HomeMy Public PortalAbout2003 Audited Financials
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 2003
Independent Auditors’ Report
Board of Trustees
The Metropolitan St. Louis Sewer District
We have audited the accompanying Statement of Plan Net Assets of The
Metropolitan St. Louis Sewer District Employees’ Pension Plan (the
“Plan”) as of December 31, 2003 and 2002, and the related Statement of
Changes in Plan Net Assets for the years then ended. These financial
statements are the responsibility of the Plan’s management. Our
responsibility is to express an opinion on these financial statements
based upon our audit.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform our audits 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 Metropolitan St.
Louis Sewer District Employees’ Pension Plan as of December 31, 2003
and 2002, 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.
Board of Trustees
The Metropolitan St. Louis Sewer District
Page 2
The Management’s Discussion and Analysis on pages 3 – 8 and the Schedule of
Funding Progress and Schedule of Employer Contributions on pages 14 and 15 are not
a required part of the basic financial statements, but are supplementary information
required by the Governmental Accounting Standards Board. We have applied to the
Management’s Discussion and Analysis, Schedule of Funding Progress and Schedule of
Employer Contributions (the “Schedules”) certain limited procedures, which consisted
principally of inquires of management regarding the methods of measurement and
presentation of the required supplementary information. However, we did not audit,
and do not express an opinion on such information. The statistical data included in the
statistical section of this report has not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we express no
opinion in them.
September 10, 2004
3
The Metropolitan St. Louis Sewer District Employee’s
Pension Plan
Management’s Discussion and Analysis
As Management of the Metropolitan St. Louis Sewer District Employees’ Pension Plan (the “Plan”)
we offer readers of the Plan’s financial statements this narrative overview of the financial activities
of the Plan for the years ended December 31, 2003 and December 31, 2002. This narrative is
intended to supplement the Plan’s financial statements, and we encourage readers to consider the
information presented here in conjunction with those statements, which begin on page 9.
Overview of the Financial Statements
The following discussion and analysis is intended to serve as an introduction to the Plan’s financial
statements. The basic financial statements are:
1) Statement of Plan Net Assets
2) Statement of Changes in Plan Net Assets
3) Notes to Financial Statements
This report also contains the following schedules as “Required Supplementary Information” to the
basic financial statements themselves.
1) Schedule of Funding Progress
2) Schedule of Employer Contributions
3) Note to the Required Supplementary Information.
Certain revenues, expenses associated with administering the Plan and other trend data are
presented immediately following the Notes to the Required Supplementary in the statistical section
of this report.
The basic financial statements contained in this report are described below:
• The Statements of Plan Net Assets is a point in time snapshot of account balances at fiscal
year-end. It reports the assets available for future payments to retirees, and any current
liabilities that are owed as of the statement date. The resulting Net Asset value (Assets –
Liabilities = Net Assets) represents the value of assets held in trust for pension benefits.
• The Statements of Changes in Plan Net Assets, displays the effect of pension fund
transactions that occurred during the fiscal year, where Additions – Deductions = Net
Increase (or Decrease) in Net Assets. This Net Increase (or Decrease) in Net Assets reflects
the change in the net asset value of the Statement of Plan Net Assets from the prior year to
the current year. Both statements are in compliance with Governmental Accounting
standard Board (GASB) Pronouncements.
4
• The Notes to the Financial Statements are an integral part of the financial statements and
provide additional information that is essential for a comprehensive understanding of the
data provided in the financial statements. These notes describe the accounting and
administrative policies under which the Plan operates, and provide additional levels of
detail for selected financial statement items. (See Notes to Financial Statements on page 11
of this report.)
Because of the long-term nature of a defined benefit pension plan, financial statements alone
cannot provide sufficient information to properly reflect the ongoing plan perspective.
Therefore, in addition to the financial statements explained above, this financial report
includes two additional schedules entitled “Required Supplementary Information.”
• The Schedule of Funding Progress (pages 14 and 15) includes actuarial information about
the status of the plan from an ongoing, long-term perspective, and the progress made in
accumulating sufficient assets to pay pension benefits when due. Valuation Assets in excess
of Actuarial Accrued Liabilities indicate that sufficient assets exist to fund the future
pension benefits of the current members and benefit recipients.
• The Schedule of Employer Contributions (page 15) presents historical trend information
regarding the value of total annual contributions required to be paid by employers, and the
actual performance of employers in meeting this requirement.
• The Note to Required Supplementary Information provides background information and
explanatory detail to aid in understanding the required supplementary schedules.
Financial Highlights
• Net assets held in trust for pension benefits totaled $137,024,216 as of December 31, 2003
or an increase of $23,847,668, 21.1 percent, during 2003, which primarily resulted from
cumulative investment gains during the year.
• The Plan’s funding objective is to meet long-term benefit obligations to the extent possible.
As of December 31, 2003, the date of the latest actuarial valuation, the funded ratio of the
Plan was .84 percent. In general, this means that for every dollar of pension benefits due,
the Plan has approximately $ .84 of net assets available for payment.
• Total additions to Plan assets (page 10) increased by $29,561,894 for the year 2003 this
increase was principally due to an investment gain of $23,559,415 and plan contributions
of $6,002,479.
• Administrative expenses (deductions to plan net assets, page 10) increased from $96,396
during 2002 to $106,892 in 2003 about 10.9 percent. As the result of supporting an
increased number of retirees and performing certain additional actuarial studies.
5
Analysis of Financial Activities
The Plan’s funding objective is to meet long-term benefit obligations through investment income
and contributions. Accordingly, the receipt of employer contributions, and the income from
investments provide the reserves needed to finance future retirement benefits.
The Districts contributions into the plan continue to increase as the result of a combination of
factors, including an increase in salaries and a lower than anticipated investment performance as
measured on an actuarially smoothed basis. The cost associated with a salary increase was partially
offset by a decrease in the number of active employees. Relative to the Public Fund peer group the
Fund was up 21.1 percent, which ranked in the 53rd percentile of the Public Fund universe. Net
assets in trust for pension increased by $23,847,668 in 2003. Since these net assets are used to meet
ongoing benefit obligations to plan participants and their beneficiaries. A positive return in 2003
has stabilized the Plan’s funding status.
Employer contributions continue to rise due to wage inflation and depreciation in Plan Net Assets
due to unfavorable market conditions. As the years roll forward, and total assets and liabilities
grow, the Plan’s investment income will play a more significant role in funding future retirement
benefits – eventually providing 80 to 90 percent of the necessary funds. Therefore, investment
return over the long-term is critical to the funding status of the retirement system.
In 2003, net investment income of $23,559,415 was significantly higher than the actuarially
assumed investment income. However, the Plan experienced investment losses in both 2002 and
2001, and the additional investment income served to offset the prior underperformance. Overall,
the Plan is adequately funded and any cumulative difference between actuarial liabilities and assets
is being amortized and funded over an appropriate period. It is important to remember that a
retirement system’s funding is based on a long time horizon, where temporary ups and downs in the
market are expected. The more critical factor is that the Plan be able to meet an expected earnings
yield of, on average, 7.5 percent annual return on investments. Even with the last two years losses
included, the Plan’s 5 and 10-year returns have been 4.8 percent and 8.9 percent, respectively.
Based upon our latest actuarial valuation for the year ended December 31, 2003, the Plan’s
actuarial value of assets was less then actuarial value of liabilities by $25,478,000 million. This
means that additional future funding will be needed to reduce this liability.
6
Financial Analysis – Summary
THE PLAN NET ASSETS (TABLE 1)
As of December 31, 2003 and 2002
2003 2002
Increase
(Decrease)
Amount
Increase
(Decrease)
Percentage
Cash Equivalents/Other Assets $ 5,868,688 $ 5,389,244 $ 479,444 8.89%
Investments at Fair Value 131,269,319 107,920,160 23,349,159 21.64%
Total Assets 137,138,007 113,309,404 23,828,603 21.03%
Current Liabilities 113,791 132,857 (19,066) (14.52)%
Total Liabilities 113,791 132,857 (19,066) (14.52)%
Net Assets $137,024,216 $113,176,548 $23,847,883 21.07%
As previously, noted, net assets viewed over time may serve as a useful indication of the Plan’s
financial position (see Table 1 above). At the close of calendar year 2003, the assets of the Plan
exceeded its liabilities, with $137,024,216 in net assets held in trust for pension. The net assts are
available to meet the Plan’s ongoing obligation to plan participants and their beneficiaries.
Despite variations in the stock market, management and the Plan’s actuary concur that the Plan
remains in a sound financial position to meet its obligations to the plan participants and
beneficiaries. The current financial position is the result of a successful investment program and
prudent management practices that have been in place for many years.
Depreciation – Reduction to Fiduciary Net Assets
Revenues - Additions to Fiduciary Net Assets Table 2)
For the Year Ended December 31, 2003 and 2002
2003 2002
Increase
(Decrease)
Amount
Increase
(Decrease)
Percentage
Employer Contributions $ 6,002,479 $ 4,789,473 $ 1,213,006 25.3%
Net Investment Income 23,559,415 (9,726,380) 33,285,795 342.2%
Total $29,561,894 $(4,936,907) $34,498,801 698.8%
As noted (see Table 2 above), the funds needed to finance retirement benefits are accumulated
through the collection of employer contributions, and through earnings on investments (net of
investment expense). Total additions for the year ended December 31, 2003, totaled a positive
$29,561,894.
Revenues for 2003 increased by $34,498,801 or 698.8 percent, from the prior year primarily due to
investment gains. The investment section of this report summarizes the results of investment
activity for the year ended December 31, 2003.
7
Expenses – Deductions from Fiduciary Net Assets
Expenses - Deductions in Fiduciary Net Assets (Table 3)
For the Year Ended December 31, 2003 and 2002
2003 2002
Increase
(Decrease)
Amount
Increase
(Decrease)
Percentage
Benefit $ 5,607,334 $ 4,830,167 $ 777,167 16.1%
Administrative Expenses 106,892 96,396 10,496 10.9%
Total $ 5,714,226 $ 4,926,563 $ 787,663 16.0%
The Plan was created to provide retirement, survivor and disability benefits to qualified members
and their beneficiaries. The cost of such programs includes recurring benefit payments as
designated by the plan, and the cost of administering the plan.
As noted (see Table 3) expenses for the year ended December 31, 2003 totaled $5,714,226, an
increase of 16.0 percent over 2002. The increase in benefits paid resulted primarily from an
increase in the number of retirees receiving benefits. Deductions from plan net assets of $5,714,226
exceeded additions to plan net assets of $29,561,894 by $23,847,668 for the year ended December
31, 2003. The Plan has consistently managed within its administrative expense budget, with no
material variances between planned and actual expenditures.
Investment Performance
The following are a few characteristics and achievements for the Plan for the year ending
December 31, 2003:
• The Plan ended the year with $137,138,007 in total assets
• The strategic asset allocation compared to the December 31, 2003 actual allocation was as
follows:
Asset Class Target Actual
Large-Cap Stocks 45.0% 48.7%
Small-Cap Stocks 7.5 8.8
International Stocks 7.5 8.6
Fixed Income 35.0 32.2
Cash Equivalents 5.0 1.7
All asset classes have been rebalanced when needed during the year in order to maintain a weighting
consistent with the strategic allocation ranges.
• The large-cap stocks were diversified between active value, active growth and passive core
strategies. The fund had a 60 percent large-cap growth value and 40% large-cap growth
allocation which added value to the Fund during the year as value stocks outperformed growth
stocks.
8
• During the year, specific investment management changes were made to improve the
risk/return characteristics of the Fund. Changes to the investment manager used by the Plan
included large-cap value and small-cap value assignments.
• The Fund's performance for the year was 21.1 percent while the passive policy index was 20.4
percent.
Relative to a universe of similar managed portfolios; the Plan during the past year has outperformed
6 out of 10 portfolios, and over the long-term (3 years), the plan has outperformed its benchmark
and the median with less risk than the median.
Fiduciary Responsibilities
The Board of Trustees and senior management are fiduciaries of the Plan and Trust. Fiduciaries are
charged with the responsibility of assuring that the assets of The Plan are used exclusively for the
benefit of plan participants and their beneficiaries.
Request for Information
This financial report is designed to provide the Board of Trustees, our membership, ratepayers,
investment managers, and creditors with an overview of The Plans finances and accountability for
the money received. Questions concerning any of the information provided in this report or requests
for additional financial information should be addressed to:
_________________________________________
Karl J. Tyminski, Secretary-Treasurer
2350 Market Street
St. Louis, MO 63103-2555
Phone: (314) 768-6222
Fax: (314) 768-2701
kjtymi@stlmsd.com.
See the accompanying notes to the financial statements.
9
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
STATEMENTS OF PLAN NET ASSETS
December 31, 2003 and 2002
__________
2003 2002
ASSETS
Interest and dividends receivable $ 589,335 $ 693,899
Investments at fair value:
Money Markets 5,279,353 4,695,346
United States Treasury
& Agency Obligations 15,701,015 12,915,841
Corporate Obligations 27,184,271 33,471,204
Municipal Obligations 385,958 -
Domestic Common Stocks 42,068,699 34,293,079
Foreign Stocks 2,520,336 -
Mutual Funds 43,409,040 27,240,036
Total investments 136,548,672 112,615,505
Total assets 137,138,007 113,309,404
LIABILITIES
Accrued expenses 113,791 132,856
Total liabilities 113,791 132,856
Net assets held in trust for pension benefits $137,024,216 $113,176,548
(A schedule of funding progress is presented on pages 14 and 15).
See the accompanying notes to the financial statements.
10
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
STATEMENT OF CHANGES IN PLAN NET ASSETS
December 31, 2003 and 2002
__________
2003 2002
Additions:
Employer contributions $ 6,002,479 $ 4,789,473
Investment income:
Net appreciation (depreciation)
in fair value of investments 20,513,077 (13,225,591)
Interest and dividends 3,575,318 4,002,746
Total investment income 24,088,395 (9,222,845)
Less investment expense 528,980 503,535
Net investment income (loss) 23,559,415 (9,726,380)
Total additions 29,561,894 (4,936,907)
Deductions:
Benefits paid 5,607,334 4,830,167
Administrative expenses 106,892 96,396
Total deductions 5,714,226 4,926,563
Net change in net assets 23,847,668 (9,863,470)
Net assets held in trust for
pension benefits
Beginning of year 113,176,548 123,040,018
End of year $137,024,216 $113,176,548
11
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
__________
1. Plan Description:
The following brief description of The Metropolitan St. Louis Sewer District Employees’
Pension Plan (the “Plan”) is provided for general information purposes only. Members
should refer to the Plan ordinance for more complete information.
The Plan is a noncontributory single employer defined benefit plan providing retirement
benefits as well as death and disability benefits. As a condition of employment, all full-time
employees of The Metropolitan St. Louis Sewer District (the “District”) are covered by the
Plan.
At December 31, 2003 and 2002, membership consisted of:
2003 2002
Retirees and beneficiaries currently
receiving benefits 482 459
Terminated members entitled to receive
benefits 194 182
Active plan members 788 829
Total 1,464 1,470
The District’s Board of Trustees, primarily to improve benefits to members, amends the Plan,
established on November 1, 1967. A Pension Committee consisting of two members of the
District’s Board of Trustees, two elected employee members and four members of the
District’s management staff administer the Plan. A committee of the District’s Board of
Trustees, with the aid of an investment advisor, reviews and evaluates the Plan’s investments
and the related rates of return on a periodic basis. The Plan is exempt from the requirements
of the Employee Retirement Income Security Act of 1974 and, as such, is not subject to the
Act’s reporting requirements.
All benefits vest after five years of credited service. Members retiring at or after age 65 with
five or more years credited service are entitled to a pension benefit. The Plan permits early
retirement with reduced benefits beginning at age 55 if the member has completed 60 months
of employment. Ordinance No. 10664 provides for unreduced retirement benefits to any
member whose combined age and term of service is equal to 75. Effective January 1, 1999,
Ordinance No. 10491 amended the Plan benefits formula. The annual benefit payable
became 1.40% of final average earnings plus 0.40% of final average earnings that are in
excess of covered earnings multiplied by the period of years and months of credited service
not to exceed thirty-five years. In addition, the annual reduction for early retirement was
revised from 5% to 2% prior to age 60 and from 2.5% to 1% after age 60.
12
NOTES TO FINANCIAL STATEMENTS, Continued
__________
1. Plan Description, continued:
Ordinance No. 10664, effective January 1, 2000, amended the plan benefits formula to 1.45%
of final average earnings plus 0.40% of final average earnings that are in excess of covered
earnings multiplied by the period of years and months of credited service not to exceed thirty-
five years. This ordinance also provided for a survivor’s benefit for vested members who
have not yet reached their normal retirement date or earned 75 points. The survivor’s benefit
is equal to the greater of 50% of the member’s monthly-accrued retirement benefit as of the
date of death, or 15% of the monthly earnings and the member’s monthly-accrued retirement
benefit actuarially reduced under the 100% joint and survivor annuity option. Members are
also able to select a Contingent Annuity Pop-Up option. This option allows the member to
elect a survivor annuity for life, with the provision that if the beneficiary should predecease
the member, the benefit shall increase to the amount payable had the survivor option not been
selected.
Ordinance Number 10872, effective January 1, 2001, further amended the Plan to extend the
cost of living increases for retirees from a maximum of 30% to 45% of the original benefit.
The retirement benefit payable to a member who retires after his or her normal retirement
date is the greater of (a) the benefit that would have been payable on the normal retirement
date plus a special annual retirement benefit provided by the accumulated value, at 4% per
annum interest, of the monthly benefit that would have been received prior to the postponed
retirement date or (b) the benefit determined as of the postponed retirement date under the
normal formula.
2. Summary of Significant Accounting Policies and Plan Asset Matters:
Basis of Accounting: The Plan’s financial statements are prepared using the accrual basis of
accounting. Employer contributions are recognized as revenues in the period in which employee
services are performed. Benefits are recognized when due and payable in accordance with the
terms of the Plan. Plan expenses are recorded when the corresponding liabilities are incurred
regardless of when payment is made.
Use of Estimates: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the financial statements. Actual results could differ from those
estimates.
Method Used to Value Investments: The Plan’s investment assets, which are trusted by U.S.
Bank, N.A., are reported at fair value as determined and certified by the Trustee. Investments
traded on a national exchange are valued at reported sales prices. Investments that do not
have an established market are reported at estimated fair value. Cash equivalents are
comprised of money market funds and are reported at cost, which approximates fair value.
13
NOTES TO FINANCIAL STATEMENTS, Continued
__________
2. Summary of Significant Accounting Policies and Plan Asset Matters, continued:
Categories of Asset Risk: The Plan is authorized to invest in:
• United States Government securities;
• Common stocks of corporations, mutual funds, or commingled equity funds organized
under the laws of the United States; however, the investment in equities cannot exceed 70
percent of total investments;
• Publicly-issued corporate bonds, debentures, notes or other evidence of indebtedness
assumed or guaranteed by corporations organized under the laws of the United States
with ratings of “BAA” or better by Standard and Poors at the time of purchase; and
• Short-term securities invested in A1/P1 commercial paper, treasury bills, certificates of
deposits, and/or money market funds with a maximum maturity of one year at the time of
purchase.
The Plan’s investments are categorized below to give an indication of the level of risk
assumed by the Plan at year-end.
12/31/2003 12/31/2002
Category 1:
U.S. Government and agency securities $ 15,701,015 $ 12,915,841
Corporate obligations 27,184,271 33,471,204
Municipal obligations 385,958 -
Domestic common stocks 42,068,699 34,293,079
Foreign stocks 2,520,336 -
87,860,279 80,680,124
Not subject to categorization:
Money market fund 5,279,353 4,695,345
Mutual funds 43,409,040 27,240,036
Total investments $136,548,672 $112,615,505
Category 1 includes investments that are insured or registered or for which the securities are
held by the Plan or its agent in the Plan’s name. Category 2 includes uninsured and
unregistered investments for which the securities are held by the broker’s or dealer’s trust
department or agent in the Plan’s name. Category 3 includes uninsured and unregistered
investments for which the securities are held by the broker or dealer or by its trust department
or agent but not in the Plan’s name.
Professional Fees: Certain professional fees, included in administrative expenses, are paid by
the District and are recognized as contributions to the Plan.
14
NOTES TO FINANCIAL STATEMENTS, Continued
__________
3. Contributions Required and Contributions Made:
Ordinances establishing the Plan provide for actuarially determined annual contributions by the
District that are sufficient to pay benefits when due. The Entry Age Normal funding method is
used to determine contributions.
Contributions of $5,994,027 and $4,777,117, excluding certain professional fees paid by the
District, were made to the Plan in 2003 and 2002, respectively. These contributions were
made in accordance with actuarially determined contribution requirements based on actuarial
valuations performed at January 1, 2003 and 2002, respectively, and for 2003 consisted of (a)
$4,353,290 normal cost plus (b) $1,640,737 amortization of the unfunded actuarial accrued
liability.
The District provides certain professional fees, office space, utilities, and other services to the
Plan at no cost. Other costs of administering the Plan are financed from plan net assets.
4. Concentration of Investments:
No investments in any one organization (other than those issued by the United States
Government) represent five percent of plan net assets.
REQUIRED SUPPLEMENTARY INFORMATION - Unaudited
__________
Six-year historical trend information about the Plan is presented herewith as required supplementary
information. This information is intended to help users assess Plan funding status on a going-concern
basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make
comparisons with other plans.
Schedule of Funding Progress (dollars in thousands)
Assets In
Excess of
Entry Age Actuarial AEAAL as a
Actuarial Actuarial Accrued Annual Percentage
Actuarial Value Accrued Liability Funded Covered of Covered
Valuation of Assets Liability (AEAAL) Ratio Payroll Payroll
Date (1) (2) (1)-(2) (1)/(2) (3) (1-2)/(3)
01/01/04 133,966 159,444 (25,478) 0.84 37,637 -67.7%
01/01/03 129,783 150,405 (20,622) 0.86 38,868 -53.1%
01/01/02 133,012 139,336 (6,324) 0.95 37,600 -16.8%
01/01/01 128,688 128,124 564 1.00 37,380 1.5%
01/01/00 120,109 113,217 6,892 1.06 36,415 18.9%
01/01/99 105,534 99,899 5,636 1.06 34,262 16.4%
15
NOTES TO FINANCIAL STATEMENTS, Continued
__________
Analysis of the dollar amounts of plan net assets, actuarial accrued liability, and unfunded actuarial
accrued liability in isolation can be misleading. Expressing plan net assets as a percentage of the
actuarial accrued liability provides one indication of Plan funding 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 Plan.
Trends in the unfunded actuarial accrued liability and annual covered payroll are both affected by
inflation. Expressing the unfunded actuarial accrued liability as a percentage of annual covered
payroll approximately adjusts for the effects of inflation and aids analysis of Plan progress made in
accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage the
stronger the Plan.
Schedule of Employer Contributions
Annual Contribution as
Calendar Required Percentage a Percentage of
Year Contribution Contributed Covered Payroll
2003 $ 5,994,027 100.00 15.9
2002 4,777,117 100.00 12.7
2001 3,964,040 100.00 10.6
2000 2,953,721 100.00 7.9
1999 2,941,323 100.00 8.1
1998 2,773,848 100.00 8.1
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:
Valuation date January 1, 2004
Actuarial cost method Entry Age Normal
Amortization method Level dollar closed
Amortization period 20 year period, re-established
each year (2)
Asset valuation method Three-year average of adjusted
market values
Post-retirement benefit increases 3.0% of current benefit, or
$50, if less
Actuarial assumptions:
Investment rate of return 7.50% per annum (1)
Projected salary increases 5.50% per annum (1)
Social Security wage base 4.50% per annum increase (1)
(1) Includes inflation component of 4.0%
(2) Effective 1/1/03 amortization period changed from 10 years to 20 years.
Statistical
Section
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
16
Performance & NAV
Year Net Asset Value (NAV) 12/31 Total Plan Performance
1994 $ 61,058,528 -0.7%
1995 $ 74,066,618 20.2%
1996 $ 83,930,038 13.4%
1997 $ 101,384,482 21.4%
1998 $ 113,031,089 13.7%
1999 $ 125,365,457 12.3%
2000 $ 125,256,835 1.2%
2001 $ 123,040,018 -1.3%
2002 $ 113,176,548 -8.0%
2003 $ 137,024,216 21.1%
Net Asset Value (NAV) 12/31
$61.1
$74.1
$83.9
$101.4
$113.0
$125.4 $125.3 $123.0
$113.2
$137.0
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Millions
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
17
Revenues by Source
Year
Employers
Contributions
Employers
Contributions
as a Percentage
of Covered
Payroll
Investment
Income (Net) Total
1994 $ 1,819,647 6.5% $ (414,057) $ 1,405,590
1995 $ 2,165,220 7.3% $ 12,865,412 $ 15,030,632
1996 $ 2,458,958 7.9% $ 9,761,305 $ 12,220,263
1997 $ 2,734,418 8.5% $ 17,463,552 $ 20,197,970
1998 $ 2,810,289 8.1% $ 11,898,138 $ 14,708,427
1999 $ 2,968,216 8.1% $ 12,758,125 $ 15,726,341
2000 $ 2,986,650 7.9% $ 831,238 $ 3,817,888
2001 $ 3,971,540 10.6% $ (1,878,456) $ 2,093,084
2002 $ 4,789,473 12.7% $ (9,726,380) $ (4,936,907)
2003 $ 6,002,479 15.4% $ 23,559,415 $ 29,561,894
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
18
Expenses by Type
Year Benefit Payments
Administrative
Expense Total
1994 $ 1,718,484 $ 121,784 $ 1,840,268
1995 $ 1,889,667 $ 132,875 $ 2,022,542
1996 $ 2,217,635 $ 139,208 $ 2,356,843
1997 $ 2,604,476 $ 139,050 $ 2,743,526
1998 $ 2,874,930 $ 186,891 $ 3,061,821
1999 $ 3,250,637 $ 141,336 $ 3,391,973
2000 $ 3,694,444 $ 232,066 $ 3,926,510
2001 $ 4,211,174 $ 98,727 $ 4,309,901
2002 $ 4,830,167 $ 96,396 $ 4,926,563
2003 $ 5,607,334 $ 106,892 $ 5,714,226
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
19
Employer Contributions
$1,819.6 $2,165.2 $2,459.0 $2,734.4 $2,810.3 $2,968.2 $2,986.7 $3,971.5 $4,789.5 $6,002.5 $0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
(Dollar Amounts in Millions)
Total Benefit Payments
$1,718.5 $1,889.7
$2,217.6
$2,604.5
$2,874.9
$3,250.6
$3,694.4
$4,211.2
$4,830.2
$5,607.3
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
(Dollar Amounts in Millions)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
20
Member Count
Year
Retirees &
Beneficiaries
Currently
Receiving
Benefits
Terminated
Members
Entitled to
Receive
Benefits
Active Plan
Members Total
1994 349 123 923 1,395
1995 363 121 906 1,390
1996 377 129 898 1,404
1997 391 137 914 1,442
1998 406 145 942 1,493
1999 410 151 934 1,495
2000 428 164 890 1,482
2001 443 175 855 1,473
2002 459 182 829 1,470
2003 482 194 788 1,464
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
21
Total Benefit Recipents
349 363 377 391 406 410 428 443 459 482
0
100
200
300
400
500
600
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
22
Top 10 Holdings
As of December 31, 2003
Holding
Market Value at
12/31/2003
Percentage of
Plan
Vanguard Asset Allocation Fund $ 13,793,318 10.1%
IRT-International Equity Fund 11,741,798 8.6%
Vanguard S&P 500 Index Fund 7,161,587 5.2%
Times Square Small Cap Fund 5,822,460 4.2%
Cash Assets Trust Money Mkt 5,279,353 3.9%
Vanguard Windsor II Fund 4,889,878 3.6%
U S Treasury Note 5.625% 5/15/2008 3,251,422 2.4%
U S Treasury Note 4.250% 8/15/2013 2,438,044 1.8%
U S Treasury Note 2.0% 11/30/2004 2,175,530 1.6%
Citigroup Inc. 1,104,285 .8%
TOTALS $ 57,657,675 42.1%
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
23
Schedule of Investment Expenses
For the Years Ended December 31, 2003 and 2002
2003 2002
Investment Managers Fees $ 528,980 $ 503,535
Administrative Expenses 106,892 96,396
TOTALS $ 635,872 $ 599,931
Schedule of Payments to Investment Managers
The Plan paid the following Investment Manager Fees in 2003
Alliance Bernstein $ 124,534
Waddell & Reed 71,194
AMVESCAP 73,235
ARK Asset Managers 39,902
Buford, Dickson 22,100
Garner Asset Management 20,705
IRM 119,952
Yanni – Partners Investment Advisor
NEPC Investment Advisor
30,077
27,281
TOTALS $ 528,980