HomeMy Public PortalAboutMSD 2022 Deferred Compensation Audited Financial Statements
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
DEFERRED COMPENSATION PLAN
AND TRUST
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
Contents
Page
Independent Auditors’ Report........................................................................ 1 - 3
Management’s Discussion And Analysis ..................................................... 4 - 11
Financial Statements
Statements Of Fiduciary Net Position ...............................................................12
Statements Of Changes In Fiduciary Net Position ............................................13
Notes To Financial Statements ................................................................. 14 - 23
Supplemental Information
Historical Trend Information ............................................................................24
Investment Returns And Expense Ratios .................................................. 25 - 26
Page 1
INDEPENDENT AUDITORS’ REPORT
Board of Trustees
The Metropolitan St. Louis Sewer District
St. Louis, Missouri
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying financial statements of The Metropolitan St. Louis Sewer District
Deferred Compensation Plan and Trust (the Plan), as of and for the years ended December 31, 2022
and 2021, and the related notes to the financial statements, which collectively comprise the Plan’s
basic financial statements as listed in the table of contents
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, 2022 and 2021, 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.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States
of America (GAAS). Our responsibilities under those standards are further described in the Auditors’
Responsibilities for the Audit of the Financial Statements section of our report. We are required to be
independent of the Plan and to meet our other ethical responsibilities in accordance with the relevant
ethical requirements relating to our audits. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for 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.
In preparing the financial statements, management is required to evaluate whether there are conditions
or events, considered in the aggregate, that raise substantial doubt about the Plan’s ability to continue
as a going concern for twelve months beyond the financial statement date, including any currently
known information that may raise substantial doubt shortly thereafter.
CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.
CliftonLarsonAllen LLP
CLAconnect.com
Board of Trustees
The Metropolitan St. Louis Sewer District
Page 2
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a
material misstatement when it exists. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control. Misstatements are considered
material if there is a substantial likelihood that, individually or in the aggregate, they would influence the
judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements.
Obtain an understanding of internal control relevant to the audit 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 Plan’s internal control. Accordingly, no such opinion is
expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about the Plan’s ability to continue as a going concern for a
reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control related
matters that we identified during the audit.
Board of Trustees
The Metropolitan St. Louis Sewer District
Page 3
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 4 through 11 be presented to supplement the basic
financial statements. Such information is the responsibility of management and, 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
Management is responsible for the other information included in the annual report. The other
information comprises the historical trend information and investment returns and expense ratios but
does not include the basic financial statements and our auditors’ report thereon. Our opinion on the
basic financial statements does not cover the other information, and we do not express an opinion or
any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and the
basic financial statements, or the other information otherwise appears to be materially misstated. If,
based on the work performed, we conclude that an uncorrected material misstatement of the other
information exists, we are required to describe it in our report.
CliftonLarsonAllen LLP
St. Louis, Missouri
July 26, 2023
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Page 4
MANAGEMENT’S DISCUSSION AND ANALYSIS
For The Years Ended December 31, 2022 and 2021
This report consists of a series of financial statements related to The Metropolitan St. Louis Sewer
District (“District”) Deferred Compensation Plan and Trust (“Plan”). The Statements of Fiduciary Net
Position and the Statements of Changes in Fiduciary Net Position (on pages 12 and 13) provide
information about this Plan’s net position and changes in its net position during the year. These
statements are prepared using the accrual basis of accounting.
The Management’s Discussion and Analysis of the Plan’s financial performance provides an overview
of the Plan’s financial activities for the years ended December 31, 2022 and 2021. Please read it in
conjunction with the Plan’s financial statements.
FINANCIAL HIGHLIGHTS 2022
On December 31, net position restricted for plan benefits is approximately $86.7M. The net
position value decreased by approximately $21.4M from that of December 31, 2021, due to a
decrease in the overall value of investments that resulted primarily from a decrease in market
values, interest and dividends, and participant contributions.
Interest and dividends are approximately $3.0M, which is a decrease of $2.0M compared with
prior year interest and dividends.
Contributions from participants are approximately $5.2M, which is a decrease of $0.1M as
compared with prior year contributions.
Distributions to participants and beneficiaries are approximately $7.7M, which is an increase
of $3.2M compared with prior year distributions.
The decrease in the fair value of investments in 2022 is approximately $21.8M whereas the fair
value of investments increased approximately $8.7M in 2021.
FINANCIAL HIGHLIGHTS 2021
On December 31, net position restricted for plan benefits is approximately $108.1M. The net
position value increased by approximately $14.5M from that of December 31, 2020, due to an
increase in the overall value of equity investments that resulted primarily from an increase in
market values, interest and dividends, and participant contributions.
Interest and dividends are approximately $5.1M, which is an increase of $2.4M compared with
prior year interest and dividends.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Page 5
Contributions from participants are approximately $5.3M, which is an increase of $0.5M as
compared with prior year contributions.
Distributions to participants and beneficiaries are approximately $4.5M, which is an increase
of $1.0M compared with prior year distributions.
The increase in the fair value of investments in 2021 is approximately $8.7M whereas the fair
value of investments increased approximately $13.1M in 2020.
FINANCIAL ANALYSIS
The condensed Statements of Fiduciary Net Position as compared to prior years are as follows:
2022 Analysis
The Plan’s net position as of December 31, 2022, totaled approximately $86.7M, a decrease of
approximately $21.4M over net position as of December 31, 2021.
2021 Analysis
The Plan’s net position as of December 31, 2021, totaled approximately $108.1M, an increase of
approximately $14.5M over net position as of December 31, 2020.
Increase Increase
December 31,December 31,(Decrease )December 31,(Decrease )
2022 2021 2022-2021 2020 2021-2020
ASSETS
Investments at Fair Value 84,942,835$ 106,118,391$ (21,175,556)$ 91,868,162$ 14,250,229$
Investments at Contract Value 286,373 306,822 (20,449) 275,726 31,096
Other Assets 1,491,631 1,647,022 (155,391) 1,424,667 222,355
Total Assets 86,720,839 108,072,235 (21,351,396) 93,568,555 14,503,680
NET POSITION RESTRICTED
FOR PLAN BENEFITS 86,720,839$ 108,072,235$ (21,351,396)$ 93,568,555$ 14,503,680$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Page 6
The condensed Statements of Changes in Fiduciary Net Position as compared to prior years are as
follows:
2022 Analysis
Additions to the Plan’s net position include contributions, other additions, and investment income. For
calendar year 2022, contributions and other additions decreased $0.2M from those of calendar year
2021. The Plan recognized a net investment loss of $32.5M for calendar year 2022 compared to
calendar year 2021.
Deductions from the Plan’s net position include participant distributions and administrative expenses.
For calendar year 2022, distributions amounted to $7.7M, an increase of $3.2M compared to calendar
year 2021.
2021 Analysis
Additions to the Plan’s net position include contributions, other additions, and investment income. For
calendar year 2021, contributions and other additions increased $0.5M from those of calendar year
2020. The Plan recognized a net investment income decrease of $2.0M for calendar year 2021
compared to calendar year 2020.
Deductions from the Plan’s net position include participant distributions and administrative expenses.
For calendar year 2021, distributions amounted to $4.5M, an increase of $1.0M compared to calendar
year 2020.
For the Year For the Year For the Year
Ended Ended Increase Ended Increase
December 31, December 31, (Decrease) December 31, (Decrease)
2022 2021 2022-2021 2020 2021-2020
ADDITIONS
Net Investment Income (Loss) (18,833,873)$ 13,709,274$ (32,543,147)$ 15,721,305$ (2,012,031)$
Contributions and Other Additions 5,280,162 5,458,210 (178,048) 4,922,954 535,256
Total Additions (13,553,711) 19,167,484 (32,721,195) 20,644,259 (1,476,775)
DEDUCTIONS
Distributions to Participants 7,688,052 4,536,098 3,151,954 3,566,103 969,995
Administrative Expenses 109,633 127,706 (18,073) 130,444 (2,738)
Total Deductions 7,797,685 4,663,804 3,133,881 3,696,547 967,257
CHANGE IN NET POSITION (21,351,396) 14,503,680 (35,855,076) 16,947,712 (2,444,032)
FIDUCIARY NET POSITION
BEGINNING OF YEAR 108,072,235 93,568,555 14,503,680 76,620,843 16,947,712
FIDUCIARY NET POSITION
END OF YEAR 86,720,839$ 108,072,235$ (21,351,396)$ 93,568,555$ 14,503,680$
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Page 7
As of December 31, 2022, the Plan’s investments at fair value showed a net loss of $2.8M when
compared to original costs. The Institutional Index Fund had the greatest gain in value for any one
individual fund at $1.9M.
Value at
December 31, Net % of Current
Fund Name Cost 2022 Gain Value
Vanguard Group, Inc.
Institutional Index Fund 10,827,493$ 12,696,902$ 1,869,409$ 14.95 %
Mid-Cap Index Fund Admiral 3,879,542 4,684,834 805,292 5.52
Small-Cap Index Fund Admiral 3,102,623 3,495,401 392,778 4.12
Balanced Index Fund Institutional 5,793,990 6,017,555 223,565 7.08
Target Retirement 2065 142,451 128,515 (13,936) 0.15
Windsor II Fund Admiral 9,666,017 9,596,241 (69,776) 11.30
Target Retirement 2060 657,137 578,820 (78,317) 0.68
Target Retirement 2055 841,013 739,075 (101,938) 0.87
Target Retirement Income 1,541,294 1,399,378 (141,916) 1.65
Target Retirement 2050 2,551,576 2,225,205 (326,371) 2.62
Target Retirment 2040 2,774,832 2,417,272 (357,560) 2.85
Target Retirement 2030 3,145,311 2,736,642 (408,669) 3.22
Target Retirement 2020 3,180,301 2,737,574 (442,727) 3.22
Target Retirement 2035 3,805,056 3,301,808 (503,248) 3.89
Total Bond Market Index Fund Admiral 4,463,532 3,957,935 (505,597) 4.66
Target Retirement 2045 3,770,310 3,260,358 (509,952) 3.84
International Growth Fund Admiral 5,184,610 4,387,834 (796,776) 5.17
Target Retirement 2025 6,919,400 5,992,964 (926,436) 7.06
U.S. Growth Fund Admiral 6,742,632 5,796,944 (945,688) 6.82
Retirement Savings Trust III 6,085,227 6,085,227 — 7.16
Cash Reserves Federal Money Market Fund Admiral 2,706,351 2,706,351 — 3.17
Totals 87,780,698$ 84,942,835$ (2,837,863)$ 100.00 %
Change in Fund Asset Values - 2022
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Page 8
As of December 31, 2021, the Plan’s investments at fair value showed a net gain of $23.5M when
compared to original costs. The Institutional Index Fund had the greatest gain in value for any one
individual fund at $5.7M.
Value at
December 31, Net % of Current
Fund Name Cost 2021 Gain Value
Vanguard Group, Inc.
Institutional Index Fund 11,256,348$ 16,931,338$ 5,674,990$ 15.96 %
U.S. Growth Fund Admiral 7,217,753 10,335,731 3,117,978 9.74
Windsor II Fund Admiral 10,188,764 12,481,299 2,292,535 11.76
Mid-Cap Index Fund Admiral 4,147,542 6,382,322 2,234,780 6.01
Balanced Index Fund Institutional 6,100,359 7,859,823 1,759,464 7.41
International Growth Fund Admiral 5,309,204 6,802,572 1,493,368 6.41
Small-Cap Index Fund Admiral 3,150,044 4,416,737 1,266,693 4.16
Institutional Target Retirement 2025 5,406,431 6,556,043 1,149,612 6.18
Institutional Target Retirement 2045 2,861,318 3,721,058 859,740 3.51
Institutional Target Retirement 2035 2,732,934 3,537,265 804,331 3.33
Institutional Target Retirement 2030 2,825,430 3,487,884 662,454 3.29
Institutional Target Retirement 2040 1,981,717 2,545,780 564,063 2.40
Institutional Target Retirement 2050 1,679,555 2,189,944 510,389 2.06
Institutional Target Retirement 2020 2,829,005 3,276,974 447,969 3.09
Institutional Target Retirement 2055 570,471 726,109 155,638 0.68
Total Bond Market Index Fund Admiral 4,725,601 4,866,954 141,353 4.59
Institutional Target Retirement 2060 446,547 564,217 117,670 0.53
Institutional Target Retirement 2015 1,186,805 1,291,026 104,221 1.22
Institutional Target Retirement Income 1,217,514 1,306,323 88,809 1.23
Institutional Target Retirement 2065 70,228 81,132 10,904 0.08
Retirement Savings Trust III 4,269,985 4,269,985 — 4.02
Cash Reserves Federal Money Market Fund Admiral 2,487,875 2,487,875 — 2.34
Totals 82,661,430$ 106,118,391$ 23,456,961$ 100.00 %
Change in Fund Asset Values - 2021
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Page 9
As of December 31, 2020, the Plan’s investments at fair value showed a net gain of $17.0M when
compared to original costs. The U.S. Growth Fund Admiral had the greatest gain in value for any one
individual fund at $3.6M.
Value at
December 31, Net % of Current
Fund Name Cost 2020 Gain Value
Vanguard Group, Inc.
U.S. Growth Fund Admiral 6,411,817$ 9,978,357$ 3,566,540$ 10.85 %
Institutional Index Fund 10,310,356 13,425,977 3,115,621 14.61
International Growth Fund Admiral 4,493,870 7,071,211 2,577,341 7.70
Balanced Index Fund Institutional 5,703,040 6,967,860 1,264,820 7.58
Mid-Cap Index Fund Admiral 4,130,209 5,289,881 1,159,672 5.76
Institutional Target Retirement 2025 5,088,394 5,917,651 829,257 6.44
Small-Cap Index Fund Admiral 2,892,095 3,635,293 743,198 3.96
Windsor II Fund Admiral 9,497,382 10,073,877 576,495 10.97
Institutional Target Retirement 2035 2,450,901 2,975,068 524,167 3.24
Institutional Target Retirement 2045 2,247,756 2,746,845 499,089 2.99
Institutional Target Retirement 2030 2,344,218 2,808,433 464,215 3.06
Institutional Target Retirement 2020 2,887,051 3,276,110 389,059 3.57
Institutional Target Retirement 2040 1,737,753 2,108,933 371,180 2.30
Total Bond Market Index Fund Admiral 4,296,150 4,622,795 326,645 5.03
Institutional Target Retirement 2050 1,341,238 1,636,632 295,394 1.78
Institutional Target Retirement Income 1,033,555 1,153,605 120,050 1.26
Institutional Target Retirement 2015 1,113,419 1,222,287 108,868 1.33
Institutional Target Retirement 2055 431,889 523,071 91,182 0.57
Institutional Target Retirement 2060 311,550 377,070 65,520 0.41
Institutional Target Retirement 2065 26,938 31,767 4,829 0.03
Retirement Savings Trust III 3,405,300 3,405,300 — 3.71
Cash Reserves Federal Money Market Fund 2,620,139 2,620,139 — 2.85
Totals 74,775,020$ 91,868,162$ 17,093,142$ 100.00 %
Change in Fund Asset Values - 2020
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Page 10
INVESTMENT ASSET ALLOCATION
Investment decisions are participant directed. The participants are offered a diversified
portfolio of investment options from which to select. These investment options represent a
series of mutual funds primarily sponsored and managed by the Vanguard Group. A breakdown
of the participant directed asset allocation totaling $85.2M as of December 31, 2022 follows:
$28,090,087
33%
$25,517,611
30%
$8,791,578
10%
$8,180,235
10%
$6,135,168
7%
$4,387,834
5%
$4,126,695
5%
Large Cap Equity
Target Date
Capital Preservation
Small/Mid Cap Equity
Balanced
International Equity
Fixed Income
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Page 11
PARTICIPANT CENSUS
Employee participation in the Plan is on a voluntary basis. Plan participants are comprised of active
employees of the District, retirees or surviving spouses, and terminated employees with account
balances. Active employee participants are as follows:
FIDUCIARY RESPONSIBILITIES
The Board of Trustees and senior management are fiduciaries of the Plan and Trust. Fiduciaries are
charged with the responsibility of assuring that the assets of the Plan are used exclusively for the benefit
of plan participants and their beneficiaries.
REQUEST FOR INFORMATION
This financial report is designed to provide the Board of Trustees, participants, investment managers,
and other interested parties with an overview of the Plan’s finances and accountability for the money
received. Questions concerning any of the information provided in this report or requests for additional
information should be addressed to:
Tim Snoke, Secretary-Treasurer
The Metropolitan St. Louis Sewer District
2350 Market Street
St. Louis, MO 63103-2555
Email: tsnoke@stlmsd.com
Number Of Active
December 31,Participants
2022 800
2021 807
2020 813
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
See the accompanying Notes To Financial Statements. Page 12
STATEMENTS OF FIDUCIARY NET POSITION
2022 2021
ASSETS
Investments at Fair Value:
Mutual Funds 78,857,608$ 101,848,406$
Common/Collective Trust 6,085,227 4,269,985
Total Investments at Fair Value 84,942,835 106,118,391
Investments at Contract Value:
Annuity Contracts 286,373 306,822
Total Investments 85,229,208 106,425,213
Notes Receivable from Participants 1,491,631 1,647,022
NET POSITION RESTRICTED FOR PLAN BENEFITS 86,720,839$ 108,072,235$
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
See the accompanying Notes To Financial Statements. Page 13
STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION
2022 2021
ADDITIONS TO NET POSITION ATTRIBUTED TO:
Investment Income:
Interest and Dividends on Investments 3,044,021$ 5,057,840$
Interest Income on Participant Loans 70,489 70,917
Net Change in Fair Value of Investments (21,836,084) 8,727,563
Total Investment Income (Loss)(18,721,574) 13,856,320
Less: Investment Expenses 112,299 147,046
Net Investment Income (Loss)(18,833,873) 13,709,274
Contributions and Other Additions:
Employee Contributions 5,161,468 5,325,308
Employee Contributions - Rollovers 9,061 5,196
Plan Expenses Paid by Employer 109,633 127,706
Total Contributions and Other Additions 5,280,162 5,458,210
Total Additions (Reductions)(13,553,711) 19,167,484
DEDUCTIONS FROM NET POSITION ATTRIBUTED TO:
Distributions to Participants and Beneficiaries 7,688,052 4,536,098
Administrative Expenses 109,633 127,706
Total Deductions 7,797,685 4,663,804
CHANGE IN NET POSITION (21,351,396) 14,503,680
NET POSITION RESTRICTED FOR BENEFITS, January 1 108,072,235 93,568,555
NET POSITION RESTRICTED FOR BENEFITS, December 31 86,720,839$ 108,072,235$
Ended December 31,
For the Years
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Page 14
NOTES TO FINANCIAL STATEMENTS
December 31, 2022 And 2021
1. Summary of Significant Accounting Policies
The following significant accounting policies, which conform to generally accepted accounting
principles, have been used consistently in the preparation of The Metropolitan St. Louis Sewer
District Deferred Compensation Plan and Trust’s (“Plan”) financial statements.
Basis of Accounting
The financial statements of the Plan are prepared under the accrual basis of accounting and in
accordance with generally accepted accounting principles that apply to governmental
accounting for deferred compensation plans. Employer and employee contributions are
recognized in the period for which they are reported to the third-party administrator. Expenses
are recognized when due and payable. Benefit payments are recognized upon distribution.
Estimates and Assumptions
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires the Plan Administrator to make certain estimates and assumptions that affect
the reported amounts in the financial statements. Actual results could differ from those
estimates.
Investment Valuation and Income Recognition
The Plan’s investments in mutual funds are stated at fair value. Shares of registered investment
companies are valued at quoted market prices which represent the net asset value of shares held
by the Plan at year-end. Units of the Retirement Savings Trust III common/collective trust are
valued at net asset value which approximates fair value. Investments in the annuity contracts
are valued at contract value, as reported by the investment carriers. The investment valuation
includes contributions received, plus investment income earned to date less applicable charges
and amounts withdrawn.
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. Realized gains of $4,368,058 and $2,185,995
were recorded in the periods ended December 31, 2022 and 2021, respectively.
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.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 15
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance. The interest
amount is determined when the loan is taken and then disbursed across each payment.
Delinquent notes receivable from a participant are reclassified as distributions based upon the
terms of the Plan document.
2. Description of the Plan
The following description of the Plan provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan covering substantially all employees of the District
beginning on the first day of employment. The District’s Board of Trustees established the Plan
in January 1976 through Ordinance No. 2971. Plan provisions are established and may be
amended by the District’s Board of Trustees. The District does not contribute to the Plan except
where mandated by the Internal Revenue Service to compensate participants for lost deferral
contributions.
All assets of the Plan are the sole property of the Plan and are not subject to the claims of
creditors of the District. The Plan Administrator issues a publicly available Summary Plan
Description. That information may be obtained by writing to The Metropolitan St. Louis Sewer
District, Attn: Secretary/Treasurer, 2350 Market Street, St. Louis, MO 63103-2555.
Contributions
Under the Plan provisions, employees of the District are eligible to contribute up to 100% of
their taxable compensation into the Plan, through payroll deferral, or any amount not previously
reduced or withheld from their total compensation. In accordance with Internal Revenue Code
Section 457, as amended, the Plan limits an individual’s annual contribution (adjusted annually)
to $20,500 for the year ended December 31, 2022, and $19,500 for the year ended December
31, 2021. If the employee is 50 or older, there is a special option which allows the employee
to contribute an additional “catch-up” contribution of up to $6,500 for the years ended
December 31, 2022 and 2021.
Employees hired after December 31, 2020 have 1% of their covered wages automatically
invested as the employee’s Savings Contribution in the Deferred Compensation Plan. The
Savings Contribution will be increased by 1% each subsequent consecutive year the employee
remains a contributor to the Plan until the employee’s Savings Contribution reaches 4%. These
employees will have the option to opt out of contributing to the employee’s Savings
Contribution at any time or to increase or decrease the percentage of compensation being
deferred by delivering the appropriate instructions to the Plan Administrator.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 16
Another special option is a one-time 457(b) “catch-up” contribution of two times the standard
annual deferral, less amounts already deferred under the Plan, which is allowed in one of the
last three calendar years before the employee reaches Normal Retirement Age. Normal
Retirement Age is defined as the first day of the month coinciding with or next following a
person’s 65th birthday and completion of 60 months of continuous service. Employees are not
permitted to take advantage of both special options in the same year.
The Plan will accept a rollover of an eligible rollover distribution from an eligible retirement
plan if the Plan Administrator approves the transaction as meeting the Plan’s rules. This is
called a “Rollover Contribution” and for the years ended December 31, 2022 and 2021, $9,061
and $5,196 were eligible rollover distributions into the Plan, respectively.
Amounts contributed by employees are deferred for federal and state income tax purposes until
received as a withdrawal or distribution from the Plan.
Participant Accounts
Each participant’s account is credited with the participant’s contribution and allocations of Plan
earnings. Allocations are based on participants’ account balances, as defined. There are no
forfeitures applicable to the Plan. Participants’ contributions are immediately fully vested. On
December 31, 2022 and 2021, 800 and 807 participants, respectively, actively participated in
the Plan.
Notes Receivable from Participants
Participants may borrow from their account a minimum of $1,000 up to a maximum equal to
the lesser of $50,000 or 50% of their vested account balance. If the participant also participates
in the Metropolitan St. Louis Sewer District Defined Contribution Plan, borrowing from the
vested account balance is generally limited to 50% of the available balance in excess of 4% of
the participant’s compensation.
Participants may only apply for a loan once during each Plan Year and may only have two
outstanding loans from the Plan at any time. Loans may not extend beyond a term of five years
except for the purchase of a principal residence for which the term is thirty years. Loans are
secured by the balance of the participant’s account and bear interest at the prime interest rate
plus 1%. Interest rates on current loans range from 4.25% to 9.25% and the rate is fixed during
the term of the loan. Current loans are due at varying dates through May 2052. Principal and
interest are paid ratably through payroll deductions.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 17
Investment Options
Upon enrollment in the Plan, a participant directs elective contributions and rollovers into any
of the investment options available. The investment options consist of mutual funds and a
common/collective trust fund. Employee contributions may be allocated to the Vanguard
accounts only, in 1% increments, as the participant directs. No new contributions are currently
allowed to the Lincoln National annuity contract accounts.
Vanguard offers participants in the Plan the following investment options:
Equity option (Large Cap): Vanguard Windsor II Fund, Vanguard Institutional Index
Fund, and Vanguard U.S. Growth Fund - Investment objective is long-term capital
appreciation.
Equity Diversification option (Small/Mid Cap and International): Vanguard Small-Cap
Index Fund, Vanguard Mid-Cap Index Fund, and Vanguard International Growth Fund
- Investment objective is long-term capital appreciation.
Bond option (Fixed Income): Vanguard Total Bond Market Index Fund - Investment
objective is income stability and conservation of principal.
Balanced option (Balanced): Vanguard Balanced Index Fund - Investment objective is
income, conservation of principal and long-term growth.
Stable Value option (Capital Preservation): Vanguard Retirement Savings Trust III -
Investment objective is income stability and conservation of principal.
Money Market option (Capital Preservation): Vanguard Cash Reserves Federal Money
Market Fund Admiral - Investment objective is income while maintaining safety of
principal.
Target Retirement option (Target Date): Vanguard Target Retirement 2020-2070 Funds
and Vanguard Target Retirement Income Fund - Investment objective is capital
appreciation and current income consistent with its current asset allocation.
Distributions
Participants contributing to the Plan may receive benefits or withdraw the present value of funds
contributed to the Plan upon retirement, disability, or termination of employment from the
District or due to financial hardship as defined by the Plan, if approved by the Plan
Administrator.
Participants may select various payout options including lump sum or equal annual payments
over various periods. Participants may also elect to have the value of the account converted
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 18
into fixed or variable annuity contracts. All investments, including annuity contracts, remain
assets of the Plan until payments are made to the participants.
Administrative Expenses
The general administrative expenses of the Plan are paid by the District. These expenses consist
of legal, consultant and accounting expenses as well as the administration of the Plan. Expenses
attributable to a participant’s choice of optional investments or optional forms of benefit
payments are charged to the respective participant’s account balance.
Change in Funds
Effective February 2022, the Vanguard Institutional Target Retirement Funds were changed to
Vanguard Target Retirement Funds. This was done to consolidate the assets in the combining
funds to lower costs. The funds that were combined have identical investment objectives,
investment strategies, and investment risks.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 19
3. Investments
Investment Balances
Investments held by custodians in the Plan’s name are as follows:
Continues on next page
2022 2021
Mutual Funds:
Vanguard Group, Inc.
Institutional Index Fund 12,696,902$ * 16,931,338$ *
Windsor II Fund Admiral 9,596,241 * 12,481,299 *
Balanced Index Fund Institutional 6,017,555 * 7,859,823 *
Target Retirement 2025 5,992,964 * —
U.S. Growth Fund Admiral 5,796,944 * 10,335,731 *
Mid-Cap Index Fund Admiral 4,684,834 * 6,382,322 *
International Growth Fund Admiral 4,387,834 * 6,802,572 *
Total Bond Market Index Fund Admiral 3,957,935 4,866,954
Small-Cap Index Fund Admiral 3,495,401 4,416,737
Target Retirement 2035 3,301,808 —
Target Retirement 2045 3,260,358 —
Target Retirement 2020 2,737,574 —
Target Retirement 2030 2,736,642 —
Cash Reserves Federal Money Market Fund Admiral 2,706,351 2,487,875
Target Retirement 2040 2,417,272 —
Target Retirement 2050 2,225,205 —
Target Retirement Income 1,399,378 —
Target Retirement 2055 739,075 —
Target Retirement 2060 578,820 —
Target Retirement 2065 128,515 —
Institutional Target Retirement 2025 - 6,556,043 *
Institutional Target Retirement 2045 - 3,721,058
Institutional Target Retirement 2035 - 3,537,265
Institutional Target Retirement 2030 - 3,487,884
Institutional Target Retirement 2020 - 3,276,974
Institutional Target Retirement 2040 - 2,545,780
Institutional Target Retirement 2050 - 2,189,944
Institutional Target Retirement Income - 1,306,323
Institutional Target Retirement 2015 - 1,291,026
Institutional Target Retirement 2055 - 726,109
Institutional Target Retirement 2060 - 564,217
Institutional Target Retirement 2065 - 81,132
Total Mutual Funds 78,857,608 101,848,406
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 20
* Represents 5% or more of the Plan’s total investments as of December 31, 2022 or 2021, respectively.
Certain participants are invested in a series of fixed and variable rate annuity contracts
sponsored by Lincoln National Life Insurance Company and these assets are valued at $286,373
and $306,822 on December 31, 2022 and 2021, respectively. The Lincoln National Life option
was phased out in 1992, and any balances represent undistributed participant balances. This
option is no longer available to new participants or for current deferrals.
Categories of Asset Risk - Debt Securities Interest Rate and Credit Risk
The Plan will minimize the risk that the market value of securities in the portfolio will fall due
to changes in general interest rates by selecting mutual funds for the investment portfolio that
manage credit quality and duration of fixed income investments.
The Plan will minimize credit risk, the risk of loss due to failure of the security issuer or backer,
by selecting mutual funds for the investment portfolio that manage their respective fund under
a predetermined average credit risk investment management policy.
2022 2021
Common/Collective Trust:
Vanguard Group, Inc.
Retirement Savings Trust III 6,085,227 * 4,269,985
Annuity Contracts:
Lincoln National Life
Fixed Earnings Option:
Fixed Account 168,760 166,581
Variable Earnings Option:
Growth & Income Fund 117,613 140,241
Total Annuity Contracts 286,373 306,822
Total Investments 85,229,208$ 106,425,213$
December 31,
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 21
The following tables provide information on the duration and credit ratings associated with the
Plan’s investments with debt securities, including obligations of the U.S. Government or
obligations explicitly guaranteed by the U.S. Government within these funds on December 31,
2022 and 2021.
Average
Effective
Fair Percentage Duration Credit
Value of Debt In Years Rating
Retirement Savings Trust III 6,085,227$ 90 % 3.40 *
Balanced Index Fund Institutional 6,017,555 40 6.53 AA
Target Retirement 2025 5,992,964 43 6.50 AA
Total Bond Market Index Fund Admiral 3,957,935 99 6.53 AA
Target Retirement 2035 3,301,808 27 6.83 AA-
Target Retirement 2045 3,260,358 13 6.82 AA-
Target Retirement 2020 2,737,574 55 6.02 AA
Target Retirement 2030 2,736,642 35 6.83 AA-
Cash Reserves Federal Money Market Fund Admiral 2,706,351 21 * *
Target Retirement 2040 2,417,272 20 6.82 AA-
Target Retirement 2050 2,225,205 9 6.83 AA-
Target Retirement Income 1,399,378 68 5.81 AA
Target Retirement 2055 739,075 9 6.82 AA-
Target Retirement 2060 578,820 9 6.83 AA-
Target Retirement 2065 128,515 9 6.85 AA-
Target Retirement 2070 — 10 6.83 AA-
Fixed (Annuity Contracts)168,760 * * *
* Information is unavailable for this security.
The average effective duration only applies to the debt portion of the investment.
Credit Quality Percentage of Total Plan Investments-2022
Lincoln National Life
Plan Investments
With Debt Securities
December 31, 2022:
Vanguard Group, Inc.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 22
4. Fair Value Measurement and Application
The Plan has the following fair value measurements as of December 31, 2022 and 2021:
Mutual fund investments of $78,857,608 and $101,848,406, respectively, are valued
using quoted market prices (Level 1 inputs).
Common Collective Trust investments of $6,085,227 and $4,269,985, respectively, are
valued at net asset value which approximates fair value.
Average
Effective
Fair Percentage Duration Credit
Value of Debt In Years Rating
Balanced Index Fund Institutional 7,859,823$ 36 % 6.85 AA
Institutional Target Retirement 2025 6,556,043 40 7.11 A
Total Bond Market Index Fund Admiral 4,866,954 97 6.86 AA
Retirement Savings Trust III 4,269,985 94 3.10 *
Institutional Target Retirement 2045 3,721,058 11 7.36 A
Institutional Target Retirement 2035 3,537,265 25 7.36 A
Institutional Target Retirement 2030 3,487,884 32 7.36 A
Institutional Target Retirement 2020 3,276,974 51 6.51 A
Institutional Target Retirement 2040 2,545,780 18 7.36 A
Cash Reserves Federal Money Market Fund Admiral 2,487,875 44 * *
Institutional Target Retirement 2050 2,189,944 9 7.36 A
Institutional Target Retirement Income 1,306,323 67 6.23 A
Institutional Target Retirement 2015 1,291,026 65 6.26 A
Institutional Target Retirement 2055 726,109 9 7.35 A
Institutional Target Retirement 2060 564,217 9 7.34 A
Institutional Target Retirement 2065 81,132 9 7.32 A
Fixed (Annuity Contracts)166,581 * * *
* Information is unavailable for this security.
The average effective duration only applies to the debt portion of the investment.
Credit Quality Percentage of Total Plan Investments-2021
Lincoln National Life
Plan Investments
With Debt Securities
December 31, 2021:
Vanguard Group, Inc.
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
Notes To Financial Statements (Continued)
Page 23
5. Risks and Uncertainties
The Plan invests in various investment securities as directed by the Plan’s participants.
Investment securities are exposed to various risks such as interest rate, market, and credit risk.
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 participants’ account balances and amounts reported in
the Plan’s Statements of Fiduciary Net Position.
6. Plan Termination
Although it has not expressed any intent to do so, the District has the right under the Plan to
terminate the Plan at any time. In the event of Plan termination, participants would remain
100% vested in their accounts.
7. Related Party Transactions
The Plan invests in shares of mutual funds managed by an affiliate of Vanguard Fiduciary Trust
Company (“VFTC”). VFTC acts as trustee for only those investments as defined by the Plan.
8. Tax Status –
The Plan received a favorable determination letter from the Internal Revenue Service (“IRS”)
on June 23, 1999, indicating the Plan and its underlying Trust are qualified under Section 457
of the Internal Revenue Code. Although the Plan has been amended since receiving the
determination letter, the Plan Administrator believes that the Plan is currently designed and is
being operated in compliance with applicable requirements of the IRS.
9. Subsequent Events
Management has evaluated subsequent events through July 26, 2023, the date through which
the financial statements were available for issue and determined that no material subsequent
events exist.
SUPPLEMENTAL INFORMATION
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
See the accompanying independent auditors’ report.
Page 24
HISTORICAL TREND INFORMATION
Employee
And Employer Distributions
For The Contributions And To Participants
Years Ended Expenses Paid Net Investment And Plan Change
December 31, By Employer Income (Loss) Expenses In Net Position
2022 5,280,162$ (18,833,873)$ (7,797,685)$ (21,351,396)$
2021 5,458,210 13,709,274 (4,663,804) 14,503,680
2020 4,922,954 15,721,305 (3,696,547) 16,947,712
2019 4,847,170 14,299,022 (3,971,704) 15,174,488
2018 4,527,030 (3,062,767) (4,085,191) (2,620,928)
2017 4,021,256 9,235,115 (4,136,198) 9,120,173
2016 3,962,177 3,944,851 (2,991,735) 4,915,293
2015 3,584,552 17,327 (2,499,216) 1,102,663
2014 3,227,393 3,677,147 (3,977,801) 2,926,739
2013 3,163,343 7,863,858 (3,298,602) 7,728,599
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
See the accompanying independent auditors’ report.
Page 25
INVESTMENT RETURNS AND EXPENSE RATIOS
An independent investment consultant, Aon Investments USA Inc., monitored investment performance
of the various options offered to the participants. Performance of the funds are measured net of the
corresponding expense ratios. Below is a table that reflects the funds available for employees to invest
and their one-year performance for the years 2022 and 2021 as compared to the appropriate
benchmarks, as well as their current expense ratios:
*The expense ratios reported as of December 31 of the respective year.
Funds / Benchmarks Expense Ratios % 2022*2021*
Vanguard Cash Reserves Federal Money Market Fund Admiral 1.6 0.0
ICE BofAML 3 Month U.S. T-Bill 1.5 0.0
Vanguard Retirement Savings Trust III 1.6 1.5
ICE BofAML 3 Month U.S. T-Bill 1.5 0.0
Vanguard Total Bond Market Index Admiral -13.2 -1.7
Vanguard Splc Blmbg. Barc. US Agg Flt Adj -13.1 -1.6
Vanguard Balanced Index Fund Institutional -16.9 14.2
Vanguard Balanced Composite Index -16.4 14.3
Vanguard Windsor II Admiral -13.1 29.1
Russell 1000 Value Index -7.5 25.2
Vanguard Institutional Index Fund Institutional -18.1 28.7
Standard & Poor’s 500 Index -18.1 28.7
Vanguard U.S. Growth Fund Admiral -39.6 12.5
Russell 1000 Growth Index -29.1 27.6
Vanguard Mid-Cap Index Admiral -18.7 24.5
Vanguard Spliced Mid Cap Index -18.7 24.5
Vanguard Small-Cap Index Admiral -17.6 17.7
Vanguard Spliced Small Cap Index -17.6 17.7
Vanguard International Growth Fund Admiral -30.8 -0.8
Vanguard Spliced International Index -15.6 7.8
0.05
0.05
0.34
0.23
0.04
Returns Net of Fees
0.05
0.06
0.26
0.10
0.28
THE METROPOLITAN ST. LOUIS SEWER DISTRICT
DEFERRED COMPENSATION PLAN AND TRUST
See the accompanying independent auditors’ report.
Page 26
INVESTMENT RETURNS AND EXPENSE RATIOS (CONTINUED)
*The expense ratios reported as of December 31 of the respective year.
Funds / Benchmarks Expense Ratios % 2022*2021*
Vanguard Target Retirement Income -12.7 5.3
Vanguard Target Income Composite Index -12.4 5.4
Vanguard Target Retirement 2020 -14.2 8.3
Vanguard Target 2020 Composite Index -13.8 8.4
Vanguard Target Retirement 2025 -15.5 10.0
Vanguard Target 2025 Composite Index -15.0 10.1
Vanguard Target Retirement 2030 -16.3 11.5
Vanguard Target 2030 Composite Index -15.7 11.7
Vanguard Target Retirement 2035 -16.6 13.1
Vanguard Target 2035 Composite Index -16.1 13.2
Vanguard Target Retirement 2040 -17.0 14.7
Vanguard Target 2040 Composite Index -16.5 14.8
Vanguard Target Retirement 2045 -17.4 16.3
Vanguard Target 2045 Composite Index -16.9 16.4
Vanguard Target Retirement 2050 -17.5 16.6
Vanguard Target 2050 Composite Index -17.1 16.8
Vanguard Target Retirement 2055 -17.5 16.5
Vanguard Target 2055 Composite Index -17.1 16.8
Vanguard Target Retirement 2060 -17.5 16.6
Vanguard Target 2060 Composite Index -17.1 16.8
Vanguard Target Retirement 2065 -17.4 16.5
Vanguard Target 2065 Composite Index -17.1 16.8
Returns Net of Fees
0.08
0.08
0.08
0.08
0.08
0.08
0.08
0.08
0.08
0.08
0.08