HomeMy Public PortalAbout2015 Audited Financial
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
Contents
Page
Independent Auditors’ Report........................................................................ 1 - 2
Management’s Discussion And Analysis ..................................................... 3 - 12
Financial Statements
Statements of Fiduciary Net Position ..............................................................13
Statements of Changes in Fiduciary Net Position ............................................14
Notes to Financial Statements .................................................................. 15 - 26
Required Supplementary Information Under GASB No. 67
Schedule of Changes in Net Pension Liability ................................................27
Schedule of Employer Contributions ...............................................................28
Actuarial Methods and Assumptions Used for Funding Policy ......................29
Schedule of Annual Weighted Rate of Return on Investments .......................30
Statistical Section (Unaudited)
Performance and Net Position Value ...............................................................31
Revenues by Source and Total Employer Contributions .................................32
Expenses by Type and Total Benefit Payments ...............................................33
Member Count and Total Benefit Recipients ..................................................34
Top Ten Holdings by Investment Manager and Percentage Distribution........35
Schedule of Investment Manager and Advisor Fees ........................................36
Independent Auditors’ Report
Board of Trustees
The Metropolitan St. Louis Sewer District
St. Louis, Missouri
Report On The Financial Statements
We have audited the accompanying Statement of Fiduciary Net Position of The Metropolitan St. Louis Sewer
District Employees’ Pension Plan (the Plan) as of December 31, 2015 and 2014, and the related Statement of
Changes in Fiduciary Net Position for the years then ended, and the related notes to the financial statements,
which collectively comprise the Plan’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted
our audits in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation
of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
Board of Trustees
The Metropolitan St. Louis Sewer District
Page 2
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the fiduciary
net position of The Metropolitan St. Louis Sewer District Employees’ Pension Plan as of December 31, 2015
and 2014, and the changes in fiduciary net position for the years then ended in accordance with accounting
principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis on pages 3 through 12 and the pension plan schedules on pages 27 through 30 be
presented to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management’s responses to our inquiries, the basic financial statements, and
other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming an opinion on the Plan’s financial statements. The
statistical information is presented for purposes of additional analysis and is not a required part of the basic
financial statements. The statistical information is the responsibility of management and was derived from and
relates directly to the underlying accounting and other records used to prepare the basic financial statements.
The statistical information has not been subjected to the auditing procedures applied in the audit of the basic
financial statements and, accordingly, we do not express an opinion or provide any assurance on it.
August 16, 2016
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 3
MANAGEMENT’S DISCUSSION AND ANALYSIS
For The Year Ended December 31, 2015
As management of The Metropolitan St. Louis Sewer District Employees’ Pension Plan (the “Plan”),
we offer readers of the Plan’s financial statements this Management’s Discussion and Analysis (the
“MD&A”) of the financial activities of the Plan for the year ended December 31, 2015. 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 13. The Plan
is a noncontributory single employer defined benefit plan providing retirement benefits as well as
death and disability benefits to all full-time employees of The Metropolitan St. Louis Sewer District
(the “District”) commencing service prior to January 1, 2011, the date entrance to the plan was
frozen.
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 Fiduciary Net Position
2) Statements of Changes in Fiduciary Net Position
3) Notes to Financial Statements
This report also contains required supplementary 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 Changes in Net Pension Liability
2) Schedule of Employer Contributions
3) Actuarial Methods and Assumptions Used for Funding Policy
4) Schedule of Annual-Weighted Rate of Return on Investments
Certain revenues, expenses associated with administering the Plan, and other trend data are presented
immediately following the required supplementary information in the statistical section of this report.
The basic financial statements contained in this report are described below:
The Statements of Fiduciary Net Position are 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 position value [assets plus
deferred outflows minus liabilities and deferred inflows equals net position] represents the
value of net position restricted for pension benefits.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Management’s Discussion And Analysis (Continued)
Page 4
The Statements of Changes in Fiduciary Net Position display the effect of pension fund
transactions that occurred during the year [additions minus deductions equals net increase
(decrease) in net position]. This net increase (decrease) in net position reflects the change in
the net position value of the Statements of Fiduciary Net Position from the prior year to the
current year. Both statements are in accordance with Governmental Accounting Standards
Board (“GASB”) Pronouncements.
The Notes to 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 provides additional levels of detail for selected
financial statement items. See Notes to Financial Statements beginning on page 15 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 additional schedules entitled
“Required Supplementary Information Under GASB No. 67.”
The Schedule of Changes in Net Pension Liability (page 27) includes actuarial information
about the status of the Plan from an ongoing, long-term perspective and overall net position of
the Plan. The total pension liability is actuarially determined. A total pension liability in
excess of Plan fiduciary net position indicates that a net pension liability exists.
The Schedule of Employer Contributions (page 28) presents historical trend information
regarding the value of total annual contributions actuarially determined to be paid by the
District and the actual performance of the District in meeting this requirement.
Actuarial Methods and Assumptions Used for Funding Policy and the Schedule of Annual-
Weighted Rate of Return on Investments (pages 29 and 30) provide information regarding
assumptions and interest rates used in the actuarial calculations.
FINANCIAL HIGHLIGHTS 2015
Net position restricted for pension benefits totaled $244,212,239 as of December 31, 2015 for
a decrease of $6,303,582 or 2.5% as compared with December 31, 2014. This decrease
consists of a net investment loss of $1,809,875 and Plan payments and expenses net of
contributions of $4,493,707.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Management’s Discussion And Analysis (Continued)
Page 5
The Plan’s funding objective is to meet long-term benefit obligations to the extent possible.
As of December 31, 2015, the date of the latest actuarial valuation, the funded ratio of the
Plan was 87.5%. In general, this means that for every dollar of pension benefits due, the Plan
has approximately $0.88 of net position available for payment. The Plan’s funding ratio
increased by 0.1 percentage points as compared with the funding ratio for December 31, 2014.
The increase in the funding ratio is primarily attributed to the increase in the Plan’s actuarial
value of assets outpacing the present value of future benefits to members and their
beneficiaries. In addition, the present value of future normal costs decreased.
Additions to the Plan’s net position (page 14) decreased from $17,749,266 for 2014 to
$8,261,503 for 2015, a decrease of $9,487,763 (or 53.5%) due primarily to a reduction of
$7,307,622 in the appreciation of the fair value of the investments, a reduction of $1,555,692
in interest and dividend income and a $611,468 reduction in the employer contributions.
Benefits paid to retirees and beneficiaries (deductions from the Plan’s net position, page 14)
increased from $13,394,219 for 2014 to $14,474,566 for 2015, an increase of $1,080,347 (or
8.1%).
Administrative expenses (deductions from the Plan’s net position, page 14) increased from
$86,504 for 2014 to $90,519 for 2015, an increase of $4,015 (or 4.6%).
FINANCIAL HIGHLIGHTS 2014
Net position restricted for pension benefits totaled $250,515,821 as of December 31, 2014 for
an increase of $4,268,543 or 1.7% as compared with December 31, 2013. This increase in net
position primarily resulted from employer contributions as cumulative investment gains
during the year were 70.6% lower in 2014 compared with 2013.
The Plan’s funding objective is to meet long-term benefit obligations to the extent possible.
As of December 31, 2014, the date of the 2014 actuarial valuation, the funded ratio of the
Plan was 87.4%. In general, this means that for every dollar of pension benefits due, the Plan
has approximately $0.87 of net position available for payment. The Plan’s funding ratio
increased by 1.3 percentage points as compared with the funding ratio for December 31, 2013.
The increase in the funding ratio is primarily attributed to the increase in the Plan’s actuarial
value of assets outpacing the present value of future benefits to members and their
beneficiaries. In addition, the present value of future normal costs decreased.
Total increase to the Plan’s net position (page 14) amounted to $4,268,543 for the year 2014
consisting of an investment gain of $7,066,420 offset by Plan payments and expenses net of
contributions of $2,797,877.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Management’s Discussion And Analysis (Continued)
Page 6
Administrative expenses (deductions from the Plan’s net position, page 14) increased from
$81,482 for 2013 to $86,504, an increase of $5,022 (or 6.2%) which primarily reflects an
increase in US Bank Trustee fees of 5.5%. This represents 81.9% of the total increase in
overall administrative expenses.
ANALYSIS OF FINANCIAL ACTIVITIES
The Plan’s funding objective is to meet long-term benefit obligations through investment income and
contributions. Accordingly, the receipt of income from investments and employer contributions
provide the reserves needed to finance future retirement benefits.
Relative to the Public Fund peer group for 2015 and 2014, the Fund was down by 0.7% and up by
2.9%, respectively, which ranked in the 73rd and 98th percentile for 2015 and 2014, respectively. Net
position restricted for pension benefits decreased by $6,303,582 in 2015 and increased by $4,268,543
in 2014. This net position is used to meet ongoing benefit obligation to the Plan’s participants and
their beneficiaries.
The Metropolitan St. Louis Sewer District’s (the “District”) contributions into the Plan, as determined
by the Plan’s actuary, decreased slightly for 2015 compared to 2014. The primary reason for the
decrease was related to the overall gain the Plan experienced in 2014.
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 7.0% on average. Both the Plan’s investment performance and the rate of return on
actuarial value have averaged 4.3% and 4.1%, respectively, over the last three years, which is below
the actuarially assumed investment rate of 7.0%. Since this year’s performance falls below the
actuarially assumed investment rate, it could result in additional contributions in upcoming years.
Based upon our latest actuarial valuations for the years ended December 31, 2015 and 2014, the
Plan’s actuarial value of assets was less than its actuarial accrued liabilities by $37,037,982 and
$36,640,207, respectively. Included in this liability is a deferred but unrecognized loss of
$15,562,021, resulting in a difference in the value of Net Position Restricted for Pension Benefits at
December 31, 2015 of $244,212,239 and the Actuarial Value of Assets at December 31, 2015 of
$259,774,260. This means that additional future funding may be needed to continue to reduce the
liability including this deferred but unrecognized loss.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Management’s Discussion And Analysis (Continued)
Page 7
FINANCIAL ANALYSIS
The condensed Statements of Fiduciary Net Position as compared to prior years are as follows:
As previously noted, net position viewed over time may serve as a useful indicator of the Plan’s
financial position. At the close of calendar years 2015 and 2014, the assets of the Plan exceeded its
liabilities by $244,212,239 and $250,515,821, respectively, in net position restricted for pension
benefits. The net position is available to meet the Plan’s ongoing obligation to the Plan’s participants
and their beneficiaries.
2015 2014 Amount $ Percent
ASSETS
Investments at Fair Value 244,122,518$ 250,217,335$ (6,094,817)$ (2.4%)
Other Assets 242,367 468,493 (226,126) (48.3%)
Total Assets 244,364,885 250,685,828 (6,320,943) (2.5%)
LIABILITIES 152,646 170,007 (17,361) (10.2%)
NET POSITION RESTRICTED
FOR PENSION BENEFITS 244,212,239$ 250,515,821$ (6,303,582)$ (2.5%)
December 31, 2015 Change
2014 2013 Amount $ Percent
ASSETS
Investments at Fair Value 250,217,335$ 245,986,723$ 4,230,612$ 1.7%
Other Assets 468,493 443,264 25,229 5.7%
Total Assets 250,685,828 246,429,987 4,255,841 1.7%
LIABILITIES 170,007 182,709 (12,702) (7.0%)
NET POSITION RESTRICTED
FOR PENSION BENEFITS 250,515,821$ 246,247,278$ 4,268,543$ 1.7%
December 31, 2014 Change
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Management’s Discussion And Analysis (Continued)
Page 8
Despite variations in the markets, 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 their 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 Fiduciary Net Position as compared to prior years are as
follows:
2015 2014 Amount $ Percent
ADDITIONS
Net Investment Income (Loss) (1,809,875)$ 7,066,420$ (8,876,295)$ (125.6%)
Employer Contributions 10,071,378 10,682,846 (611,468) (5.7%)
Total Additions 8,261,503 17,749,266 (9,487,763) (53.5%)
DEDUCTIONS
Benefits Paid to Retirees and Beneficiaries 14,474,566 13,394,219 1,080,347 8.1%
Administrative Expenses 90,519 86,504 4,015 4.6%
Total Deductions 14,565,085 13,480,723 1,084,362 8.0%
NET INCREASE (DECREASE)(6,303,582) 4,268,543 (10,572,125) (247.7%)
NET POSITION RESTRICTED FOR
PENSION BENEFITS, January 1 250,515,821 246,247,278 4,268,543 1.7%
NET POSITION RESTRICTED FOR
PENSION BENEFITS, December 31 244,212,239$ 250,515,821$ (6,303,582)$ (2.5%)
For the Years Ended
December 31,2015 Change
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Management’s Discussion And Analysis (Continued)
Page 9
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 years ended December 31, 2015 and 2014, total $8,261,503 and
$17,749,266, respectively.
Additions to Plan assets for 2015 decreased from 2014 due to the decrease in the fair values of the
investments held by the Plan.
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, 2015 totaled $14,565,085, an increase
of 8.0% over 2014. The increase in benefits paid resulted primarily from an increase in the number
of retirees receiving benefits by 31 members or a 4.7% increase. Additions to Plan net position of
$8,261,503 were exceeded by deductions from Plan net position of $14,565,085 for the year ended
December 31, 2015. The Plan has consistently managed within its administrative expense budget,
with no material variances between planned and actual expenditures.
2014 2013 Amount $ Percent
ADDITIONS
Net Investment Income 7,066,420$ 24,001,334$ (16,934,914)$ (70.6%)
Employer Contributions 10,682,846 11,397,904 (715,058) (6.3%)
Total Additions 17,749,266 35,399,238 (17,649,972) (49.9%)
DEDUCTIONS
Benefits Paid to Retirees and Beneficiaries 13,394,219 12,537,990 856,229 6.8%
Administrative Expenses 86,504 81,482 5,022 6.2%
Total Deductions 13,480,723 12,619,472 861,251 6.8%
NET INCREASE 4,268,543 22,779,766 (18,511,223) (81.3%)
NET POSITION RESTRICTED FOR
PENSION BENEFITS, January 1 246,247,278 223,467,512 22,779,766 10.2%
NET POSITION RESTRICTED FOR
PENSION BENEFITS, December 31 250,515,821$ 246,247,278$ 4,268,543$ 1.7%
For the Years Ended
December 31, 2014 Change
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Management’s Discussion And Analysis (Continued)
Page 10
INVESTMENT PERFORMANCE - 2015
The following are a few characteristics and achievements for the Plan for the year ended
December 31, 2015:
The Plan ended the year with a net position of $244,212,239.
The Plan’s performance for the year was -0.7% compared to the policy benchmark index of -
1.4%, and the average five-year return was 5.2% compared to the policy benchmark index of
5.3%.
The actual asset allocation is as follows:
2015 2014
Equities:
Domestic Large-Cap Stocks 20.0 % 15 - 25 % 21.1 % 22.4 %
Domestic Small-Cap Stocks 6.0 2 - 8 6.1 6.1
International Developed Markets Stocks 10.0 5 - 15 10.4 10.7
International Emerging Markets Stocks 4.0 2 - 8 3.1 2.8
Fixed Income:
Domestic Core Bonds 14.0 10 - 20 14.4 14.4
Domestic Core Plus Bonds 12.0 10 - 20 12.0 —
High Yield Bonds — 0 - 7 — 5.0
Global Bonds 9.0 4 - 14 8.8 8.8
Credit Opportunities — 0 - 5 — 2.0
Emerging Fixed — 0 - 7 — 4.3
Other:
Hedge Funds 15.0 0 - 20 14.1 —
Global Tactical — 0 - 12 — 9.9
Real Estate 5.0 0 - 10 6.2 5.4
Real Assets 5.0 0 - 10 3.1 3.8
Cash Equivalents — — 0.7 0.5
Absolute Return — 0 - 7 — 3.9
Market Neutral — 0 - 7 — —
Asset Class
Actual
Allowable
RangeTarget
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Management’s Discussion And Analysis (Continued)
Page 11
All asset classes have been rebalanced when needed during the year in order to maintain a weighting
consistent with the strategic allocation ranges. Resolution 2986, effective August 2011, authorized
initial proposed targets and ranges. Resolution 3138, effective February 2014, authorized new
proposed targets and ranges that were implemented in 2015 and are reflected above. Resolution 3226
was adopted July 2015 and resolved that the codified document entitled “Metropolitan St. Louis
Sewer District, Statement of Investment Policy, Objectives and Operating Guidelines” including all
appendices represents the Investment Policy, Objectives and Operating Guidelines of the Employees’
Pension Plan and also revised the Employees’ Pension Plan actuarial return target.
Ordinance 13719, effective September 2013, authorized Pavilion to act as the Plan’s investment
consultant for the District and provide investment advisory services. Pavilion’s contract to act as the
Plan’s investment consultant for the District and to provide investment advisory services was
extended with Resolutions 3170 and 3234, which authorized the exercise of one-year renewal
options.
Overall asset class allocations changed moderately. Annual changes in asset allocation are the result
of relative asset class performance, redemptions from investments to pay benefits and Plan expenses,
contributions to new or existing investments, and regular rebalancing transactions. The largest
changes in sub-classes were due to the liquidation of the Global Tactical and Absolute Return
allocations and subsequent investments in a new alternative class, Hedge Funds; and the redemption
of certain specific fixed income asset classes and subsequent investments into Domestic Core Plus
Bonds, another Fixed Income asset class. While some of the sub-classes were over target by varying
percentage points, they were all still within the target ranges. Resolution 2987, effective August
2011, authorized specific investment managers to act on behalf of the Plan to actively manage
specific investment types. Resolution 3068, effective January 2013, amended the master list of
authorized investment managers which was further amended for individual investment managers by
Resolutions 3138 (February 2014), 3183 (December 2014), 3209 (May 2015) and 3221 (June 2015).
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Management’s Discussion And Analysis (Continued)
Page 12
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:
Tim Snoke, Secretary-Treasurer
The Metropolitan St. Louis Sewer District
2350 Market Street
St. Louis, MO 63103-2555
E-mail: tsnoke@stlmsd.com
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
See the accompanying Notes to Financial Statements. Page 13
STATEMENTS OF FIDUCIARY NET POSITION
2015 2014
ASSETS
Investments at Fair Value:
Collective Investment Funds 92,901,411$ 47,580,822$
Mutual Funds 81,504,039 118,093,075
Corporate Obligations 21,641,376 33,236,006
Domestic Common Stocks 16,364,200 20,403,290
Real Estate Investments 15,125,222 13,546,840
US Treasury and Agency Obligations 12,267,405 12,650,017
Money Market Funds 2,603,081 2,663,733
Municipal Obligations 1,044,415 852,619
Foreign Stocks 671,369 481,871
Foreign Obligations — 678,075
Domestic Preferred Stock — 30,987
Total Investments 244,122,518 250,217,335
Receivables
Interest and Dividends Receivable 242,367 468,493
Total Receivables 242,367 468,493
Total Assets 244,364,885 250,685,828
LIABILITIES
Accrued Expenses 152,646 170,007
Total Liabilities 152,646 170,007
NET POSITION RESTRICTED FOR PENSION
BENEFITS 244,212,239$ 250,515,821$
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
See the accompanying Notes to Financial Statements. Page 14
STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION
For the Years Ended
December 31,
2015 2014
ADDITIONS TO NET POSITION ATTRIBUTED TO:
Investment Income:
Net Appreciation (Depreciation) in Fair Value of Investments (4,862,326)$ 2,445,296$
Interest and Dividends 3,928,862 5,484,554
Total Investment Income (Loss) (933,464) 7,929,850
Less - Investment Managers' and Advisors' Fees 876,411 863,430
Net Investment Income (Loss) (1,809,875) 7,066,420
Employer Contributions 10,071,378 10,682,846
Total Additions 8,261,503 17,749,266
DEDUCTIONS FROM NET POSITION ATTRIBUTED TO:
Benefits Paid to Retirees and Beneficiaries 14,474,566 13,394,219
Administrative Expenses 90,519 86,504
Total Deductions 14,565,085 13,480,723
NET INCREASE (DECREASE)(6,303,582) 4,268,543
NET POSITION RESTRICTED FOR PENSION
BENEFITS, January 1 250,515,821 246,247,278
NET POSITION RESTRICTED FOR PENSION
BENEFITS, December 31 244,212,239$ 250,515,821$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 15
NOTES TO FINANCIAL STATEMENTS
December 31, 2015 And 2014
1. 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:
Basis of Accounting
The accompanying financial statements have been prepared on the accrual basis of accounting
and adhere to U.S. Generally Accepted Accounting Principles as issued by the Governmental
Accounting Standards Board (“GASB”). GASB Statement No. 67, Financial Reporting for
Pension Plans – an amendment of GASB Statement No. 25 (GASB No. 67), was adopted
during the year ended December 31, 2014. GASB No. 67 addresses the accounting and
financial reporting requirements for pension plans. The requirements for GASB No. 67
require changes in presentation of the financial statements, notes to the financial statements
and required supplementary information. Significant changes include an actuarial calculation
of total and net pension liability/asset. It also includes comprehensive footnote disclosures
regarding the total pension liability, the sensitivity of the net pension liability/asset to the
discount rate, and increased investment activity disclosures. The implementation of GASB
No. 67 did not significantly impact the accounting for investment balances. The total pension
liability, determined in accordance with GASB No. 67, is presented in Note 5 and in the
Required Supplementary Information.
Estimates and Assumptions
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 position during the reporting period. Actual
results could differ from those estimates.
Investment Valuation
The Plan’s investment assets, for which U.S. Bank, N.A., acts as trustee (the “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.
Payment of Benefits
Benefits are recorded when paid.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 16
Subsequent Events
Management has evaluated subsequent events through August 16, 2016, the date the financial
statements were available for issue.
2. 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.
General
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”) commencing service
prior to December 31, 2010, were eligible to be covered by the Plan. As of January 1, 2011,
the Plan was frozen to new employees. Instead, new employees of the District may
participate in The Metropolitan St. Louis Sewer District Defined Contribution Plan and/or
The Metropolitan St. Louis Sewer District Deferred Compensation Plan and Trust. Current
employees with less than ten years of service on January 1, 2011 could also voluntarily elect
to transfer from the Plan and enter The Metropolitan St. Louis Sewer District Defined
Contribution Plan.
Membership in the Plan consists of:
For the Years Ended
December 31,
Increase
2015 2014 (Decrease)
Active plan members 665 710 (45)
Retirees and beneficiaries currently receiving benefits 691 660 31
Terminated members entitled to receive benefits 175 180 (5)
Total 1,531 1,550 (19)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 17
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, and thus is also known as the “Plan
Administrator”. 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 (the “Act”) and, as such, is not subject to the Act’s
reporting requirements.
Benefit Payments and Vesting
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.
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 the
greater of (a) 50% of the member’s monthly-accrued retirement benefit as of the date of
death, or (b) 15% of the monthly earnings and the member’s monthly-accrued retirement
benefit actuarially reduced under the 100% joint and survivor annuity option. Members are
also able to select a Contingent Annuity Pop-Up option. This option allows the member to
elect a survivor annuity for life, with the provision that if the beneficiary should predecease
the member, the benefit shall increase to the amount payable had the survivor option not been
selected.
Ordinance Number 10872, effective January 1, 2001, further amended the Plan to extend the
cost of living increases for retirees from a maximum of 30% to 45% of the original benefit.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 18
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. An employee retiring from the
District with five or more years of service will be compensated for any unused accrued sick
leave at the rate of 1.25% for each year of District service multiplied by the unused accrued
sick leave remaining at the employee’s current rate of pay. 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 any one 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.
Effective August 27, 2011, Ordinance No. 13288 amended the Plan to include the following:
“Upon termination or complete discontinuance of contributions under the Plan, the rights of
all Members to benefits accrued to the date of such termination or discontinuance shall be
non-forfeitable, to the extent then funded.”
Amounts in participants’ accounts are distributed upon retirement, death, disability, or
termination of employment. The normal form of retirement benefit is either a lump sum
payment or equal monthly installments.
3. Cash and Investments
Categories of Asset Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of the Plan’s
investment in a single issuer. Pursuant to Resolution 3226, the Plan is authorized to invest in:
Equity Investments: Common stocks of corporations, mutual funds, or co-mingled
equity funds (Domestic and International, both within defined limits); however, the
investments in equities cannot exceed 56% of total investments.
Fixed Income Investments: U.S. government and agency securities, 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 73% of total investments.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 19
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 10% of total investments.
Hedge Funds, Global Tactical, Real Assets, Market Neutral, and Absolute Return
Neutral, and Absolute Return Investments: These investment strategies help diversify
the investment portfolio. These investments cannot exceed 20%, 12%, 10%, 7% and
7% of total investments, respectively.
The fair value of investments managed consisted of the following:
As of December 31,
2015 2014
Investments, at Fair Value
Collective Investment Funds 92,901,411$ 47,580,822$
Mutual Funds 81,504,039 118,093,075
Corporate Obligations 21,641,376 33,236,006
Domestic Common Stocks 16,364,200 20,403,290
Real Estate Investments 15,125,222 13,546,840
US Treasury and Agency Obligations 12,267,405 12,650,017
Money Market Funds 2,603,081 2,663,733
Municipal Obligations 1,044,415 852,619
Foreign Stocks 671,369 481,871
Foreign Obligations — 678,075
Domestic Preferred Stock — 30,987
Total Investments 244,122,518$ 250,217,335$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 20
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of
an investment. The Plan does not have a formal investment policy that limits investment
maturities as a means of managing its exposure to interest rates. The Plan had the following
debt securities and maturities:
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; and
As of December 31, 2015
Weighted
Average
Maturity
Investment Type Fair Value (in Years)
Corporate Obligations 21,641,376$ 4.23
U.S. Treasury and Agency Obligations 12,267,405 5.31
Municipal Obligations 1,044,415 2.52
Total 34,953,196$
Portfolio Weighted Average Maturity in Years 4.55
As of December 31, 2014
Weighted
Average
Maturity
Investment Type Fair Value (in Years)
Corporate Obligations 33,236,006$ 5.00
U.S. Treasury and Agency Obligations 12,650,017 5.43
Foreign Obligations 678,075 5.55
Municipal Obligations 852,619 1.70
Total 47,416,717$
Portfolio Weighted Average Maturity in Years 5.06
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 21
Monitoring fixed income investment managers’ performances to be sure the fixed
income portion of the investment portfolio is managed to predetermined indexes.
Credit Risk
Investment credit risk is the risk that the issuer or other counterparty to an investment will not
fulfill its obligations. The Plan will minimize credit risk 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.
The following tables provide information on the credit ratings associated with the Plan’s
investments in debt securities:
U.S. Treasury
S & P & Agency Municipal Corporate Foreign
Rating Obligations Obligations Obligations Obligations Total
AAA —$ —$ 3,050,011$ —$ 3,050,011$
AA 12,267,405 678,154 3,468,460 — 16,414,019
A— 366,261 6,001,510 — 6,367,771
BBB — — 8,200,975 — 8,200,975
BB — — — — —
B— — — — —
CCC — — — — —
Not Rated — — 920,420 — 920,420
Total 12,267,405$ 1,044,415$ 21,641,376$ —$ 34,953,196$
Credit Rating by Investment as of December 31, 2015
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 22
Investments Greater Than 5% Of Net Position Restricted For Pension Benefits
Investments that exceed 5% or more of net position restricted for pension benefits at
December 31, 2015 and 2014 are as follows:
4. 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.
U.S. Treasury
S & P & Agency Municipal Corporate Foreign
Rating Obligations Obligations Obligations Obligations Total
AAA —$ —$ 3,777,491$ —$ 3,777,491$
AA 12,650,017 552,656 3,672,677 — 16,875,351
A— 299,963 6,627,691 — 6,927,654
BBB — — 6,889,008 — 6,889,008
BB — — 3,731,591 232,475 3,964,066
B— — 6,418,946 445,600 6,864,546
CCC — — 753,220 — 753,220
Not Rated — — 1,365,381 — 1,365,381
Total 12,650,017$ 852,619$ 33,236,006$ 678,075$ 47,416,717$
Credit Rating by Investment as of December 31, 2014
December 31,
2015 2014
Prudential Core Plus Bond Fund 29,227,764$ N/A
Morgan Stanley International Equity Fund I 25,530,686 26,735,417
Brandywine Global Bond Opportunistic Fixed Income 21,586,226 22,143,385
Lighthouse Global Long/Short Fund Limited 18,117,254 N/A
Entrust Capital Diversified Fund 16,363,940 N/A
Vanguard Institutional Index Fund 15,602,554 16,087,355
UBS Trumball Property Fund 15,125,222 13,546,840
Vanguard Windsor II 12,791,751 13,267,354
T. Rowe Price Inst. Large-Cap Core Growth 12,600,942 13,612,960
GMO Global Balanced Asset Allocation N/A 24,737,029
Holland Large Cap Growth * 13,208,743
Penn Capital N/A 12,558,480
* Denotes less than 5%.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 23
Contributions of $10,059,004 and $10,675,321, excluding certain professional fees paid by
the District, were made to the Plan in 2015 and 2014, respectively. These contributions were
made in accordance with actuarially determined contribution recommendations based on
actuarial valuations performed at December 31, 2014 and 2013, respectively, and consisted
of:
Certain professional fees, included in administrative expenses, are paid by the District and are
recognized as contributions to the Plan and totaled $12,374 and $7,525 for the years ended
December 31, 2015 and 2014, respectively. The District provides office space, utilities, and
other services to the Plan at no cost. Other costs of administering the Plan are financed from
Plan net position.
5. Net Pension Liability of the District
During the year ended December 31, 2014, the District implemented GASB Statement No. 67,
Financial Reporting for Pension Plans – an amendment of GASB Statement No. 25. The schedule
of net pension liability pursuant to the provisions of GASB Statement No. 67 as of December 31,
2015 and December 31, 2014 is as follows:
December 31,
2015 2014
Normal Cost 5,253,091$ 5,852,375$
Amortization of the Unfunded Actuarial Accrued Liability 4,147,847 4,101,304
Investment Rate of Return Factor of 7.0% (7.25% in 2014) 658,066 721,642
Current Year Contribution Due from the District
as Calculated by the Plan's Actuary 10,059,004$ 10,675,321$
Net Pension Liability
December 31,
2015 2014
Total Pension Liability 296,812,242$ 290,411,812$
Fiduciary Net Position 244,212,239 250,515,821
Net Pension Liability 52,600,003$ 39,895,991$
Fiduciary net position as a percentage of total pension liability 82.28% 86.26%
Covered payroll 43,344,502$ 44,663,896$
Net pension liability as a percentage of covered payroll 121.35% 89.32%
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 24
Actuarial Assumptions: The total pension liability was determined by an actuarial valuation
as of the measurement date (December 31), calculated based on the discount rate and actuarial
assumptions below for December 31, 2015 and December 31, 2014:
December 31,
2015 2014
Inflation Rate 2.50% 2.50%
Projected Salary Increases 4.25% 4.25%
Investment Rate of Return 7.00% 7.00%
Mortality Rates were based on the RP-2000 Mortality for Employees and Healthy Annuitants
and the RP-2000 Disability Mortality.
Discount Rate
December 31,
2015 2014
Discount rate 7.00% 7.00%
Long-term expected rate of return, net of investment expense 7.00% 7.00%
Municipal bond rate N/A N/A
The plan's fiduciary net position was projected to be available to make all projected future benefit payments of current
active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-
term expected rate of return.
Long-Term Expected Rate of Return
Long-Term
Expected
Arithmetic
Target Real Rate
Asset Class Allocation of Return
Large Cap US Equity 20.0% 7.1%
Small Cap US Equity 6.0% 8.1%
International Equity 10.0% 7.7%
Emerging Market Equity 4.0% 9.9%
Core Bonds 26.0% 1.2%
Global Fixed Income 9.0% 1.3%
Absolute Return/HFOF 15.0% 3.2%
Real Estate 5.0% 5.4%
Real Assets 5.0% 3.5%
Assumed Inflation - Mean 2.5%
The expected long-term rate of return is assumed to be 7.0%.
The long-term expected rate of returnis determined by addingexpected inflationto expected long-term real returns
and reflecting expected volatilityand correlation. The capital market assumptions as of December 31, 2015 are as
follows:
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 25
Rate of Return
For the years ended December 31, 2015 and 2014, the annual money-weighted rate of return
on pension plan investments, net of pension plan investment expense, was -0.76% and 2.86%,
respectively. The money-weighted rate of return considers the changing amounts actually
invested during a period and weights the amount of pension plan investments by the
proportion of time they are available to earn a return during that period. External cash flows
are determined on a monthly basis and are assumed to occur at the beginning of each month.
External cash inflows are netted with external cash outflows, resulting in a net external cash
flow in each month. The money-weighted rate of return is calculated net of investment
expenses.
6. Risk Management
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.
7. 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 change could materially
affect the amounts reported in the statements of Plan net position.
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
1% Current 1%
Decrease Discount Rate Increase
6.00% 7.00% 8.00%
Total Pension Liability 329,874,402$ 296,812,242$ 268,527,544$
Fiduciary Net Position 244,212,239 244,212,239 244,212,239
Net Pension Liability 85,662,163 52,600,003 24,315,305
The following presents the net pension liability of the District, calculated using the discountrate of7.00%, as well
as what the District's net pension liability would be if it were calculated using a discount rate that is 1 percentage
point lower (6.00%) or 1 percentage point higher (8.00%) than the current rate.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 26
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.
8. Tax Status
The plan received a favorable determination letter from the Internal Revenue Service on
September 10, 2014, indicating the Plan and its underlying trust are qualified under Section
414(d) of the Internal Revenue Code. The Plan has not been amended since receiving the
determination letter.
REQUIRED SUPPLEMENTARY INFORMATION
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 27
REQUIRED SUPPLEMENTARY INFORMATION UNDER GASB NO. 67
December 31,
Total Pension Liabilty 2015 2014
Service cost 5,253,091$ 5,409,485$
Interest 20,198,502 19,900,507
Effect of economic/demographic gains or losses (4,576,597) (3,667,991)
Effect of changes of assumptions — 6,500,227
Benefit payments (14,474,566) (13,387,127)
Net Change In Total Pension Liability 6,400,430 14,755,101
Total Pension Liability - Beginning 290,411,812 275,656,711
Total Pension Liability - Ending 296,812,242 290,411,812
Plan Fiduciary Net Position
Contributions - employer (including employer paid expenses) 10,071,378 10,682,846
Net investment income (1,809,875) 7,066,420
Benefit payments (14,474,566) (13,394,219)
Administrative expenses (90,519) (86,504)
Net Change In Plan Fiduciary Net Position (6,303,582) 4,268,543
Plan Fiduciary Net Position - Beginning 250,515,821 246,247,278
Plan Fiduciary Net Position - Ending 244,212,239 250,515,821
District’s Net Pension Liability - Ending 52,600,003$ 39,895,991$
Plan Fiduciary Net Position As A Percentage Of
Total Pension Liability 82.28% 86.26%
Covered Employee Payroll 43,344,502$ 44,663,896$
The District's Net Pension Liability As A Percentage Of
Covered Employee Payroll 121.35% 89.32%
Note to Schedule:
Schedule is intended to show information for 10 years. Additional years will be displayed as they become available.
Schedule of Changes in Net Pension Liability
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 28
REQUIRED SUPPLEMENTARY INFORMATION UNDER GASB NO. 67 (Continued)
Schedule of Employer Contributions
Plan Year Actuarially Contribution Covered Contribution
Ending Determined Annual Deficiency Employee as a % of
December 31, Contribution Contribution (Excess) Payroll* Covered Payroll
2006 6,847,278$ 6,847,278$ —$ 42,113,000$ 16.26%
2007 7,673,240 7,673,240 — 43,640,000 17.58%
2008 7,425,602 7,425,602 — 48,077,000 15.45%
2009 8,859,535 8,859,535 — 52,267,000 16.95%
2010 10,306,739 10,306,739 — 51,703,000 19.93%
2011 10,969,154 10,969,154 — 49,432,000 22.19%
2012 11,737,168 11,737,168 — 48,333,000 24.28%
2013 11,391,287 11,391,287 — 46,600,000 24.44%
2014 10,675,321 10,675,321 — 44,663,896 23.90%
2015 10,059,004 10,059,004 — 43,344,502 23.21%
* Payroll as of prior December 31 Measurement Date.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 29
REQUIRED SUPPLEMENTARY INFORMATION UNDER GASB NO. 67 (Continued)
Valuation Timing
Actuarial Cost Method Entry Age Normal
Amortization Method
Level percent or level dollar Level dollar
Closed, open, or layered periods Layered, 20 year periods
Asset Valuation Method
Smoothing period 3 years
Inflation 2.50%
Salary Increases 4.25%
Investment Rate of Return 7.00%
Cost of Living Adjustments 2.5%, with 45%/$750 per month lifetime cap
Retirement Age Retirement rates are summarized in the 2016 Actuarial Valuation.
Turnover Turnover rates are summarized in the 2016 Actuarial Valuation.
Disability Disability rates are summarized in the 2016 Actuarial Valuation.
Mortality
The following actuarial methods and assumptions were used in the December 31, 2015 funding valuation. Please see the
valuation report dated June 28, 2016 for further details.
Actuarially determined contribution rates are calculated as of January 1 of
the fiscal year in which the contributions are reported.
Healthy Lives: RP-2000 Mortality for Employees and Healthy Annuitants,
male and female rates, with projection five years from the valuation date
using Scale AA; Disabled Lives: RP-2000 Disability Mortality, male and
female rates.
Actuarial Methods and Assumptions Used for Funding Policy
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 30
REQUIRED SUPPLEMENTARY INFORMATION UNDER GASB NO. 67 (Continued)
Money-Weighted Rate of Return
Plan Year
Ending Money-Weighted
December 31, Rate of Return
2006 N/A
2007 N/A
2008 N/A
2009 N/A
2010 N/A
2011 N/A
2012 N/A
2013 N/A
2014 2.86%
2015 -0.76%
Schedule of Annual Weighted Rate of Return on Investments
Note to Schedule: Schedule is intended to show information for 10 years. Additional years will
be displayed as they become available.
STATISTICAL SECTION (UNAUDITED)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 31
STATISTICAL SECTION
For The Year Ended December 31, 2015
Net Position Value
(NPV) as of
Year December 31,
2006 174,256,931$ 10.4 %
2007 191,382,492 10.8
2008 150,808,625 (21.2)
2009 179,219,472 18.8
2010 198,540,074 10.8
2011 200,340,622 1.9
2012 223,467,512 11.5
2013 246,247,278 10.2
2014 250,515,821 1.7
2015 244,212,239 (2.5)
Performance and Net Position Value
Total
Plan
Performance
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 32
STATISTICAL SECTION
For The Year Ended December 31, 2015
Net
Employer Investment
Year Contributions Income/(Loss) Total
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 19,597,109 29,944,701
2011 10,981,546 22.2 2,144,533 13,126,079
2012 11,742,410 24.3 23,391,578 35,133,988
2013 11,397,904 24.5 24,001,334 35,399,238
2014 10,682,846 23.9 7,066,420 17,749,266
2015 10,071,378 23.2 (1,809,875) 8,261,503
Payroll
Revenues by Source
Employer
Contributions
as a Percentage
of Covered
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 33
STATISTICAL SECTION
For The Year Ended December 31, 2015
Benefit Administrative
Year Payments Expenses Total
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 10,508,665 115,434 10,624,099
2011 11,233,668 91,863 11,325,531
2012 11,910,664 96,434 12,007,098
2013 12,537,990 81,482 12,619,472
2014 13,394,219 86,504 13,480,723
2015 14,474,566 90,519 14,565,085
Expenses by Type
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 34
STATISTICAL SECTION
For The Year Ended December 31, 2015
Terminated
Members
Entitled to
Receive
Year Benefits Total
2006 481
1 199 798
2 1,478
2007 504
1 198 811
2 1,513
2008 532
1 196 885
2 1,613
2009 550
1 192 938
2 1,680
2010 571
1 183 917
2 1,671
2011 596
1 183 838 1,617
2012 614
1 179 803 1,596
2013 636
1 179 761 1,576
2014 660
1 180 710 1,550
2015 691
1 175 665 1,531
1 New Actuarial excluded individuals covered by insurance policy.
2 New Actuarial excludes members with less than six months of service.
Member Count
Benefits
Active Plan
Members
Retirees &
Beneficiaries
Currently
Receiving
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 35
STATISTICAL SECTION
For The Year Ended December 31, 2015
Market Percentage
Value as of of
Holding December 31, 2015 Plan
Income Research Management $ 35,287,866 14.4%
Prudential Core Plus Bond Fund 29,227,764 12.0%
Morgan Stanley International Equity Fund I 25,530,686 10.5%
Brandywine Global Bond Opportunistic Fixed Income 21,586,226 8.8%
Lighthouse Global Long/Short Fund Limited 18,117,254 7.4%
Entrust Capital Diversified Fund 16,363,940 6.7%
Vanguard Institutional Index Fund 15,602,554 6.4%
UBS Trumball Property Fund 15,125,222 6.2%
Vanguard Windsor II 12,791,751 5.2%
T. Rowe Price Inst. Large-Cap Core Growth 12,600,942 5.2%
Totals $ 202,234,205 82.8%
Top Ten Holdings by Investment Manager
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 36
STATISTICAL SECTION
For The Year Ended December 31, 2015
2015 2014
Investment Manager Fees:
UBS Real Estate $ 162,669 $ 134,768
Income Research Management 127,142 120,898
Brandywine Asset Management 99,001 99,484
Holland 93,731 102,874
Wellington Management 79,954 98,787
Prudential (Global Asset and Bond Core Plus) 66,509 —
Kennedy Capital/ARK Asset Managers 65,589 72,806
Penn Capital Management 41,362 91,661
Loomis / Sayles 12,275 22,316
Fidelity Investments (Pyramis)— 14,836
Total Investment Manager Fees 748,231 758,429
Advisor Fees:
Pavilion 128,180 105,001
Total Advisor Fees 128,180 105,001
Total of All Fees $ 876,411 $ 863,430
Schedule of Investment Manager & Advisor Fees
For the Years Ended December 31,
Firm