Annual Comprehensive Financial Report 2021

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The actuarial assumptions were developed primarily from the actuarial investigation of the experience of TMRS over the four-year period from December 31, 2014 to December 31, 2018. They were adopted in 2019 and first used in the December 31, 2019 actuarial valuation. The post-retirement mortality assumption for Annuity Purchase Rates (APRs) is based on the Mortality Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income in order to satisfy the short-term and long-term funding needs of TMRS. The long-term expected rate of return on pension plan investments was determined using a buildingblock method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. In determining their best estimate of a recommended investment return assumption under the various alternative asset allocation portfolios, GRS focused on the area between (1) arithmetic mean (aggressive) without an adjustment for time (conservative) and (2) the geometric mean (conservative) with an adjustment for time (aggressive). The target allocation and best estimates of arithmetic real rates return for each major asset class in fiscal year 2021 are summarized in the following table: Long-Term Expected Real Rate of Return Asset Class Target Allocation (Arithmetic) Global Equity 30.00% 5.30% Core fixed income 10.00% 1.25% Non-core fixed income 20.00% 4.14% Real return 10.00% 3.85% Real estate 10.00% 4.00% Absolute return 10.00% 3.48% Private equity 10.00% 7.75% Total 100.00% Discount Rate The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rates specified in statute. Based on that assumption, the pension plan’s Fiduciary Net Position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. Changes in Net Pension Liability Increase (Decease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a)-(b) Balance at 12/31/2019 $ 11,324,846 $ 10,160,021 $ 1,164,825 Changes for the year: Service cost 949,953 - 949,953 Interest 784,454 - 784,454 Difference between expected and actual experience ( 154,487) - ( 154,487) Contributions - employer - 540,005 ( 540,005) Contributions - employee - 532,399 ( 532,399) Net investment income - 773,124 ( 773,124) Benefit payments, including refunds of employee contributions ( 356,560) ( 356,560) - Change in assumptions - - - Administrative expense - ( 4,990) 4,990 Other changes - ( 195) 195 Net changes 1,223,360 1,483,783 ( 260,423) Balance at 12/31/2020 $ 12,548,206 $ 11,643,804 $ 904,402 38
The City’s net pension liability is generally liquidated by the General Fund and Proprietary Funds depending on an employee’s assignment at termination. Discount Rate Sensitivity Analysis The following presents the net pension liability of the City calculated using the discount rate of 6.75%, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.75%) or 1-percentage-point higher (7.75%) than the current rate: 1% Decrease in Current Single 1% Increase in Discount Rate Discount Rate Discount Rate (5.75%) (6.75%) (7.75%) City's net pension liability (asset) $ 2,974,434 $ 904,402 $( 781,020) Pension Plan Fiduciary Net Position Detailed information about the pension plan’s Fiduciary Net Position is available in a separately issued TMRS financial report. That report may be obtained electronically at www.TMRS.org. Pension Expense, Deferred Outflows, and Deferred Inflows of Resources Related to Pensions For the year ended September 30, 2021, the City recognized pension expense in the governmental and business-type activities of $384,857 and $61,872, respectively. At September 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual economic experience $ 75,696 $ 148,139 Changes in actuarial assumptions 6,725 - Difference between projected and actual investment earnings - 285,300 Contributions subsequent to the measurement date 412,488 - Total $ 494,909 $ 433,439 The City reported $412,488 as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year ending September 30, 2022. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: For the Year Ended September 30, 2022 $( 109,958) 2023 ( 23,918) 2024 ( 175,596) 2025 ( 37,337) 2026 ( 4,209) IX. DEFINED OTHER POST-EMPLOYMENT BENEFIT (OPEB) PLAN – TMRS SUPPLEMENTAL DEATH BENEFITS FUND Plan Description The City voluntarily participates in a single-employer other postemployment benefit (OPEB) plan administered by TMRS. The Plan is a group-term life insurance plan known as the Supplemental Death Benefits Fund (SDBF). The Plan is established and administered in accordance with the TMRS Act identically to the City’s pension plan. SDBF includes coverage for both active and retired members, and assets are commingled for the payment of such benefits. Therefore, the Plan does not qualify as an OPEB Trust in accordance with paragraph 4 of GASB Statement No. 75. 39
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City of Red Oak, Texas Annual Compr
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THE CITY The City of Red Oak (the
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at the intersection of State Highwa
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Annual Comprehensive Financial Report 2021

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