California Comprehensive Annual Financial Report - City of Temecula

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City of Temecula Notes to Financial Statements (Continued) Note 7: Insurance Programs (Continued) Changes in claims payable for the years ended June 30, 2008 and June 30, 2009, are as follows: Liability as of June 30, 2007 $ 424,552 Claims and changes in estimates during the year ended June 30, 2008 100,456 Claim payments during the year ended June 30, 2008 (65,568) Liability as of June 30, 2008 459,440 Claims and changes in estimates during the year ended June 30, 2009 39,540 Claim payments during the year ended June 30, 2009 (121,497) Liability as of June 30, 2009 $ 377,483 The ultimate amount of losses incurred through June 30, 2009, is dependent on future developments. Based upon information from the City Attorney, the City's claims administrators and others involved with the administration of the insurance programs, City management believes the accrual is adequate to cover such losses. Note 8: Public Employees Retirement System a. Plan Description: The City's defined benefit pension plan provides retirement and disability benefits, annual cost of-living adjustments, and death benefits to plan members and beneficiaries. The Plan is part of the Public Agency portion of the California Public Employees' Retirement System (CalPERS), an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public entities within the State of California. A menu of benefit provisions as well as other requirements are established by State statutes within the Public Employees' Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance. CalPERS issues a separate comprehensive annual financial report. Copies of CalPERS's annual financial report may be obtained from the CalPERS Executive Office: 400 P Street, Sacramento, CA 95814. b. Employee and Employer Contribution Obligations: The City makes the contributions required of City employees on their behalf and for their account. The rates are set by statute and therefore remain unchanged from year to year. The present rate for the City is 13.896%. The City is required to contribute the remaining amounts necessary to fund the benefits for its members, using the actuarial basis recommended by the PERS actuaries and actuarial consultants and adopted by the Board of Administration. c. Funding Status and Progress: For 2009, the City's actual and contributed annual pension cost was $3,201,970. The required contribution for the fiscal year 2009 was determined as part of the June 30, 2006 actuarial valuation (most recent available) using the entry age normal actuarial cost method with the contributions determined as a percent of payroll. The actuarial assumptions included (a) 7.75% investment rate of return (net of administrative expenses), (b) projected salary increases that vary by duration of service 53
City of Temecula Notes to Financial Statements (Continued) Note 8: Public Employees Retirement System (Continued) ranging from 3.25% to 14.45% for miscellaneous members, (c) inflation of 3.0%, (d) payroll growth of 3.25%, and (e) an individual salary growth based on merit scale varying by duration of employment, coupled with an assumed annual inflation component of 3.0%, and an annual production growth of 0.25%. The actuarial value of the Plan's assets were determined using a technique that smoothes the effect of short-term volatility in the market value of investments over a three year period. The Plans' initial unfunded liabilities are amortized over a closed period that depends on the Plans' date of entry into CalPERS. Subsequent plan amendments are amortized as a level percentage of pay over a closed 20 year period. Gains and losses that occur in the operation of the plan are amortized over an open 30 year period, which results in an amortization of 6% of unamortized gains and losses each year. If the Plans accrued liability exceeds the actuarial value of plan assets, then the amortization payment on the total unfunded liability may not be lower than the payment calculated over a 30 year amortization period. d. Trend Information: Three Year Trend Information for PERS Fiscal Annual Percentage Net Year Ending Pension of APC Pension June 30, Cost (APC) Contributed Obligation 2007 $ 2,962,575 100% $ - 2008 3,100,770 100% - 2009 3,201,970 100% - e. Funded Status of the Plan: Schedule of Funding Progress for PERS Actuarial Accrued Underfunded UAAL as a Actuarial Actuarial Liability (Overfunded) % of Valuation Value of (AAL) AAL Funded Covered Covered Date Assets Entry Age (UAAL) Ratio Payroll Payroll ( A ) ( B ) ( B-A ) ( A/B ) ( C ) [(B-A)/C] 6/30/2005 18,687,800 24,985,767 6,297,967 74.80% 11,326,214 55.60% 6/30/2006 22,973,422 30,011,128 7,037,706 76.5% 12,464,916 56.5% 6/30/2007 27,953,389 36,159,212 8,205,823 77.3% 13,903,970 59.0% *latest information available Note 9: Deferred Compensation Plan Certain provisions of the Small Business Job Protection Act (the Act) affected Internal Revenue Code Section 457 plans by eliminating the requirement that Section 457 plan assets legally remain the assets of the sponsoring government. The Act requires that amounts deferred under a Section 457 plan be held in trust for the exclusive benefit of participating employees and not be accessible by the government or its creditors. The City has implemented GASB 32, "Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans". The assets have been transferred into a trust, and are no longer subject to claims of the City's general creditors, and are no longer considered the assets of the City. The plan permits all City employees to defer a portion of their salary until future years. The amount deferred is not available to employees until termination, retirement, death or unavoidable emergency. 54
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City of Te m e c u California Compr
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CITY OF TEMECULA COMPREHENSIVE ANNU
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STATISTICAL SECTION CITY OF TEMECUL
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City of Temecula Letter of Transmit
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City of Temecula CITY ORGANIZATIONA
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Brandon W. Burrows, C.P.A Donald L.
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CITY OF TEMECULA COMBINING BALANCE
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CITY OF TEMECULA NET ASSETS BY COMP
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CITY OF TEMECULA FUND BALANCES OF G
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CITY OF TEMECULA GOVERNMENT-WIDE RE
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CITY OF TEMECULA GENERAL GOVERNMENT
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CITY OF TEMECULA PRINCIPAL SECURED
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CITY OF TEMECULA PROPERTY TAX LEVIE
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CITY OF TEMECULA RATIO OF OUTSTANDI
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CITY OF TEMECULA LEGAL DEBT MARGIN
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CITY OF TEMECULA PLEDGED REVENUE CO
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CITY OF TEMECULA LARGEST EMPLOYERS
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CITY OF TEMECULA FULL-TIME CITY EMP
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CITY OF TEMECULA COMPARATIVE CITY I
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California Comprehensive Annual Financial Report - City of Temecula

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