870173 TMRS CAFR new8 fix 049-081.qxd - Texas Municipal ...

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MANAGEMENT'S DISCUSSION AND ANALYSIS The Management’s Discussion and Analysis (MD&A) of the Texas Municipal Retirement System (TMRS or the System) for the year ended December 31, 2004, provides a summary of the financial position and performance of TMRS, including highlights and comparisons. The MD&A is presented as a narrative overview and analysis in conjunction with the Letter of Transmittal, which is included in the Introductory Section of the TMRS Comprehensive Annual Financial Report. For more detailed information regarding TMRS financial activities, the reader should also review the actual financial statements, including the notes and supplementary schedules. OVERVIEW OF THE FINANCIAL STATEMENTS This MD&A is intended to serve as an introduction to the TMRS basic financial statements, which comprise the following components: • Fund financial statements • Notes to financial statements • Required supplementary information • Other supplemental schedules Collectively, this information presents the net assets and summarizes the changes in net assets of TMRS as of December 31, 2004. The information available in each of these sections is briefly summarized below. • FUND FINANCIAL STATEMENTS. The System’s fund financial statements presented include both Fiduciary and Proprietary Fund statements. Fiduciary Fund statements represent the financial position and activities of the Pension Trust Fund. A Statement of Fiduciary Net Assets and a Statement of Changes in Fiduciary Net Assets are presented for the Pension Trust Fund as of December 31, 2004, and for the year then ended. These financial statements reflect the resources available to pay benefits to retirees and other beneficiaries. Proprietary Fund statements represent the financial position and activities of the Supplemental Death Benefits Program. A Statement of Proprietary Net Assets, Statement of Revenues, Expenses, and Changes in Proprietary Net Assets, and a Statement of Proprietary Cash Flows are presented for the Supplemental Death Benefits Program as of and for the year ended December 31, 2004. These financial statements reflect the resources available to pay supplemental death claims for covered participants as of December 31, 2004. For both Fiduciary and Proprietary Fund statements, comparative information as of December 31, 2003, and for the year then ended, has been presented. • NOTES TO FINANCIAL STATEMENTS. The financial statement notes provide additional information that is essential to a full understanding of the data provided in the fund financial statements. Information available in the notes to the financial statements is described below: – Note 1 provides a summary of significant accounting policies, basis of accounting, and explanations of major asset and liability classes. Also included is a general description of TMRS, as well as a description of each of the funds administered by TMRS. – Note 2 provides a general description of the pension benefits plan, including eligibility and vesting requirements, contributions, and benefit payments. – Note 3 provides information on the System’s investment portfolio. – Note 4 provides information on the System’s cash and equivalents. – Note 5 addresses credit risk issues. – Note 6 provides information on the System’s property and equipment. – Note 7 describes the allocation of interest among the separate funds. – Note 8 addresses the System’s risk management issues. – Note 9 describes the System’s commitments at December 31, 2004. 28 T M R S COMPREHENSIVE ANNUAL FINANCIAL REPORT 2004
MANAGEMENT'S DISCUSSION AND ANALYSIS CONTINUED • REQUIRED SUPPLEMENTARY INFORMATION. Required supplementary information consists of schedules and related notes concerning the funding status and contribution trends of the pension plan administered by TMRS. • OTHER SUPPLEMENTAL SCHEDULES. Other supplemental schedules include additional information regarding administrative expenses, professional fees and services, investment expenses, and changes in Employee Savings Fund and Municipal Accumulation Fund balances. FINANCIAL HIGHLIGHTS FIDUCIARY FUND - PENSION TRUST FUND The following table displays a summary of assets, liabilities, net assets, and changes in net assets for the TMRS Pension Trust Fund at December 31, 2004, 2003 and 2002. 2004 2003 2002 Assets, excluding capital Capital assets Total assets Liabilities Net assets Change in net assets $16,421,388,097 12,121,111 16,433,509,208 4,498,912,466 11,934,596,742 1,377,082,522 $15,887,572,580 6,374,797 15,893,947,377 5,336,433,157 10,557,514,220 352,645,210 $10,328,825,896 5,269,086 10,334,094,982 129,225,972 10,204,869,010 1,569,604,513 Additions to net assets held in trust for pension benefits include municipal and member contributions as well as investment income. Such amounts were as follows in 2004, 2003 and 2002 (in millions): Municipal contributions Member contributions Net investment income Total additions 2004 $401.4 230.0 1,271.8 1,903.2 2003 $371.3 218.1 254.5 843.9 2002 $353.6 207.9 1,457.4 2,018.9 2004 - 2003 2003 - 2002 $ CHANGE % CHANGE $ CHANGE % CHANGE $ 30.1 11.9 1,017.3 1,059.3 8.1% 5.5 399.7 125.5 $17.7 10.2 (1,202.9) (1,175.0) 5.0 % 4.9 -82.5 -58.2 The growth in municipal and member contributions during fiscal years 2004 and 2003 is due to increases in active membership as well as growth in annual payroll. City membership totaled 801, 794 and 774 at December 31, 2004, 2003 and 2002, respectively. Net investment income is presented net of investment expenses and is comprised of interest, gains/(losses) from the sale of investments, net unrealized appreciation/(depreciation) in the fair value of investments, and net income from securities lending activities. The change in net investment income in 2004, 2003 and 2002 is primarily a result of the change in the net unrealized appreciation/(depreciation) in the fair value of investments during those periods ($574.3 million appreciation in 2004, $(463.7) million depreciation in 2003, and $807.7 million appreciation in 2002). Due to the long average maturity of the TMRS investment portfolio, such fluctuation is attributed to a change in the level of long interest rates. Bond market prices are inversely affected by a change in interest rates and so increased in 2004 as long interest rates declined between December 31, 2003 and December 31, 2004. T M R S COMPREHENSIVE ANNUAL FINANCIAL REPORT 2004 29
Page 1 and 2: ★ Texas Municipal Retirement Syst
Page 3 and 4: TMRS® TEXAS MUNICIPAL RETIREMENT S
Page 5 and 6: TABLE OF CONTENTS ACTUARIAL SECTION
Page 7 and 8: DENISON Population: 22,773 INTRODUC
Page 9 and 10: LETTER OF TRANSMITTAL T M R S COMPR
Page 11 and 12: LETTER OF TRANSMITTAL CONTINUED T M
Page 13 and 14: LETTER OF TRANSMITTAL CONTINUED T M
Page 15 and 16: TMRS HIGHLIGHTS 2001 2002 2003 2004
Page 17 and 18: TMRS PROFESSIONAL ADVISORS LEGAL CO
Page 19 and 20: TMRS STAFF CONTINUED MEMBER SERVICE
Page 21 and 22: TMRS ADMINISTRATIVE ORGANIZATION T
Page 23 and 24: SUMMARY OF PLAN PROVISIONS CONTINUE
Page 25 and 26: SUMMARY OF PLAN PROVISIONS CONTINUE
Page 27 and 28: GREENVILLE FINANCIAL SECTION Popula
Page 29: INDEPENDENT AUDITORS’ REPORT CONT
Page 33 and 34: STATEMENTS OF PLAN NET ASSETS FIDUC
Page 35 and 36: STATEMENTS OF NET ASSETS PROPRIETAR
Page 37 and 38: STATEMENTS OF CASH FLOWS PROPRIETAR
Page 39 and 40: NOTES TO FINANCIAL STATEMENTS CONTI
Page 47 and 48: SUPPLEMENTAL SCHEDULES SCHEDULE OF
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Additions Deductions Transfers to S
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Additions Deductions Transfers to S
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A small city 18 miles east of Waco
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REPORT ON INVESTMENT ACTIVITY CONTI
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SUMMARY OF INVESTMENTS AS OF DECEMB
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2004 INVESTMENT RESULTS CONTINUED T
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LARGEST HOLDINGS (BY FAIR VALUE) AS
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TEXARKANA Population: 34,782 A Pine
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SUMMARY OF ACTUARIAL ASSUMPTIONS I.
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SUMMARY OF ACTUARIAL ASSUMPTIONS CO
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SUMMARY OF ACTUARIAL LIABILITIES AN
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CONTRIBUTION RATE INFORMATION CONTI
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ACTUARIAL VALUATION OF PARTICIPATIN
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WEIMAR Population: 1,981 STATISTICA
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SCHEDULE OF BENEFIT EXPENSES BY TYP
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SCHEDULE OF RETIRED MEMBERS BY TYPE
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PLAN PROVISIONS FOR PARTICIPATING M
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Vesting Requirement PLAN PROVISIONS
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