Police Actuary Report 2010
CITY OF ATLANTIC BEACH POLICE OFFICERS’ RETIREMENT SYSTEM ACTUAR IAL VALUAT ION R E POR T S E P T EMB E R 3 0 , 2 0 1 0
ANNUAL EMPLOYER CONTRIBUTION IS DETERMINED BY THIS VALUATION TO BE PAID IN THE EMPLOYER FISCAL YEAR ENDING SEPTEMBER 30, 2012
April 20, 2011 The Board of Trustees City of Atlantic Beach Police Officers’ Retirement System Atlantic Beach, Florida Dear Board Members: We are pleased to submit herein our September
30, 2010 Actuarial Valuation Report for the City of Atlantic Beach Police Officers’ Retirement System. The contribution results apply to the City's fiscal year ending September 30, 2012.
The valuation was performed on the basis of participant data and financial information supplied by the City whose information is summarized in this Report. Although this information
was not audited by us, we did review it for reasonableness and comparability to prior years. The benefits valued are those which were in effect on the valuation date. There is no material
benefit or expense to be provided by the Plan and/or paid from the plan's assets for which no liabilities or current costs have been established or otherwise provided for in the valuation.
We know of no event or trend not taken into account in this valuation which may require a material increase in plan costs or required contribution rates. Gabriel, Roeder, Smith & Company
will be pleased to answer questions pertaining to the valuation and to meet with you to review this Report. The undersigned are members of the American Academy of Actuaries and meet
the Qualification Standards of the Academy of Actuaries to render the actuarial opinion herein. We hereby certify that this actuarial valuation is complete and accurate, and in our opinion,
the techniques and assumptions used are reasonable and meet the requirements and intent of Part VII, Chapter 112, Florida Statutes. Respectfully submitted, GABRIEL, ROEDER, SMITH AND
COMPANY James J. Rizzo, ASA, MAAA Senior Consultant & Actuary Piotr Krekora, ASA, MAAA Senior Actuarial Analyst
STATEMENT BY ENROLLED ACTUARY This actuarial valuation and/or cost determination was prepared and completed by me or under my direct supervision, and I acknowledge responsibility for
the results. To the best of my knowledge, the results are complete and accurate. In my opinion, the techniques and assumptions used are reasonable, meet the requirements and intent of
Part VII, Chapter 112, Florida Statutes, and are based on generally accepted actuarial principles and practices. There is no benefit or expense to be provided by the plan and/or paid
from the plan's assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require
a material increase in plan costs or required contribution rates have been taken into account in the valuation. Signature April 17, 2011 Date 11-03355 Enrollment Number
TABLE OF CONTENTS SECTION TITLE PAGE A EXECUTIVE SUMMARY A-1 B VALUATION RESULTS 1. Participant Data B-1 2. Annual Required Contribution B-2 3. Actuarial Value of Benefits and Assets
B-3 4. State Premium Tax Revenues B-4 5. Financial Soundness B-5 6. Actuarial Gains and Losses B-9 7. Recent History of Valuation Results B-14 8. Recent History of Required and Actual
Contributions B-16 9. Actuarial Assumptions and Cost Method B-17 C PENSION FUND INFORMATION 1. Summary of Assets C-1 2. Summary of Fund's Income and Disbursements C-2 3. Reconciliation
of DROP Accounts C-3 4. Actuarial Value of Assets C-4 5. Investment Rate of Return C-6 D FINANCIAL ACCOUNTING INFORMATION 1. FASB No. 35 D-1 2. GASB No. 25 D-2 3. GASB No. 27 D-4 E MISCELLANEOUS
INFORMATION 1. Reconciliation of Membership Data E-1 2. Statistical Data E-2 F SUMMARY OF PLAN PROVISIONS F-1 G COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS G-1 Circular 230 Notice:
Pursuant to regulations issued by the IRS, to the extent this communication (or any attachment) concerns tax matters, it is not intended or written to be used, and cannot be used, for
the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) marketing or recommending to another party any tax-related matter addressed within. Each taxpayer
should seek advice based on the individual’s circumstances from an independent tax advisor.
SECTION A EXECUTIVE SUMMARY
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | A-1 EXECUTIVE SUMMARY Funding Objective The funding objective of the Retirement System is to
establish and receive contributions, which will remain approximately level (when expressed as percents of active member payroll) from year to year and will not have to be increased for
future generations of citizens in the absence of benefit improvements. This objective is stated in the Retirement System Ordinance and meets the requirements of Part VII, Chapter 112,
Florida Statutes. Comparison of Required Employer Contributions The following is a comparison of required contributions developed in this year's and the last actuarial valuations: Gross
Contribution Requirement $ 712,617 $ 575,562 $ 137,055 As % of Expected Payroll 41.00 % 31.31 % 9.69 % Expected Employee Contribution $ 83,708 $ 88,530 $ (4,822) As % of Covered Payroll
4.815 % 4.815 % 0.00 % Required Employer/State Contribution $ 628,909 $ 487,032 $ 141,877 As % of Expected Payroll 36.18 % 26.49 % 9.69 % Estimated State Contribution $ 88,806 $ 88,806
$ 0 As % of Covered Payroll 5.11 % 4.83 % 0.28 % Required Employer Contribution $ 540,103 $ 398,226 $ 141,877 As % of Covered Payroll 31.07 % 21.66 % 9.41 % Based on 9/30/2010 Valuation
Valuation (Decrease) Based on 9/30/2009 Increase For FYE 9/30/2012 For FYE 9/30/2011 Minimum Required Contribution As illustrated in the preceding chart, the contribution necessary from
the City and State to support the current benefits for the Police Officers is $628,909 for the fiscal year ending September 30, 2012. The city may be able to use up to $88,806 of State
premium tax moneys to satisfy part of that requirement, leaving the City contribution at $540,103. However, the City may need to contribute more, should receipts from the State fall
short of the expected amount presented in the table above. Please note that the Required Employer Contribution for that fiscal year is assumed to be deposited in monthly intervals throughout
the year. Revisions in Benefits There were no revisions in benefits for the current year. Revisions in Actuarial Assumptions or Methods This valuation reflects the following revisions
in actuarial assumptions and methods, as adopted by the Board:
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | A-2 The mortality table is updated from the 1983 Group Annuity Mortality Table to the RP-2000
Generational Mortality Table. The turnover rates were updated to reflect the recent and anticipated experience, but still based on service and ultimate rates based on age. The new
rates are generally lower than used in previous valuations. The retirement rates were updated, but still based on age. The disability rates for all police officers have been changed
to be more in line with rates used for similar plans in the State. We continue using an age based table. The long-term inflation assumption has been lowered to an annual rate of 3%
from 5% used previously. The salary increase assumptions were updated to reflect the recent and anticipated experience, and still based on age. The new rates are generally higher than
used in previous valuations. The long-term rate of payroll increase assumption has been lowered to an annual rate of 4.0% from 5.5% used previously. This assumption has been further
limited for this valuation to 3.05% in accordance with the requirements of Ch. 112.64 (5) (a), F.S. The Board chose to maintain the same long-term expected rate of return at 8% per
year without change. The net effect of these changes combined includes an increase in the Unfunded Actuarial Accrued Liability of $630,507. Changes to the City Contribution (for the
year ending 9/30/2012) resulting from the assumption changes include a new amortization payment of $46,541and an increase in the Normal Cost of $3,095. Actuarial Experience Actuarial
gains occur in a year whenever the experience of the plan is better than was assumed. For example, if investment performance were better than the level being assumed in the actuarial
valuation and costing process, then an actuarial gain results and would have the effect of lowering the Minimum Required Contribution for the year. Whenever more employees terminate
employment than were assumed would terminate, fewer employees are then expected to actually retire from the City, resulting in an actuarial gain for the plan. Actuarial losses occur
in a year whenever the experience of the plan is worse than was assumed. In the examples given above, if the reverse were to occur, then actuarial losses would result. As another example,
if salaries increased in one year were higher than assumed or more new employees were hired than terminated, an actuarial loss would occur. The actuarial valuation cost method which
determines the Minimum Required Contribution is designed to produce contribution requirements which remain level as a percent of payroll whenever the experience of the plan matches the
actuarial assumptions used. Contribution Requirements are also level whenever actuarial losses exactly offset actuarial gains.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | A-3 Analysis of Change in Employer Contribution The components of change in the actuarially
required contribution are as follows: Contribution rate last year 21.66 % Payment on UAAL prior to changes 6.51 Experience (gain)/loss (0.97) Change in administrative expense 0.74 Change
in normal cost before expenses (0.18) Revision in benefits 0.00 Revision in assumptions/methods 3.59 Change in State Revenue (0.28) Contribution rate this year 31.07 % There was a net
actuarial gain this year which is due to lower than expected salary increases that were well below the expected (no change vs. 6.4% assumed) partially offset by the actuarial asset investment
return being less than expected (4.7% actual return on an actuarial basis vs. 8.00% assumed for the year ending September 30, 2010). Administrative expenses were higher than the previous
year by 0.74% of pay. The dollar amount of the State Revenue is expected to remain at the same level but due to a recent payroll reduction it will represent a larger percentage of the
projected payroll. The required contribution increases mainly due to changes in assumptions, either required by F. S. Ch. 112.64 (5) (a), or recently adopted by the Board. The remainder
of this Report includes detailed actuarial valuation results, financial information, miscellaneous information and statistics, and a summary of plan provisions.
SECTION B VALUATION RESULTS
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-1 ACTIVE MEMBERS Number 27 27 Covered Annual Payroll $ 1,639,155 $ 1,696,746 Average Annual
Payroll $ 60,709 $ 62,842 Average Age 38.8 39.3 Average Past Service 8.3 8.0 Average Age at Hire 30.5 31.3 RETIREES, BENEFICIARIES, & DROP MEMBERS Number 12 13 Annual Benefits $ 409,353
$ 417,970 Average Annual Benefit $ 34,113 $ 32,152 Average Age 60.8 61.3 DISABILITY RETIREES Number 3 3 Annual Benefits $ 56,032 $ 56,032 Average Annual Benefit $ 18,677 $ 18,677 Average
Age 56.9 55.9 TERMINATED VESTED MEMBERS Number 6 4 Annual Benefits $ 64,984 $ 42,030 Average Annual Benefit $ 10,831 $ 10,508 Average Age 45.3 46.0 PARTICIPANT DATA September 30, 2010
September 30, 2009
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-2 A. Valuation Date B. ARC to Be Paid During Fiscal Year Ending 9/30/2012 9/30/2012 9/30/2011
C. Assumed Date(s) of Employer Contrib. Continuously Continuously Continuously D. Annual Payment to Amortize Unfunded Actuarial Liability if Paid on the Valuation Date $ 310,885 $ 269,581
$ 188,563 E. Employer Normal Cost (including Administrative Expenses) if Paid on the Valuation 247,252 244,157 243,663 F. Annual Required Contribution (ARC) if Paid on the Valuation
Date: D+E 558,137 513,738 432,226 G. ARC Adjusted for Frequency of Payments and Interest to Required Time of Contribution 628,909 578,880 487,032 H. Covered Payroll for Contribution
Year 1,738,481 1,776,228 1,838,635 I. ARC as % of Expected Covered Payroll in the Contribution Year G ÷ H 36.18 % 32.59 % 26.49 % J. Estimate of State Revenue in Contribution Year**
88,806 88,806 88,806 K. Required Employer Contribution (REC) in Contribution Year 540,103 490,074 398,226 L. REC as % of Covered Payroll in Contribution Year: K ÷ J 31.07 % 27.59 % 21.66
% ANNUAL REQUIRED CONTRIBUTION (ARC) After Changes Before Changes September 30, 2010 September 30, 2010 September 30, 2009 ** Chapter 185 Florida Statutes. The City contribution amount
may need to be increased if the amount received under the provisions of Chapter 185, Florida Statutes, is not sufficient to meet the total employer contribution requirement. CAUTION:
If the amount received under the provisions of Chapter 185, Florida Statutes, exceeds $88,806, the City may NOT use any of the excess to reduce the city contribution shown.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-3 A. Valuation Date After Changes Before Changes B. Actuarial Present Value of All Projected
Benefits for 1. Active Members a. Service Retirement Benefits $6,169,427 $6,464,102 $6,441,735 b. Vesting Benefits 413,322 160,187 167,919 c. Disability Benefits 214,592 166,132 171,402
d. Preretirement Death Benefits 49,355 173,035 172,611 e. Return of Member Contributions 75,025 48,693 46,779 f. Total 6,921,721 7,012,149 7,000,446 2. Inactive Members a. Service Retirees
& Beneficiaries 4,346,304 4,122,857 4,203,454 b. Disability Retirees 551,226 541,511 551,209 c. Terminated Vested Members 224,979 202,263 137,360 d. Total 5,122,509 4,866,631 4,892,023
3. Total for All Members 12,044,230 11,878,780 11,892,469 C. Actuarial Accrued (Past Service) Liability per GASB No. 25 9,449,190 8,818,683 8,688,737 D. Actuarial Value of Accumulated
Plan Benefits per FASB No. 35 7,876,256 7,285,177 7,044,846 E. Plan Assets 1. Market Value 6,010,877 6,010,877 5,457,479 2. Actuarial Value 6,164,269 6,164,269 5,921,648 F. Actuarial
Present Value of Projected Covered Payroll 13,939,718 16,761,832 17,447,833 G. Actuarial Present Value of Projected Member Contributions 671,894 807,920 840,985 ACTUARIAL VALUE OF BENEFITS
AND ASSETS September 30, 2010 September 30, 2010 September 30, 2009
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-4 STATE PREMIUM TAX REVENUES A. Additional premium tax revenues as of 9/30/2009 $ 120,454
$ -B. Chapter 185 receipts during fiscal year ending 9/30/2010 88,117 1,151,504 C. Chapter 185 "frozen" receipts during fiscal year ending 9/30/1998 70,289 904,496 D. Qualifying benefit
improvements since Chapter 99-1 effective date 18,517 129,619 E. Additional premium tax revenues as of 9/30/2010 [ A + B -C -D] not less than beginning of the year. 120,454 Minimum Compliance
($18,517) A. Early retirement eligibility at 50 & 10 B. Normal retirement eligibility at 55 & 10 C. 10 year certain and life normal form Extra Benefits A. None proposed Potential Future
Benefits Prior Year Cumulative Note: During the Fiscal Year ended 9/30/2010, “Chapter 185 receipts” totaled $88,117. This amount is lower than the maximum amount of State premium tax
moneys that can be used by the City to satisfy part of the Annual required Contribution. The current such maximum, equal $88,806, is a sum of (i) the “frozen” amount of $70,289 and (ii)
amount equal to initial annual cost of qualifying benefit improvements of $18,517.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-5 FINANCIAL SOUNDNESS The purpose of this portion of the Report is to provide certain measures
which indicate the financial soundness of the program. These measures relate to short term solvency and long term solvency. The various percentages listed in this Section as of a single
valuation date are not that significant. What is significant, however, is the trend of the rates over a period of years. It is also important to keep in mind that each time benefits
or assumptions are revised; actuarial liabilities are created or diminished. Any newly created liabilities are financed systematically over a period of future years. All actuarially
computed values in this analysis are based on the actuarial assumptions utilized in the respective years' actuarial valuations. Short Term Solvency The ultimate test of financial soundness
is the program's ability to pay all promised benefits when due. The program's progress in accumulating assets to pay all promised benefits can be measured by comparing the market value
of assets with: 1. The actuarial present value of projected benefits payable to those already receiving benefits and to vested terminations, and 2. The actuarial present value of accrued
benefits payable to active participants. This amount is based on benefits earned to date without future credited service or salary increases. The total of the two items should generally
be fully covered by assets. That portion of the total of the two items covered by assets should increase over time. Often assets continue to grow beyond the actuarial present value of
these two items. Increases in benefits will, of course, adversely affect the trend in the years when such increases are first reflected in the actuarial values. Although different actuarial
assumptions would be used in the event of a termination of the program, this test shows how much of the benefits accrued to date might be covered by assets in the event of a plan freeze
using the valuation assumptions. 1. Accumulated Contributions of Active Members $ 298,857 $ 236,929 $ 157,782 2. APV of Projected Benefits in Pay Status and for Vested Terminations 5,122,509
4,892,023 4,970,128 3. APV of Accrued Benefits for Active Participants (Employer Portion) 2,454,890 1,915,894 1,667,111 4. Total 7,876,256 7,044,846 6,795,021 5. Market Value of Assets
6,010,877 5,457,479 5,085,645 6. Assets as % of Total 76 % 77 % 75 % Police Officers 9/30/2010 9/30/2009 9/30/2008
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-6 0% 50% 100% 150% $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 2008 2009 2010 Ratio Millions Actuarial
Valuation Date (September 30) Ratio of Market Value of Assets to Present Value of Accrued Benefits Market Value of Assets PV Accrued Benefits Ratio
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-7 Long Term Solvency Over the longer term, the solvency of an ongoing plan can be measured
by comparing the Actuarial Value of Assets to an amount known as the Actuarial Accrued Liability (AAL) under the Entry Age Actuarial Cost Method. This item has often been called the
"past service liability". Its derivation differs from the short term solvency value derivation in several ways. The short term solvency liability number is based on the benefits accrued
to date by the participants while the long term solvency liability number is based on what the normal costs accrued to date by the employer. In addition, the short term solvency asset
number is the market value, while the long term asset number is the actuarial value of assets. As in the case of the short term solvency values, the AAL is affected immediately by any
revisions in benefits or assumptions. The accumulation of assets to equal the AAL can be considered a long range funding goal. 9/30/00 $ 3,791 $ 4,615 82 % 9/30/01 * 4,068 5,016 81 9/30/02
4,230 5,334 79 9/30/03 * 4,373 5,986 73 9/30/04 4,534 6,405 71 9/30/05 4,775 6,997 68 9/30/06 5,175 7,034 74 9/30/07 * 5,663 7,620 74 9/30/08 5,764 8,112 71 9/30/09 * 5,922 8,689 68
9/30/10 * 6,164 9,449 65 Valuation Date Actuarial Value of Assets (in Thousands) Actuarial Accrued Liability (in Thousands) % of AAL Covered by Assets *Reflects change in benefits, actuarial
assumptions and/or method.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-8 0% 50% 100% 150% $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 2004 2005 2006 2007 2008 2009
2010 Ratio Millions Actuarial Valuation Date (September 30) Actuarial Assets Accrued Liability Ratio
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-9 ACTUARIAL GAINS AND LOSSES The assumptions used to anticipate mortality, employment turnover,
investment income, expenses, salary increases, and other factors have been based on long range trends and expectations. Actual experience can vary from these expectations. The variance
is measured by the gain and loss for the period involved. If significant long term experience reveals consistent deviation from what has been expected and that deviation is expected
to continue, the assumptions should be modified. The net actuarial gain (loss) for the past year is computed as follows: 1. Last Year's UAAL $2,767,089 2. Last Year's Employer Normal
Cost 253,409 3. Last Year's Actual City Contibution 425,823 4. Interest at the assumed rate on: a. 1 for one year 221,367 b. 2 for half a year 10,136 c. 3 from dates paid 17,033 d. a
+ b -c 214,470 5. This Year's Expected UAAL 1 + 2 -3 + 4d 2,809,145 6. This Year's Actual UAAL (before any changes in benefits or assumptions) 2,654,414 7. Net Actuarial Gain (Loss):
(5) -(6) 154,731 8. Gain (Loss) due to investments (193,649) 9. Gain (Loss) due to other sources 348,381 Derivation of Experience Gain (Loss)
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-10 Net actuarial gains (losses) in previous years have been as follows: Year Ended 9/30/1995
198,928 1 98,928 9/30/1996 ( 266,965) (68,037) 9/30/1997 249,395 1 81,358 9/30/1998 95,019 2 76,377 9/30/1999 117,618 3 93,995 9/30/2000 ( 103,871) 2 90,124 9/30/2001 1,389 2 91,513
9/30/2002 ( 128,212) 1 63,301 9/30/2003 ( 339,563) (176,262) 9/30/2004 ( 207,808) (384,070) 9/30/2005 ( 287,225) (671,295) 9/30/2006 ( 287,225) (958,520) 9/30/2007 ( 137,906) (1,096,425)
9/30/2008 ( 308,022) (1,404,447) 9/30/2009 ( 323,582) (1,728,030) 9/30/2010 154,731 (1,573,298) Actuarial Gain (Loss) Cumulative Gain (Loss) ($3) ($2) ($1) $0 $1 $2 $3 ($1) $0 $1 Millions
Millions Plan Year End Actuarial Gain (+) or Loss (-) Gain or Loss Cumulative
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-11 The fund earnings and salary increase assumptions have considerable impact on the cost
of the Plan so it is important that they are in line with the actual experience. The following table shows the history of actuarial fund earnings and salary increase rates compared to
the assumed rates. 9/30/2000 10.7 % 8.0 % 16.8 % 6.6 % 9/30/2001 6.3 8.0 (0.4) 6.9 9/30/2002 2.6 8.0 7.5 6.7 9/30/2003 2.2 8.0 8.8 6.5 9/30/2004 2.4 8.0 11.2 6.5 9/30/2005 4.4 8.0 15.1
6.3 9/30/2006 7.8 8.0 1.5 6.7 9/30/2007 9.4 8.0 12.8 6.6 9/30/2008 4.6 8.0 2.1 6.6 9/30/2009 3.8 8.0 11.0 6.4 9/30/2010 4.7 8.0 (0.0) 6.4 Average 5.3 % ---7.7 % ---Assumed Salary Increases
Actual Investment Return Year Ending Actuarial Assumed The actual investment return rates shown above are based on the actuarial value of assets. The actual salary increase rates shown
above are the increases received by those active members who were included in the actuarial valuations both at the beginning and the end of each year.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-12 -5% 0% 5% 10% 15% -5% 0% 5% 10% 15% Plan Year End History of Investment Return -Actuarial
Value of Assets Actual Assumed 0% 5% 10% 15% -5% 0% 5% 10% 15% 20% Plan Year End Compared to Previous Year History of Salary Increases Actual Assumed
City of Atlantic Beach General Employees’ Retirement System 9/30/2010 Actuarial Valuation | B-13 Active Members Inactive Members 9/30/00 27 11 $ 1,213 $ 3,791 $ 824 $ 185 15.24 % 9/30/01
* 26 12 1,155 4,068 948 177 15.32 9/30/02 25 12 1,195 4,230 1,104 184 15.44 9/30/03 * 22 15 1,129 4,373 1,613 182 16.12 9/30/04 27 16 1,360 4,534 1,871 220 16.21 9/30/05 26 18 1,402
4,775 2,222 228 16.25 9/30/06 24 19 1,254 5,175 1,859 211 16.84 9/30/07 * 25 19 1,453 5,663 1,957 200 13.74 9/30/08 26 19 1,476 5,764 2,348 207 13.99 9/30/09 * 27 20 1,697 5,922 2,767
244 14.36 9/30/10 * 27 21 1 ,639 6,164 3,285 247 15.08 UAAL (in Thousands) RECENT HISTORY OF VALUATION RESULTS Number of Employer Normal Cost** Valuation Date Reported Covered Annual
Payroll (in Thousands) Actuarial Value of Assets (in Thousands) % of Covered Payroll Amount (in Thousands) * Reflects change in benefits, actuarial assumptions and/or method. **For Valuations
prior to 2009, Normal Cost is a mid-year amount, excluding any administrative expenses. Beginning with 10/1/2009 valuation, Normal Cost is a beginning of the year figure, including administrative
expenses. For all years, % of Covered Payroll is Normal Cost shown expressed as a % of Covered Valuation Payroll.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-14 0 10 20 30 40 50 Actuarial Valuation Date Recent History of Number of Members Active Members
Inactive Members $0.0 $0.3 $0.5 $0.8 $1.0 $1.3 $1.5 $1.8 Millions Actuarial Valuation Date Recent History of Covered Annual Payroll
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-15 9/30/04 9/30/06 $ 350,161 23.76 % $ 350,160 9/30/05 9/30/07 390,494 25.70 390,494 9/30/06
9/30/08 309,841 22.80 309,842 9/30/07 * 9/30/09 345,280 21.93 345,280 9/30/08 9/30/10 425,823 26.62 425,823 9/30/09 * 9/30/11 487,032 26.49 ---9/30/10 * 9/30/12 628,909 36.18 ---RECENT
HISTORY OF REQUIRED AND ACTUAL CONTRIBUTIONS Required Contributions Actual Contributions Valuation End of Year To Which Valuation Applies Amount % of Expected Payroll * Reflects change
in benefits, actuarial assumptions and/or method.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-16 ACTUARIAL ASSUMPTIONS AND COST METHOD Valuation Methods Actuarial Cost Method -The actuarial
cost method is a procedure for allocating the actuarial present value of benefits and expenses to time periods. Normal cost and the allocation of benefit values between service rendered
before and after the valuation date were determined using the Entry-Age Actuarial Cost Method. The entry-age actuarial cost method allocates the actuarial present value of each member's
projected benefits on a level basis over the member's pensionable compensation between the entry age of the member and the estimated active status exit ages. The portion of the actuarial
present value allocated to the valuation year is called the normal cost. The portion of the actuarial present value not provided for by the actuarial present value of future normal costs
is called the actuarial accrued liability. Deducting accrued assets from the actuarial accrued liability determines the unfunded actuarial accrued liability. Financing of Unfunded Actuarial
Accrued Liabilities -The unfunded actuarial accrued liability was financed as a level percent of member payroll. Actuarial Value of Assets -The Actuarial Value of Assets phase in the
difference between the expected and actual return on market value of assets at the rate of 25% per year. The Actuarial Value of Assets will be further adjusted to the extent necessary
to fall within the corridor whose lower limit is 80% of the Market Value of plan assets and whose upper limit is 120% of the Market Value of plan assets. During periods when investment
performance exceeds the assumed rate, Actuarial Value of Assets will tend to be less than Market Value. During periods when investment performance is less than assumed rate, Actuarial
Value of Assets will tend to be greater than Market Value. Valuation Assumptions The actuarial assumptions used in the valuation are shown in this Section.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-17 Economic Assumptions The investment return rate assumed in the valuations is 8.00% per
year, compounded annually (net of investment expenses). The Wage Inflation Rate assumed in this valuation was 4% per year. The Wage Inflation Rate is defined to be the portion of total
pay increases for an individual
that are due to macro economic forces including productivity, price inflation, and labor market conditions. The wage inflation rate does not include pay changes related to individual
merit and seniority effects. The price inflation rate assumed in this valuation was 3% per year. The plan does not provide for automatic post-retirement cost of living adjustments (COLA)
of retiree benefits. Ad-hoc COLA increases have been adopted in the past upon approval by the City. Most recently, such increases have been granted in 1987, 1996 and 2001. No assumptions
are made regarding future adjustments. Any such increases will be recognized as they occur. The payroll growth rate would be 4%, except that it is limited this year due the lower actual
payroll growth rate over the last 10 years in accordance with the requirements of Ch. 112.64 (5) (a), F.S. The rate used to amortize the unfunded actuarial accrued liabilities is 3.05%
per year. The total rate of return is defined as earnings resulting from interest, dividends, realized gains (losses) and unrealized appreciation (depreciation) divided by the beginning
market value of the fund, adjusted for cash flow during the year. Total rate of return is as the assumed to be 8.00% per year. The rates of salary increases used in the valuation are
illustrated in the following table. Annual Rates for Salary Increase for Sample Ages Age: 20 30 40 50 60 Expected Increase (After Assumption Changes) 23.0% 9.8% 6.6% 5.7% 5.0% Expected
Increase (Before Assumption Changes) 8.5% 8.1% 5.7% 5.7% 5.5%
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-18 Demographic Assumptions The mortality table was changed from the 1983 Group Annuity Mortality
Table (1983 GAM), set back 0 years for men and 6 years for women to gender specific RP-2000 Mortality Tables with generational projections per the Society of Actuaries’ Scale AA. New
Assumption Old Assumption Ages Men Women Men Women 45 $142.32 $144.10 36.55 38.92 50 137.16 139.47 31.81 34.12 55 130.09 133.16 27.13 29.40 60 120.93 125.02 22.62 24.85 65 109.77 115.10
18.40 20.57 70 96.86 103.57 14.56 16.65 75 82.00 90.48 11.08 13.11 80 66.10 75.95 8.09 9.96 $1 Monthly for Life Expectancy (Years) RP2000 Table Projected to Valuation Year Value of Future
Life Ages Men Women Men Women 45 $138.18 $143.79 33.74 39.42 50 132.10 139.24 29.18 34.68 55 124.57 133.42 24.82 30.08 60 115.04 126.21 20.64 25.68 65 103.26 117.13 16.69 21.46 70 90.18
105.77 13.18 17.45 75 76.40 92.85 10.15 13.84 80 62.65 79.21 7.64 10.72 1983 GAM Table Value of Future Life $1 Monthly for Life Expectancy (Years) This assumption is used to measure
the probabilities of each benefit payment being made after retirement. For active members, the probabilities of dying before retirement were based upon the same mortality table as members
dying after retirement. All deaths before retirement are assumed to be non-service connected. The rates of retirement used to measure the probability of eligible members retiring under
normal and early retirement eligibility during the next year were as follows: Retirement Ages New Assumptions Old Assumptions 45 40% 20% 46 10% 20% 47 10% 20% 48 10% 20% 49 40% 20% 50
50% 20% 51 50% 15% 52-58 50% 15% 59 50% 20% 60 50% 100% 61-64 50% 65 100% Normal Retirement/DROP Percent of Eligible Employees Retiring
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-19 Retirement Ages 50 10% 51 10% 52 10% 53 10% 54 10% Early Retirement/DROP Percent of Eligible
Employees Retiring Rates of separation from active membership were as shown below (rates do not apply to members eligible to retire and do not include separation on account of death
or disability). This assumption measures the probabilities of members remaining in employment. Sample Years of New Old Ages Service Assumptions Assumptions ALL 0 34.00% 16.00% 1 23.00%
13.00% 2 16.00% 11.00% 3 12.00% 9.00% 4 9.00% 7.00% 25 5 & Over 5.88% 6.00% 30 5.32% 5.10% 35 4.40% 2.70% 40 3.70% 1.60% 45 3.20% 1.10% 50 2.40% 1.00% 55 1.40% 1.00% 60 1.00% 1.00% Rates
of Separationg from Active Employment Rates of disability among active members. New Assumption Old Assumption Sample Ages Men Women 20 0.14% 0.14% 25 0.15% 0.15% 30 0.18% 0.18% 35 0.23%
0.23% 40 0.30% 0.30% 45 0.51% 0.51% 50 1.00% 1.00% 55 1.55% 1.55% 60 0.00% 0.00% Percent Becoming Disabled Within Next Year Sample Ages Men Women 20 0.07% 0.03% 25 0.09% 0.05% 30 0.10%
0.07% 35 0.14% 0.13% 40 0.21% 0.19% 45 0.32% 0.28% 50 0.52% 0.45% 55 0.92% 0.76% 60 1.53% 1.10% Percent Becoming Disabled Within Next Year The mortality table was set forward ten years
for projecting disability costs.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-20 Miscellaneous and Technical Assumptions Administrative & Investment Expenses Annual administrative
expenses are assumed to be equal to the actual expenses paid during the preceding fiscal year. Investment expenses are offset against gross investment income. Assumed administrative
expenses are added to the Normal Cost. Benefit Service Exact fractional service is used to determine the amount of benefit payable. Decrement Operation Disability and mortality decrements
do not operate during the first 5 years of service. Disability and separation do not operate during retirement eligibility. Decrement Timing Decrements of all types are assumed to occur
mid year. Eligibility Testing Eligibility for benefits is determined based upon the age nearest birthday and service nearest whole year on the date the decrement is assumed to occur.
Forfeitures Vested members who terminate with a benefit worth less than 100% of their own own accumulated contributions were assumed to forfeit their vested benefit. Incidence of Contributions
Employer contributions are assumed to be received in 12 equal monthly installments. Member contributions are assumed to be received continuously throughout the year based upon the computed
percent of payroll shown in this report, and the actual payroll payable at the time contributions are made. Marriage Assumption 80% of members are assumed to be married for purposes
of death-in-service benefits. Male spouses are assumed to be three years older than female participants and female spouses are assumed to be three years younger than male participants
for active member valuation purposes. Normal Form of Benefit The normal form of benefit is a life annuity with 10 year certain. Pay Increase Timing Beginning of fiscal year. This is
equivalent to assuming that reported pays represent the actual amount paid during the previous fiscal year. Service Credit Accruals It is assumed that members accrue one year of service
credit per year.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | B-21 GLOSSARY OF TERMS Actuarial Accrued Liability The difference between (i) the actuarial
present value of future plan benefits, and (ii) the actuarial present value of future normal cost. Sometimes referred to as “accrued liability” or “past service liability.” Accrued Service
The service credited under the plan which was rendered before the date of the actuarial valuation. Actuarial Assumptions Estimates of future plan experience with respect to rates of
mortality, disability, turnover, retirement, rate or rates of investment income and salary increases. Decrement assumptions (rates of mortality, disability, turnover and retirement)
are generally based on past experience, often modified for projected changes in conditions. Economic assumptions (salary increases and investment income) consist of an underlying rate
in an inflation-free environment plus a provision for a long-term average rate of inflation. Actuarial Cost Method A mathematical budgeting procedure for allocating the dollar amount
of the “actuarial present value of future plan benefits” between the actuarial present value of future normal cost and the actuarial accrued liability. Sometimes referred to as the “actuarial
funding method.” Actuarial Equivalent A single amount or series of amounts of equal value to another single amount or series of amounts, computed on the basis of the rate(s) of interest
and mortality tables used by the plan. Actuarial Present Value The amount of funds presently required to provide a payment or series of payments in the future. It is determined by discounting
the future payments at a predetermined rate of interest, taking into account the probability of payment. Amortization Paying off an interest-bearing liability by means of periodic payments
of interest and principal, as opposed to paying it off with a lump sum payment. Experience Gain (Loss) A measure of the difference between actual experience and that expected based upon
a set of actuarial assumptions during the period between two actuarial valuation dates, in accordance with the actuarial cost method being used. Normal Cost The annual cost assigned,
under the actuarial funding method, to current and subsequent plan years. Sometimes referred to as “current service cost.” Any payment toward the unfunded actuarial accrued liability
is not part of the normal cost. Reserve Account An account used to indicate that funds have been set aside for a specific purpose and is not generally available for other uses. Unfunded
Actuarial Accrued Liability The difference between the actuarial accrued liability and valuation assets. Sometimes referred to as “unfunded accrued liability.” Valuation Assets The value
of current plan assets recognized for valuation purposes. Generally based on market value plus a portion of unrealized appreciation or depreciation.
SECTION C PENSION FUND INFORMATION
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | C-1 Cash and Securities -Market Value Cash and Cash Equivalents $ 59,925 $ 33,763 Short Term
Investments 243,503 0 Treasury and Agency Bonds & Notes 1,696,370 0 Corporate Bonds 1,163,354 0 Common & Preferred Stocks 2,884,298 0 Other Fixed Income 85,602 0 Mutual or Pooled Bond
Funds 0 2,031,469 Mutual Funds 0 3,510,357 Other Securities -Participant Directed 0 380,373 Total 6,133,052 5,955,962 Receivables and Accruals Member Contribution 0 0 Additional Employer
Contribution 0 2,373 Interest and Dividends 0 0 Total 0 2,373 Payables Benefits-DROP Reserve 0 380,373 Lump Sum Distributions 0 0 Excess Premium Tax Liability 120,454 120,454 Other 1,641
29 Total 122,095 500,856 Net Assets -Market Value $ 6,010,957 $ 5,457,479 SUMMARY OF ASSETS 9/30/2010 9/30/2009 Year Ending Year Ending
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | C-2 Market Value at Beginning of Period $ 5,457,479 $ 5,085,645 Income Member Contributions
81,183 88,691 State Contributions 88,117 86,433 Employer Contribution 337,706 258,847 Interest and Dividends 145,313 159,932 Gain (Loss) 443,923 271,938 Total Income 1,096,242 865,841
Disbursements Monthly Benefit Payments 490,492 474,002 Lump Sum Distributions 0 0 Refund of Contributions 7,981 3,440 Increase in Excess Premium Tax Liability 0 0 Investment Related
Expenses 17,278 592 Other Administrative Expenses 27,093 15,973 Insurance Premiums 0 0 Total Disbursements 542,844 494,007 Net Increase During Period $ 553,398 $ 371,834 Market Value
at End of Period $ 6,010,877 $ 5,457,479 Year Ending 9/30/2009 Year Ending 9/30/2010 PENSION FUND INCOME AND DISBURSEMENTS
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | C-3 DEFERRED RETIREMENT OPTION PLAN (DROP) BENEFITS HELD IN RESERVE State Statutes require that
the value of assets be offset by the total accumulated balance of DROP payments being held in reserve for those participating in the DROP plan. A reconciliation of the accumulated balance
to be recognized is provided in the table below. $380,373+4,558+(0)-384,9310RECONCILIATION OF DROP ACCOUNTSPayments credited to accountsInvestment Earnings creditedWithdrawals from accountsValue
at end of yearValue at beginning of year
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | C-4 ACTUARIAL VALUE OF ASSETS As of September 30, 2010 Valuation assets are calculated using
a smoothed market value over a period of four (4) years, as prescribed under Internal Revenue Procedure 2000-40. The asset value determined under this method will be adjusted to be no
greater than 120% and no less than 80% of the fair market value. Under this method, the actuarial value of assets is equal to the market value of assets less a decreasing fraction (1/nth
per year, where n equals the number of years in the smoothing period) of the gain or loss for each of the preceding 3 years. Under this method, a gain or loss for a year is determined
by calculating the difference between the expected market value of the assets at the valuation date and the actual market value of the assets at the valuation date. The expected value
of the assets for the year is the market value of the assets at the valuation date for the prior year brought forward with interest at the valuation interest rate to the valuation date
for the current year plus contributions minus disbursements (i.e., benefits paid and expenses), all adjusted with interest at the valuation rate to the valuation date for the current
year. If the expected value is less than the market value, the difference is a gain. Conversely, if the expected value is greater than the market value, the difference is a loss. Calculation
of Valuation Assets is shown on the following page.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | C-5 2008 2009 2010 2011 A. Preliminary actuarial value from prior year $ 5,662,661 $ 5,763,883
$ 5,921,648 $ 6,164,269 B. Market value beginning of prior year 5,922,696 5,085,645 5,457,479 6,010,957 C. Market value end of prior year 5,085,645 5,457,479 6,010,957 D. Non-investment
net cash flow [contributions-(benefits & expenses)] (153,385) (60,036) (35,838) E. Investment return 1. Actual market value return net of investment expenses: C -B -D (683,666) 431,870
589,317 2. Expected return of 8.00% 446,877 404,450 435,165 3. Excess/(shortfall) to be phased-in: E1 -E2 (1,130,543) 27,420 154,152 F. Phased-in recognition of investment return (4
Year Recognition) 1. Current year: 25% of E3 (282,636) 6,855 38,538 2. 25% of excess/(shortfall) from first prior year 80,537 (282,636) 6,855 38,538 3. 25% of excess/(shortfall) from
second prior year 8,595 80,537 (282,636) 6,855 4. 25% of excess/(shortfall) from third prior year 1,234 8,595 80,537 (282,636) 5. Total phased-in recognition of investment return (192,270)
(186,649) (156,706) (237,243) G. Actuarial value end of year 1. Preliminary actuarial value end of year: A + D + E2 + F5 5,763,883 5,921,648 6,164,269 2. Upper corridor limit: 120% of
C 6,102,774 6,548,974 7,213,149 3. Lower corridor limit: 80% of C 4,068,516 4,365,983 4,808,766 4. Actuarial value end of year * 5,763,883 5,921,648 6,164,269 H. Difference between market
value and actuarial value (678,238) (464,169) (153,312) I. Ratio of Funding Value to Market Value 113% 109% 103% DEVELOPMENT OF FUNDING VALUE OF ASSETS AS OF SEPTEMBER 30 * Offset for
DROP Reserve made prior to the calculation of valuation assets.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | C-6 INVESTMENT RATE OF RETURN The investment rate of return has been calculated on the following
bases: Basis 1 -Cost Value: Interest, dividends and realized gains (losses) divided by the beginning cost value of the fund, adjusted for cash flow during the year. Basis 2 -Market Value:
Interest, dividends, realized gains (losses) and unrealized appreciation (depreciation) divided by the beginning market value of the fund, adjusted for cash flow during the year. This
figure is normally called the Total Rate of Return. Basis 3 -Actuarial Value: Investment earnings recognized in the Actuarial Value of Assets divided by the weighted average of the Actuarial
Value of Assets during the year. 9/30/00 4 .3 % 9 .7 % 9/30/01 ( 1.9) 5 .1 9/30/02 ( 6.7) 1 .5 9/30/03 1 0.1 1 .7 9/30/04 7 .2 2 .3 9/30/05 9 .4 4 .9 9/30/06 9 .7 8 .5 9/30/07 1 4.7
1 0.0 9/30/08 ( 11.9) 4 .9 9/30/09 8 .5 3 .8 9/30/10 1 0.8 4 .7 6.2 % 5.8 % 4.5 % 5.3 % Average Compounded Rate of Return for 5 Years 10 Years Year Ended Market Value Actuarial Value
Investment Rate of Return
SECTION D FINANCIAL ACCOUNTING INFORMATION
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | D-1 A. Valuation Date B. Actuarial Present Value of Accumulated Plan Benefits 1. Vested Benefits
a. Members Currently Receiving Payments $ 4,897,530 $ 4,754,663 b. Terminated Vested Members 224,979 137,360 c. Other Members 2,579,728 2,032,829 d. Total 7,702,237 6,924,852 2. Non-Vested
Benefits 174,019 119,994 3. Total Actuarial Present Value of Accumulated Plan Benefits: 1d + 2 7,876,256 7,044,846 4. Accumulated Contributions of Active Members 298,857 236,929 C. Changes
in the Actuarial Present Value of Accumulated Plan Benefits 1. Total Value at Beginning of Year 7,044,846 6,795,021 2. Increase (Decrease) During the Period Attributable to: a. Plan
Amendment 0 0 b. Change in Actuarial Assumptions 591,079 0 c. Latest Member Data, Benefits Accumulated and Decrease in the Discount Period 738,804 727,267 d. Benefits Paid (Including
DROP Reserve) (498,473) (477,442) e. Net Increase 831,410 249,825 3. Total Value at End of Period 7,876,256 7,044,846 D. Market Value of Assets 6,010,877 5,457,479 E. Actuarial Assumptions
-See page entitled Actuarial Assumptions and Methods FASB NO. 35 INFORMATION September 30, 2010 September 30, 2009
City of Atlantic Beach General Employees’ Retirement System 9/30/2010 Actuarial Valuation | D-2 SCHEDULE OF FUNDING PROGRESS (GASB Statement No. 25) 9/30/2001 * $ 4,068 $ 5,016 $ 948
81.1 % $ 1,155 82.1 % 9/30/2002 4,230 5,334 1,104 79.3 1,195 92.4 9/30/2003 * 4,373 5,986 1,613 73.1 1,129 142.9 9/30/2004 4,534 6,405 1,871 70.8 1,360 137.6 9/30/2005 4,775 6,997 2,222
68.2 1,402 158.5 9/30/2006 5,175 7,034 1,859 73.6 1,254 148.2 9/30/2007 * 5,663 7,620 1,957 74.3 1,453 134.7 9/30/2008 5,764 8,112 2,348 71.1 1,476 159.1 9/30/2009 * 5,922 8,689 2,767
68.2 1,697 163.1 9/30/2010 * 6,164 9,449 3,285 65.2 1,639 200.4 Actuarial Valuation Date UAAL As % of Covered Payroll (b -a) /c Covered Payroll ( c ) Funded Ratio (a) /(b) Actuarial
Value of Assets (a) Unfunded AAL (UAAL) (b) -(a) Actuarial Accrued Liability (AAL) -Entry Age (b)
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | D-3 SCHEDULE OF CONTRIBUTIONS FROM EMPLOYER (GASB Statement No. 25) Fiscal Year Ending 9/30/2001
* 16.70 % $ 183,091 $ 183,091 100 % 9/30/2002 17.10 224,812 224,812 100 9/30/2003 * 18.05 225,991 226,041 100 9/30/2004 18.74 242,637 242,637 100 9/30/2005 24.31 297,361 297,361 100
9/30/2006 23.76 350,161 350,160 100 9/30/2007 * 25.70 390,494 390,494 100 9/30/2008 22.80 309,841 309,842 100 9/30/2009 * 21.93 345,280 345,280 100 9/30/2010 * 26.62 425,823 425,823
100 Percentage Contributed Annual Required Contribution Contribution Contribution Rate Actual As a % of Payroll * Reflects change in benefits, actuarial assumptions and/or method. Note:
Annual Required Contribution (if any), above, is payable by the City and includes185/175 State Premium Tax Money up to allowable limit.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | D-4 Employer FYE September 30 A. Annual Required Contribution (ARC) $ 425,823 $ 345,280 $ 309,841
B. Interest on Net Pension Obligation (Asset) ---C. Adjustment to ARC ---D. Annual Pension Cost (APC): (A + B -C) 4 25,823 3 45,280 309,841 E. Contributions made 425,823 345,280 309,842
F. Increase (decrease) in Net Pension Obligation(Asset): (D -E) ---G. Net Pension Obligation(Asset) at beginning of year ---H. Net Pension Obligation(Asset) at end of year: (F+ G) ---ANNUAL
PENSION COST AND NET PENSION OBLIGATION (GASB STATEMENT NO. 27)2010 2009 2008 Fiscal Annual Pension Actual Year Ending Cost (APC) Contribution 9/30/2008 $ 309,841 $ 309,842 100.0 % $
-9/30/2009 345,280 345,280 100.0 -9/30/2010 425,823 425,823 100.0 -THREE YEAR TREND INFORMATION Percentage of APC Contributed Net Pension Obligation
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | D-5 REQUIRED SUPPLEMENTARY INFORMATION GASB Statement No. 25 and No. 27 The information presented
in the required supplementary schedules was determined as part of the actuarial valuation at the dates indicated. Additional Information as of the latest actuarial valuation: Valuation
Date Contribution Rates: Employer Plan Members Actuarial Cost Method Amortization Method Equivalent Single Amortization Period Asset Valuation Method Actuarial Assumptions: Investment
rate of return Projected salary increases Includes price inflation Cost-of-living adjustments Payroll Growth Assumption September 30, 2010 31.07 % 4.815% Entry Age Closed, Level % of
Pay Method 9.85 Years See Section entitled “Actuarial Value of Assets” 8.0% 5.0% -23.0% 3.0% None 3.05%
SECTION E MISCELLANEOUS INFORMATION
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | E-1 A. 1. Number Included in Last Valuation 27 26 2. New Members Included in Current Valuation
3 5 3. Non-Vested Employment Terminations (1) (3) 4. Vested Employment Terminations (2) (1) 5. Service Retirements 0 0 6. Disability Retirements 0 0 7. Deaths 0 0 8. DROP Retirement
0 0 9. Transfer to Another Division 0 0 10. Number Included in This Valuation 27 27 B. 1. Number Included in Last Valuation 4 3 2. Additions from Active Members 2 1 3. Lump Sum Payments/Withdrawals
0 0 4. Payments Commenced 0 0 5. Deaths 0 0 6. Other 0 0 7. Number Included in This Valuation * 6 4 C. 1. Number Included in Last Valuation 16 16 2. Additions from Active Members 0 0
3. Additions entering the DROP 0 0 4. Additions from Terminated Vested Members 0 0 5. Deaths Resulting in No Further Payments (1) 0 6. Deaths Resulting in New Survivor Benefits 0 0 7.
End of Certain Period -No Further Payments 0 0 8. Other --Lump Sum Distributions 0 0 9. Number Included in This Valuation 15 16 RECONCILIATION OF MEMBERSHIP DATA Active Members Service
Retirees, Disability Retirees, Beneficiaries & DROP Terminated Vested Members From 9/30/09 From 9/30/08 To 9/30/10 To 9/30/09
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | E-2 STATISTICAL DATA Active Members as of September 30, 2010 Age Group 0-4 5-9 10-14 15-19 20-24
25-29 30 & Up Totals Avg. Pay 20-24 NO. 0 0 0 0 0 0 0 0 0 25-29 NO. 2 0 0 0 0 0 0 2 44,785 30-34 NO. 4 1 0 0 0 0 0 5 49,115 35-39 NO. 3 4 3 0 0 0 0 10 59,745 40-44 NO. 1 0 1 1 0 0 0
3 64,389 45-49 NO. 1 0 1 1 1 0 0 4 76,923 50-54 NO. 0 1 0 0 2 0 0 3 68,568 55-59 NO. 0 0 0 0 0 0 0 0 0 60-64 NO. 0 0 0 0 0 0 0 0 0 65&UP NO. 0 0 0 0 0 0 0 0 0 0 TOT NO. 11 6 5 2 3 0
0 27 60,709
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | E-3 Active Year Members Ended Vested Other End of September 30 A E A E A E A E A A A E Year
2000 5 3 0 0.2 0 0.0 0 0.0 0 3 3 1.6 27 2001 1 2 1 0.1 0 0.0 0 0.0 0 1 1 1.9 26 2002 3 4 0 0.1 0 0.1 0 0.0 0 4 4 1.7 25 2003 3 6 0 0.1 1 0.1 0 0.0 2 3 5 1.3 22 2004 9 4 0 0.3 0 0.0 0
0.0 2 2 4 1.1 27 2005 3 4 2 0.6 0 0.0 0 0.0 1 1 2 1.9 26 2006 2 4 1 1.0 0 0.0 0 0.0 1 2 3 1.8 24 2007 4 3 1 0.2 0 0.0 0 0.0 0 2 2 1.5 25 2008 5 4 1 0.1 0 0.0 0 0.0 0 3 3 1.6 26 2009
5 4 1 0.1 0 0.0 0 0.0 0 3 3 1.6 27 2010 3 3 0 0.4 0 0.0 0 0.0 2 1 3 1.4 27 5-yr. Totals 2006-2010 19 18 4 1.8 0 0.0 0 0.1 14 7.9 Expected for 2011 1.0 0.1 0.0 2.5 A Represents actual
number. E Represents expected number. Year Retirement Retirement Service Total NUMBER ADDED TO AND REMOVED FROM ACTIVE MEMBERSHIP Number Added Terminations During Year During Normal
Disability Died-in Withdrawal
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | E-4 Year Ended September 30No.Annual PensionsNo.Annual PensionsNo.Annual PensionsNo.Annual PensionsNo.Annual
Pensions2000 8158,270 0.11,462 2001146,892*1 46,892 9205,162 0.11,608 20029205,162 0.11,960 2003230,1482 30,148 11235,310 0.12,072 200411235,310 0.22,683 20052106,7312 106,731 13342,041
0.22,933 2006134,52119,796 -24,724 13366,765 0.23,809 2007143,4551 43,455 14410,220 0.23,922 2008263,7812 63,781 16474,001 0.24,510 200916474,001 0.25,200 20106,319**114,935 (8,616)
15465,385 0.25,200 Expected for20110.35,761 ***On-time adjustment correcting past underpaymentsIncludes a one-time 5.0% cost-of-living increase. Retired Members and Beneficiary DataHistorical
Schedule**Expected AddedRemovedNet IncreaseEnd of YearRemovals
SECTION F SUMMARY OF PLAN PROVISIONS
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | F-1 A. Ordinances: Plan established under the Code of Ordinances for the City of Atlantic Beach,
Florida, Part II, Chapter 2, Article VI, Division 4 and was most recently amended and restated under Ordinance No. 58-08-34 passed and adopted on August 11, 2008. The Plan is also governed
by certain provisions of Part VII, Chapter 112, Florida Statutes (F.S.) and the Internal Revenue Code. B. Effective Date December 22, 1975, Restated under Division 4 on July 10, 2000
C. Plan Year October 1 through September 30 D. Type of Plan Qualified, governmental defined benefit retirement plan; for GASB purposes it is a sole employer plan. E. Eligibility Requirements
All full time sworn city police officers, who normally work more than 1,000 hours annually and are not an elected officials, temporary or contractual employees, or executives or departments
heads who have elected not to participate, will become members on the date of employment. F. Credited Service Service is measured as the total number of years and fractional parts of
years, but credited to the nearest one-twelfth (1/12) of a year. No service will be credited for any periods of employment for which the member received a refund of their employee contributions.
G. Compensation Base salary or wages paid for services rendered to the City including longevity pay, overtime pay, cost of living payments, vacation, holiday and sick pay and incentive
pay. Compensation excludes payments of unused vacation or sick leave, uniform or equipment allowances, extra duty or special detail pay on behalf of a second party employer, or any reimbursement
of expenses. H. Final Average Compensation (FAC) Average monthly rate of Compensation during the highest 60 consecutive months of Credited Service out of the last 120 months preceding
the date of termination or retirement.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | F-2 I. Normal Retirement Eligibility: A participant may retire on the first day of the month
coincident with or next following the earlier of: (1) 25 years of Credited Service regardless of age, or (2) age 50 with 20 years of Credited Service, or (3) age 55 with 10 years of
Credited Service, or (4) age 60 with 5 years of Credited Service. Benefit: 3.00% of FAC times Credited Service. Benefit is limited to 100% of FAC. Normal Form of Benefit: 10 Years Certain
and Life thereafter; other options are also available. J. Early Retirement Eligibility: A member may elect to retire earlier than the Normal Retirement Eligibility upon attainment of
age 50 with 10 years of Credited Service. Benefit: The Normal Retirement Benefit is actuarially reduced by 3% for each year by which the member’s Early Retirement date precedes the member’s
normal retirement age. Normal Form of Benefit: 10 year certain and life thereafter; other options are also available. K. Delayed Retirement Same as Normal Retirement taking into account
compensation earned and service credited until the date of actual retirement. L. Service Connected Disability Eligibility: Any member who becomes totally and permanently disabled due
to a service related injury or illness and is deemed unable to render useful and efficient service to the City as a police officer is eligible for a disability benefit. Benefit: The
benefit is calculated as if the member was eligible for Normal Retirement and is payable retroactively to the later of; the last day on payroll, or the date of application for disability
benefits. The minimum for a service connected disability benefit is 42% of FAC. Normal Form of Benefit: 10 year certain and life thereafter.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | F-3 M. Non-Service Connected Disability Eligibility: Any member with
5 or more years of Credited Service who becomes totally and permanently disabled and is deemed unable to render useful and efficient service to the City as a police officer is eligible
for a disability benefit. Benefit: The benefit is calculated as if the member was eligible for Normal Retirement and is payable retroactively to the later of; the last day on payroll,
or the date of application for disability benefits. The minimum for a non-service connected disability benefit is 25% of FAC if the member had at least 8 1/3 years of Credited Service.
Normal Form of Benefit: 10 year certain and life thereafter. N. Pre-Retirement Death Eligibility: Any member with 5 or more years of Credited Service is eligible for a death benefit.
Benefit: Upon the death of a member, the designated beneficiary shall be paid an actuarially reduced standard ten (10) year certain and life survivor pension notwithstanding that the
member may not have satisfied the conditions for retirement. If there are no beneficiaries designated by the member, then a benefit shall be paid to the surviving spouse or, if no surviving
spouse, a reduced benefit will be paid to the member’s unmarried children. If spouse is receiving benefits described above, no children’s benefits are payable. If spouse is not receiving
benefits, children under age 19, or age 23 if an unmarried fulltime student, will receive equal shares of 50% of the member’s Normal Retirement Benefit under the Life Annuity option
based upon service and FAC as of the date of death. Normal Form of Benefit: Payable for the life of the member’s beneficiary or spouse. Children’s benefits are payable until age 19 or
age 23 if an unmarried fulltime student. O. Post Retirement Death Benefit determined by the form of benefit elected upon retirement. P. Optional Forms In lieu of electing the Normal
Form of benefit, the optional forms of benefits available to all retirees are a Life Annuity, or the 50%, 66 2/3%, 75% or 100% Joint and Survivor options. A Social Security option is
also available for members retiring prior to the time they are eligible for Social Security retirement benefits.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | F-4 Q. Vested Termination Eligibility: A participant has earned a non-forfeitable right to Plan
benefits after the completion of 5 or more years of Credited Service. Benefit: The benefit is the member’s vested portion of the accrued Normal Retirement Benefit as of the date of termination.
Benefit begins on the Normal Retirement date. Normal Form of Benefit: 10 year certain and life thereafter; other options are also available. Member’s terminating employment with less
than 5 years of Credited Service will receive a refund of their own accumulated contributions. R. Refunds Eligibility: All members with less than 5 years are eligible. Optionally, vested
participants may also withdraw their contributions in lieu of the deferred benefits otherwise due. Benefit: The member who terminates employment receives a lump-sum payment of their
employee contributions. S. Member Contributions 4.815% of Compensation. T. Premium Tax Monies A distribution of casualty insurance premium tax monies collected by the State pursuant
to Chapter 185 Florida Statutes. U. Employer Contributions The amount determined by the actuary to pay the normal cost and an amortization of the unfunded actuarial accrued liabilities,
along with employee contributions and Chapter 185 monies. Following are contribution rates per recent valuations: Plan Year Beginning City Sec 185 Member* Total 10/1/2006 19.85% 5.85%
1.44% 27.14% 10/1/2007 16.27% 6.53% 4.82% 27.62% 10/1/2008 16.44% 5.49% 4.815% 26.75% 10/1/2009 21.07% 5.55% 4.815% 31.44% 10/1/2010 21.66% 4.83% 4.815% 31.31% 10/1/2011 31.07% 5.11%
4.815% 41.00% * Weighted average of member contribution rates.
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | F-5 V. Cost of Living Increases The plan does not provide for automatic post-retirement cost
of living adjustments (COLA) of retiree benefits. W. Changes from Previous Valuation See the Discussion of Valuation Results Section of this report under the Revisions in Benefits heading.
X. Gain-sharing benefits Not applicable. Y. Deferred Retirement Option Plan Eligibility: Upon obtaining Normal or Early Retirement eligibility All members must make a written election
to participate in the DROP. Benefit: The member’s Credited Service and FAC are frozen upon entry into the DROP. The monthly retirement benefit as described under Normal Retirement is
calculated based upon the frozen Credited Service and FAC. Benefits for members entering the DROP upon Early Retirement eligibility will be actuarially reduced as described for Early
Retirement. Maximum DROP Period: 60 months Interest Credited: Earnings to the DROP account will be accordance with the self-directed options selected by the participant. Normal Form
of Benefit: Lump Sum.
SECTION G COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | G-1 A. Participant Data Number Included: Actives 27 27 27 Service Retirees & Beneficiaries 12
12 13 Disability Retirees 3 3 3 Terminated Vested Members 6 6 4 Total Members and Beneficiaries 48 48 47 Total Annual Payroll $1,639,155 $1,639,155 $1,696,746 Expected Annual Payroll
in Contribution Year 1,738,481 1,776,228 1,838,635 Total Annualized Benefits Service Retirees & Beneficiaries 409,353 409,353 417,970 Disability Retirees 56,032 56,032 56,032 Terminated
Vested Members 64,984 64,984 42,030 B. Assets (Market Value) Cash and Short Term Investments 303,428 303,428 33,763 Treasury and Agency Bonds & Notes 1,696,370 1,696,370 0 Corporate
Bonds 1,163,354 1,163,354 0 Common & Preferred Stocks 2,884,298 2,884,298 0 Mutual Fund Bonds 0 0 2,031,469 Mutual Fund Stocks 0 0 3,510,357 Other Securities 85,602 85,602 380,373 Net
Receivables & Payables (122,095) (122,095) (498,483) Total 6,010,957 6,010,957 5,457,479 Actuarial Value 6,164,269 6,164,269 5,921,648 Assets include: Accumulated active member contributions
298,857 298,857 236,929 (with interest if applicable) C. Actuarial present value of accrued benefits (i) Vested accrued benefits Retired members and benefitciaries (incl DROP) 4,897,530
4,664,368 4,754,663 Terminated members 224,979 202,263 137,360 Active members (includes non-forfeitable memebrs contributions of 298,857 and 236,929) 2,579,728 2,248,547 2,032,829 Total
7,702,237 7,115,178 6,924,852 (ii) Non-vested accrued benefits 174,019 169,999 119,994 (iii) Total actuarial p.v. of accrued benefits 7,876,256 7,285,177 7,044,846 (iv) Actuarial p.v.
of accrued benefits at begin. of year 7,044,846 7,044,846 7,661,492 (v) Changes attributable to: Amendments none none none Assumption change none none none Operation of decrements 738,804
738,804 959,043 Benefit payments (498,473) (498,473) (477,442) Other (Method Change) 591,079 none (1,098,247) (vi) Net change 831,410 240,331 (616,646) (vii) Actuarial p.v. of accr.
benefits at end of year 7,876,256 7,285,177 7,044,846 September 30, 2009 COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS September 30, 2010 Prior to Changes September 30, 2010 After
Changes
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | G-2 D. Liabilities-Actuarial Present Value of Future Benefits 1. Active Members Service Retirement
Benefits $6,169,427 $6,464,102 $6,441,735 Vesting Benefits 413,322 160,187 167,919 Disability Benefits 214,592 166,132 171,402 Preretirement Death Benefits 49,355 173,035 172,611 Return
of Member Contributions 75,025 48,693 46,779 Total Actives 6,921,721 7,012,149 7,000,446 2. Inactive Members Service Retirees & Beneficiaries 4,346,304 4,122,857 4,203,454 Disability
Retirees 551,226 541,511 551,209 Terminated Vested Members 224,979 202,263 137,360 Total Inactive Members 5,122,509 4,866,631 4,892,023 3. Total Present Value for All Members 12,044,230
11,878,780 11,892,469 Total Present Value of: Future Salaries 13,939,718 16,761,832 17,447,833 Future Employee Contributions 671,894 807,920 840,985 Future Contributions from Other Sources
5,208,067 4,906,591 5,129,836 Derivation of Current Employer Unfunded Actuarial Accrued Liability (UAAL) a. Total UAAL for Prior Valuation Date $2,767,089 $2,767,089 $2,347,850 b. Employer
Normal Cost for this period 253,409 253,409 217,525 c. Interest acccrued on (a) and (b) 231,503 231,503 196,529 d. Contributions for this period 425,823 425,823 345,280 e. Interest accrued
on (d) 17,033 17,033 13,811 f. Changes due to: Assumptions 630,507 0 0 Plan Amendment 0 0 0 Cost Method (Asset Method) 0 0 40,694 Actuarial (Gain) Loss (154,731) (154,731) 323,582 g.
Total Current UAAL: a+b+c-d-e+f 3,284,921 2,654,414 2,767,089 September 30, 2009 COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS September 30, 2010 Prior to Changes September 30,
2010 After Changes
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | G-3 DateItem DescriptionYears RemainingAmortization PaymentOriginal Amount9/30/1993Original3($9,550)9/30/1995
Experience Loss--(198,928)9/30/1996Experience Gain161,494266,9659/30/1997Experience Loss2(48,936)(249,395)9/30/1998Experience Gain3(16,898)(95,019)9/30/1999Experience Gain4(19,375)(117,618)9/30/2000E
xperience Gain516,080103,8719/30/2001Experience Loss6(203)(1,389)9/30/2002Experience Gain717,784128,2129/30/2003Experience Loss844,759339,5639/30/2004Experience Loss926,071207,8089/30/2005Experience
Loss1034,329287,2259/30/2006Experience Loss11(46,898)287,2259/30/2007Experience Loss1214,991137,9069/30/2008Experience Loss1331,955308,0229/30/2009Experience Loss1430,672323,5829/30/2010Experience
Loss15(15,154)(154,731)9/30/1993Benefit Changes1360,124442,2329/30/1994Benefit Changes14(1,635)(12,597)9/30/1996Benefit Changes164,25035,9149/30/1997Benefit Changes171,0058,8929/30/2001Benefit
Changes217,68181,6279/30/2003Benefit Changes2311,654144,0069/30/2007Benefit Changes27(3,510)(49,157)9/30/1995Assumption/Method Change1540,107323,6339/30/1997Assumption/Method Change1726,201231,7959/3
0/2010Assumption/Method Change3041,304630,507TOTAL$308,302$3,410,150(1,088)108,636 305,652 12,057 280,538 (154,731)599,119 (17,179)48,974 Current Unfunded($27,359) -61,494 (95,631) Original
and Current Unfunded Actuarial Accrued Liabilities 73,367 318,423 (412,597)(72,339)(48,409)195,950 442,266 $3,243,007 140,838 105,052 (55,033)167,915 314,268 322,317 630,507
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | G-4 E. Pension Cost Entry Age Normal Cost for: Service Retirement Benefits $242,085 $258,393
$271,011 Vesting Benefits 22,438 8,695 8,780 Disability Benefits 14,537 10,742 10,646 Preretirement Death Benefits 2,398 8,263 8,488 Return of Member Contributions 16,359 9,748 10,210
Total Actives 297,815 295,842 309,134 Administrative Expenses 26,051 26,051 15,359 Expected Member Contributions 76,614 77,736 80,829 Total Employer Normal Cost 247,252 244,157 243,663
Payment Required to Amortize Unfunded Actuarial Accrued Liability 310,885 269,581 188,563 Total Contribution at Valuation Date 558,137 513,738 432,226 Total Contribution Adjusted for
Frequency of Payments and Interest to Next Following Fiscal Year 628,909 578,880 487,032 % of Expected Payroll 36.18% 32.59% 26.49% Amount Expected to be Contributed by Members 83,708
85,525 88,530 % of Expected Payroll 4.815% 4.815% 4.815% F. Past Contributions-For the Fiscal Years Ended September 30 of 2009 and 2010: Required Contribution Determined in the Valuation
as of September 30, 2008 September 30, 2007 by the Plan Sponsor $425,823 $345,280 by Members $77,016 $75,809 Actual Contribution for the Fiscal Year ended September 30, 2010 September
30, 2009 by the Plan Sponsor 4 25,823 $345,280 by Members $81,183 $88,691 G. N e t experience (gain) loss during year: ($154,731) $323,582 H. 1. Plan to Amortize Unfunded Actuarial Accrued
Liability 20 year funding of the Original Unfunded Actuarial Accrued Liability, 15 year funding of any Gains or Losses and 30 year of adjustments due to benefit or assumption changes.
2. Schedule Illustrating the Amortization of the Unfunded Actuarial Accrued Liability (UAAL) Year Projected UAAL 2010 (peak) $2,654,414 2011 2,563,683 2012 2,536,391 2013 2,443,689 2016
1,929,112 2020 1,124,411 2026 207,636 2028 122,925 2032 22,134 2033 1,446 3. Action taken since last actuarial valuation. Contribution sufficient to satisfy the total required contribution.
September 30, 2009 COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS September 30, 2010 Prior to Changes September 30, 2010 After Changes
City of Atlantic Beach Police Officers’ Retirement System 9/30/2010 Actuarial Valuation | G-5 I. 1. Three-Year Comparison of Actual and Assumed Salary Increases (Annualized) Actual Assumed
2.1% 6.6% 11.0% 6.4% 0.0% 6.4% 2. Three-Year Comparison of Investment Return (Actuarial Value) Actual Assumed 4.6% 8.0% 3.8% 8.0% 4.7% 8.0% 3. Average Annual Growth in Covered Payroll,
Last Ten Years (if applicable) Total % Increase Last Ten Years 35.11% Annual % Increase 3.05% Thirty-year Forecast 4.00% J. Benefits and Expenses of Plan not Explicitly or Implicitly
Provided in Valuation NONE K. Trends not taken into Account but which are likely to Result in Future Cost Increases NONE 9/30/2006 9/30/2005 9/30/2001 9/30/2002 1,402,444 9/30/2010 1,254,264
1,452,926 9/30/2000 $1,213,234 1,155,404 1,194,950 1,129,034 1,476,074 1,696,746 1,639,155 9/30/2010 Year Ended 9/30/2008 9/30/2009 1,360,051 9/30/2003 9/30/2004 9/30/2010 9/30/2007
9/30/2008 9/30/2009 COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS Year Ended Valuation Date Total Covered Payroll 9/30/2008 9/30/2009