Texas Pension Review Board House Pensions Committee September 29, 2016
Systems Overview Governance Dallas Employees’ Chapter 40A of the Dallas City Code Retirement Fund (DERF) Seven-member board Dallas Police & Fire Pension Article 6243a- 1, Vernon’s Texas Civil Statutes System (DPFPS) Twelve-member board Fort Worth Employees’ Article 6243i, Vernon’s Texas Civil Statutes Retirement Fund (FWERF) Thirteen-member board 2
Systems Overview - Dallas Key Plan Provisions DERF DPFPS Benefit Types Service retirement, disability, and Service retirement, disability, and death death benefits benefits Benefit Tiers No Yes, includes five groups DROP Available No Yes (all members) COLA Yes (automatic COLA for all members) Yes (automatic COLA for Group A and Group B Tier 1. Ad-hoc for Group B Tier 2. No COLA for Group B Tier 3) Social Security No No Participation 3
Systems Overview – Fort Worth Key Plan Provisions FWERF Benefit Types Service retirement, disability, and death benefits Benefit Tiers Yes, includes six groups with multiple tiers DROP Available Yes (all members) COLA Yes, Tier 1: ad-hoc COLA contingent upon the funding status, or 2% simple. Tier 2: none Social Security Participation No 4
Systems Overview Current Actuarial Snapshots Date of Funded Amortization Discount Membership Contribution Plan Name Valuation AVA AAL UAAL Ratio Period Rate Active Annuitant Member Employer 14.33% 1 DERF 12/31/2015 $3.3 B $4.1 B $0.8 B 80.41% Infinite 8.00% 7,477 6,756 13.32% 7.08% 2 DPFPS 1/1/2016 $2.7 B $5.9 B $3.3 B 45.07% Infinite 7.25% 5,415 4,230 30.53% 8.00% 3 FWERF 12/31/2015 $2.2 B $3.6 B $1.4B 60.65% 72.5 years 7.75% 6,280 4,042 19.97% 1 The employer contribution shown reflects the amount paid by the City after subtracting out their pension obligation bond (POB) contribution. 2 Member contributions are 8.50% of computation pay for participants who do not currently participate in the DROP, and 4.00% for DROP participants. The weighted average of the member rates is 7.08% as of the valuation date. 3 Municipal employees and firefighters contribute 8.25% of pay, while police contribute 8.73%. Because members no longer contribute on overtime pay, the weighted average of employee contributions between all five plan tiers is 8.00% of total compensation. The city of Fort Worth contributes 19.74% of pay for municipal employees and firefighters and 20.46% for police. Key: AVA - Actuarial Value of Assets AAL - Actuarial Accrued Liability UAAL - Unfunded Actuarial Accrued Liability 5
Funding Trends DERF Funding Trends Funded Ratio, Assets, Liabilities and Year over Year Growth Valuation Date, 12/31 2010 2011 2012 2013 2014 2015 Funded Ratio 92.24% 86.00% 80.89% 85.14% 80.94% 80.41% Amortization Period (years) 30 30 30 51 Infinite Infinite UAAL (in millions) $254.69 $474.91 $672.23 $536.56 $763.00 $808.75 AVA (in billions) $3.03 $2.92 $2.85 $3.07 $3.24 $3.32 AVA Growth (YoY) -0.14% -3.66% -2.42% 8.02% 5.42% 2.45% AAL (in billions) $3.28 $3.39 $3.52 $3.61 $4.00 $4.13 AAL Growth (YoY) 2.82% 3.34% 3.74% 2.63% 10.89% 3.12% 6
Funding Trends DPFPS Funding Trends Funded Ratio, Assets, Liabilities and Year over Year Growth Valuation Date, 1/1 2011 2012 2013 2014 2015 2016 Funded Ratio 79.48% 73.95% 78.12% 75.59% 63.80% 45.07% Amortization Period (years) 21 30 23 26 Infinite Infinite UAAL (in millions) $885.53 $1,190.37 $1,063.18 $1,251.87 $2,096.94 $3,267.05 AVA (in billions) $3.43 $3.38 $3.80 $3.88 $3.70 $2.68 AVA Growth (YoY) 1.42% -1.53% 12.33% 2.17% -4.70% -27.47% AAL (in billions) $4.32 $4.57 $4.86 $5.13 $5.79 $5.95 AAL Growth (YoY) 4.43% 5.85% 6.33% 5.58% 12.93% 2.68% 7
Funding Trends FWERF Funding Trends Funded Ratio, Assets, Liabilities and Year over Year Growth Valuation Date, 12/31 2010 2011 2012 2013 2014 2015 Funded Ratio 76.60% 71.42% 63.26% 63.86% 62.23% 60.65% Amortization Period (years) 19.5 28.4 36 49.3 55.7 72.5 UAAL (in millions) $578.96 $748.21 $1,077.42 $1,128.97 $1,271.15 $1,398.33 AVA (in billions) $1.89 $1.87 $1.85 $2.00 $2.09 $2.15 AVA Growth (YoY) 18.42% -1.32% -0.79% 7.56% 4.98% 2.89% AAL (in billions) $2.47 $2.62 $2.93 $3.12 $3.37 $3.55 AAL Growth (YoY) 12.95% 5.83% 12.01% 6.54% 7.73% 5.58% 8
Asset-Liabilities Trends – Dallas *Calculated as of 1/1 9 *Calculated as of 1/1
Asset-Liabilities Trends – Fort Worth *Calculated as of 1/1 10
Contribution Trends – Dallas 11 *Calculated as of 1/1, for the city’s fiscal year beginning 10/1
Contribution Trends – Fort Worth *Calculated as of 1/1, for the city’s fiscal year beginning 10/1 12
Contribution Trends *Calculated as of 1/1, for the city’s fiscal year beginning 10/1 13
Contribution Trends *Calculated as of 1/1, for the city’s fiscal year beginning 10/1 14
Contribution Trends *Calculated as of 1/1, for the city’s fiscal year beginning 10/1 15
Funded Ratio Trends – Dallas *Calculated as of 1/1 16
Funded Ratio Trends – Dallas *Calculated as of 1/1 17
Funded Ratio Trends – Fort Worth *Calculated as of 1/1 18
Funded Ratio Trends – Fort Worth *Calculated as of 1/1 19
Demographic Trends – Dallas 20
Demographic Trends – Fort Worth 21
Cash Flow Trends – Dallas * In 2005, DERF had a large increase in contributions ($588,961,000) due to the issuance of pension obligation bonds. 22
Cash Flow Trends – Fort Worth 23
Cash Flow Trends – Dallas 24
Cash Flow Trends – Fort Worth 25
Investment Returns – Dallas *Investment returns are net of investment expenses. 26
Investment Returns – Fort Worth *Net investment returns are net of investment expenses. 27
Asset Allocation – Dallas 28 * Includes Cash, Securities Lending, Capital Assets, and Receivables
Asset Allocation – Dallas 29
Asset Allocation – Fort Worth 30
GASB Pronouncements – Dallas 2015 GASB 67 Reported Information System DERF DPFPS Total Pension Liability (TPL) $5,367,564,000 $9,536,840,000 Fiduciary Net Position $3,202,208,000 $2,680,124,000 Net Pension Liability (NPL) $2,165,356,000 $6,856,716,000 Funded Ratio 59.66% 28.10% Long-Term Expected Rate of 8.00% 7.25% Return TPL Discount Rate (Blended) 5.76% 3.95% NPL at Discount Rate – 1% $2,915,146,000 $8,471,987,000 NPL at Discount Rate +1% $1,457,749,000 $5,581,404,000 Muni Bond Rate 3.57% 3.57% Money-Weighted Rate of -1.92% -12.70% Return DROP Balance N/A $1,517,000,000 31
GASB Pronouncements – Fort Worth 2015 GASB 67 Reported Information System FWERF Total Pension Liability (TPL) $4,127,343,024 Fiduciary Net Position $2,003,269,563 Net Pension Liability (NPL) $2,124,073,461 Funded Ratio 48.54% Long-Term Expected Rate of 8.00% Return TPL Discount Rate (Blended) 6.25% NPL at Discount Rate – 1% $2,845,284,182 NPL at Discount Rate +1% $1,773,132,040 Muni Bond Rate 3.71% Money-Weighted Rate of -1.06% Return DROP Balance $108,600,000 32
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