HomeMy Public PortalAboutPension 2020 Audited Financial StatementsTHE METROPOLITAN ST. LOUIS
SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
Contents
Page
Independent Auditors’ Report........................................................................ 1 - 2
Management’s Discussion And Analysis ..................................................... 3 - 11
Financial Statements
Statements of Fiduciary Net Position ..............................................................12
Statements of Changes in Fiduciary Net Position ............................................13
Notes to Financial Statements .................................................................. 14 - 30
Required Supplementary Information Under GASB Statement No. 67
Schedule of Changes in Net Pension Liability ........................................ 31 - 32
Schedule of Employer Contributions ...............................................................33
Actuarial Methods and Assumptions Used ......................................................34
Schedule of Annual Money-Weighted Rate of Return on Investments ...........35
Statistical Section (Unaudited)
Performance and Net Position Value ...............................................................36
Revenues by Source and Total Employer Contributions .................................37
Expenses by Type and Total Benefit Payments ...............................................38
Member Count and Total Benefit Recipients ..................................................39
Top Ten Holdings by Investment Manager and Percentage Distribution........40
Schedule of Investment Manager and Advisor Fees ........................................41
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Page 1
CliftonLarsonAllen LLP
CLAconnect.com
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 financial statements of The Metropolitan St. Louis Sewer District
Employees’ Pension Plan (the Plan), which comprise the statements of fiduciary net position as of
December 31, 2020 and 2019, and the related statements of changes in fiduciary net position for the
years then ended, and the related notes to the financial statements.
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 opinion.
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 Plan as of December 31, 2020 and 2019, 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 11 and pension plan schedules on pages
31 through 35 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 audits 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 basic financial statements as a
whole. The statistical section on pages 36 through 41 is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such 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.
CliftonLarsonAllen LLP
St. Louis, Missouri
July 29, 2021
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 3
MANAGEMENT’S DISCUSSION AND ANALYSIS
For The Years Ended December 31, 2020 and 2019
As management of The Metropolitan St. Louis Sewer District Employees’ Pension Plan (“Plan”), we
offer readers of the Plan’s financial statements this Management’s Discussion and Analysis (“MD&A”)
of the financial activities of the Plan for the years ended December 31, 2020 and 2019. 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 12. 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
(“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 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
4) Schedule of Annual Money-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 minus
liabilities equal 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 the Plan’s
transactions that occurred during the year [additions minus deductions equal 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 14 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 Statement No. 67.”
The Schedule of Changes in Net Pension Liability (pages 31 and 32) 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 33) 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 and the Schedule of Annual Money-Weighted Rate
of Return on Investments (pages 34 and 35) provide information regarding assumptions and
interest rates used in the actuarial calculations.
FINANCIAL HIGHLIGHTS 2020
Fiduciary net position restricted for pension benefits totaled $326,912,684 as of December 31,
2020 for an increase of $30,710,037 or 10.4% as compared with December 31, 2019. This
increase in net position resulted from investment gains during the year with net investment
income totaling $36,675,298 offset by benefits paid of $19,273,097 or a 3.5% increase, Plan
expenses of $108,229 and employer contributions of $13,416,065 or a 5.3% increase compared
to the prior year.
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, 2020, the date of the latest actuarial valuation, the funded ratio of the Plan,
defined as the Plan’s fiduciary net position as a percentage of the actuarially determined total
pension liability, was 91.7%. In general, this means that for every dollar of pension benefits
due, the Plan has approximately $0.92 of net position available for payment. The Plan’s funding
ratio increased by 8.0 percentage points as compared with the funding ratio for December 31,
2019. The increase in the funding ratio is due to Plan performance above the assumed rate of
return. The recommended contribution for the calendar year ending December 31, 2021 is
decreasing to $12,144,484 or 9.4% lower than the recommended contribution for the prior year
of $13,398,565, mainly due to the asset return on an actuarial value basis of 7.7% versus the
assumed rate of return of 6.75%, salary increases lower than expected and mortality gains.
Additions to the Plan’s net position (page 13) decreased from $54,371,890 for 2019 to
$50,091,363, a decrease of $4,280,527, due primarily to a decrease of $6,836,438 in the
appreciation of the fair value of the investments, an increase of $1,971,458 in interest and
dividend income and an increase of $675,659 in the employer contributions.
Benefits paid to retirees and beneficiaries (deductions from the Plan’s net position, page 13)
increased from $18,626,890 in 2019 to $19,273,097 in 2020, an increase of $646,207 or 3.5%.
Administrative expenses (deductions from the Plan’s net position, page 13) increased slightly
from $102,929 in 2019 to $108,229 in 2020.
FINANCIAL HIGHLIGHTS 2019
Net position restricted for pension benefits totaled $296,202,647 as of December 31, 2019 for
an increase of $35,642,071 or 13.7% as compared with December 31, 2018. This increase in
net position resulted from a 422.4% increase in investment gains during the year with net
investment income totaling $41,631,484 offset by a 10.1% increase in benefits paid
($18,626,890 paid in 2019) and 2019 Plan expenses of $102,929 with employer contributions
essentially flat compared to the prior year ($12,740,406 contributed in 2019).
The Plan’s funding objective is to meet long-term benefit obligations to the extent possible. As
of December 31, 2019, the date of the 2019 actuarial valuation, the funded ratio of the Plan,
defined as the Plan’s fiduciary net position as a percentage of the actuarially determined total
pension liability, was 83.7%. In general, this means that for every dollar of pension benefits
due, the Plan has approximately $0.84 of net position available for payment. The Plan’s funding
ratio increased by 5.90 percentage points as compared with the funding ratio for December 31,
2018. The increase in the funding ratio is due to Plan performance above the assumed rate of
return. The recommended contribution for the calendar year ended December 31, 2020
increased to $13,398,565 or 5.3% over the recommended contribution for the prior year of
$12,725,462, mainly due to the changes in the assumed actuarial rate of return from 6.9% to
6.75% and mortality assumptions.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Management’s Discussion And Analysis (Continued)
Page 6
Additions to the Plan’s net position (page 13) increased from a negative $390,482 for 2018 to
a positive $54,371,890, an increase of $54,762,372, due primarily to an increase of $54,024,927
in the appreciation of the fair value of the investments and an increase of $592,143 in interest
and dividend income and an increase of $218,230 in the employer contributions.
Benefits paid to retirees and beneficiaries (deductions from the Plan’s net position, page 13)
increased from $16,911,759 in 2018 to $18,626,890 in 2019, an increase of $1,715,131 or
10.1%.
Administrative expenses (deductions from the Plan’s net position, page 13) decreased slightly
from $113,398 in 2018 to $102,929 in 2019.
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.
Net position restricted for pension benefits increased by $30,710,037 in 2020 compared to an increase
of $35,642,071 in 2019. 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 (“District”) contributions into the Plan, as determined by
the Plan’s actuary, increased for 2020 compared to 2019. The primary reasons for the increase were
the changes in the assumed actuarial rate of return from 6.9% to 6.75% and mortality assumptions.
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 6.75%
on average. Both the Plan’s investment performance and the rate of return on actuarial value have
averaged 7.8% and 7.7%, respectively, over the last three years.
Based upon the Plan’s actuarial computations under Statement No. 67 of the Governmental Accounting
Standards Board, the actuarially determined total pension liability increased from $353,995,560 as of
December 31, 2019 to $356,407,862 as of December 31, 2020. To calculate the net pension liability,
the Plan’s fiduciary net position is subtracted from the total pension liability. Reducing the total
pension liabilities by the $326,912,684 and $296,202,647 Plan fiduciary net positions as of December
31, 2020 and 2019, respectively, results in net pension liabilities of $29,495,178 and $57,792,913 as of
December 31, 2020 and 2019, respectively. The existence of a net pension liability means that
additional future funding may be needed to reduce this liability.
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:
2020 Change
2020 2019 Amount $
ASSETS
Investments at Fair Value 326,920,357$ 296,151,777$ 30,768,580$
Other Assets 236,729 333,726 (96,997)
Total Assets 327,157,086 296,485,503 30,671,583
LIABILITIES 244,402 282,856 (38,454)
FIDUCIARY NET POSITION
RESTRICTED FOR
PENSION BENEFITS 326,912,684$ 296,202,647$ 30,710,037$
2019 Change
2019 2018 Amount $
ASSETS
Investments at Fair Value 296,151,777$ 260,477,218$ 35,674,559$
Other Assets 333,726 288,581 45,145
Total Assets 296,485,503 260,765,799 35,719,704
LIABILITIES 282,856 205,223 77,633
FIDUCIARY NET POSITION
RESTRICTED FOR
PENSION BENEFITS 296,202,647$ 260,560,576$ 35,642,071$
December 31,
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Management’s Discussion And Analysis (Continued)
Page 8
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 2020, 2019 and 2018, the assets of the Plan exceeded
its liabilities by $326,912,684, $296,202,647 and $260,560,576, 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.
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:
2020 Change
2020 2019 Amount $
ADDITIONS
Net Investment Income 36,675,298$ 41,631,484$ (4,956,186)$
Employer Contributions 13,416,065 12,740,406 675,659
Total Additions 50,091,363 54,371,890 (4,280,527)
DEDUCTIONS
Benefits Paid to Retirees and Beneficiaries 19,273,097 18,626,890 646,207
Administrative Expenses 108,229 102,929 5,300
Total Deductions 19,381,326 18,729,819 651,507
NET INCREASE 30,710,037 35,642,071 (4,932,034)
FIDUCIARY NET POSITION RESTRICTED
FOR PENSION BENEFITS, January 1 296,202,647 260,560,576 35,642,071
FIDUCIARY NET POSITION RESTRICTED
FOR PENSION BENEFITS, December 31 326,912,684$ 296,202,647$ 30,710,037$
For the Years Ended
December 31,
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, 2020, 2019, and 2018, equal $50,091,363, $54,371,890,
and ($390,482), respectively.
Additions to Plan assets for 2020 decreased from 2019 due primarily to the appreciation in the fair
values of the investments held by the Plan for 2020 being lower than the appreciation in 2019.
Additions to Plan assets for 2019 increased from 2018 due primarily to the increase 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 on page 8, deductions for the year ended December 31, 2020 totaled $19,381,326, an increase
of 3.5% over 2019. The increase in benefits paid resulted primarily from an increase in the number of
retirees receiving benefits by 29 members or a 3.8% increase. The Plan has consistently managed
within its administrative expense budget, with no material variances between planned and actual
expenditures.
2019 Change
2019 2018 Amount $
ADDITIONS
Net Investment Income (Loss) 41,631,484$ (12,912,658)$ 54,544,142$
Employer Contributions 12,740,406 12,522,176 218,230
Total Additions 54,371,890 (390,482) 54,762,372
DEDUCTIONS
Benefits Paid to Retirees and Beneficiaries 18,626,890 16,911,759 1,715,131
Administrative Expenses 102,929 113,398 (10,469)
Total Deductions 18,729,819 17,025,157 1,704,662
NET INCREASE (DECREASE)35,642,071 (17,415,639) 53,057,710
FIDUCIARY NET POSITION RESTRICTED
FOR PENSION BENEFITS, January 1 260,560,576 277,976,215 (17,415,639)
FIDUCIARY NET POSITION RESTRICTED
FOR PENSION BENEFITS, December 31 296,202,647$ 260,560,576$ 35,642,071$
For the Years Ended
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Management’s Discussion And Analysis (Continued)
Page 10
As noted above, deductions for the year ended December 31, 2019 totaled $18,729,819, an increase of
10.0% over 2018. The increase in benefits paid resulted primarily from an increase in the number of
retirees receiving benefits by 23 members or a 3.1% increase.
INVESTMENT PERFORMANCE – 2020
The following are a few characteristics and achievements for the Plan for the year ended December 31,
2020:
The Plan ended the year with a net position of $326,912,684.
The Plan’s performance for the year was 12.8% on a time-weighted basis compared to the
policy benchmark index of 12.7%, and the average five-year return was 8.2% on a time-
weighted basis compared to the policy benchmark index of 8.6%.
The actual asset allocation is as follows:
2020 2019
Equities:
Domestic Large Cap Stocks 25.0 % 15 - 30 % 25.7 % 24.9 %
Domestic Small-Mid Cap Stocks 10.0 5 - 15 11.6 10.7
International Developed Markets Stocks 12.0 5 - 15 12.3 12.1
International Emerging Markets Stocks 6.0 2 - 8 6.1 6.3
Fixed Income:
Domestic Core Bonds 14.0 9-19 13.2 13.3
Domestic Core "Plus" Bonds 13.0 8-18 12.4 12.5
Global Bonds 8.0 3-13 8.3 8.1
Other:
Real Estate 12.0 0 - 15 9.3 11.0
Hedge Funds — — 0.4 0.4
Cash Equivalents — — 0.7 0.7
Asset Class
Actual
Allowable
RangeTarget
December 31,2020
2020
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 3597, effective May 2020, authorized new proposed
targets and allowable ranges that were implemented in 2020 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.
Ordinance 15006, effective September 2018, authorized Aon Investments USA, Inc. (“AON”) to act
as the Plan’s investment consultant for the District and provide investment advisory services for the
District’s Defined Benefit Plan. Resolution 3616 adopted in September 2020 exercised the second
option year to retain AON as the investment advisor for the Plan.
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 in 2020 were due to asset class performance and redemptions to fund pension benefit
payments, primarily from the Equity sub-classes. While some of the sub-classes were over target by
varying percentage points, they were all still within the target ranges.
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:
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 12
STATEMENTS OF FIDUCIARY NET POSITION
2020 2019
ASSETS
Investments at Fair Value:
Collective Investment Funds 171,767,753$ 136,062,084$
Mutual Funds 60,179,174 70,580,513
Real Estate Investments 30,265,219 32,566,168
Corporate Obligations 27,630,867 21,981,050
Domestic Common Stocks 18,552,256 14,868,772
US Treasury and Agency Obligations 13,994,724 16,428,797
Money Market Funds 3,237,837 3,110,257
Municipal Obligations 1,292,527 554,136
Total Investments 326,920,357 296,151,777
Receivables
Interest and Dividends Receivable 236,729 333,726
Total Receivables 236,729 333,726
Total Assets 327,157,086 296,485,503
LIABILITIES
Accrued Expenses 244,402 282,856
Total Liabilities 244,402 282,856
FIDUCIARY NET POSITION RESTRICTED FOR
PENSION BENEFITS 326,912,684$ 296,202,647$
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
See the accompanying Notes to Financial Statements. Page 13
STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION
For the Years Ended
December 31,
2020 2019
ADDITIONS TO NET POSITION ATTRIBUTED TO:
Investment Income:
Net Appreciation in Fair Value of Investments 32,083,437$ 38,919,875$
Interest and Dividends 5,514,283 3,542,825
Total Investment Income 37,597,720 42,462,700
Less - Investment Managers' and Advisors' Fees 922,422 831,216
Net Investment Income 36,675,298 41,631,484
Employer Contributions 13,416,065 12,740,406
Total Additions 50,091,363 54,371,890
DEDUCTIONS FROM NET POSITION ATTRIBUTED TO:
Benefits Paid to Retirees and Beneficiaries 19,273,097 18,626,890
Administrative Expenses 108,229 102,929
Total Deductions 19,381,326 18,729,819
NET INCREASE 30,710,037 35,642,071
FIDUCIARY NET POSITION RESTRICTED FOR
PENSION BENEFITS, January 1 296,202,647 260,560,576
FIDUCIARY NET POSITION RESTRICTED FOR
PENSION BENEFITS, December 31 326,912,684$ 296,202,647$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 14
NOTES TO FINANCIAL STATEMENTS
December 31, 2020 And 2019
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 defined by the Governmental
Accounting Standards Board (“GASB”) Pronouncements.
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 and Income Recognition
The Plan’s investment assets, for which U.S. Bank, N.A. acts as trustee (“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 amortized cost,
which approximates fair value.
Purchases and sales of investments are recorded on a trade-date basis. Interest income is
accrued when earned. Dividend income is recorded on the ex-dividend date. Capital gain
distributions are included in dividend income.
The calculation of realized gains and losses is independent of a calculation of the net change in
the fair value of investments. Realized gains and losses on investments that had been held in
more than one reporting period and sold in the current reporting period were included as a
change in the fair value of investments reported in the prior reporting period(s) and the current
reporting period.
Recognition of Contributions
Contributions to the Plan are placed in a separate trust fund by the District in advance of the
date when Pension benefits are payable. Bi-annual employer contributions, determined by an
actuary, and investment earnings (net of investment expense) make up the contributions in the
trust.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 15
Payment of Benefits
Benefits are received after an employee reaches retirement via Normal, Early, Postponed or
Alternate Retirement and are recorded when paid.
Subsequent Events
Management has evaluated subsequent events through July 29, 2021, the date the financial
statements were available for issue and determined that no material subsequent events exist.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 16
2. Description of Plan
The following brief description of The Metropolitan St. Louis Sewer District Employees’
Pension Plan (“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 (“District”) commencing service prior
to January 1, 2011, 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:
As of December 31,
Increase
2020 2019 (Decrease)
Active plan members 450 493 (43)
Retirees and beneficiaries currently receiving benefits 800 771 29
Terminated members entitled to receive benefits 172 180 (8)
Total 1,422 1,444 (22)
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 the Pension Committee 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 (“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 with
the overall aggregate amount of such annual increases not to exceed $9,000.
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 up to a maximum of $50,000. 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.
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.”
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 September 14, 2017, Ordinance No. 14776 amended the Plan to require enrollment in
Medicare Parts A and B when Members first become eligible for such Medicare programs due
to disability in order to receive, or continue to receive, retiree medical benefits under the
Pension Plan and to clarify that any retiree medical benefits under the Pension Plan will be
secondary to Medicare disability benefits in accordance with the Medicare secondary payor
rules.
Effective February 14, 2019, Ordinance No. 15110 amended the Plan to update the language of
Plan benefits for death of a member after retirement and retiree medical coverage.
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 19
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 3597, the Plan is authorized to invest in
the following;
Equity Investments: Common stocks of corporations, mutual funds, or co-mingled
equity funds (Domestic and International, target range 6% to 25%, allowable range 2%
to 30% ).
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, target range 8% to 14%, allowable range 3%
to 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 (Target range 12%, allowable range 0% to 15%).
Hedge Funds, Global Tactical, Real Assets, Market Neutral, and Absolute Return
Investments; these investment strategies help diversify the investment portfolio.
The fair value of investments managed consisted of the following:
As of December 31,
2020 2019
Investments, at Fair Value
Collective Investment Funds 171,767,753$ 136,062,084$
Mutual Funds 60,179,174 70,580,513
Real Estate Investments 30,265,219 32,566,168
Corporate Obligations 27,630,867 21,981,050
Domestic Common Stocks 18,552,256 14,868,772
US Treasury and Agency Obligations 13,994,724 16,428,797
Money Market Funds 3,237,837 3,110,257
Municipal Obligations 1,292,527 554,136
Total Investments 326,920,357$ 296,151,777$
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:
As of December 31, 2020
Weighted
Average
Maturity
Investment Type Fair Value (in Years)
Corporate Obligations 27,630,867$ 3.92
U.S. Treasury and Agency Obligations 13,994,724 5.46
Municipal Obligations 1,292,527 3.57
Total 42,918,118$
Portfolio Weighted Average Maturity in Years 4.42
As of December 31, 2019
Weighted
Average
Maturity
Investment Type Fair Value (in Years)
Corporate Obligations 21,981,050$ 3.67
U.S. Treasury and Agency Obligations 16,428,797 5.34
Municipal Obligations 554,136 2.72
Total 38,963,983$
Portfolio Weighted Average Maturity in Years 4.36
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 21
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
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 does not have a formal credit risk policy. 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 METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 22
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
Rating Obligations Obligations Obligations Total
AAA —$ —$ 3,328,025$ 3,328,025$
AA 13,994,724 1,039,765 876,954 15,911,443
A— 221,605 5,645,923 5,867,528
BBB — 31,157 12,531,702 12,562,859
BB — — 221,720 221,720
Not Rated — — 5,026,543 5,026,543
Total 13,994,724$ 1,292,527$ 27,630,867$ 42,918,118$
U.S. Treasury
S & P & Agency Municipal Corporate
Rating Obligations Obligations Obligations Total
AAA —$ —$ 3,322,315$ 3,322,315$
AA 16,428,797 524,046 795,055 17,747,898
A— — 4,013,879 4,013,879
BBB — 30,090 9,862,765 9,892,855
Not Rated — — 3,987,036 3,987,036
Total 16,428,797$ 554,136$ 21,981,050$ 38,963,983$
Credit Rating by Investment as of December 31, 2020
Credit Rating by Investment as of December 31, 2019
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 23
Investments Greater Than 5% Of Net Position Restricted For Pension Benefits or Total
Investments
Investments that exceed 5% of net position restricted for pension benefits or total investments
at December 31, 2020 or 2019 are as follows:
4. Fair Value Measurement and Application
The Plan categorizes its fair value measurements within the fair value hierarchy established by
U.S. Generally Accepted Accounting Principles. The hierarchy is based on the valuation inputs
used to measure the fair value of the asset and give the highest priority to unadjusted quoted
process in active markets for identical assets or liabilities and the lowest priority to
unobservable inputs. The Plan had the following fair value measurements of invested assets as
of December 31, 2020 and December 31, 2019:
2020 % 2019 %
BlackRock Russell 1000 Index Fund Non-Lending 83,783,652$ 26% 73,563,571$ 25%
Prudential Core Plus Bond Fund 40,461,722 12% 36,944,488 12%
Morgan Stanley International Equity Fund I 40,216,372 12% 35,694,985 12%
UBS Trumbull Property Fund 30,265,219 9% 32,566,282 11%
Brandywine Global Bond Opportunistic Fixed Income 27,297,538 8% 24,337,678 8%
Morgan Stanley Emerging Markets Fund I 19,962,802 6% 18,621,570 6%
TimesSquare Small Cap Growth Fund 19,005,439 6% 16,325,240 6%
Kennedy Mid Cap Value 18,571,060 6% 14,892,847 5%
Note: 2019 Investment balances have been updated from prior year report to exclude cash.
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 24
Investments Measured at Fair Value
Fair Value Measurements Using
Quoted Prices
in Active Significant
Markets for Other Significant
Identical Observable Unobservable
Assets Inputs Inputs
Investments by Fair Value Level 12/31/2020 (Level 1) (Level 2) (Level 3)
Debt Securities:
Corporate Obligations 27,630,867$ —$ 27,630,867$ —$
US Treasury Notes and Bonds 8,491,150 8,491,150 — —
US Government Agency Obligations 5,503,574 — 5,503,574 —
Municipal Obligations 1,292,527 — 1,292,527 —
Total Debt Securities 42,918,118 8,491,150 34,426,968 —
Equity Securities:
Domestic Equities 18,552,256 18,552,256 — —
International Equities 40,216,372 — 40,216,372 —
Emerging Markets Fund 19,962,802 — 19,962,802 —
Total Equity Securities 78,731,430 18,552,256 60,179,174 —
Total Investments by Fair Value Level 121,649,548 27,043,406$ 94,606,142$ —$
Unfunded Redemption Redemption
Investments Measured at the Net Asset Value (NAV) Commitments Frequency Notice Period
Domestic Equities (1)102,789,091 — Daily Varies
Core Plus Bond Commingled Trust Fund (2)40,461,722 — Daily 5 Days
Real Estate Funds (3)30,265,219 — Quarterly 60 Days
Global Fixed Income Collective Trust Fund (4)27,297,538 — Daily 10 Days
Diversified Hedge Fund of Fund (5)1,219,402 — Quarterly 90 Days
Total Investments Measured at the Net Asset Value 202,032,972
Money Market at Amortized Cost 3,237,837
Total Investments at Fair Value 326,920,357$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 25
(1) Domestic Equities – These funds seek long-term capital appreciation through passive or
active management of equity securities listed on U.S. stock exchanges. Redemption is daily
and the notice period is two days or less.
(2) Core Plus Bond Commingled Trust Fund – Seeks to outperform the Barclays Capital
U.S. Aggregate Bond Index by investing primarily in fixed income securities in the U.S.
investment grade sectors, as well as U.S. fixed income securities below investment grade,
the debt of developed international markets, and the debt of emerging markets. Redemption
is daily with a 1-day notice.
Investments Measured at Fair Value
Fair Value Measurements Using
Quoted Prices
in Active Significant
Markets for Other Significant
Identical Observable Unobservable
Assets Inputs Inputs
Investments by Fair Value Level 12/31/2019 (Level 1) (Level 2) (Level 3)
Debt Securities:
Corporate Obligations 21,981,050$ —$ 21,981,050$ —$
US Treasury Notes and Bonds 13,242,420 13,242,420 — —
US Government Agency Obligations 3,186,377 — 3,186,377 —
Municipal Obligations 554,136 — 554,136 —
Total Debt Securities 38,963,983 13,242,420 25,721,563 —
Equity Securities:
Domestic Equities 31,132,731 14,868,772 16,263,959 —
International Equities 35,694,984 — 35,694,983 —
Emerging Markets Fund 18,621,570 — 18,621,570 —
Total Equity Securities 85,449,285 14,868,772 70,580,512 —
Total Investments by Fair Value Level 124,413,267 28,111,192$ 96,302,075$ —$
Unfunded Redemption Redemption
Investments Measured at the Net Asset Value (NAV) Commitments Frequency Notice Period
Domestic Equities (1)73,563,551 — Daily Varies
Core Plus Bond Commingled Trust Fund (2)36,944,488 — Daily 5 Days
Real Estate Funds (3)32,566,168 — Quarterly 60 Days
Global Fixed Income Collective Trust Fund (4)24,337,678 — Daily 10 Days
Diversified Hedge Fund of Fund (5)1,216,368 — Quarterly 90 Days
Total Investments Measured at the Net Asset Value 168,628,253
Money Market at Amortized Cost 3,110,257
Total Investments at Fair Value 296,151,777$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 26
(3) Real Estate Funds – The portfolio assets in this investment consist primarily of high-
quality real estate investments located in major markets throughout the U.S. and are
diversified by property type, geographic region and economic sector. The majority of the
investments are stable, primarily income-oriented properties. The fair values of the
investments in this type have been determined using the NAV per share (or its equivalent)
of the investments. The District has elected to liquidate holdings in the UBS Trumbull
Property Fund. Redemption requests from fund investors currently exceed the amount
available for redemption. Redemptions are calculated on a pro rata basis according to the
ratio of the requesting investor's units to the total of all investors then requesting
redemptions. Any redemption request that is not fully honored will be deemed effective
in following quarters until completed.
(4) Global Fixed Income Collective Trust Fund – This fund invests in sovereign debt and
currencies of countries in its benchmark index, the investment-grade corporate bond and
mortgage-backed securities markets in those countries, as well as to limited degrees,
emerging market, high yield debt, and securities of countries rated A or better by a
nationally recognized statistical rating organization. Redemption is daily with a 10-day
notice.
(5) Diversified Hedge Fund of Fund – Seeks return, long-term capital growth and
diversification through a combination of Managers trading a range of strategies, including,
but not limited to, hedging, distressed securities, arbitrage and special situations. The fair
values of the investments in this type have been determined using the NAV per share (or
its equivalent) of the investments. The District’s remaining investment in this fund is
limited to its pro rata interest in Peruvian sovereign bonds held through an investment in
the Fund, whose advisor has endeavored to sell said interest, on a best efforts’ basis, and
distribute any proceeds to shareholders.
5. 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 $13,398,565 and $12,725,462, excluding certain professional fees paid by the
District, were made to the Plan in 2020 and 2019, respectively. These contributions were made
in accordance with actuarially determined contribution recommendations based on actuarial
valuations performed at December 31, 2019 and 2018, respectively, and consisted of:
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 27
Certain professional fees, included in administrative expenses, are paid by the District and are
recognized as contributions to the Plan and totaled $17,500 and $14,944 for the years ended
December 31, 2020 and 2019, respectively. The District provides office space, utilities, and
other services to the Plan at no cost. Other costs of administering the Plan are financed from
Plan net position.
6. Net Pension Liability of the District
During the year ended December 31, 2014, the District implemented GASB Statement No. 67,
Financial Reporting for Pension Plans – an amendment of GASB Statement No. 25. The
schedule of net pension liability pursuant to the provisions of GASB Statement No. 67 as of
December 31, 2020 and December 31, 2019 is as follows:
December 31,
2020 2019
Normal Cost 4,832,125$ 4,902,474$
Amortization of the Unfunded Actuarial Accrued Liability 7,719,224 7,001,606
Investment Rate of Return Factor of 6.75% for 2020 & 6.9% for 2019 847,216 821,382
Current Year Contribution Due from the District
as Calculated by the Plan's Actuary 13,398,565$ 12,725,462$
Net Pension Liability
December 31,
2020 2019
Total Pension Liability 356,407,862$ 353,995,560$
Plan Fiduciary Net Position 326,912,684 296,202,647
Net Pension Liability 29,495,178$ 57,792,913$
91.72% 83.67%
Covered Payroll 34,391,330$ 36,793,274$
Net Pension Liability as a Percentage of Covered Payroll 85.76% 157.07%
Fiduciary Net Position as a Percentage of Total Pension
Liability
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 28
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, 2020 and December 31, 2019:
Discount Rate
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.
December 31,
2020 2019
Inflation Rate 2.50% 2.50%
Projected Salary Increases 4.25% 4.25%
Actuarial Discount Rate 6.75% 6.75%
Mortality rates were based on the Pub-2010 General Amount-Weighted Mortality Tables for Employees,
Healthy Retirees, Disabled Retirees and Contingent Survivors, male and female rates, with generational
projection from 2010 using Scale MP-2019 and Scale MP-2020 for the December 31, 2019 valuation
and December 31, 2020 valuation, respectively.
December 31,
2020 2019
Discount Rate 6.75% 6.75%
Long-Term Expected Rate of Return, Net of Investment Expense 6.75% 6.75%
Municipal Bond Rate N/A N/A
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 29
Long-Term Expected Rate of Return
The long-term expected rate of return is determined by adding expected inflation to expected
long-term real returns and reflecting expected volatility and correlation. The capital market
assumptions are as follows:
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the Net Pension Liability of the District, calculated using the discount
rate of 6.75%, 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 (5.75%) or 1 percentage point higher
(7.75%) than the current rate.
Long-Term
Expected
Geometric
Target Real Rate
Asset Class Allocation of Return
Lar ge Cap US E quity 25.0% 4.2%
Small Cap US E quity 10.0% 4.7%
Developed International Equity 12.0% 5.0%
Emerging Markets Equity 6.0% 5.2%
Domestic Fixed Income 27.0% 0.8%
Global Bonds 8.0% 3.5%
Real Estate 12.0% 2.9%
Assumed Inflation - Mea n 2.5%
The long-term expected rate of return is assumed to be 6.75%.
1% Current 1%
Decrease Discount Rate Increase
5.75% 6.75% 7.75%
Total Pension Liability 395,297,400$ 356,407,862$ 323,289,445$
Plan Fiduciary Net Position 326,912,684 326,912,684 326,912,684
Net Pension Liability 68,384,716$ 29,495,178$ (3,623,239)$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Notes To Financial Statements (Continued)
Page 30
Rate of Return
For the years ended December 31, 2020 and 2019, the annual money-weighted rate of return
on pension plan investments, net of pension plan investment expense, was 12.52% and 16.19%,
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.
7. 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.
8. 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 Fiduciary Net Position.
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.
9. 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.
REQUIRED SUPPLEMENTARY INFORMATION
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 31
REQUIRED SUPPLEMENTARY INFORMATION UNDER GASB STATEMENT NO. 67
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THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 32
REQUIRED SUPPLEMENTARY INFORMATION UNDER GASB STATEMENT NO. 67
(Continued)
Notes to Schedule:
1. Changes of Assumptions. The actuarial discount rate and the long-term expected rate of return
were changed to 6.75% in 2020 and 2019. Both rates were 6.90% in 2018 and 2017. Both rates
for 2016, 2015 and 2014 were 7.00%. The mortality tables utilized in 2020 and 2019 were the
Pub-2010 General Amount-Weighted Mortality Tables and the effect of changing mortality
tables in 2019 is also reflected in the assumption changes. In 2016, the amount reported as
changes of assumptions resulted from changing to the RP-2014 Mortality for Employees and
Healthy Annuitants and Disabled Mortality tables, while the 2014 change resulted primarily
from adjustments to the discount rate, long-term expected rate of return, inflation and employee
rate increases.
2. This schedule will ultimately present ten years of information when available.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 33
REQUIRED SUPPLEMENTARY INFORMATION UNDER GASB STATEMENT NO. 67
(Continued)
Schedule of Employer Contributions
Plan Year Actuarially Contribution Contribution
Ending Determined Annual Deficiency Covered as a % of
December 31, Contribution Contribution (Excess) Payroll* Covered Payroll
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%
2016 10,145,562 10,145,562 — 42,054,815 24.12%
2017 12,328,093 12,328,093 — 41,868,586 29.44%
2018 12,493,916 12,493,916 — 39,437,165 31.68%
2019 12,725,462 12,725,462 — 36,793,274 34.59%
2020 13,398,565 13,398,565 — 34,391,330 38.96%
* Payroll as of prior December 31 Measurement Date.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 34
REQUIRED SUPPLEMENTARY INFORMATION UNDER GASB STATEMENT NO. 67
(Continued)
Notes to Schedule:
Valuation Timing
Actuarial Cost Method Entr y 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
Inflatio n 2.50%
Salary Increases 4.25%
Investment Rate of Return 6.75%
Cost of Living Adjustments 2.50%, with 45.00%/$750 per month lifetime cap
Retirement Age Retirement rates are summarized in the December 31, 2020 Actuarial Valuation.
Turnover Turnover rates are summarized in the December 31, 2020 Actuarial Valuation.
Disability Disability rates are summarized in the December 31, 2020 Actuarial Valuation.
Mortality
The following actuarial methods and assumptions were used in the December 31, 2020 funding valuation. Please see
the December 31, 2020 actuarial funding valuation report for further details.
Actuarially determined contribution rates are calculated as of January 1 of the
fiscal year in which the contributions are reported.
Pub-2010 General Amount-Weighted Mortality Tables with generational
projection based on Scale MP-2020
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 35
REQUIRED SUPPLEMENTARY INFORMATION UNDER GASB STATEMENT NO. 67
(Continued)
Money-Weighted Rate of Return
Plan Year Net
Ending Mone y-Weighte d
December 31, Rate of Return
2011 N/A
2012 N/A
2013 N/A
2014 2.86%
2015 -0.76%
2016 4.95%
2017 12.28%
2018 -4.73%
2019 16.19%
2020 12.52%
Schedule of Annual Money-Weighted Rate of Return on Investments
Note: Schedule is intended to show information for 10 years. Additional years
will be displayed as they become available.
STATISTICAL SECTION (UNAUDITED)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 36
STATISTICAL SECTION
For The Year Ended December 31, 2020
Net Position Value
(NPV) as of
Year December 31,
2011 200,340,622$ 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)
2016 251,010,031 2.8
2017 277,976,215 10.7
2018 260,560,576 (6.3)
2019 296,202,647 13.7
2020 326,912,684 10.4
Performance and Net Position Value
Percentage
Change
200.3
223.5
246.2 250.5 244.2 251.0
278.0
260.6
296.2
326.9
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
$350.0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Net Position Value
at December 31,
($ in millions)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 37
STATISTICAL SECTION
For The Year Ended December 31, 2020
Net
Employer Investment
Year Contributions Income/(Loss) Total
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
2016 10,159,922 24.2 11,992,366 22,152,288
2017 12,346,563 29.5 30,579,933 42,926,496
2018 12,522,176 31.8 (12,912,658) (390,482)
2019 12,740,406 34.6 41,631,484 54,371,890
2020 13,416,065 39.0 36,675,298 50,091,363
Payroll
Revenues by Source
Employer
Contributions
as a Percentage
of Covered
10,982
11,742 11,398 10,683 10,071 10,160
12,347 12,522 12,740 13,416
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Employer Contributions
at December 31,
($ in thousands)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 38
STATISTICAL SECTION
For The Year Ended December 31, 2020
Benefit Administrative
Year Payments Expenses Total
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
2016 15,260,904 93,592 15,354,496
2017 15,858,355 101,957 15,960,312
2018 16,911,759 113,398 17,025,157
2019 18,626,890 102,929 18,729,819
2020 19,273,097 108,229 19,381,326
Expenses by Type
11,234 11,911 12,538 13,394 14,475 15,261 15,858 16,912
18,627 19,273
$0
$5,000
$10,000
$15,000
$20,000
$25,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Benefit Payments
at December 31,
($ in thousands)
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 39
STATISTICAL SECTION
For The Year Ended December 31, 2020
Retirees & Terminated
Beneficiaries Members
Currently Entitled to
Receiving Receive Active Plan
Year Benefits Benefits Members Total
2011 596 183 838 1,617
2012 614 179 803 1,596
2013 636 179 761 1,576
2014 660 180 710 1,550
2015 691 175 665 1,531
2016 717 174 626 1,517
2017 722 178 595 1,495
2018 748 181 545 1,474
2019 771 180 493 1,444
2020 800 172 450 1,422
Member Count
596 614 636 660 691 717 722 748 771 800
0
100
200
300
400
500
600
700
800
900
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Benefit Recipients
at December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 40
STATISTICAL SECTION
For The Year Ended December 31, 2020
Market Percentage
Value as of of
Holding December 31, 2020 Plan
BlackRock Russell 1000 Index Fund Non-Lending 83,797,741$ 25.6%
Income Research Management 43,256,384 13.2%
Prudential Core Plus Bond Fund 40,461,723 12.4%
Morgan Stanley International Equity Fund I 40,216,496 12.3%
UBS Trumbull Property Fund 30,338,507 9.3%
Brandywine Global Bond Opportunistic Fixed Income 27,297,538 8.3%
Morgan Stanley Emerging Markets Fund I 19,962,802 6.1%
TimesSquare Small Cap Growth Fund 19,016,797 5.8%
Kennedy Mid Cap Value 18,845,918 5.8%
Entrust Capital Diversified Fund 1,672,762 0.5%
Totals 324,866,668$ 99.3%
Top Ten Holdings by Investment Manager
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
EMPLOYEES’ PENSION PLAN
Page 41
STATISTICAL SECTION
For The Year Ended December 31, 2020
2020 2019
Investment Manager Fees:
UBS Global Real Estate 271,997$ 282,873$
Income Research & Management Inc. 135,517 132,365
Kennedy Capital Management, Inc. 111,847 102,627
Brandywine Global Investment Management, LLC 109,589 99,579
Prudential Core Plus Bond Fund & Global Asset 98,862 93,482
TimesSquare Collective Investment Trust 74,009 1 —
BlackRock Institutional Trust Co. 31,712 23,622
Total Investment Manager Fees 833,533 734,548
Advisor Fees:
Aon Investments USA, Inc. 88,889 96,668
Total Advisor Fees 88,889 96,668
Total of All Fees 922,422$ 831,216$
Note: Some investment managers report investment income net of related expense. The
management fees of these investment managers are not reported in this table because the
fees are not readily separable from investment income.
1 TimesSquare reported investment income net of related expense in 2019 but changed to
reporting manager fees separately after the assets were transferred, in-kind, to a collective
investment trust in April 2020.
Schedule of Investment Manager & Advisor Fees
Firm
For the Years Ended December 31,