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CITY OF TALLAHASSEE PENSION PLAN FOR GENERAL EMPLOYEES CHAPTER 112.664, F.S. COMPLIANCE REPORT IN CONNECTION WITH THE OCTOBER 1, 2018 FUNDING ACTUARIAL VALUATION REPORT AND THE PLAN’S FINANCIAL REPORTING FOR THE YEAR ENDING SEPTEMBER 30, 2018

July 19, 2019

Board of Trustees Pension Plan for the City of Tallahassee Tallahassee, Florida Dear Board Members: Gabriel, Roeder, Smith & Company (GRS) has been engaged by the City of Tallahassee Pension Plan for General Employees (Plan) to prepare a disclosure report to satisfy the requirements set forth in Ch. 112.664, F.S. and as further required pursuant to Ch. 60T‐1.0035, F.A.C. This report was prepared at the request of the City and is intended for use by the Retirement System and those designated or approved by the City. This report may be provided to parties other than the System only in its entirety and only with the permission of the City. The purpose of the report is to provide the required information specified in Ch. 112.664, F.S. as well as supplement this information with additional exhibits. This report should not be relied on for any purpose other than the purpose described above. For financial reporting purposes under GASB 67, the liabilities were “rolled forward” from October 1, 2017 to the measurement date, September 30, 2018. The liabilities for this purpose were based on the October 1, 2017 Actuarial Valuation report dated June 5, 2018. The findings in this report are based on data or other information through September 30, 2018. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan’s funded status); and changes in plan provisions or applicable law. The scope of this engagement does not include an analysis of the potential range of such measurements. This report was based upon information furnished by the City and the Plan Administrator concerning Retirement Plan benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We checked for internal and year‐to‐year consistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided by the City and Plan Administrator. Except as otherwise indicated as required for the disclosures contained herein, this report was prepared using certain assumptions selected by the Board as described in our October 1, 2018 Actuarial Valuation report. This report is also based on the Plan Provisions, census data, and financial information as summarized in our October 1, 2018 Actuarial Valuation report. Please refer to the October 1, 2018

Board of Trustees Pension Plan for the City of Tallahassee July 19, 2019 Page ii

Actuarial Valuation report, dated May 16, 2019, and the GASB No. 67 actuarial disclosure report, dated January 3, 2019, for summaries and descriptions of this information. The use of an investment return assumption that is 2% higher than the investment return assumption used to determine the funding requirements does not represent an estimate of future Plan experience nor does it reflect an observation of future return estimates inherent in financial market data. The use of this investment return assumption is provided as a counterpart to the Chapter 112.664, Florida Statutes requirement to utilize an investment return assumption that is 2% lower than the assumption used to determine the funding requirements. The inclusion of the additional exhibits showing the effect of using a 2% higher investment return assumption shows a more complete assessment of the range of possible results as opposed to showing a one‐sided range as required by Florida Statutes. Peter N. Strong and Jeffrey Amrose are members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. The signing actuaries are independent of the plan sponsor. This report has been prepared by actuaries who have substantial experience valuing public employee retirement systems. To the best of our knowledge the information contained in this report is accurate and fairly presents the actuarial position of the Retirement Plan as of the valuation date. All calculations have been made in conformity with generally accepted actuarial principles and practices, with the Actuarial Standards of Practice issued by the Actuarial Standards Board and with applicable statutes. With respect to the reporting standards for defined benefit retirement plans or systems contained in Section 112.664(1) F.S., the actuarial disclosures required under this section were prepared and completed by us or under our direct supervision, and we acknowledge responsibility for the results. To the best of our knowledge, the results are complete and accurate, and in our opinion, meet the requirements of Section 112.664(1), F.S. and Section 60T‐1.0035, F.A.C. Respectfully submitted, GABRIEL, ROEDER, SMITH AND COMPANY

By By Peter N. Strong, FSA, MAAA Jeffrey Amrose, MAAA Enrolled Actuary No. 17‐06975 Enrolled Actuary No. 17‐06599 Senior Consultant & Actuary Senior Consultant & Actuary

City of Tallahassee Pension Plan for General EmployeesChapter 112.664, F.S. Compliance Report

GRS RetirementConsulting

TABLE OF CONTENTS Title Page Ch. 112.664, F.S. Results

Schedule of Changes in Net Pension Liability 1. Using financial reporting assumptions per GASB Statement No. 67 1 2. Using assumptions prescribed in Section 112.664(1)(a), F.S. 2 3. Using assumptions prescribed in Section 112.664(1)(b), F.S. 3 4. Using the mandated mortality and funding interest rate +2% 4

Assets Versus Benefit Payments Projections 5. Using assumptions from the Plan’s latest actuarial valuation 5 6. Using assumptions prescribed in Section 112.664(1)(a), F.S. 6 7. Using assumptions prescribed in Section 112.664(1)(b), F.S. 7 8. Using the mandated mortality and funding interest rate +2% 8

Actuarially Determined Contribution 9

CH. 112.664, FLORIDA STATUTES

RESULTS


1


Schedule of Changes in the Employers' Net Pension Liability

Using Financial Reporting Assumptions per GASB Statement No. 67

Fiscal year ending September 30, 2018

1. Total pension liability

a. Service Cost 15,916,000$

b. Interest 86,053,000

c. Benefit Changes 118,000

d. Difference between actual & expected experience & Other 11,976,000

e. Assumption Changes 14,262,000

f. Benefit Payments (58,587,000)

g. Contribution Refunds (262,000)

h. Net Change in Total Pension Liability 69,476,000

i. Total Pension Liability ‐ Beginning 1,118,980,000

j. Total Pension Liability ‐ Ending 1,188,456,000$

2. Plan Fiduciary Net Position

a. Contributions ‐ Employer 18,814,000$

b. Contributions ‐ State ‐

c. Contributions ‐ Member 5,560,000

d. Net Investment Income 94,722,000

e. Benefit Payments (58,587,000)

f. Contribution Refunds (262,000)

g. Administrative Expense (493,000)

h. Other ‐

i. Net Change in Plan Fiduciary Net Position 59,754,000

j. Plan Fiduciary Net Position ‐ Beginning 1,074,804,000

k. Plan Fiduciary Net Position ‐ Ending 1,134,558,000$

3. Net Pension Liability / (Asset) 53,898,000

Certain Key Assumptions

Valuation Date 10/01/2017

Measurement Date 09/30/2018

Investment Return Assumption 7.60%

Mortality Table FRS Mortality ‐ Regular

Class


2



Using Assumptions required under 112.664(1)(a), F.S.





c. Benefit Changes 118,000

d. Difference between actual & expected experience & Other 11,976,000

e. Assumption Changes 14,262,000














h. Other ‐










Class


3



Using Assumptions required under 112.664(1)(b), F.S.





c. Benefit Changes ‐

d. Difference between actual & expected experience & Other ‐

e. Assumption Changes ‐














h. Other ‐










Class


4



Using Assumptions under 112.664(1)(b), F.S. except 2% higher investment return assumption





c. Benefit Changes ‐

d. Difference between actual & expected experience & Other ‐

e. Assumption Changes ‐




i. Total Pension Liability ‐ Beginning 911,680,000

j. Total Pension Liability ‐ Ending 948,710,000$









h. Other ‐




3. Net Pension Liability / (Asset) (185,848,000)






Class


5


Asset and Benefit Payment Projection

Not Reflecting Any Contributions from the Employer, State or Employee

Using Assumptions from the Plan's Latest Actuarial Valuation

FYE

Market Value of

Assets (BOY)

Expected

Investment Return

Projected Benefit

Payments

Market Value of

Assets (EOY)2019 1,134,558,000 82,745,000 62,576,000 1,154,727,000 2020 1,154,727,000 84,108,000 66,581,000 1,172,254,000 2021 1,172,254,000 85,274,000 70,544,000 1,186,984,000 2022 1,186,984,000 86,236,000 74,348,000 1,198,872,000 2023 1,198,872,000 86,991,000 77,975,000 1,207,888,000 2024 1,207,888,000 87,549,000 81,144,000 1,214,293,000 2025 1,214,293,000 87,906,000 84,439,000 1,217,760,000 2026 1,217,760,000 88,057,000 87,344,000 1,218,473,000 2027 1,218,473,000 88,012,000 89,969,000 1,216,516,000 2028 1,216,516,000 87,769,000 92,536,000 1,211,749,000 2029 1,211,749,000 87,324,000 94,857,000 1,204,216,000 2030 1,204,216,000 86,681,000 96,934,000 1,193,963,000 2031 1,193,963,000 85,836,000 98,973,000 1,180,826,000 2032 1,180,826,000 84,784,000 100,743,000 1,164,867,000 2033 1,164,867,000 83,531,000 102,230,000 1,146,168,000 2034 1,146,168,000 82,080,000 103,543,000 1,124,705,000 2035 1,124,705,000 80,430,000 104,600,000 1,100,535,000 2036 1,100,535,000 78,588,000 105,390,000 1,073,733,000 2037 1,073,733,000 76,557,000 105,936,000 1,044,354,000 2038 1,044,354,000 74,341,000 106,269,000 1,012,426,000 2039 1,012,426,000 71,949,000 106,212,000 978,163,000 2040 978,163,000 69,394,000 105,818,000 941,739,000 2041 941,739,000 66,688,000 105,142,000 903,285,000 2042 903,285,000 63,840,000 104,162,000 862,963,000 2043 862,963,000 60,866,000 102,845,000 820,984,000 2044 820,984,000 57,777,000 101,254,000 777,507,000 2045 777,507,000 54,590,000 99,270,000 732,827,000 2046 732,827,000 51,322,000 97,070,000 687,079,000 2047 687,079,000 47,983,000 94,599,000 640,463,000 2048 640,463,000 44,592,000 91,801,000 593,254,000 2049 593,254,000 41,163,000 88,831,000 545,586,000 2050 545,586,000 37,706,000 85,666,000 497,626,000 2051 497,626,000 34,237,000 82,260,000 449,603,000 2052 449,603,000 30,769,000 78,703,000 401,669,000 2053 401,669,000 27,311,000 75,052,000 353,928,000 2054 353,928,000 23,870,000 71,320,000 306,478,000 2055 306,478,000 20,453,000 67,539,000 259,392,000 2056 259,392,000 17,064,000 63,746,000 212,710,000 2057 212,710,000 13,705,000 59,957,000 166,458,000 2058 166,458,000 10,377,000 56,201,000 120,634,000 2059 120,634,000 7,079,000 52,502,000 75,211,000 2060 75,211,000 3,808,000 48,883,000 30,136,000 2061 30,136,000 559,000 45,367,000 ‐

42.67

Certain Key AssumptionsValuation Investment Return Assumption 7.50%

Valuation Mortality Table

Note: As required in Section 112.664(1)(c) of the Florida Statutes, the projection of the Fund assets do

not include contributions from the Employer, Employee or State, which is contrary to Florida Statutes

and Plan provisions. For this reason, these projections should not be viewed as a representation of the

amount of time the Fund can sustain benefit payments. Under the GASB standards which DO include

contributions from the employer, employee and State, the Fund is expected to be able to sustain the

benefit payment demands in the near‐term and long‐term future.

Number of years for which current market value of assets is adequate to sustain

the payment of expected retirement benefits, reflecting no contributions from the

Employer, Employee or State, contrary to Florida Statutes and Plan provisions:

FRS Mortality ‐ Regular Class


6




Using Assumptions required under 112.664(1)(a), F.S.

FYE

Market Value of

Assets (BOY)

Expected

Investment Return

Projected Benefit

Payments

Market Value of

Assets (EOY)2019 1,134,558,000 82,745,000 62,576,000 1,154,727,000 2020 1,154,727,000 84,108,000 66,581,000 1,172,254,000 2021 1,172,254,000 85,274,000 70,544,000 1,186,984,000 2022 1,186,984,000 86,236,000 74,348,000 1,198,872,000 2023 1,198,872,000 86,991,000 77,975,000 1,207,888,000 2024 1,207,888,000 87,549,000 81,144,000 1,214,293,000 2025 1,214,293,000 87,906,000 84,439,000 1,217,760,000 2026 1,217,760,000 88,057,000 87,344,000 1,218,473,000 2027 1,218,473,000 88,012,000 89,969,000 1,216,516,000 2028 1,216,516,000 87,769,000 92,536,000 1,211,749,000 2029 1,211,749,000 87,324,000 94,857,000 1,204,216,000 2030 1,204,216,000 86,681,000 96,934,000 1,193,963,000 2031 1,193,963,000 85,836,000 98,973,000 1,180,826,000 2032 1,180,826,000 84,784,000 100,743,000 1,164,867,000 2033 1,164,867,000 83,531,000 102,230,000 1,146,168,000 2034 1,146,168,000 82,080,000 103,543,000 1,124,705,000 2035 1,124,705,000 80,430,000 104,600,000 1,100,535,000 2036 1,100,535,000 78,588,000 105,390,000 1,073,733,000 2037 1,073,733,000 76,557,000 105,936,000 1,044,354,000 2038 1,044,354,000 74,341,000 106,269,000 1,012,426,000 2039 1,012,426,000 71,949,000 106,212,000 978,163,000 2040 978,163,000 69,394,000 105,818,000 941,739,000 2041 941,739,000 66,688,000 105,142,000 903,285,000 2042 903,285,000 63,840,000 104,162,000 862,963,000 2043 862,963,000 60,866,000 102,845,000 820,984,000 2044 820,984,000 57,777,000 101,254,000 777,507,000 2045 777,507,000 54,590,000 99,270,000 732,827,000 2046 732,827,000 51,322,000 97,070,000 687,079,000 2047 687,079,000 47,983,000 94,599,000 640,463,000 2048 640,463,000 44,592,000 91,801,000 593,254,000 2049 593,254,000 41,163,000 88,831,000 545,586,000 2050 545,586,000 37,706,000 85,666,000 497,626,000 2051 497,626,000 34,237,000 82,260,000 449,603,000 2052 449,603,000 30,769,000 78,703,000 401,669,000 2053 401,669,000 27,311,000 75,052,000 353,928,000 2054 353,928,000 23,870,000 71,320,000 306,478,000 2055 306,478,000 20,453,000 67,539,000 259,392,000 2056 259,392,000 17,064,000 63,746,000 212,710,000 2057 212,710,000 13,705,000 59,957,000 166,458,000 2058 166,458,000 10,377,000 56,201,000 120,634,000 2059 120,634,000 7,079,000 52,502,000 75,211,000 2060 75,211,000 3,808,000 48,883,000 30,136,000 2061 30,136,000 559,000 45,367,000 ‐

42.67

Certain Key AssumptionsValuation Investment Return Assumption 7.50%Valuation Mortality Table FRS Mortality ‐ Regular Class











7




Using Assumptions required under 112.664(1)(b), F.S.

FYE

Market Value of

Assets (BOY)

Expected

Investment Return

Projected Benefit

Payments

Market Value of

Assets (EOY)

2019 1,134,558,000 60,680,000 62,576,000 1,132,662,000

2020 1,132,662,000 60,465,000 66,581,000 1,126,546,000

2021 1,126,546,000 60,020,000 70,544,000 1,116,022,000

2022 1,116,022,000 59,337,000 74,348,000 1,101,011,000

2023 1,101,011,000 58,411,000 77,975,000 1,081,447,000

2024 1,081,447,000 57,248,000 81,144,000 1,057,551,000

2025 1,057,551,000 55,843,000 84,439,000 1,028,955,000

2026 1,028,955,000 54,191,000 87,344,000 995,802,000

2027 995,802,000 52,295,000 89,969,000 958,128,000

2028 958,128,000 50,152,000 92,536,000 915,744,000

2029 915,744,000 47,757,000 94,857,000 868,644,000

2030 868,644,000 45,110,000 96,934,000 816,820,000

2031 816,820,000 42,203,000 98,973,000 760,050,000

2032 760,050,000 39,032,000 100,743,000 698,339,000

2033 698,339,000 35,597,000 102,230,000 631,706,000

2034 631,706,000 31,896,000 103,543,000 560,059,000

2035 560,059,000 27,927,000 104,600,000 483,386,000

2036 483,386,000 23,688,000 105,390,000 401,684,000

2037 401,684,000 19,179,000 105,936,000 314,927,000

2038 314,927,000 14,399,000 106,269,000 223,057,000

2039 223,057,000 9,347,000 106,212,000 126,192,000

2040 126,192,000 4,031,000 105,818,000 24,405,000

2041 24,405,000 ‐ 105,142,000 ‐

2042 ‐ ‐ 104,162,000 ‐

2043 ‐ ‐ 102,845,000 ‐

2044 ‐ ‐ 101,254,000 ‐

22.17


Valuation Investment Return Assumption 5.50%

Valuation Mortality Table FRS Mortality ‐ Regular Class











8




Using Assumptions under 112.664(1)(b), F.S. except 2% higher investment return assumption

FYE

Market Value of

Assets (BOY)

Expected

Investment Return

Projected Benefit

Payments

Market Value of

Assets (EOY)

2019 1,134,558,000 104,811,000 62,576,000 1,176,793,000

2020 1,176,793,000 108,633,000 66,581,000 1,218,845,000

2021 1,218,845,000 112,439,000 70,544,000 1,260,740,000

2022 1,260,740,000 116,239,000 74,348,000 1,302,631,000

2023 1,302,631,000 120,046,000 77,975,000 1,344,702,000

2024 1,344,702,000 123,892,000 81,144,000 1,387,450,000

2025 1,387,450,000 127,797,000 84,439,000 1,430,808,000

2026 1,430,808,000 131,778,000 87,344,000 1,475,242,000

2027 1,475,242,000 135,874,000 89,969,000 1,521,147,000

2028 1,521,147,000 140,114,000 92,536,000 1,568,725,000

2029 1,568,725,000 144,523,000 94,857,000 1,618,391,000

2030 1,618,391,000 149,143,000 96,934,000 1,670,600,000

2031 1,670,600,000 154,006,000 98,973,000 1,725,633,000

2032 1,725,633,000 159,150,000 100,743,000 1,784,040,000

2033 1,784,040,000 164,628,000 102,230,000 1,846,438,000

2034 1,846,438,000 170,493,000 103,543,000 1,913,388,000

2035 1,913,388,000 176,803,000 104,600,000 1,985,591,000

2036 1,985,591,000 183,625,000 105,390,000 2,063,826,000

2037 2,063,826,000 191,032,000 105,936,000 2,148,922,000

2038 2,148,922,000 199,100,000 106,269,000 2,241,753,000

2039 2,241,753,000 207,921,000 106,212,000 2,343,462,000

2040 2,343,462,000 217,603,000 105,818,000 2,455,247,000

2041 2,455,247,000 228,254,000 105,142,000 2,578,359,000

2042 2,578,359,000 239,996,000 104,162,000 2,714,193,000

2043 2,714,193,000 252,963,000 102,845,000 2,864,311,000

2044 2,864,311,000 267,300,000 101,254,000 3,030,357,000

All future years


Valuation Investment Return Assumption 9.50%

Valuation Mortality Table FRS Mortality ‐ Regular Class











9


A. Valuation Date

B. Actuarial Determined Contribution (ADC)

to Be Paid During Fiscal Year Ending

C. Assumed Dates of Employer Contributions Biweekly Biweekly Biweekly Biweekly

D. Annual Payment to Amortize Unfunded

Actuarial Liability $ 13,209,000 $ 13,209,000 $ 33,228,000 $ 0

E. Employer Normal Cost 12,536,000 12,536,000 24,600,000 6,022,000

F. Employer ADC if Paid on Valuation

Date: D + E 25,745,000 25,745,000 57,828,000 6,022,000

G. Employer ADC Adjusted for Frequency

of Payments 26,887,000 26,887,000 59,549,000 6,526,000

H. Employer ADC Adjusted for Frequency of

Payments as % of Covered Payroll 24.72 % 24.72 % 54.75 % 6.00 %

I. Assumed Rate of Increase in Covered

Payroll to Contribution Year 1.09 % 1.09 % 1.09 % 1.09 %

J. Covered Payroll for Contribution Year 109,952,000 109,952,000 109,952,000 109,952,000

K. Employer ADC for Contribution Year: H x J 27,180,000 27,180,000 60,199,000 6,597,000

L. Estimated State Revenue in Contribution Year 0 0 0 0

M. Net Employer ADC in Contribution Year 27,180,000 27,180,000 60,199,000 6,597,000

N. Net Employer ADC as % of Covered

Payroll in Contribution Year: M ÷ J 24.72 % 24.72 % 54.75 % 6.00 %

O. Expected Member Contributions 5,498,000 5,498,000 5,498,000 5,498,000

P. Total Contribution (including Members) 32,678,000 32,678,000 65,697,000 12,095,000

Q. Total Contribution as % of Covered Payroll

in Contribution Year: P ÷ J 29.72 % 29.72 % 59.75 % 11.00 %

R. Certain Key Assumptions

Investment Return Assumption 7.50% 7.50% 5.50% 9.50%

Mortality Table FRS Mortality ‐

Regular Class

FRS Mortality ‐

Regular Class

FRS Mortality ‐

Regular Class

FRS Mortality ‐

Regular Class

9/30/2020 9/30/2020 9/30/2020 9/30/2020

October 1, 2018

112.664(1)(b) F.S.

except 2% higher

investment return

assumption

112.664(1)(b) F.S.

Assumptions

112.664(1)(a) F.S.

Assumptions

Plan's Latest

Actuarial

Valuation

October 1, 2018

ACTUARIALLY DETERMINED CONTRIBUTION (ADC)

October 1, 2018 October 1, 2018

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