HomeMy Public PortalAbout2006 - Firefighters Retirement System Annual ReportREPORT OF
CITY OF JEFFERSON
FIREFIGHTERS' RETIREMENT SYSTEM
JEFFERSON CITY:, MISSOURI
FOR TH _E YEi\R :E.NilED
OCTOBER 31, :2006
Report of
City of Jefferson, Missouri
FIREFIGHTERS' RETIREMENT SYSTEM
FOR FISCAL YEAR ENDED OCTOBER 31, 2006
Prepared by:
Department of Finance
CITY OF JEFFERSON
FIREFIGHTERS' RETIREMENT SYSTEM
JEFFERSON CITY, MISSOURI
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
FINANCIAL STATEMENTS
Statements of Plan Net Assets
Statements of Changes in Plan Net Assets
Notes to Financial Statements
SUPPLEMENTARY INFORMATION
1-2
3-6
8
9
10-17
Schedules of Funding Progress 19
Schedules of Employer Contributions 20
Schedules ofNet Pension Obligation 21
Notes to the Schedules of Funding Progress, Schedules of Employer Contributions,
and Schedules of Net Pension Obligation 22
STATISTICAL DATA
Schedules of Revenue by Source and Expenses 24
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Evers ·& CotnlJany, CPNs, L.L~C.
Certified Public Accountants and Consultants
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and Members
Of the City Council of the City of Jefferson,
Missouri Firefighters' Retirement System:
Elmer L. Evers
Jerome L Kauffman
Richard E. EllioH
Dale A. Siebeneck
Keith l. Taylor
Jo l. Moore
We have audited the accompanying statements of plan net assets of the City of Jefferson, Missouri
Firefighters' Retirement System, a component unit of the City of Jefferson, as of October 31, 2006 and
2005, and the related statements of changes in plan net assets for the years then ended. These financial
statements are the responsibility ofth_e System's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with accounting principles generally accepted in the United States
of America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion. ·
In our opinion, the financial statements referred to above present fairly, in all material respects, the plan
net assets of the City of Jefferson, Missouri Firefighters' Retirement System as of October 31, 2006
and 2005, and the changes in plan net assets for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
The management's discussion and analysis and schedule of funding progress on pages 3 through 6 and 19
through 22, are not a required part of the basic financial statements but are supplementary information
required by accounting principles generally accepted in the United States of America. We have applied
certain limited procedures, which consisted principally of inquiries of management regarding the m ethods
o f measurement and presentation of the required supplementary information. However, we did not audit
the information and express no opinion on it.
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520 Dix Rood • Jefferson City, Missouri 65109 • 573/635·0227 • FAX 573/634·3764
Village Green Shopping Center • 1021 W. Bucha nan Street, Ste. 10 • Califomia, Missouri 65018 • 573/796·32l0 • FAX 573/796·3452
4571 Hwy. 54, Suite~ • Osage ~ch, Missouri 65065 • 573/348·4141 • FAX 573/348·0989
Member Affiliated Offices Worldwide
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Our audits were conducted for the purpose of fonning an opinion on the basic financial statements taken
as a whole. The schedules of employer contributions, net pension obligation and statistical data are
presented for purposes of additional analysis and are not a required part of the basic financial statements.
The schedules of employer contributions and net pension obligation have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a whole. The statistical data have
not been subjected to the auditing procedures applied in the audit of the basic fmancial statements and,
accordingly, we express no opinion on them.
EVERS & COMPANY, CPA's,:L .L.C.
Jefferson City, Missouri
March 21, 2007
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MANAGEMENT'S DISCUSSION AND ANALYSIS
(Unaudited)
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This discussion and analysis of the Jefferson City Firefighter Pension Fund's financial statement provides an
·overview ofthe financial activities and funding conditions for the fiscal year ended October 31,2006.
FINANCIAL IDGHLIGHTS
-The Plan's net assets increased by $1,310,263 (8 .0%) as a result of the fiscal year's activities.
-The City, property tax, and employee contributions increased by $221,558 over prior year contributions.
-Net investment income increased by $572,831 from fiscal year 2005.
-Benefit payments increased by $14,632 over the prior year, excluding the 13th check payout of $521,428 in FY
2006.
PLAN IDGHLIGHTS
The actuarially smoothed investment return valuation system experienced an investment return of 10.05% this
valuation year. Market value currently exceeds valuation assets by approximately 3%.
USING THE ANNUAL REPORT
The financial statements, which reflect the activities of the Jefferson City Firefighter Pension Trust, are reported in
the Statements of Plan Net Assets and the Statements of Changes in Plan Net Assets. These statements are
presented on a full accrual basis and reflect all trust activities as incurred.
PLAN NET ASSETS
The table below shows a comparative summary of Plan Net Assets.
Cash & Investments
Other Assets
Total Assets
Investment Liabilities
Other Liabilities
Total Liabilities
PLAN NET ASSETS
October 31,
2006
$17,546,63 7
815 ,604
18,362,241
718,55 2
718,552
Net Assets Held in Trust
For Pension Benefits $17,643,689
October 31,
2005
$16,246,854
766,111
17,012,965
679 ,539
679 ,539
$16,333,426
For the current fiscal year 2006 there is a net increase in Net Assets Held in Trust for Pension Benefits of$1.3
million (8.0%) from the previous fiscal year 2005 due to net increases in contributions and trust activities.
The major portion of other assets and offsetting other liabilities is due to the property tax receivable/deferral for
property assessed January 1, 2006, but not recognized as revenue because there was not an enforceable legal claim to
received the revenue until December 31, 2006 which is after the fiscal year end.
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CHANGES IN PLAN NET ASSETS
The following comparative summary of the changes in net assets reflects the activities of the trust.
CHANGES IN NET ASSETS
October 31, October 31,
2006 2005
Additions:
Contributions $1,137,310 $915,752
Investment Income (Net) 1,810,459 1,237,628
Total Additions 2,947,769 2,153,380
Deductions:
Pension Benefits 1,604,959 1,068,899
Other 32,547 32,824
Total Deductions 1,637,506 1,101,723
Net Increase (Decrease) 1,310,263 1,051,657
Net Assets Held in Trust For
Pension Benefits-Beginning $16,333,426 $15,281,769
Net Assets Held in Trust For
Pension Benefits-Ending $17,643,689 $16,333,426
The City, property tax, and employee contributions increased by $221,558 over prior year contributions. The
property tax rate remained at .0960 per assessed $100 assessed valuation in fiscal year 2006. The City continues to
contribute 4% in addition to the property tax along with the member's 4% contribution to fund the pension benefits.
In addition to the 4%, the City contributed an additional $162,000 during fiscal year 2006.
The net investment income increased $572,831 (or 46.3%) over prior year. The Plan's investment activity, measured
at the end of year, is a function of the underlying marketplace and the investment policy's asset allocation.
The benefit payments are a function of payments to retirees, their beneficiaries (if the retired is deceased), and new
retirements during the period. Retirees prior to January 14, 2004 receive no COLA; retirees as ofJanuary 14, 2004
receive 2% each year on their anniversary retirement date.
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PLAN MEMBERSIDP
The following table reflects the Firefighter Pension Plan membership as of the beginning and ending of the year.
CHANGES IN PLAN MEMBERSIDP
Activity Participants
Vested
Non-Vested
Retirees & Beneficiaries
Terminated Vested
October 31,
2006
41
32
60
0
October 31,
2005
38
31
58
0
Change
The table below demonstrates the changes in retirees and beneficiaries over the past twelve months .
CHANGES IN RETIREES & BENEFICIARIES
Beginning (11/1/2005)
Retirements
Beneficiary became ineligible
Ending ( 1 0/31/06)
58
2
0
60
3
1
2
0
Beneficiary payments, upon the death of an activity participants, consist of monthly payments equal to 50% of the
member's average final compensation, plus monthly payments to each of the member's eligible children equal to
10% of the member's average final compensation, until the child or children each reach age 19.
Beneficiary payments, upon the death of the retiree, consist of monthly payments equal to 50% of the member's
benefit, plus 5% of the member's average final compensation to each eligible child .
FUNDING STATUS
Of primary concern to most pension plans participants is the amount of money available to pay benefits.
Historically, pension plans have been underfunded when the employer failed to make the annual actuarially
required contributions to the Plan. The City has traditionally contributed slightly over or under the annual
required contribution (ARC) as determined by the Plan's Actuary. The net pension obligation (NPO) for
the Plan is ($674,546) as of October 31, 2006. This is due to the Plan being funded by a combination of
property tax and employer contribution which is slightly different than the percentage of payroll stated as
the required percentage in the Plan's Actuary.
An indicator of funding status is the ratio of the actuarial value of the assets to the actuarial accrued liability
(AAL). An increase in this percentage over time usually indicates a plan is becoming financially stronger.
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However, a decrease will not necessarily indicate a plan is in financial decline. Changes in actuarial
assumptions can significantly impact the AAL. During fiscal year 2004 there were changes in actuarial
assumptions and/or methods and changes in benefit provisions. Performance in the stock markets also can
have a material impact on the actuarial value of assets. The Plan's funded position as measured by the ratio
of actuarial accrued liabilities to actuarial value of assets increased to 67% in fiscal year 2006.
SCHEDULE OF FUNDING PROGRESS
80%
70%
60%
50%
40%
30%
20%
10%
FUNDED RATIO (as of October 31)
0 ~------~~------~--------~--------~
2002 2003 2004 2005 2006
ASSET ALLOCATION
The following table indicates the policy target asset allocation for October 31, 2006 and 2005. The primary
goal of the fund is to provide principal growth consistent with preservation of capital.
ASSET ALLOCATION
October 31,
2006 2005
EQUITY 60% 60%
Large Cap Core 35% 35%
Small Cap Core 12.5% 12.5%
International 12.5% 12.5%
FIXED INCOME 40% 40%
CASH EQUIVALENT 0% 0%
CONTACTING THE PLAN'S FINANCIAL MANAGEMENT
The financial report is designed to provide citizens, taxpayers, plan participants and the marketplace's credit
analysis with an overview of the Plan's fmances. If you have any questions regarding this report or need
additional financial information, please contact the City's Finance Director, 320 E McCarty Street, Jefferson
City, MO 65101.
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I FINANCIAL STATEMENTS
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I CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS" RETIREMENT SYSTEM
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STATEMENTS OF PLAN NET ASSETS I ------------------------~O~C~T~O~B~ER~3~1,~2~0~06~an~d~2~00~5 ______________________ __
I Assets
Cash and cash equivalent
I Receivables:
Accounts
I Taxes
Accrued Interest
I Investments, at fair value:
Short term securities
I (cost$ 551,265 and $199,786)
Fixed income securities
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(cost $5,274,680 and $5,763,906)
Equity securities
(cost $8,203,659 and $7 ,870,035)
I Total investments
Total assets
I Liabilities
I Accounts payable
Deferred Revenues-Property Taxes
I Total Liabilities
Net assets held in trust for
pension benefits (A schedule of funding
I progress is presented on page 1 0).
I The Notes to Financial Statements are an integral part of these statements.
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$ 1,224,218 $ 752,214
7,028 6,629
724,424 679,468
84.152 80,014
2,039,822 1,518,325
549,547 201,784
5,179,077 5,659,443
10,593,795 9,633,413
16,322,419 15,494,640
18,362,241 17,012,965
5,370 8,896
713.182 670,643
718,552 679,539
$ 17,643,689 $16,333,426
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CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS' RETIREMENT SYSTEM
STATEMENTS OF CHANGES IN PLAN NET ASSETS
Years Ended OCTOBER 31, 2006 and 2005
2006
Additions:
Contributions
Employer $ 296,417
Property taxes 706,476
Plan Member 134,417 I Total Contributions 1,137,310
Investment Income
I Net increase in fair value of investments 1,365,485
Interest/Dividends 466,249
I 1,831,734
Less: investment expenses (21,275)
I Net Investment Income (Loss) 1,810,459
Total Additions 2,947,769
· Deductions:
Benefits paid to participants 1,604,959
Members Contribution Refunds 3,628
I Administrative expenses 28,919
Total deductions 1,637,506
I Net Increase (Decrease) 1,310,263
I Net Assets Held in Trust for Pension Benefits
Beginning of Year 16,333,426
End of Year $17,643,689
I The Notes to Financial Statements are an integral part of these statements.
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2005
$ 124,916
665,920
124,916
915,752
817,945
452,477
1,270,422
(32,794)
1,237,628
2,153,380
1,068,899
32,824
1,101,723
1,051,657
15,281,769
$16,333,426
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NOTES TO THE
FINANCIAL STATEMENTS
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CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS • RETIREMENT SYSTEM
NOTES TO FINANCIAL STATEMENTS
for the Years Ended OCTOBER 31, 2006 and 2005
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A. Plan Description
The Firefighters Retirement Board is the administrator of a single employer public employee retirement
system established and administered by the City of Jefferson to provide defined pension benefits for
substantially all members of the Jefferson City Fire Department. At October 31, 2006 and 2005 the
Firefighters Retirement Plan membership consisted of:
Retirees and beneficiaries currently
receiving benefits
Terminated employees entitled to benefits
but not yet receiving them
Current employees:
Vested
Non-vested (under 10 yrs)
Total Current
Total
Authority:
60
0
41
22
.11
133
58
0
38
21
69
127
The Firefighters' Retirement Plan was established by Jefferson City Ordinance number 4883 and
became effective on April1, 1947. Since that date a number of ordinances have been enacted to change
certain benefits and other plan provisions. These ordinances were subsequently incorporated into the
Charter of the City of Jefferson, Missouri as Section 6.4. Amendments require the approval of the
Firemen's Pension Board and the City Council.
Due to the nature of the Retirement Plan, reliance on the funding from the City of Jefferson and the
overall control of policies by city officials, the Retirement Plan is considered a part ofthe City of
Jefferson financial reporting entity. The Retirement Plan is not subject to the provisions of the
Employee Retirement Income Security Act of 1974.
All persons employed by the Fire Department for the purpose of fire suppression are eligible to
participate in the Plan. Plan benefits are as follows:
Duty Disability:
A participant permanently and totally disabled by injury or disease occurring in the line of duty is
eligible for monthly payments equal to 60 percent of the member's average final compensation, plus an
additional 5 percent of such average final compensation for each eligible child.
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Non-Duty Disability:
CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS• RETIREMENT SYSTEM
NOTES TO FINANCIAL STATEMENTS
for the Years Ended OCTOBER 31, 2006 and 2005
A participant having completed at least five years of service who is permanently and totally disabled by
injury or disease not occurring in the line of duty, but while still employed as a firefighter, is eligible for
monthly payments equal to 2.5 percent of the member's average final compensation multiplied by his
years of service. In no event, however, will that amount be less than 25 percent, nor more than 60
percent, of the members average final compensation. That amount will be increased by 5 percent of the
member's average final compensation for each eligible child.
Retirement:
Any member of the Fire Department having 24 years or more of service in the Department, the last two
years being consecutive, and any member first becoming a firefighter after November 1, 1989 who is at
least 55 years of age, is eligible for retirement benefits. The benefit will consist of a life annuity under
which the member receives monthly payments equal to 60 percent of his average final compensation
plus 2.5 percent per year for each year after 24 years with a maximum of 10 years or 85 percent of
average final compensation.
Duty Death:
A members eligible spouse and eligible children will receive a Duty Death Benefit if the member dies in
the line of duty. The benefit will consist of monthly payments to the member's eligible spouse equal to
50 percent of the member's average final compensation, plus monthly payments to each ofthe member's
eligible children equal to 10 percent of the member's average final compensation.
Non-Duty Death:
A member's eligible spouse and eligible children will receive a Non-Duty Death Benefit if the member
dies outside the line of duty, but while still employed as a firefighter. The benefit will consist of monthly
payments to the member's eligible spouse equal to 2 percent of the member's-average-final
compensation, multiplied by his years of service. In no event, however, will that amount be less than 25
percent, not more than 50 percent, of the member's average final compensation. The benefit will also
provide monthly payments to each of the member's eligible children equal to 5 percent of the member's
average final compensation.
Retiree Death:
A member's eligible spouse and eligible children will receive a Retiree Death Benefit ifthe member
dies while properly receiving a retirement, termination, or disability benefit. The benefit will consist
ofmonthlypayments to the members eligible spouse equal to 50 percent ofthe member's benefit, plus
5 percent of the member's average final compensation to each eligible child.
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Deferred Death:
CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS' RETIREMENT SYSTEM
NOTES TO FINANCIAL STATEMENTS
for the Years Ended OCTOBER 31, 2006 and 2005
A members eligible spouse and eligible children will receive a Deferred Death Benefit if that member
dies after satisfying the requirements for a termination benefit, but prior to receiving any portion ofthe
benefit. The benefit will consist of monthly payments to the member's eligible spouse equal to 50
percent of the member's termination benefit, plus 5 percent of the member's average final
compensation to each eligible child.
Notes on Death Benefits
If eligible spouse remarries, any death benefit payable to the spouse terminates. If there is no eligible
spouse, the benefit that would have been paid to the eligible spouse is divided equally among each
eligible child. To be eligible a child must be younger than 19.
Termination:
Any member not eligible to receive the Retirement Benefit will receive a termination benefit under the
plan ifhe terminates his employment with the City and has completed at least 10 years of service. The
termination benefit will consist of a monthly life annuity equal to 2.5 percent of the member's average
final compensation, multiplied by his years of service, up to a maximum of 24 years. The benefit
payments commence at age 60.
13th Check Program:
The 13th check program provides an additional benefit for retirees and beneficiaries and is intended to
help benefit recipients cope with inflation for members who retired prior to the January 14, 2004
amendment date. Prior to the amendment date, the sources of revenue for the 13th check reserve were
(1) a portion of investment return on retired life assets in excess of the assumed rate and (2) 1% active
member contributions. After the amendment date, the 1% active member contributions to the 13th
check reserve ceased. $521 ,428 was distributed by the Retirement Board in fiscal year 2006. The
amount of the 13th check for each benefit recipient is based on the regular benefit amount and the
number of years benefits have been payable.
Member Contributions:
As a condition of employment by the City, each member will be required to contribute 4% ofthe
member's compensation to the general fund of the plan, beginning with the January 14, 2004,
amendment date.
Cost of Living Increases:
Each member who retires after the January 14, 2004 amendment date, or the beneficiary of such
member, receive a 2% increase, compounded, in the member's retirement allowance on the first day of
the month next following the anniversary date of the members's retirement.
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CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS' RETIREMENT SYSTEM
NOTES TO FINANCIAL STATEMENTS
for the Years Ended OCTOBER 31, 2006 and 2005
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B. Significant Accounting Policies and Plan Asset Matters
Basis of Accounting:
The accompanying fmancial statements are presented on the accrual basis of accounting which
recognizes revenues when earned and expenses when the related liability is incurred.
Receivables:
Receivables consist primarily of contributions owed and yet to be remitted by the employer, interest,
dividends, and property tax; including property tax assessed as of January 1, 2005 per Governmental
Accounting Standards Board Statement No. 33.
Method Used to Value Investments:
Investments in the Statement of Plan Net Assets are reported at fair value. Fair value is determined by
closing market prices at year end as reported by custodian. Investment income is recognized as earned.
Gains and losses on sales and exchanges of fixed-income securities are recognized on the transaction
date.
Use of Estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in
the United States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses during the reported period.
Actual results could differ from those estimates.
Funding Requirements
A tax levy of9.60 cents in FY 2006 and FY 2005 per each hundred dollars of the assessed value of all
taxable property annually assessed in the City of Jefferson, Missouri is designated for the Fund.
The City is obligated to make additional payments in amounts necessary to maintain the actuarial
soundness of the plan. Effective in 1983, the City replaced the employees' 4% of covered payroll
contribution with the same level of funding from the City. Effective January 14,2004 the Firefighters'
Retirement Plan was amended to include the following major changes: ( 1) the eligibility requirement
includes the eighty and out clause, "the sum ofthe member's age and the member's years of service is
no less than eighty (80)," (2) in addition to the retirement benefit provided (60 percent of average final
compensation), a member shall receive an Extended Duty Benefit for full years of service above 24
years, (3) the Extended Duty Benefit shall be an amount equal to 2.5 percent of a member's average
final compensation for each additional year, but in no event shall exceed 25 percent of a member's
average final compensation, (4) the total maximum is 85% of a member's average final compensation,
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1---------------· --------CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS' RETIREMENT SYSTEM I NOTES TO FINANCIAL STATEMENTS
I for the Years Ended OCTOBER 31, 2006 and 2005
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(5) the active firemen's 1% salary deduction for the 13th check is discontinued, and (6) as a condition of
employment by the City, each member will be required to contribute an amount equal to four percent
(4%) ofthe member's compensation to the general fund of the plan, beginning on the 2004 amendment
date.
An annual actuarial review is performed to insure that contributions are made at adequate levels. Such
actuarial review includes the assumption that unfunded actuarial accrued liabilities are amortized by
level percentage to payroll contributions over a period of 28 years. The actuarial review, as of October
31, 2006 determined the Fund is in satisfactory actuarial condition in accordance with level of percent-
of-payroll financing. Continuation ofthis condition is dependent upon continued receipt of level of
percentage-of-payroll contributions. The computed rate for fiscal year 2007 is 29.97% consisting of
employer normal cost of16.10% and amortization ofunfunded actuarial accrued liability costs of
13.87%. The employer contributions are funded by 4% of payroll and the 9.60 cents per each hundred
dollars of assessed value of all taxable property.
Administrative expenses are financed through the tax levy and investment earnings.
Annual Pension Cost
For the fiscal year ended October 31, 2006, the City's actual contribution of$1,002,893 was slightly
more than the Firefighters' Retirement annual pension cost of $1 ,001 ,00 1. However, in fiscal year
2005, the City's actual contribution of$790,836 was less than the annual pension cost of $935,865.
The annual pension costs and net pension obligations (assets) for the current year were as follows (does
not include employee contribution paid by the City):
2006 2005
Annual required contribution $1,001,001 $953,906
Interest on net pension obligation ( 49,445) ( 60,322)
Adjustment to annual required contributions 36,058 42,281
Annual Pension Cost 987,614 935,865
Contributions made (1,002,893) (790,836)
Increase in net pension obligation (15,279) 145,029
Net pension obligation beginning of year (659,267) (804,296)
Net pension obligation end of year ($674,546) ($659,267)
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CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS' RETIREMENT SYSTEM
NOTES TO FINANCIAL STATEMENTS
for the Years Ended OCTOBER 31, 2006 and 2005
Deposits and Investments
The Firemen's Pension Fund of the City of Jefferson, Missouri is under the exclusive management and
control of its Board ofTrustees. The Board established an Investment Policy Statement in accordance
with applicable local, State and Federal laws. The Board members exercise authority and control over
the management of the Firemen's Pension Fund assets (the Plan) by setting policy which the Investment
company, United Missouri Bank executes by their Trust investment staff/advisors. The Board oversees
the plan subject to the following basic fiduciary responsibilities:
• The assets of the Firefighters' Retirement plan may be invested and managed by an investment
fiduciary who shall "act" with the same care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a similar capacity and familiar
with those matters would use in the conduct of a similar enterprise with similar aims."
•
•
The Plan's investment policy with the trustee is to invest in no less than AAA Standard &
Poor's and A1 Moody's Investor Service.
The Plan's investment policy with the trustee is to emphasize a high quality well diversified
portfolio of securities.
Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will not fulfil its
obligations. The Firemen Retirement Plan seeks to maintain a diversified portfolio per the asset
allocation goals set by the Board. The Fixed Income Portfolio goal is 40% of the assets with a
minimum of 35% and a maximum of 45%. The Equity Portfolio goal is 60% with a minimum of 40%
and a maximum of 60% (includes large cap core goal of 35% with a minimum of 30% and a maximum
of 40%, small cap core goal and international goal of 12.5% with a minimum of 5% and a maximum of
15%.) The Cash Equivalent goal is 0% to 5%. To control credit risk, the Plan's investment policy
with the trustee for corporate bonds is to invest in no less than AAA Standard & Poor's and A1
Moody's Investor Service. The investment in corporate bonds met the investment policy as of October
31,2006. '
Custodial Credit Risk: Custodial Credit Risk for deposits is the risk that in the event of a financial
institution's failure, the Firemen's Retirement Plan would not be able to recover its deposits. Deposits
are exposed to custodial credit risk if they are not insured or not collateralized. The Jefferson City
Firemen's Retirement Plan carries Fiduciary Responsibility Insurance.
Custodial Credit Risk for investments is the risk that, in the event of the failure of the counterparty to a
transaction, the Firemen's Retirement Plan would not be able to recover the value of the investment or
collateral securities that are in the possession of an outside party. Investment securities are exposed to
custodial credit risk if the securities are uninsured, not registered in the Firemen Retirement Plan's
name, and held by the counterparty. The Firemen Retirement Plan's investment securities are not
exposed to custodial credit risk because all securities are held by the Plan's custodial bank in the Plan's
name.
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CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS' RETIREMENT SYSTEM
NOTES TO FINANCIAL STATEMENTS
for the Years Ended OCTOBER 31, 2006 and 2005
Concentration of Credit Risk: As of October 31, 2006 Jefferson City Firemen's Retirement did not hold
any investments in any one issuer that would represent five percent (5%) or more of total investments.
Investments issued or explicitly guaranteed by the U.S. government and pooled investments are
excluded from this requirement.
Interest Rate Risk: Interest Rate Risk is the risk that changes in interest rates will adversely affect the
fair value of an investment. The Firemen Retirement Plan performance goals are to exceed the average
rate of inflation (Consumer Price Index-CPI) plus 4% ; and stocks (S&P 500 Index), fixed-income
securities (Lehman Brothers Govt/Credit Intermediate), and risk-free securities (90-day Treasury Bills).
Investments are reported at fair value per GASB Statement No. 31. Investments that are
purchased with less than 90 days maturity date are listed as "cash equivalents". As of October 31, 2006,
the Firefighters' Retirement System had the following investments and maturities:
Type Maturities Fair Value
Purchase Agreements (cash & cash equivalents) Less than one year $203,936
Money Market (cash & cash equivalents) Less than one year 1,020,282
Government and Agency Bonds Less than one year 499,531
Corporate Bonds Less than one year 50,016
Government and Agency Bonds One to three years 961 ,170
Corporate Bonds One to three years 783,228
Government and Agency Bonds Three to five years 751,859
Municipal Bonds Three to five years 102,484
Other: Small Business Administration Three to five years 13,784
Government and Agency Bonds Five to seven years 1,623,796
Government and Agency Bonds Seven to ten years 586,797
Corporate Bonds Seven to ten years 245,975
Government and Agency Bonds Greater than 1 0 years 109,984
Equity 10,593,795
Total Firemen's Pension Deposit/Investments $17,546,637
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SUPPLEMENTARY INFORMATION
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CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS' RETIREMENT SYSTEM
REQUIRED SUPPLEMENTARY INFORMATION-SCHEDULES OF FUNDING PROGRESS
OCTOBER 31, 2006
Trend Information
Historical information about the Firefighters' Retirement System is presented below as required
supplementary information. This information is intended to help users assess the retirement plan's
funding status on a going-concern basis, assess progress being made in accumulating assets to pay
benefits when due, and allow for comparisons with other retirement systems. Ten-year trend
information is as follows:
Computed
Entry Age Unfunded UALasa Annual
Actuarial Actuarial Actuarial Accrued Annual Percentage Employer
Valuation Value Accrued Funded Liability Covered of Covered Contribution
Date of Assets Liabili~ Ratio ~uAq Pa~oll Pa~oll as% ofPa~oll
10/31/97 10,950,415 14,051,324 78% 3,100,909 2,206,516 141% 22.06%
10/31/98 11,669,212 15,123,704 77% 3,454,492 2,236,122 154% 22.90%
10/31/98@ 11,669,212 14,877,983 78% 3,208,771 2,236,122 143% 22.02%
10/31/98@# 12,170,254 15,379,025 79% 3,208,771 2,236,122 143% 22.02%
10/31/99 13,041,582 16,043,532 81% 3,001,950 2,421,530 124% 21.11%
10/31/00 13,930,576 17,064,499 82% 3,133,923 2,572,690 122% 21.10%
10/31/01 14,345,972 17,408,622 82% 3,062,650 2,633,291 116% 21.08%
10/31/02 14,408,849 18,553,669 78% 4,144,820 2,836,345 146% 23.06%
10/31/03 14,608,661 19,458,966 75% 4,850,305 2,969,736 163% 24.32%
10/31/04 15,106,675 19,852,209 76% 4,745,534 3,012,209 158% 24.21%
10/31/04*@ 15,106,675 23,480,456 64% 8,373,781 3,012,209 278% 30.45%
10/31/05 15,965,931 24,785,811 64% 8,819,880 3,093,865 285% 31.11%
10/31/06 17,075,661 25,564,177 67% 8,488,516 3,288,048 258% 31.11%
• After changes in benefit provisions.
@ After changes in actuarial assumptions.
# Beginning with the October 31, 1998 actuarial valuation, the schedule of funding progress includes the 13 111 Check Reserve in the entry
age actuarial accrued liability and actuarial value of assets.
I Analysis of the dollar amounts of actuarial value of assets, actuarial accrued liability, and unfunded accrued
liability in isolation can be misleading. Expressing actuarial value of assets as a percentage of the actuarial
I accrued liability provides an indication of the plans funded status on a going-concern basis. Analysis of this
percentage over time indicates whether the plan is becoming financially stronger or weaker. Generally, the
greater this percentage, the stronger the system. Trends in unfunded accrued liability and annual covered payroll
I are both affected by inflation. Expressing the unfunded accrued liability as a percentage of annual covered
payroll approximately adjusts for the effects of inflation and aids analysis of the plans progress made in
accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage, the stronger the I system.
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CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS' RETIREMENT SYSTEM
REQUIRED SUPPLEMENTARY INFORMATION-SCHEDULES OF EMPLOYER CONTRIBUTIONS
OCTOBER 31, 2006
Year Ended Annual Required Percent Net
October 31 Contribution Contributed Pension
Obligation
1997 $463,377 95.8% ($617,818)
1998 $486,757 99.5% ($634,801)
1999 $492,394 105.8% ($677,121)
2000 $ 511,185 106.2% ($722,316)
2001 $542,838 102.5% ($749,563)
2002 $555,098 106.3% ($797,783)
2003 $654,061 91.9% ($757,934)
2004 $722,240 104.9% ($804,296)
2005 $953,906 82.9% ($659,267)
2006 $1,001,001 100.2% ($674,546)
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Fiscal
Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
• CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS' RETIREMENT SYSTEM
REQUIRED SUPPLEMENTARY INFORMATION-SCHEDULES OF NET PENSION OBLIGATION
OCTOBER 31, 2006
Annual Interest on ARC Annual Net Pension
Required Net Pension Adjustment Pension Actual Change in Obligation
Contribution Obligation Cost Contribution NPO (NPA) (Asset) at End
(ARC) (Asset) of Year (NPO (NPA))
463,377 (46,294) (26,261) 443,344 443,915 (571) (617,818)
486,757 (46,336) (26,932) 467,353 484,336 (16,983) (634,801)
492,394 (47,610) (34,045) 478,829 521,1 4 9 (42,320) (677,121)
511,185 (50,784) (37,090) 497,491 542,686 (45,195) (722,316)
542,838 (54,174) (40,457) 529,121 556,368 (27,247) (749,563)
555,098 (56,217) (42,985) 541,866 590,086 (48,220) (797,783)
654,061 (59,834) (46,907) 641,134 601,285 39,849 (757,934)
722,240 (56,845) (45,760) 711,155 757,517 (46,362) (804,296)
953,903 (60,322) (42,281) 935,865 790,836 145,029 (659,267)
1,001,001 (49 ,445) (36,058) 987,614 1,002,893 (15,279) (674,546)
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CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS' RETIREMENT SYSTEM
NOTES TO THE SCHEDULES OF FUNDING PROGRESS,
SCHEDULES OF EMPLOYER CONTRIBUTIONS,
AND SCHEDULES OF NET PENSION OBLIGATION
October 31, 2006
I The information presented in the required supplementary schedules was determined as part of the actuarial
valuations at the dates indicated. Additional information as of the latest actuarial valuation follows:
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Valuation Date
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
Actuarial assumptions:
Investment rate of return
Projected salary increases
Includes inflation at
Cost-of-living adjustments
10/31106
Entry Age
Level Percent Closed
28 Years
4-Year Smoothed Market
7.5%
4.00% to 7.00%
4.00%
2.00%
I The rate of return based upon the funding value of assets was 10.05% for the valuation year ended October 31,
2006. The rate of return based up the market value assets was 11.07% for the valuation year ended October 31,
2006. Investment gains are scheduled for the next three years due to past market activity in excess' of the
I assumed rate that is "smoothed" in over time. This will exert downward pressure on the computed employer
contribution rate next year. The actuarial valuation calculated City contribution to decrease from 31.11% to
29.97% of active member payroll for the next fiscal year. This is actually 4% of active member payroll with I the balance of the 29.97% coming from property taxes or additional City funding.
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STATISTICAL DATA
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Revenues by Source:
Fiscal
Year
Ended
*10/31197
10/31198
10/31/99
10/31100
I 0/31101
10/31/02
10/31103
10/31104
10/31105
10/31/06
Expenses by Type:
Fiscal
Year
Ended
10/31/97
10/31198
10/31199
10/31100
10/31101
10/31102
10/31103
10/31104
10/31/05
10/31106**
CITY OF JEFFERSON, MISSOURI
FIREFIGHTERS' RETIREMENT SYSTEM
SCHEDULESOFREVENUESANDEXPENSES
OCTOBER 31,2006
Employer Member Investment
Contributions Contributions Income Total
443,915 22,288 1,798,465 2,264,668
484,336 22,048 845,263 1,351,647
521,149 23,684 899,888 1,444,721
542,686 34,531 1,020,216 1,597,433
556,368 24,201 99,424 679,993
590,086 28,457 (306,159) 312,384
601,285 27,979 1,751,635 2,380,899
757,517 104,458 1,463,977 2,325,952
790,836 124,916 1,270,422 2,186,174
1,002,893 134,417 1,831,734 2,969,044
Benefits Administrative
and and Investment
Refunds Paid Expenses Total
701,947 50,680 752,627
860,755 54,189 914,944
846,004 56,817 902,821
870,848 70,433 941,281
912,055 90,383 1,002,438
995,999 75,691 1,071,690
1,023,015 71,841 1,094,856
1,062,039 64,090 1,126,129
1,068,899 65,618 1,134,517
1,608,587 50,194 1,658,781
In fiscal year ended 6/30/89, actuarial assumptions were changed as follows:
Employer
Contributions
As a percent
Of Covered
Payroll
20.1%
21.7%
21.5%
21.1%
21.2%
20.8%
20.2%
25.1%
25.6%
30.5%
(a) The rate of investment return assumed was increased from 7 .0% to 7.5% per year compounded annually, and (b) the base salary
increase assumption was increased from 5.0% to 5.5% per year, compounded annually. As a result, these changes had the effect of
decreasing the pension benefit obligation as of 6/30/89 by $216,818.
In fiscal year ended l 0/31/94, the plan was amended for benefit changes, resulting in an increase in the pension benefit obligation of
$1,493,888.
• Investment Income includes market value conversion unrealized income of $534,807 for 1997 and $523,186 for 1996.
••Benefits include 131h check payout of $521,428.
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