HomeMy WebLinkAboutIR 10208 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10208
To the Mayor and Members of the City Council December 4, 2018
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SUBJECT: FINANCIAL REPORTING OF PENSION ASSETS AND LIABILITIES
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Background:
The City and Employee contributions to the Fort Worth Employees Retirement Fund (FWERF)
represent a substantial impact to the financial position of the City. Detailed information for the
assets and liabilities of the FWERF is disclosed in the Financial Statements and Notes to the
Basic Financial Statements sections of the Comprehensive Annual Financial Report (CAFR) in
accordance with Government Accounting Standards Board (GASB) Statement No. 68 titled
"Accounting and Financial Reporting for Pensions" (Statement).
Discussion:
The Statement establishes standards for measuring and recognizing liabilities, deferred outflows
of resources, deferred inflows of resources, and expenditures. For FWERF, this Statement
identifies the methods and assumptions that should be used to project benefit payments, discount
projected benefit payments to their actuarial present value, and attribute that present value to
periods of employee service.
Each year FWERF commissions an actuarial valuation report and a GASB 68 disclosure letter
which is provided to the City for inclusion in the CAFR. For the period ending September 30, 2017
the City reported a $3.22 Billion net pension liability in the FWERF as presented below:
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability°
(a) (b) (a)-(b)
Balances at September 30.2016 S 4.127.343 $ 2.003.270 S 2.124.073
Changes for the year:
Service Cost 98.173 98.173
Interest 252.240 251240
Differences Between Expected and Actual Experience 4.178 4.178
Changes ofAsstunptions 1.022.193 - 1.022,193
Contributions-Employer - 84,747 (84,747)
Contributions-Employee ,3,977 (33,977)
Net Investment Income 166.306 (166,306)
Benefit Payments.Includmg Refunds of Employee Contributions (185.820) (185,820) -
Administrative Expenses (4.522) 4.522
Other - (241) 241
Net Changes 1.190.964 94.447 1.096.517
Balances at September 30.2017 S 5. 18.307 2,097.717 S �.220.590
The analysis for the disclosure letter was based on actuarial valuation of the FWERF for the
period ending December 31, 2016 which identified a $1.57 Billion Unfunded Actuarial Accrued
Liability(UAAL).
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10208
To the Mayor and Members of the City Council December 4, 2018
Page 2 of 2
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SUBJECT: FINANCIAL REPORTING OF PENSION ASSETS AND LIABILITIES
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The difference between the two lies in the purpose of the two reports. The actuarial valuation
report is created to determine the adequacy of the current contribution rates, describe the current
financial condition of FWERF, analyze changes in the condition of FWERF, and provide various
summaries of the data. The report assumes that participants will take actions to correct the
UAAL.
The GASB 68 does not include this assumption reporting only the net present value of FWERF
assest and liabilities with no changes to contribution rates, investment returns and/or expenses
by plan participants.
Both reports use identical 30 year ammortization periods and project FWRF to remain solvent for
approximately 27 periods, after which the fund will revert to a pay-as-you-go status.
Contact Kevin Gunn, Chief Financial Officer, at 817.392.2015 with any questions.
David Cooke
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS