie3 E Mutual Funde as of January 1 2007 437,493 98,594 14,070,488 11,689,969 122,479 (4.635ヽ 26_414.388 SUMMARY OF ASSETS As OfJanuary l,2008 11% …6- -7… ASSET CHANGES DURING PRIOR YEAR Trust Balance as of January 1,2007 Contributions Village Employee Total Payments Benefit Payments Expenses Total Investment Income Trust Balance as of January 1, 2008 Approximate Annual Rate of Retum 564,283 301.565 1,406,061 99。680 ASSET CHANGES DUR:NG PR:OR YEAR 26,414,383 865,848 1,505,741 2.053.348 27_827_838 7.87% I trust Balance aB of January l, 2007 I Contributions I Payments I lnveatment lncome ! Trutt Balance a3 of January l, 2008 NORNIAL COST The Nolll.al COSt is the actuarial present value ofthe portion ofthe proJected beneflts that are cxpected to accrue during the year based upon the actuarial valuation inethod and actuarial assumptions employed in the valuation. Total Normal Cost Anticipated Employee Contributions Village Normal Cost Normal Cost Payroll Village Normal Cost Rate Total Normal Cost Rate as of January l 2008 673,184 $ 299.445 373.739 3,180,282 $ 11.750/0 21.17% I Anticipated Employee Contributions ! vittage Normal cost 2007 681,207 297.804 383.403 3,162,857 12.12% 21.54% NORMAL COST As Of January l,2008 555% 445% -8‐ 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 l 2008Accrued 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 14,292,7800 2,240,300 15,241,713 184,276 170.360 17,836,649 32,129,429 27.827.838 4_301_591 86.6% I total Accrued Liability I Actuarial value of Assets I Unfunded Accrued Liabilityl(Surplus) 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% ACCRUED L:AB:L!TY As Of January l,2008 -9- 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. 'f"::ff':liT' 2008 2007 Village Normal Cost as of Beginning of Year $ 373,739 $ 383,403 - Amortization of Unfunded 217.754 202.586 Accrued Liability(Surplus) Tax Levy Rcquirement as of End of Year 591.493 585.989 TAX LEVY REQU:REMENT For Fiscai Year Ending December 31,2008 Annual Payroll Tax Levy Requirement as a Percentage ofPayroll $ 3,180,282 $ 3,162,857 18.60%18.530/0 ! vittage Normel cost I Amortization of UAU(S) …10- SUMMARY OF PLAN PARTICIPANTS The actuarial valuation ofthe Plan is based upon the employee data fumished by the Village. _ The infollllation provided for Active participants included: Narne Sex Date ofBirth Date ofHire _ Compensation Employee Contributions _ The infollllation provided for lnactive participants includcd: Nalne ― Sex Date ofBirth Date ofPension Conllnencement ― NIIonthly Pension Beneflt Folll1 0f Payment ~ ⅣIembership 2008 2008 2007 2007 Cllrrent Employees ｀ Vested 26 27 Nonvested ll 15 _ Tota1 40_ 2 1nactive Participants Allllual Beneflts Amual Beneflts Children O S 0 0 $ 0 E)isabled Employees 5 151,884 4 84,776 ~ Retired Employees 24 1,250,143 24 1,212,410 Sllrviving Spouses l 19,476 1 19,476 - Tellllinated Vesteds 1 40.597 Ω Ω Totd ■ 1^462_100 型 1‐316_662 Annual Payroll $ 3,180,282 $ 3,162,857 SUMMARY OF PLAN PARTICIPANTS (Continued) ARe and SeⅣice Disttibution O‐4 5-9 10-14 15-19 20¨24 25-29Servlce Agc 20-24 25‐29 30…34 35-39 40¨44 45-49 50-54 55-59 60+ 30+ Total Salary 1 51,399 4 64,832 8 68,197 9 76,913 9 77,364 4 96,081 4 73,1650 1 1 99,865 2012 $1,949,340121266123161Total 生 墨 ヱ 里 旦 里1 Salary 56,081 70,818 76,161 81,578 99,806 73,615 99,865 ω 75_541 Average Age: 38.7 Average Service: 12.7 DURATION(yearS)Act市 e Mcmbers: 16。9 Retired Members: 9.2 All Members: 12.6 PROJECTED PENSION PAYMENTS 2008 $1,649,242 2009 $1,662,043 2010 $1,666,708 2011 $1,826,718 I 2oo8 I zoog I 2o1o E zott I zorz PROJECTED PENS:ON PAYMENTS 2008…2012 …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 maximw of (75Yo) 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, 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 the time of the increase. Employees are required to contribute (9.91o/o) 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- -14- 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. ACTUARIAL ASSUMPTIONS The Actuarial Assumptions used fbr detellllining the Tax Levy Requirernent and GASB Statements No。25&27 Disclosure lnfollllation are the sarne and have not been changed from~ the prior year. The Actuarial Assumptions employed for this valuation are as fbllows: Valuation]Date January l,2008 Asset Valuation Ⅳ〔ethod Ⅳiarket Value lnvestinent Retum 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 NIlarried,Spouse Sallne Age ~ Plan Expenses None _ Salnde Amual Rttes 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: 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 Dccember 31.2007 December 31.2006 30 29 SCHEDULE OF FUNDING PROGRESS UAAL asa Actuarial Actuarial Accrued Unfunded Percentage Actuarial Value of Liability(AAL) AAL Funded Covered ofCovcred Valuation Asscts ―Entry Agc (UAAL) Ratio Payroll Payroll Date 0 0 (b…ハ (a/b) 壼主 ((b‐ハ/C) 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% 12/31/07 27,827,838 32,129,429 4,301,591 86.60/0 3,180,282 135.3%126 14 ■1027 15 211 …16- -17… GASB STATEMENTS NO.25&27 DISCLOSUu INFORNIIATION(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 INFORⅣIATION Deccmber 31.2007 564,28300 564,283 564。28300 ‐QDeccmber 319 2006 549,75000 549,750 549,75000 Ω Fiscal Year Ending 12/31/05 12/31/06 12/31/07 Annual Penslon Cost(APC) 497,650 549,750 564,283 Percentage ofAPC Contributcd 100.0% 100.0% 100.0% Net Pension Obligation 0 0 0 GASB STATEMENTS NO.25&27 DISCLOSURE INFORNIIATION(Continucd) FUNDING 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 17.74% 9。91% 564,283 564,283 12/31/2007 Entry age Levcl percentage ofpay,closcd 26years Market 7.50% 5.25% 3.00% 3.00%pcr ycar 17.38% Salne 549,750 549,750 12/31/2006 Sallne Same 27 years Same Same Same Salne Same -18-