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CITY OF EUGENE, OREGON
<br />Notes to Basic Financial Statements
<br />(5) Other Information, continued
<br />(C) Retirement Plan, continued
<br />Annual Pension Cost, continued
<br />Annual required contribution $ 11,545,962
<br />Interest on pension assets (5,108,354)
<br />Adjustment to the annual required contribution 6,374,731
<br />Annual pension. cost 12,812,339
<br />Contributions made 11,545,962
<br />Decrease in pension assets (1,266,377)
<br />Pension assets, beginning of year 63,854,428
<br />Pension assets, end of year $ 62,588,051
<br />For the fiscal year ending June 30, 2008, the City's annual required contribution rate for PERS and OSRP was
<br />determined using the projected unit credit method. Prior to July 1, 2007, the City's pension liability and annual
<br />required contribution rate for PERS was determined using the entry age normal method. The change in the
<br />PERS unfunded accrued actuarial liability (UAAL), due to the change from the entry age normal to projected
<br />unit credit method, will be amortized as a level percentage of the combined valuation payroll (PERS plus
<br />OPSRP payroll) over a rolling three-year period.
<br />The actuarial assumptions for the December 31, 2007 PERS and OPSRP actuarial valuations included an
<br />investment return of 8.0% (8.5% for PERS variable account balances), a projected salary growth of 3.75%, and
<br />a projected inflation rate of 2.75%. The PERS actuarial valuation included a healthcare cost inflation trend rate
<br />of 8.0% in 2008 decreasing to 5.0% in 2013. The actuarial value of assets equals the market value of assets.
<br />The unfunded actuarially accrued liability and plan gains and losses are amortized as a level percentage of the
<br />combined valuation payroll over a closed period of 20 years for PERS and 16 years for OPSRP.
<br />Both the PERS_ and OPSRP defined benefit pension plans utilize a contribution rate stabilization method to
<br />restrict the degree of change to new contribution rates. The new contribution rate will not increase or decrease
<br />from the prior contribution rate by more than the greater of 3 percentage points or 20 percent of the prior
<br />contribution rate. If the plan's funded percentage drops below 80 percent or increases above 120 percent, the
<br />size of the collar doubles. The actuarial value of assets is equal to their fair market value less contingency,
<br />capital preservation, and rate guarantee reserves.
<br />The Oregon Legislative Assembly created a second level or "Tier" of PERS benefits that modified service and
<br />disability retirement allowances payable to persons who established PERS membership on or after January 1,
<br />1996 ("Tier Two" members). Future interest credits on all member contributions in Tier One and Tier Two
<br />Regular Accounts are assumed to accrue at an annual rate of 8.0%, compounded annually.
<br />The following table presents three-year trend information for the City's defined benefit pension plans:
<br /> Annual Percentage
<br />Fiscal year pension of APC Pension
<br />ending June 30 cost APC Contribution contributed assets
<br />2006 $ 13,230,969 12,625,679 95% 65,026,999
<br />2007 14,557,979 13,385,408 92% 63,854,428
<br />2008 12,812,339 11,545,962 90% 62,588,051
<br />continued
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