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