POETIKA
2. Benjaminen irudi eta metafora kontzeptualak Mayorgaren lanetan
Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions
Teacher Plan
At June 30, 2018, the City School Department reported a liability for its proportionate share of the net pension liability that reflected a reduction of State pension support provided to the City School Department.
The amount recognized by the City School Department as its proportionate share of the net pension liability, the related State support, and the total portion of the net pension liability that was associated with the City School Department were, as follows:
City School Department's proportionate share of the net pension liability $ 1,464,273 State's proportionate share of the net pension liability associated
with the City School Department 22,309,645
Total $23,773,918
The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City School Department's proportion of the net pension liability was based on a projection of the School Department's long-term share of contributions relative to the projected contributions of all participating school districts and the State, actuarially determined. At June 30, 2017, the City School Department's proportion was 0.101 percent, which was a decrease of 0.03 from its proportion measured as of June 30, 2016.
For the year ended June 30, 2018, the School Department recognized pension expense of $712,753 and revenue of $1,876,391 for support provided by the State. In addition, the School Unit reported deferred outflows of resources and deferred inflows of resources from the following sources:
Deferred Deferred Outflows of Inflows of
Resources Resources Differences between expected and actual results $ 61,584
Changes of assumptions $ 22,869
Net difference between projected and actual
earnings on Plan investments 408,519 430,055
Changes in proportion and differences between contributions and proportionate share of
contributions 100,620 254,105
Contributions subsequent to the measurement
date 923,482
Total $ 1,494,205 $ 707,029
33
City of Sanford. Maine
Notes to Financial Statements
June 30, 2018
NOTE 7 - PENSION PLANS - CONTINUED
Teacher Plan - Continued
The $923,482 of deferred outflows of resources, resulting from the City School Department’s contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the year ending June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources will be netted and recognized in pension expense (reduction in expense), as follows:
Years ending June 30, proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City and the City School Department’s proportion of the net pension liability was based on a projection of the City and the City School Department's long-term share of contributions to the pension plan relative to the projected contributions of all participating entities, actuarially determined. At June 30, 2017, the City and the City School Department's proportion was 2.44, which was a decrease of less than 1% from its proportion measured as of June 30, 2016.
For the year ended June 30, 2018, the City and the City School Department recognized pension expense of
$1,313,128. At June 30, 2018, the City and the City School Department reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual results $ 480,564
Changes of assumptions $ 851,176
Net difference between projected and actual
earnings on Plan investments 3,447,256 3,722,309 Changes in proportion and differences between
contributions and proportionate share of
contributions 406,209
Contributions subsequent to the measurement
date 1,365,640
Total $ 5,664,072 $4,609,082
34
City of Sanford. Maine
Notes to Financial Statements
June 30, 2018
NOTE 7 - PENSION PLANS - CONTINUED
PLD Plan - Continued
The $1,365,640 of deferred outflows of resources, resulting from the City’s contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the year ending June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources will be netted and recognized in pension expense (reduction in expense), as follows:
Years ending June 30,
2019 $ (461,182)
2020 764,455
2021 67,109
2022 (681,031)
Total $ (310,649)
Actuarial Assumptions
The total pension liability in the June 30, 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation Teachers Plan 2.20% and PLD Plan 2.20%, per annum
Salary increases Teachers Plan 2.75%-14.5% and PLD Plan 2.75%-9.0%, per year
Teachers Plan 6.875% and PLD Plan Investment rate of return 6.875%, per annum, compounded
annually
Mortality rates were based on the RP-2014 Total Dataset Health Annuitant Mortality Table for Males or Females, as appropriate.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period of June 30, 2012 to June 30, 2015.
35
City of Sanford. Maine
Notes to Financial Statements
June 30, 2018
NOTE 7 - PENSION PLANS - CONTINUED
Actuarial Assum ptions - Continued
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following
Public equities 30% 6.0 %
Private equities 15% 7.6 %
Real estate 10% 5.2 %
Infrastructure 10% 5.3 %
Diversifiers 10% 5.9 %
U.S. government 7.5% 2.3 %
Traditional credit 7.5% 3.0 %
National resources 5% 5.0 %
Alternative credit 5% 4.2 %
Total 100%
Discount Rate
The discount rate used to measure the total pension liability was 6.875% for the Teacher Plan and for the PLD Plan. The projection of cash flows used to determine the discount rate assumed that employee contributions would be made at the current contribution rate and that contributions from employers would be made at contractually required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on Plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
Teacher Plan
The following presents the City School Department’s proportionate share of the net pension liability calculated using the discount rate of 6.875%, as well as what the City School Department’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage- point lower (5.875%) or 1-percentage-point higher (7.875%) than the current rate:
City and School Departm ent’s proportionate Discount share of net _____ rate_______ pension liability
1% decrease 5.875% $ 2,569,365
Current discount rate 6.875% $ 1,464,273
1 % increase 7.875% $ 551,862
36
City of Sanford. Maine
Notes to Financial Statements
June 30, 2018
NOTE 7 - PENSION PLANS - CONTINUED
PLD Plan
The following presents the City and the City School Department’s proportionate share of the net pension liability calculated using the discount rate of 6.875%, as well as what the City and the City School Department’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.875%) or 1-percentage-point higher (7.875%) than the current rate:
Plan Fiduciary Net Position
Detailed information about the Plan’s fiduciary net position is available in the separately issued Maine Public Employees Retirement System financial report.
On-Behalf Payments
The State of Maine makes a contribution to the Maine Public Employees Retirement System Teachers Fund for the teachers of the City School Department. The actual payment, which is made by the State, is determined by an actuary for the entire teachers’ fund. The Maine Public Employees Retirement System estimates the payment made on-behalf of the City School Department to approximate 11.08% of the qualified teachers’ salaries, plus an additional 2.61% for health insurance. For the year ended June 30, 2018, the total amount of on-behalf payments was approximately $2,593,000 and was recognized in the fund financial statements. The amount of on-behalf payments recognized in the government wide financial statements for pension expense was approximately $1,684,000.
Discount rate
City and School Departm ent’s
proportionate share of net pension liability 1 % decrease
Current discount rate 1% increase
5.875%
6.875%
7.875%
$20,068,718
$ 10,002,814
$ 2,424,748
37
City of Sanford. Maine
Notes to Financial Statements
June 30, 2018