5 years ago

Complete Report - Fayette County Government

Complete Report - Fayette County Government

Funding Status and

Funding Status and Funding Progress. Based on the employee census data for January 1, 2011, which is the most recent actuarial valuation date, the plan was 12.84 percent funded. The actuarial accrued liability was $2,197,298 and the actuarial value of assets set aside to fund this liability was $0, resulting in unfunded accrued actuarial liability of $2,197,298. The annual OPEB cost for the 2012 fiscal year was $334,702 of which $42,960 was contributed. The covered payroll was $32.6 million and the ratio of the unfunded actuarial liability to the covered payroll was 6.74 percent. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment and termination, mortality and the healthcare cost trends. Amounts determined regard ing the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, is intended to present multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Because of the significant cost involved to obtain this accounting estimate, the County has chosen to have the actuarial study performed every other year. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan provisions, as understood by the employer and participating members, and include the type of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and participating members. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective ofthe calculations. The County's actuarial valuation information is as follows: Current valuation date : January 1, 2011 Actuarial cost method: Projected Unit Credit Amortization method: Closed periods using level dollar payments Amortization period : 30 Asset valuation method: Not Applicable Actuarial assumptions: Investment rate of return Healthcare cost trend rate Discount rate Inflation Assumption C. Employees' Pension Plan 5.5% (Net of administrative costs) 5.0% 4.0% 1.5% (Included in above percentages) In the fiscal year 2010, the County established a hybrid retirement plan for employees. The plan consists of a defined benefit and a defined contribution component. Employees are eligible for the - 57 -

plan if they are at least 18 years old and work a minimum of 30 hours per week . Participation in the defined benefit plan begins upon employment. Participants are vested after 5 years. In the case of the defined contribution plan, the employee becomes eligible on the first day of the month following three months of employment. Participants are vested at 20 percent intervals over the first five years of employment. The County sponsors the Association County Commissioners of Georgia Restated Pension Plan for Fayette County Employees (The Plan), which is a defined benefit pension plan. The plan provides retirement, disability and death benefits to plan participants and beneficiaries. The Plan, through execution of the adoption agreement, is affiliated with the Association County Commissioners of Georgia Third Restated Defined Benefit Plan (the ACCG Plan), an agent multiple-employer pension plan, administered by the Government Employee Benefits Corporation (GEBCorp). The ACCG, in its role as the Plan Sponsor, has the sole authority to amend the provisions of the ACCG Plan, as provided in Section 19.03 of the ACCG Plan document. The County has the authority to amend the adoption agreement, which defines the specific benefit provisions of The Plan, as prov ided in Section 19.02 of the ACCG Plan document. GEBCorp issues a publicly available financial report that includes financial statements and required supplementary information for ACCG. This report can be obtained by contacting GEBCorp, 400 Galleria Parkway, Suite 1250, Atlanta, Georgia 30339. Funding Policy. The County is required to contribute an actuarially determined amount annually to the Plan's trust. The contribution amount is determined using actuarial methods and assumptions approved by the ACCG Plan trustees and must satisfy the minimum contribution requirement contained in the State of Georgia statutes. The actuarial recommended contribution rate based on the January 1, 2011 valuation was 2.5% of payroll. However, the Board of Commissioners has adopted a contribution rate of 3.8% of payroll. The higher contribution was recommended at the establishment of the plan to smooth fluctuations in the plan and has been maintained since establishment of the plan. In addition to the 3.8% contributed by the County, employees are required to contribute 2.5% of salary to the plan for a total contribution of 6.3% of payroll. The unfunded liability is being amortized over 10 years. The actuarial assumptions used as a basis in the pension valuation include the following: Current Valuation Date January 1, 2012 Annual Return on Invested Plan Assets 7.75% Projected Annual Salary Increases 3.5%-6.0% based on age Expected Annual Inflation 3.00% Actuarial Value of Assets Market Value Actuarial Funding Method Projected Unit Credit Amortization Method Level Percent of Pay (Closed) Amortization Period Ten Years - 58 -

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