comprehensive annual financial report - City of St. Petersburg

CITY OF ST. PETERSBURG, FL
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2010
NOTE 20 – EMPLOYEE RETIREMENT AND PENSION PLANS – (Continued)
The General Employees, Fire and Police systems use the Entry Age Actuarial Cost Method, with
allocation of future Normal Costs based on earnings and determined by individual. Entry Age is the age
nearest the employees’ birthday on the first of October following employment. This method is intended
to provide for a funding of normal costs as a level percentage of payroll over time and provides for
funding of the frozen initial liability (FIL) as a level dollar over time, and the Police and Fire method
provides for funding of the unfunded actuarial accrued liabilities (UAAL) as a level percentage of payroll.
The Annual Pension Cost (APC) that the City records in its funds is the same as the Annual Required
Contribution (ARC).
The State of Florida has established guidelines for state and local pension plan funding that requires
submission to and approval of the local government’s actuarial reports by a State Bureau, at least every
third year. The City’s pension plans, by policy, (1) require annual actuarial reports as of October 1 of
each year, (2) receive employer contributions based on the actuarially determined requirement which
includes funding from the State of Florida as required by Florida Statute and (3) use the same
assumptions (see the following schedule) for determining the employer contribution required. The total
City payroll for the fiscal year ended September 30, 2010, is approximately $168.3 million. Fire and
Police pensions require employee contributions based on a percentage of covered payroll of 7% and 7%
for the supplemental plans, respectively. Participants in the General Employees Pension Plan contribute
2% of the employees covered payroll. The following schedule (derived from the respective actuarial
reports and City information) reflects accounting policies, membership and plan provisions, assumptions,
liabilities and funding provisions for the three pension systems as of October 1, 2009.
General Employees Fire Police
ACCOUNTING POLICIES & PLAN ASSETS:
Establishing and Amending Authority:
Prior City Ordinance Special State Act Special State Act
Supplemental (Supp.) City Ordinance City Ordinance City Ordinance
Basis of Accounting Accrual Accrual Accrual
Asset Valuation:
Reporting Market Market Market
Actuarial Valuation (1) (1) (1)
Covered Payroll $ 81,206,902 $ 16,613,368 $ 33,890,712
Internal Loans None None None
Non-governmental Investment > 5% None None None
(1) The difference between actual investment return and the expected investment return (based on an 8.00% assumption for fire and police,
7.75% for general employees) each year is recognized over 4 years; in order to be used as valuation assets, the smoothed value must be within the
range of 80% and 120% of market value.
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