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HomeMy Public PortalAboutPension Plan 2010 Audited FinancialsTHE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN INDEPENDENT AUDITORS' REPORT, FINANCIAL STATEMENTS, AND SUPPLEMENTAL INFORMATION FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN CONTENTS ---------------------------------------------------------- INDEPENDENT AUDITORS' REPORT .................................................................................. 1 MANAGEMENT'S DISCUSSION AND ANALYSIS .............................................................. 2 - 9 FINANCIAL STATEMENTS Statements of Plan Net Assets .................................................................................................... . Statements of Changes in Plan Net Assets ................................................................................. . Notes to Financial Statements .................................................................................................... . REQUIRED SUPPLEMENTAL INFORMATION Schedule of Funding in Progress ................................................................................................ . Schedule of Employer Contributions in Accordance with GASB Statement No. 25 ................. . Note to Required Supplemental Information .............................................................................. . STATISTICAL SECTION (Unaudited) Performance and Net Asset Value .............................................................................................. . Historical Trend Information: 10 11 12 -23 24 24 25 26 Revenue by Source ................................................................................................................... 27 Expenses by Type .... .......................... ...... ....... ............. ............... ........... ......... ... .................... ... 28 Member Count ..................................... ..... ......... ....... ........ ................... ................... ........ .......... 29 Graphs: Total Benefit Payments............................................................................................................. 30 Employer Contributions............................................................................................................ 30 Total Benefit Recipients ........................................................................................................... 31 Top Ten Investment Holdings ..................................................................................................... 32 Schedule oflnvestment Managers' and Advisors' Fees ............................................................. 33 Independent Auditors' Report To the Board of Trustees of the Metropolitan St. Louis Sewer District We have audited the accompanying statements of plan net assets of the Metropolitan St. Louis Sewer District Employees' Pension Plan (the "Plan") as of December 31, 2010 and 2009 , and the related statements 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 on our audit. We conducted our audits in accordance with U.S. generally accepted auditing standards. 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe 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 as of December 31 , 2010 and 2009, and changes in plan net assets for the years then ended, in conformity with U.S. generally accepted accounting principles. The management's discussion and analysis (the "MD&A") and the schedules of funding progress and employer contributions (the "schedules"), as listed in the table of contents, are not a required part of the basic financial statements but are supplementary information required by u .S. generally accepted accounting principles. We have applied certain limited procedures to the MD&A and the schedules, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information . However, we did not audit the information and express no opinion on it. 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 on them. July 29,2011 (314) 966-2727 • fax (314) 966-6464 • 10805 Sunset Office Drive, Suite 400 • St. Louis, MO 63127 • e-mail : stcpa@stcpa.com THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS _______________ FOR THE YEAR ENDED DECEMBER 31, 2010 As management of The Metropolitan St. Louis Sewer District Employees' Pension Plan (the Plan), we offer readers ofthe Plan's financial statements this Management's Discussion and Analysis (MD&A) of the financial activities of the Plan for the year ended December 31, 2010. This MD&A 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 10. OVERVIEW OF THE FINANCIAL STATEMENTS The following MD&A is intended to serve as an introduction to the Plan's financial statements. The basic financial statements are: 1) Statements of Plan net assets 2) Statements of changes in Plan net assets 3) Notes to financial statements This report also contains required supplemental information to the basic financial statements which provides actuarial information for use in analyzing the funded status of the Plan and includes: 1) Schedule of funding progress 2) Schedule of employer contributions in accordance with GASB Statement No. 25 3) Additional information regarding required schedules 4) Note to required supplemental information Certain revenues, expenses associated with administering the Plan, and other trend data are presented immediately following the note to required supplemental information 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 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 assets 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 [additions -deductions = net increase (decrease) in net assets]. This net increase ( decrease) in net assets reflects the change in the net assets value of the statements of Plan net assets from the prior year to the current year. Both statements are in compliance with Governmental Accounting Standards Board (GASB) Pronouncements. 2 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS _______________ FOR THE YEAR ENDED DECEMBER 31,2010 • 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 beginning on page 12 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 supplemental information". • The schedule of funding in progress (page 24) 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, whereas, excess liabilities require future funding or investment performance in excess of the actuarial assumed investment returns. • The schedule of employer contributions in accordance with GASB Statement No. 25 (page 24) 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 supplemental information provides explanatory detail to aid in understanding the required supplemental schedules. FINANCIAL HIGHLIGHTS 2010 • Net assets held in trust for pension benefits totaled $198,540,074 as of December 31,2010 for an increase of $19,320,602 or 10.8% as compared with December 31, 2009. This increase in net assets 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, 2010, the date of the latest actuarial valuation, the funded ratio of the Plan was 81.6%. In general, this means that for every dollar of pension benefits due, the Plan has approximately $0.82 of net assets available for payment. The Plan's funding ratio decreased by 1.7 percentage points as compared with the funding ratio for December 31, 2009. The decrease in the funding ratio is primarily attributed to a decline in the actuarial value of investments that was impacted by the 2008 investment loss. • Total increase to the Plan's net assets (page 11) amounted to $19,320,602 for the year 2010 consisting of an investment gain of $19,619,450, as offset by Plan payments net of contributions of $298,848. • Administrative expenses (deductions to the Plan's net assets, page 11) decreased from $148,157 for 2009 to $137,775 or $10,382 (7.0%) which primarily reflects the net impact of a reduction in the cost of actuarial services for the Plan. 3 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS ________________ FOR THE YEAR ENDED DECEMBER 31, 2010 FINANCIAL HIGHLIGHTS 2009 • Net assets held in trust for pension benefits totaled $179,219,472 as of December 31, 2009 for an increase of $28,410,846 or 18.8% as compared with December 31, 2008. This increase in net assets 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, 2009, the date of the latest actuarial valuation, the funded ratio of the Plan was 83.3 %. In general, this means that for every dollar of pension benefits due, the Plan has approximately $0.83 of net assets available for payment. The Plan's funding ratio decreased by 3.3 percentage points as compared with the funding ratio for December 31,2008. The decrease in the funding ratio is primarily attributed to a decline in the actuarial value of investments that was impacted by the 2008 investment loss. • Total increase to the Plan's net assets (page 11) amounted to $28,410,846 for the year 2009 consisting of an investment gain of $29,480,945, as offset by Plan payments net of contributions of $1 ,070,099. • Administrative expenses (deductions to the Plan's net assets, page 11) increased from $104,221 for 2008 to $148,157 or $43,936 (42.2%) which primarily reflects the net impact of an increase in the asset based costs such as consulting services that is associated with a higher value of assets under management. ANAL YSIS 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 contIibutions and the income from investments provide the reserves needed to finance future retirement benefits. The Metropolitan S1. Louis Sewer District's (the District) 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. Relative to the Public Fund peer group for 2010 and 2009, the Fund was up by 11.9% and 20.8%, respectively, which ranked in the 79th and 34th percentile, respectively, ofthe Public Fund universe. Net assets held in trust for pension benefits increased by $19,320,602 in 2010 and increased by $28,410,846 in 2009. These net assets are used to meet ongoing benefit obligation to the Plan's participants and their beneficiaries. Required employer contributions as determined by the Plan's actuary increased for 2010 compared to 2009. The item that most significantly increased the required Plan contribution by the employer is the decline in the actuarial market value of the assets that occurred because of the sharp drop of asset values in 2008; most notably was the decline in the value of the equity investments. As the years roll forward and total assets and liabilities grow, the Plan's investment income will playa more significant role in funding future retirement benefits, eventually providing 80% -90% of the necessary funds; therefore, investment return over the long-term is critical to the funding status of the Plan. 4 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS ________________ FOR THE YEAR ENDED DECEMBER 31,2010 In 2010 net investment gain of $19,619,450, and in 2009 net investment gain of $29,480,945 were higher than the actuarially assumed investment income; however, since the value of actuarial assets uses a three year smoothing formula, the 2008 net investment loss of $38,697,158 was significantly lower than the actuarially assumed investment income and offset the gains from 2010 and 2009 and significantly impacts the actuarial asset value. Overall, the Plan remains 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 the Plan'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 7.5% on average. The Plan's average return for both 2010 and 2009 is 16.3%, which is above the actuarially assumed investment rate of 7.5%; however, the three year average which is used in the actuarial calculations is 2.7% which is below the actuarially assumed investment rate of 7.5% and could, depending on future investment performance, result in additional contributions in future years. The Plan continues to retain an investment consultant to identify opportunities to improve investment return. A suggestion made by the investment consultant is that the Plan should more broadly diversify its investment asset base. As such, the Plan added new asset classes that have helped to offset the impact from the significant decline in the value of equity investments that was experienced in 2008. Based upon our latest actuarial valuations for the years ended December 31, 2010 and 2009, the Plan's actuarial value of assets was less than its actuarial value of liabilities by $42,586,930 and $37,310,076, respectively. Included in this liability is a deferred but unrecognized gain of $9,528,204 resulting from the difference in the value of Net Assets at December 31, 2010 of$198,540,074 and the actuarial value of Net Assets at December 31,2010 of$189,011,870. This means that additional future funding will be needed to continue to reduce this liability for the amount in excess of the deferred but unrecognized gain. FINANCIAL ANALYSIS The condensed statements of Plan net assets as compared to prior years are as follows: December 31: 2010 Change 2010 2009 Amount Percent ASSETS Investments at fair value $198,294,751 $178,867,750 $19,427,001 10.9% Other assets 6,831,456 6,016,977 814,479 13.5% Total Assets 205,126,207 184,884,727 20,241,480 10.9% LIABILITIES 6,586,133 5,665,255 920,878 16.3% NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $198 1 540 1074 $179 1219 1472 $19 1320 1602 10.8% 5 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS ________________ FOR THE YEAR ENDED DECEMBER 31,2010 December 31= 2009 Change 2009 2008 Amount Percent ASSETS Investments at fair value $178,867,750 $150,347,966 $28,519,784 19.0% Other assets 6,016,977 6,004,424 12,553 0.2% Total Assets 184,884,727 156,352,390 28,532,337 18.2% LIABILITIES 5,665,255 5,543,764 121,491 2.2% NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $179!219!472 $150!808!626 $28AI0!846 18.8% As previously noted, net assets viewed over time may serve as a useful indication of the Plan's financial position. At the close of calendar years 2010 and 2009, the assets of the Plan exceeded its liabilities with $198,540,074 and $179,219,472, respectively, in net assets held in trust for pension benefits. The net assets are available to meet the Plan's ongoing obligation to the Plan's 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's 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. The condensed statements of changes in the Plan's net assets as compared to prior years are as follows: For the Years Ended December 31= 2010 Change 2010 2009 Amount Percent ADDITIONS Net investment income $ 19,619,450 $ 29,480,945 ($ 9,861,495) (33.5%) Employer contributions 10,347,592 8,910,664 1,436,928 16.1% Total Additions 29,967,042 38,391,609 ( 8,424,567) (21.9%) DEDUCTIONS Benefits paid to retirees and beneficiaries 10,508,665 9,832,606 676,059 6.9% Administrative expenses 137,775 148,157 ( 10,382) ( 7.0%) Total Deductions 10,646,440 9,980,763 665,677 6.7% NET INCREASE 19,320,602 28,410,846 ( 9,090,244) (32.0%) NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, JANUARY 1 179,219,472 150,808,626 28,410,846 18.8% NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, DECEMBER 31, $198,540,074 $179.219.472 $19.320!602 10.8% 6 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS ________________ FOR THE YEAR ENDED DECEMBER 31,2010 For the Years Ended December 31~ 2009 Change 2009 2008 Amount Percent ADDITIONS Net investment (loss) income $ 29,480,945 ($ 38,697,158) $68,178,103 176.2% Employer contributions 8,910,664 7,460,492 1,450,17'4 19.4% Total (Reductions) Additions 38,391,609 ( 31 ,236,666) ( 69,628,275) 222.9% DEDUCTIONS Benefits paid to retirees and beneficiaries 9,832,606 9,232,979 599,627 6.5% Administrative expenses 148,157 104,221 43,936 42.2% Total Deductions 9,980,763 9,337,200 643,563 6.9% NET (DECREASE) INCREASE 28,410,846 ( 40,573,866) 68,984,712 270.0% NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, JANUARY 1 150,808,626 191,382,492 ( 10,573,866) ( 21.2%) NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, DECEMBER 31, $~219.472 $150,808,626 $28.4lQJ46 18.8% As noted 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, 2010 and 2009, total $29,967,042 and $38,391,609 respectively. Additions to Plan assets for 2009 exceeded 2010 due to investment gains. The investment section of this report summarizes the results of investment activity for the year ended December 31, 2010. 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 above, deductions for the year ended December 31, 2010 totaled $10,646,440, an increase of 6.7% over 2009. The increase in benefits paid resulted primarily from an increase in the number of retirees receiving benefits. Deductions from Plan net assets of $10,646,440 were exceeded by additions to Plan net assets of $29,967,042 by $19,320,602 for the year ended December 31,2010. The Plan has consistently managed within its administrative expense budget, with no material variances between planned and actual expenditures. INVESTMENT PERFORMANCE -2010 The following are a few characteristics and achievements for the Plan for the year ending December 31, 2010: • The Plan ended the year with $198,540,074 in net assets. 7 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS ________________ FOR THE YEAR ENDED DECEMBER 31, 2010 • The Plan's perfonnance for the year was 11.9% compared to the passive policy index of 11.5%, and the average five-year return was 4.8% compared to the passive policy index of3.5%. • The District retains an independent investment consultant to monitor the investment perfonnance of the Plan and identifY opportunities for improved returns. The recommendation of the investment consultant has been to more broadly diversify the investment asset base of the Plan. • New England Pension Consultants, present advisor to the Board of Trustees, conducted a review and evaluation ofthe Employee Pension Fund's investment activities. At their recommendation, a new asset class entered the Plan's investment mix. Credit Opportunities, with its own proposed target and proposed target range, appeared for the first time in 2010. • The actual asset allocation as of December 31, 2010, as compared to the December 31, 2009 actual allocation, is as follows: Asset Class Target Equities: Domestic Large-Cap Stocks 20.0% Domestic Small-Cap Stocks 5.0 International Developed Markets Stocks 10.0 International Emerging Markets Stocks 3.0 Fixed Income: Domestic Core Bonds 15.0 High Yield Bonds 5.0 Global Bonds 8.0 Credit Opportunities 5.0 Other: Global Tactical 10.0 Real Estate 5.0 Real Assets 5.0 Market Neutral 5.0 Cash Equivalents 0.0 Absolute Return 4.0 Proposed Range 16-24% 8 -12 8 -12 2-5 16 -24 3-7 6 -10 3-7 8-12 3-7 3-7 3-7 0.0 3-7 20.1% 6.3 9.7 3.5 14.5 5.5 8.1 1.9 9.9 4.0 4.8 4.9 0.8 6.0 Actual 19.1 % 9.7 9.5 3.3 14.8 5.3 7.9 10.2 3.9 5.6 6.8 3.9 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% large-cap value and 40% large-cap growth allocation which added value to the fund during the year as value stocks outperfonned growth stocks. 8 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN MANAGEMENT'S DISCUSSION AND ANALYSIS ________________ FOR THE YEAR ENDED DECEMBER 31,2010 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 the Plan's participants and their beneficiaries. REQUEST FOR INFORMATION This financial report is designed to provide the Board of Trustees, our members, ratepayers, investment managers, and creditors with an overview of the Plan's 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 The Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO 63103-2555 E-mail: kjtymi@stlmsd.com 9 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN __________________ STATEMENTS OF PLAN NET ASSETS ASSETS Investments at fair value: Mutual funds Corporate obligations Collective investment fund Domestic common stocks U.S. Treasury and agency obligations Foreign obligations Money market funds Foreign stocks Municipal obligations Domestic preferred stock Total Investments Receivables: Due from brokers for forward currency exchange contracts Due from brokers for pending sales securities sold Interest and dividends receivable Total Receivables Total Assets LIABILITIES Due to brokers for forward currency exchange contracts Due to brokers for securities purchased Accrued expenses Total Liabilities NET ASSETS HELD IN TRUST FOR PENSION BENEFITS See notes to financial statements December 31, 2010 $ 85,541,511 32,048,509 27,290,006 26,493,788 12,640,364 8,732,795 2,849,260 1,654,584 771,025 272,909 198,294,751 6,135,013 26,202 670,241 6,831,456 205,126,207 6,314,361 41,153 230,619 6,586,133 $198,540,074 2009 $ 76,113,440 30,129,155 17,083,798 21,199,474 9,689,256 7,609,646 14,108,201 1,940,458 796,981 197,341 178,867,750 5,238,726 109,433 668,818 6,016,977 184,884,727 5,370,387 122,096 172,772 5,665,255 $179,219,472 -----------------------------------------------10 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES" PENSION PLAN _____________ STATEMENTS OF CHANGES IN PLAN NET ASSETS ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income: Net appreciation in fair value of investments Interest and dividends Total Investment Income Less -Investment managers' and advisors' fees Net Investment Income Employer contributions Total Additions DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits paid to retirees and beneficiaries Administrative expenses Total Deductions NET INCREASE NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, January 1 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS, December 31 See notes to financial statements F or The Years Ended December 31, 2010 2009 $ 14,953,861 5,437,699 20,391,560 772,110 19,619,450 10,347,592 29,967,042 10,508,665 137,775 10,646,440 19,320,602 179,219,472 $198,540,074 $ 26,442,207 3,690,046 30,132,253 651,308 29,480,945 8,910,664 38,391,609 9,832,606 148,157 9,980,763 28,410,846 150,808,626 $179,219,472 ---------------------------------------------11 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS _____________________ DECEMBER 31,2010 AND 2009 NOTE A -DESCRIPTION OF PLAN 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. Membership in the Plan consists of: Active Plan members Retirees and beneficiaries currently receiving benefits Terminated members entitled to receive benefits December 31, 2010 2009 917 938 571 550 183 192 1,671 1,680 Increase (Decrease) (21) 21 ( 9) ( 9) 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 five years 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 1.7% of final average earnings plus 0.4% 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 35 years. Also, 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 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS _____________________ DECEMBER 31, 2010 AND 2009 NOTE A -DESCRIPTION OF PLAN (Continued) Ordinance No. 10664, effective January 1, 2000, amended the Plan benefits formula to 1.45% of final average earnings plus 0.4% 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 35 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% ofthe 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. Effective August 1,2004, Ordinance No. 11781 amended the Plan to change the benefit formula to 1.7% of final average earnings plus 0.4% 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 35 years without including accrued sick leave. A member who retires between August 1, 2004 and July 1, 2007 is entitled to select the greater of the above or the benefit calculated under the 1.45%11.85% benefit formula including accrued sick leave. Sick leave is paid out at 1.25% per year of service times the amount of leave accrued. Also, the Plan was amended to provide the retiring member with a 10% partial lump sum payment option. The balance of the distribution will be paid in accordance with anyone of the other payment options available under the Plan. The retirement benefit payable to a member who retires after the 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. NOTE B -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied by the Plan in the preparation of the accompanying financial statements are summarized as follows: 1. 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 when due and the District's Trustees have made a formal commitment to provide the contribution. 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. Investment purchases and sales are recorded on a trade-date basis. 13 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS _____________________ DECEMBER 31,2010 AND 2009 NOTE B -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management and the Plan's actuary 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 additions to and deductions from net assets during the reporting period. Actual results could differ from those estimates. 3. Method Used to Value Investments The Plan's investment assets, for which U.S. Bank, N.A., acts as a trustee, 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. The money market fund is reported at cost, which approximates fair value. 4. Subsequent Events In preparing these financial statements, the District has evaluated events and transactions for potential recognition or disclosure through July 29, 2011, the date the financial statements were available to be issued. NOTE C -CASH AND INVESTMENTS 1. Categories of Asset Risk The Plan is authorized to invest in: • Equity Investments: Common stocks of corporations, mutual funds, or commingled equity funds (Domestic and International, both within defined limits); however, the investments in equities cannot exceed 53% of total investments. • Fixed Income Investments: U.S. government and agency secuntles, corporate bonds, debentures, notes, or other evidence of indebtedness assumed or guaranteed by corporations (Domestic and International, both within defined limits); however, the investment in fixed income cannot exceed 41 % of total investments. • Short-Term Securities: Commercial paper, treasury bills, certificates of deposit, and/or money market funds. • Real Estate Investments: Real estate investment trusts and multi-employer property trusts; however the investment in real estate cannot exceed 7% of total investments. 14 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS _____________________ DECEMBER 31,2010 AND 2009 NOTE C -CASH AND INVESTMENTS (Continued) 1. Categories of Asset Risk (Continued) • Global Tactical Asset Allocation, Market Neutral, Absolute Return, and Real Assets: These investment strategies help diversify the investment portfolio while increasing return and decreasing risk. These investments cannot exceed 12%, 7%, 7%, and 7% oftotal investments, respectively. • Futures Contracts: Currency forward contracts for the purpose of currency risk management ofnon-U.S. investments. The fair value of investments managed consisted of the following: Investments, at fair value Mutual Funds Corporate obligations Collective investment fund Domestic common stocks u.s. Treasury and agency obligations Foreign obligations Money market funds Foreign stocks Municipal obligations Domestic preferred stock Total Investments 2. Interest Rate Risk December 31, 2010 $ 85,541,511 32,048,509 27,290,006 26,493,788 12,640,364 8,732,795 2,849,260 1,654,584 771,025 272,909 $198,294,751 2009 $ 76,113,440 30,129,155 17,083,798 21,199,474 9,689,256 7,609,646 14,108,201 1,940,458 796,981 197,341 $178,867,750 The Plan had the following debt securities and maturities: Investment Type Corporate obligations u.s. Treasury and agency obligations Foreign obligations Municipal obligations Portfolio weighted average maturity December 31, 2010 Fair Value $32,048,509 12,640,364 8,732,795 771,025 $54,192,693 Weighted Average Maturity (Years) 4.06 7.70 4.74 10.40 5.11 15 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS _____________________ DECEMBER 31, 2010 AND 2009 NOTE C -CASH AND INVESTMENTS (Continued) 2. Interest Rate Risk (Continued) Investment Type Corporate obligations u.s. Treasury and agency obligations Foreign obligations Municipal obligations Portfolio weighted average maturity December 31, 2009 Fair Value $30,129,155 9,689,256 7,609,646 796,981 $48,225,038 Weighted Average Maturity (Years) 4.19 6.79 5.67 0.08 4.89 The Plan will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates by: • Structuring the investment portfolio so that securities mature to meet cash requirements for benefit payments, thereby avoiding the need to sell securities on the open market prior to maturity. • Monitoring fixed income investment managers performance to be sure the fixed income portion of the investment portfolio is managed to predetermined indexes. 3. Credit Risk The Plan will minimize credit risk, the risk of loss due to failure of the security issuer or backer, by: • Pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisors with which the Plan will do business; and • Diversifying the portfolio so that potential losses on individual securities will be minimized. 16 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS _____________________ DECEMBER 31,2010 AND 2009 NOTE C -CASH AND INVESTMENTS (Continued) 3. Credit Risk (Continued) The following tables provide information on the credit ratings associated with the Plan's investments in debt securities: Credit Rating B~ Investment as of December 31, 2010 u.s. Treasury S&P & Agency Municipal Corporate Foreign Rating Obligations Obligations Obligations Obligations Totals AAA $12,640,364 $ 45,487 $ 5,219,713 $4,714,291 $22,619,855 AA 261,573 2,048,035 649,173 2,958,781 A 463,965 9,596,205 1,713,705 11,773,875 BBB 4,362,649 348,639 4,711,288 BB 2,241,296 519,732 2,761,028 B 6,237,319 787,255 7,024,574 CCC 2,255,648 2,255,648 Not Rated 87,644 87,644 Total $12,640,364 $771,025 $32,048,509 $8,732,795 $54,192,693 Credit Rating By Investment as of December 31, 2009 u.s. Treasury S&P & Agency Municipal Corporate Foreign Ratin~ Obli~ations Obligations Obli~ations Obligations Totals AAA $9,689,256 $152,940 $ 5,173,969 $2,760,368 $17,776,533 AA 644,041 2,288,968 395,950 3,328,959 A 9,336,852 2,592,230 11,929,082 BBB 3,694,050 778,153 4,472,203 BB 2,662,162 417,727 3,079,889 B 5,552,469 665,218 6,217,687 CCC 1,248,495 1,248,495 Not Rated 172,190 172,190 Total $9,689,256 $796,981 $30,129,155 $7,609,646 $48,225,038 17 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS _____________________ DECEMBER 31,2010 AND 2009 NOTE C -CASH AND INVESTMENTS (Continued) 4. Foreign Currency Risk Foreign Currency Risk is the risk that changes in exchange rates will adversely impact the fair value of an investment. The Plan's policy is to allow the individual investment manager to decide what action to take regarding their respective portfolio's foreign currency exposure. The following table demonstrates the Plan's current level of foreign currency exposure: Foreign Currency Exposure By Asset Class In U.S. Dollars as of December 31,2010 Currency Australian dollar Canadian Dollar Swedish Krona Polish Zloty British Pound Sterling Malaysian Ringgit Norwegian Krone Indonesia Rupiah Hungarian Forint New Zealand Dollar Not Denominated in a foreign currency Total Equities $ 1,654,584 $1,654,584 Foreign Obligations $1,599,850 1,248,767 947,274 946,410 797,374 767,296 641,578 499,412 233,776 73,990 977,068 $8,732,795 Foreign Currency Exposure By Asset Class In U.S. Dollars as of December 31, 2009 Currency Australian dollar Malaysian Ringgit Polish Zloty British Pound Sterling Brazil Real New Zealand Dollar Mexican Peso Indonesia Rupiah . Canadian Dollar Swedish Krona South Africa Rand Euro Not Denominated in a foreign currency Total Equities $ 1,940,458 $1,940,458 Foreign Obligations $1,335,667 698,381 669,211 623,246 563,371 531,661 528,724 417,727 361,840 341,614 228,031 98,002 1,211 ,171 $7,608,646 Totals $ 1,599,850 1,248,767 947,274 946,410 797,374 767,296 641,578 499,412 233,776 73,990 2,631,652 $10,387,379 Totals $1,335,667 698,381 669,211 623,246 563,371 531,661 528,724 417,727 361,840 341,614 228,031 98,002 3,151,629 $9,549,104 18 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS _____________________ DECEMBER 31,2010 AND 2009 NOTE C -CASH AND INVESTMENTS (Continued) 5. Open Foreign Currency Exchange Contracts in U.S. Dollars : OPEN CONTRACTS AS OF DECEMBER 31, 2010 Aggregate Cost Delivery Unrealized Unrealized Fair Value Value Dates Almreciation De~reciation Foreign Currency Exchange Contracts Purchased: Great British Pound $1,626,711 $1,616,684 3/2/11 $ 10,027 $ Brazilian Real 613,855 589,699 1128111 24,156 South Korean Won 566,523 576,249 2/22/11 9,726 Turkish Lira 547,109 579,471 2/8/11 32,362 Polish Zloty 318,326 314,272 1/25111 4,054 Swedish Krona 291,666 286,451 3/14/11 5,215 China Yuan Renminbi 150,234 149,796 1121111 438 Foreign Currency Exchange Contracts Sold: Australian Dollar 957,526 1,122,335 1112111 164,809 Polish Zloty 341,722 330,023 1125/11 11,699 Canadian Dollar 317,743 322,913 2116111 5,170 Swedish Krona 276,402 284,034 3114/11 7,632 New Zealand Dollar 127,190 142,428 3/9/11 15,238 Totals $ 55,589 $234,937 19 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS _____________________ DECEMBER 31, 2010 AND 2009 NOTE C -CASH AND INVESTMENTS (Continued) 5. Open Foreign Currency Exchange Contracts in U.S. Dollars (Continued): OPEN CONTRACTS AS OF DECEMBER 31,2009 Aggregate Cost Delivery Unrealized Unrealized Fair Value Value Dates Al!l!reciation Del!reciation Foreign Currency Exchange Contracts Purchased: British Pound $1,401,636 $1,360,031 3/3/10 $ 41,605 $ Norwegian Krone 852,475 869,880 1115/10 17,405 South Korean Won 661,141 619,667 1/7/10 41,474 Turkish Lira 506,181 556,235 3/17/10 50,054 Swedish Krona 480,171 500,080 1125/10 19,909 Canadian Dollar 142,131 137,902 2/2/10 4,229 Australian Dollar 93,031 93,031 2/8/10 New Zealand Dollar 30,563 30,963 2/10/10 400 Foreign Currency Exchange Contracts Sold: Australian Dollar 426,090 523,406 2/8/10 97,316 Swedish Krona 171,561 165,037 1125/10 6,524 Norwegian Krone 147,827 152,282 1/15/10 4,455 New Zealand Dollar 139,762 172,800 2/10/10 33,038 South Korean Won 117,571 117,649 1/7/10 78 Canadian Dollar 22,008 24,668 2/2/10 2,660 Euro 46,570 46,748 3/3/10 178 Totals $93,832 $225,493 The fair value of open currency forward contracts, including any unrealized appreciation or depreciation, is recorded in the statements of Plan net assets as amounts due from/to brokers for securities sold/purchased. Based upon the advice of the Plan's investment consultant and the Plan's investment policy and guidelines, the investments in currency forward contracts do not, in the Plans' judgment, have any legal risk. The currency forward contracts are executed through large money center banks with credit rating standards. The credit risk exposure could be with the bank counterparty. Depending on the bank, the degree of credit risk could vary. Based on the assessment of the Plan's investment manager trading the account and Plan's investment consultant, the risk is minimal. 20 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS _____________________ DECEMBER31, 2010 AND 2009 NOTE D -INVESTMENTS GREATER THAN 5% OF NET ASSETS HELD IN TRUST FOR PENSION BENEFITS Investments which exceed 5% or more of net assets held in trust for pension benefits are as follows: GMO Global Balanced Asset Allocation Morgan Stanley Inst. International Equity Vanguard Windsor II Fund PIMCO Pyramid US Equity Market Neutral CIGNA Small Cap Fund First American Prime Money Market For the Years Ended December 31, 2010 2009 $19,635,737 $18,285,997 19,322,101 17,078,227 14,116,519 11,693,186 11,308,343 <5% <5% 10,169,363 <5% 9,602,961 <5% 13,966,544 NOTE E -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 $10,306,739 and $8,859,535 excluding certain professional fees paid by the District, were made to the Plan in 2010 and 2009, respectively. These contributions were made in accordance with actuarially determined contribution requirements based on actuarial valuations performed at December 31,2010 and 2009, respectively, and consisted of: Normal Cost Amortization of the unfunded actuarial accrued liability Inflation factor of 7.5% Current Year Contribution Due From The District As Calculated By The Plan's Actuary For The Years Ended December 31, 2010 2009 $ 6,103,002 $5,651,150 3,484,662 2,590,278 719,075 618,107 $10,306,739 $8,859,535 21 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS _________________ ~ ___ DECEMBER 31,2010 AND 2009 NOTE E -CONTRIBUTIONS REQUIRED AND CONTRIBUTIONS MADE (Continued) Certain professional fees, included in administrative expenses are paid by the District and are recognized as contributions to the Plan and totaled $40,853 and $51,129 for the years ended December 31,2010 and 2009. The District provides office space, utilities, and other services to the Plan at no cost. Other costs of administering the Plan are financed from Plan net assets. NOTE F -FUNDED STATUS AND FUNDING PROGRESS The funded status ofthe Plan as ofJanuary 1, 2011, the most recent actuarial valuation date, and January 1, 2010, is as follows (dollar amounts in thousands): Valuation for the Entry Age Actuarial Actuarial UAAL as a Years Actuarial Accrued Unfunded Annual Percentage Beginning Value of Liability AAL Funded Covered of Covered January 1 Assets (AAL) (UAAL) Ratio Payroll Payroll 2011 $189,012 $231,599 $42,587 81.6% $51,703 82.4% 2010 $185,753 $223,063 $37,310 83.3% $52,267 7l.4% The schedules of funding progress, presented as required supplemental information following the notes to financial statements, present multi-year trend information about whether the actuarial values of Plan assets are increasing or decreasing over time relative to the AALs for benefits. 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 dates Actuarial cost method Amortization method Amortization period Asset valuation method Post-retirement cost ofliving benefit increases Actuarial assumptions: Investment rate of return January 1,2011 and 2010 Entry Age Normal Level dollar closed 20 year period 3-year average of adjusted market values CPI with maximum 3% of current benefit or $50 ifless, and lifetime maximum 45% in the original benefit or $750 ifless 7.5% per annum (1) 22 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN NOTES TO FINANCIAL STATEMENTS ______________________ DECEMBER 31,2010 AND 2009 NOTE F -FUNDED STATUS AND FUNDING PROGRESS (Continued) Actuarial assumptions (continued): Projected salary increases based on years of service Social Security wage base (1) Includes inflation component of3% NOTE G -RISK MANAGEMENT years of service o 1 2 3+ 10.0% (1) 7.5% (1) 5.0% (1) 4.5% (1) 4.0% per annum increase (1) The Plan is exposed to various risks of loss related to natural disasters, errors and omissions, loss of assets, torts, etc. The Plan has chosen to cover such losses through the purchase of commercial insurance. There has been no material insurance claim filed or paid during the past three fiscal years. NOTE H -RISKS AND UNCERTAINTIES The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term, and that such changes could materially affect the amounts reported in the statements of Plan net assets. Actuarial present value of accumulated Plan benefits are reported based on certain assumptions pertaining to interest rates, inflation rates, and employee demographics, all of which are subject to change. Due to uncertainties inherent in the estimations and assumptions process, it is at least reasonably possible that changes in these estimates and assumptions in the near term would be material to the financial statements. NOTE I -SUBSEQUENT EVENTS Effective January 1, 2011, the District started the Defined Contribution Plan for all new hires. Current employees with less than ten years of service on December 31, 2010, could voluntarily elect to transfer from the Defined Benefit Plan into the Defined Contribution Plan. The Defined Contribution Plan provides a basic employer contribution of seven percent of employee earnings. An additional matching contribution of 50% of the first four percent of earnings the employee defers into the Defined Contribution Plan (this is a maximum matching contribution of two percent of earnings) is also provided. Employees decide upon the investment of these contributions and savings from funds offered by Vanguard. Of the 404 District employees with less than ten years of services, 23 elected to participate in the Defined Contribution Plan. A transfer of $70,869, representing the total actuarial accrual of pension benefits for each employee, was made from the Defmed Benefit Plan into the Defined Contribution Plan for these 23 employees. 23 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN REQUIRED SUPPLEMENTAL INFORMATION __________________ DECEMBER 31, 2010 AND 2009 REQUIRED SUPPLEMENTAL INFORMATION SECTION THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN REQUIRED SUPPLEMENTAL INFORMATION _____________________ DECEMBER 31,2010 AND 2009 Six-year historical trend infOlmation about the Plan is presented herewith as required supplementary information. This information is intended to help users assess Plan funding status on a going-concem basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons with other plans. SCHEDULE OF FUNDING IN PROGRESS (dollars in thousands) Valuation Entry For The Age UAALAs Actuarial Actuarial A Years Actuarial Accrued Unfunded Annual Percentage Beginning Value of Liability AAL Funded Covered of Covered Januar~ 1 Assets (AAL) (UAAL) Ratio Pa~roll Pa~ron 2011 $189,012 $231,599 $42,587 81.6 % $51,703 82.4 % 2010 185,753 223,063 37,310 83.3 52,267 71.4 2009 183,679 212,066 28,387 86.6 48,077 59.0 2008 185,356 195,834 10,478 94.6 43,640 24.0 2007 170,757 187,432 16,675 91.1 42,113 39.6 2006 158,321 177,630 19,309 89.1 40,144 48.1 Analysis of the dollar amounts of Plan net assets, AAL, and UAAL in isolation can be misleading. Expressing Plan net assets as a percentage of the AAL provides one indication of Plan funding status on a going-concem 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 UAAL and annual covered payroll are both affected by inflation. Expressing the UAAL 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 IN ACCORDANCE WITH GASB STATEMENT NO. 25 For The Years Ended Annual Contribution As December Required Actual Percentage A Percentage of 31 Contribution Contribution Contributed Covered Pa~roll 2010 $10,306,739 $10,347,592 100.4 % 20.0 % 2009 8,859,535 8,910,664 100.6 17.0 2008 7,425,602 7,460,492 100.5 15.5 2007 7,673,240 7,731,672 100.8 17.7 2006 6,847,278 6,875,168 100.4 16.3 2005 7,184,531 7,192,531 100.1 17.9 2004 6,775,520 6,797,077 100.3 17.3 24 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN REQUIRED SUPPLEMENTAL INFORMATION _____________________ DECEMBER 31, 2010 AND 2009 NOTE TO REQUIRED SUPPLEMENTAL INFORMATION Annual Required Contribution (ARC) The ARC applicable to the Plan's year ended each year on December 31 in accordance with GASB Statement No. 25 requires blending of the actuarial valuations. The ARC is presented each year using the aggregate of the District's ARCs for the portions of the District's fiscal years that overlap the Plan's fiscal year. 25 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (Unaudited) _________________ DECEMBER 31,2010 AND 2009 STATISTICAL SECTION (UNAUDITED) THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (Unaudited) ____________________ DECEMBER 31, 2010 AND 2009 Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $250.0 .~ $200.0 j $150.0 $100.0 $50.0 $0.0 Performance & NA V Net Asset Value (NA V) 12/31 Total Plan Performance $ 123,040,018 (1 .8%) $ 113 ,176 ,548 (8 .0%) $ 137 ,024 ,216 21 .1% $ 149 ,053 ,173 8.8% $ 157,822,577 5.9% $ 174 ,256 ,931 10.4% $ 191,382,492 10 .8% $ 150 ,808 ,625 (21 .2%) $ 179 ,219,472 18.8% $ 198,540,074 10.8% Net Asset Value (NAV) 12/31 $191 4 $198.5 $174.3' $179.2 $149.1 $157.8 $150.8 123.0 $113.2 $137.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 26 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (Unaudited) ____________________ DECEMBER 31 , 2010 AND 2009 R evenues b S Iy ouree Employers Contributions as a Employers Percentage of Investment Income Year Contributions Covered Payroll (Net) Total 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 .9% $ 23 ,559,415 $ 29 ,561 ,894 2004 $ 6,797 ,077 17 .3% $ 11 ,551 ,937 $ 18 ,349 ,014 2005 $ 7,192 ,531 17.9% $ 8,475 ,275 $ 15 ,667 ,806 2006 $ 6 ,875 ,168 16 .3% $ 17 ,565,462 $ 24,440 ,630 2007 $ 7 ,731 ,672 17 .7% $ 18 ,111 ,294 $ 25,842,966 2008 $ 7,460,492 15 .5% $ (38 ,697,159) $ (31,236 ,667) 2009 $ 8,910 ,664 17 .0% $ 29 ,480 ,945 $ 38 ,391 ,609 2010 $ 10,347,592 20 .0% $ 19,619,450 $ 29,967,042 27 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (Unaudited) _____________________ DECEMBER 31, 2010 AND 2009 Expenses by Type Year Benefit Payments Administrative Expense Total 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 2004 $ 6,198,470 $ 121 ,587 $ 6,320,057 2005 $ 6,781,416 $ 116,986 $ 6,898,402 2006 $ 7,841,783 $ 150,548 $ 7,992 ,331 2007 $ 8,540 ,957 $ 147,232 $ 8,688 ,189 2008 $ 9,232,979 $ 104 ,221 $ 9,337,200 2009 $ 9,832 ,606 $ 148,157 $ 9,980,763 2010 $ 10 ,508 ,665 $ 137 ,775 $ 10,687 ,185 28 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (Unaudited) _____________________ DECEMBER 31,2010 AND 2009 Member Count Retirees & Beneficiaries Terminated Currently Members Entitled Active Plan Year Receiving Benefits to Receive Benefits Members Total 2001 443 175 855 1,473 2002 459 182 829 1,470 2003 482 194 788 1,464 2004 490 190 808 1,488 2005 460 1 198 780 2 1,438 2006 481 1 199 798 2 1,478 2007 504 1 198 8112 1,513 2008 532 1 196 885 2 1,613 2009 550 1 192 938 2 1,680 2010 571 183 917~ 1,671 1 New Actuarial excluded individuals covered by insurance policy . 2 New Actuarial excludes members with less than six months of service 29 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (Unaudited) _____________________ DECEMBER 31, 2010 AND 2009 (Dollar Amounts in Thousands) $12 ,000 $10 ,000 $8,000 $6 ,000 $4 ,000 $2 ,000 $0 2001 2002 (Dollar Amounts in Thousands ) $12 ,000 $10 ,000 $8 ,000 $6 ,000 $4 ,000 $2 ,000 $0 2001 2002 2003 2004 2003 2004 Total Benefit Payments $10,508 .7 2005 2006 2007 2008 2009 2010 Employer Contributions $10 ,347 .5 $7 ,192 .5 $6 ,875.2 $7,731.7 $7 ,460.5 2005 2006 2007 2008 2009 2010 30 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (Unaudited) ____________________ DECEMBER 31,2010 AND 2009 Total Benefit Recipients 600 571 500 400 300 200 100 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 31 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (Unaudited) _____________________ DECEMBER 31, 2010 AND 2009 Top 10 Ho/dings As of December 31, 2010 Holding Market Value at 1213112010 Percentage of Plan GMO Global Balanced Asset Allocation $ 19,635,737 9.9% Morgan Stanley Inst. International Equity 19,322,101 9.7% Vanguard Windsor II Fund 14,116,519 7.1% PIMCO 11,308,343 5.7% Fidelity Market Neutral Fund 9,812,942 4.9% Wellington 9,472,290 4.8% UBS Real Estate 8,004,774 4.0% Vanguard 500 Index Fund 7,498,584 3.8% Morgan Stanley Emerging Market Fund 6,951,259 3.5% Times Square Growth Fund 6,167,716 3.1% TOTALS $ 112,290,265 56.5% 32 THE METROPOLITAN ST. LOUIS SEWER DISTRICT EMPLOYEES' PENSION PLAN STATISTICAL SECTION (Unaudited) _____________________ DECEMBER 31,2010 AND 2009 Schedule of Investment Managers' and Advisors' Fees For the Years Ended December 31,2010 and 2009 2010 2009 Managers' Fees: Income Research Management $ 104 ,508 $ 111 ,547 Fidelity Investments 87 ,361 91,240 Waddell & Reed 70 ,812 60,058 Kennedy Capital/ARK Asset Managers 56 ,162 57,666 PENN Capital Management 77 ,590 63 ,950 Brandywine Asset Management 69 ,366 68,094 Buford , Dickson , Harper, & Sparrow 40 ,428 35,427 UBS Real Estate Separate Account 51 ,010 78,714 Loomis/Sayles 13 ,285 - Wellington Management 55 ,3 13 - Total Managers' Fees 625 ,835 566 ,696 Advisors' Fees : Mill iman 35 ,867 - NEPC Investment Advisor 110,409 84,612 TOTAL $ 772,110 $ 651,308 33